Why is intellectual property important for the EU economy and its recovery?
Intangible assets such as inventions, cultural creations, brands, software, know-how and data are the cornerstone of today's economy. Over the last two decades, the volume of annual investments in such ‘intellectual property products' increased by 87% in the EU, while the volume of tangible investments increased by only 30%.
Intellectual property (IP) rights are titles for patents, trade-marks, designs, copyright, geographical indications, plant variety rights as well as trade secrets which help companies and creators protect and valorise their intangible assets.
IPR-intensive industries are major components of the EU's industrial ecosystems and increasingly contribute to the EU's economy. A recent study by the European Union Intellection Property Office (EUIPO) demonstrates that:
-IPR-intensive industries generated 29.2% (63 million) of all jobs in the EU during the period 2014-2016;
-9% of all employment in the EU (83.3 million) can be attributed, directly or indirectly, to IPR-intensive industries;
-45% of the total economic activity (GDP) in the EU is attributable to IPR-intensive industries, worth€6 trillion.
-IPR-intensive industries are major employment providers in the culture, textiles and electronics ecosystems where they contribute to 100% of EU employment. The contribution is 97% in digital, 88% in low-carbon energy-intensive industries, 87% in renewable energy, 53% in aerospace and defence, 39% in retail and 36% in mobility-automotive.
Why is the Commission proposing a new Action Plan today?
While the EU has traditionally a strong IP framework, we are facing several challenges that undermine our creative and innovative efforts, and hinder the EU from translating its R&D spending into modern and accessible market solutions. For instance, our IP system remains too fragmented with a costly patent system because we still have no unitary patent nor a unitary supplementary protection certificate (SPC); most SMEs and many research institutions are not making full use of opportunities offered by IP protection; tools to provide wider access to IP are insuffiently developed; counterfeiting and piracy are still increasing and there is a lack of fair play at global level.
The Action Plan proposes to upgrade the EU framework where necessary and put in place balanced IP policies to help companies capitalise on their inventions and creations in times of coronavirus health and economic crises, amid digital and green transitions.
How will the Action Plan support the green and digital transitions?
Green technologies are essential to enable the transition to the green economy. The EU is a world leader on key green technologies (e.g., it has 34 % of all climate change technology patents) but in the light of rising competition world-wide, we need to further build on our strenghts.The Action Plan aims to incentivise and reward green inventions. It will also help mobilise green technologies and data, to help put them at the service of Europe's economy. Tackling issues such as spare parts protection and the right to repair should also help facilitate the turn to a more sustainable economy.
The Action Plan also seeks to ensure that the IP framework is fit for the digital age. The Commission will take steps to update the legal framework where needed to take into account new digital realities. It will for instance update the designs system and launch an industry dialogue on the implications of the artificial intelligence (AI) revolution for the IP system. More generally, it will seek to promote the use of new technologies, such as AI and blockchain, to improve the functioning of the IP system. For instance, it will promote the use of high quality metadata and new technologies such as blockchain to help improve transparency and facilitate licensing in the area of copyright. It will also come with new IP-related initiatives to promote data access and sharing, while safeguarding legitimate interests. For instance, the Commission will come forward with an initiative to revise the Database Directive.
How will the Action Plan support the efforts to overcome the ongoing coronavirus pandemic?
The coronavirus pandemic has shown that the current IP system is generally resilient and fit-for-purpose, providing the necessary incentives for the development of critical technologies, including diagnostics, treatments and vaccines. The pandemic has also highlighted the importance of effective IP rules and tools to boost innovation and secure fast deployment of critical innovations and technologies, both in Europe and across the globe. The Action Plan includes proposals to fine-tune the existing toolbox in order to enable and further incentivise transfer of IP-protected technologies in times of crisis, such as possible mechanisms for rapid voluntary IP pooling and better coordination if the last resort measure of compulsory licensing is to be used.
Is there a link between the Action Plan and the Commission's Pharmaceutical Strategy?
Intellectual property rights, in particular patents and supplementary protection certificates, protect innovative medicinal products and influence when competing products can come on the market. Incentivising innovation while ensuring access, availability and affordability of medicines are key considerations of the Pharmaceutical Strategy. The EU's IP system works in tandem with the EU system of pharmaceutical incentives (e.g. market protection, data protection), both contributing to the same objectives.
-Improving the protection of IP rights
What will the Commission do in order to improve the protection of IP rights in the EU?
A first priority is to ensure that EU innovators have access to fast, effective and affordable protection tools. To this end, the Commission is proposing a number of measures to address the remaining fragmentation and reduce complexity as well as make sure that our rulebook is fully in line with the needs of the new green and digital economy. It is notably taking action to improve the framework for patents, designs, geographical indications and plant varieties.
What is the Unitary Patent and what are is benefits?
The Unitary Patent System is a one-stop shop for patent protection and enforcement across the EU. This will help to reduce the costs of patent protection in Europe and bridge the gap between the cost of patent protection in Europe when compared with the US, Japan and other countries; foster investment in R&D and facilitate the transfer of knowledge across the Single Market.
Unitary Patents will be based on European patents granted by the EPO under the rules and procedures of the European Patent Convention, meaning that the costs for obtaining a patent will remain the same; these costs amount to approximately € 5 000. Once a European patent has been granted, the patent holder can request to obtain a Unitary Patent free of charge, thereby avoiding the need for complex and costly national validation procedures in the participating EU Member States (which could add up to € 32 000 in expenses). On top of this, the currently fragmented system of renewal fee payments will be replaced by a single payment for all the participating EU Member States. It will cost less than € 4 700 to maintain a Unitary Patent for an average lifetime of ten years, down from about € 30 000 today, if validated in the 25 participating EU Member States. Overall, direct costs for a Unitary Patent will be lower than for an average European patent validated in four EU Member States. Further cost savings can be realized as patent holders will be able to save the attorney fees or costs of service providers related to renewal fee payments in the different Member States.
The Unitary Patent System is implemented through so-called “enhanced cooperation” of 25 participating Member States (all EU countries except for Spain and Croatia) and includes an international agreement between EU countries to set up a single and specialised patent jurisdiction (the ‘Unified Patent Court Agreement' or ‘UPCA'). The unitary patent system will become effective with the entry into force of the UPCA. With the ratification process now on track following the resolution of the constitutional complaint before the German Constitutional Court, it is now expected that that the new system could start operating in 2022, following the ‘provisional application period' that should start in 2021.
Thus the Commission is calling upon Member States for a rapid roll-out of the Unitary Patent System.
Is the Supplementary Protection Certificate system still fit for purpose?
A supplementary protection certificate (SPC) is an IP right that extends a patent (by up to five years) for a pharmaceutical or plant protection product that has been authorised by regulatory authorities, thereby encouraging innovation and promoting growth and jobs in these sectors. An evaluation of the SPC framework published today finds that the EU SPC Regulations appear to effectively support research on new active ingredients, and thus remain largely fit for purpose. However, the Commission is exploring measures to strengthen the EU SPC regime to address the legal uncertaintly, red tape and extra costs for businesses arising from the fact that SPCs are nationally administered and managed. One option is to introduce a centralised (‘unified') grant procedure, under which a single application would be subjected to a single examination that, if positive, would result in the granting of national SPCs for each of the Member States designated in the application. The creation of a unitary SPC, complementing the future unitary patent, would be another option.
Why is the Commission proposing to modernise design protections?
The Commission is proposing to modernise EU design protection to better reflect the important role design-intensive industries play in the EU economy, and asks for stakeholder feedback on the options for future reform. During the period 2014-2016 they generated almost 16% of EU GDP and of 14 % of all jobs; while their increasing economic impact is also reflected in the filings of Registered Community Designs (RCD), in particular in the field of new technological (digital) designs. Recent results of the evaluation of EU legislation on design protection show that the current legislation works well overall and is still broadly fit for purpose. However, the evaluation has also revealed a number of shortcomings, including the fact that design protection is not yet fully adapted to the digital age and lacks clarity and robustness in terms of eligible subject matter, scope of rights conferred and their limitations. They further involve partly outdated or overly complicated procedures, inappropriate fee levels and fee structure, lack of coherence of the procedural rules at Union and national level, and an incomplete single market for spare parts.
What is the Commission proposing as regards the EU system of geographical indications?
The Action Plan aims at strengthening the protection of agricultural geographical indications (GIs) while considering the feasibility of a GI protection system for non-agricultural products at EU level.
The Commission is proposing to review the legislation on geographical indications (GIs) for agricultural products and recently launched a public consultation. While the current GI schemes for agricultural products are fundamentally sound, the Action Plan follows the Commission's Farm to Fork Strategy in committing to strengthen the GI system by enhancing IP enforcement, empowering producer groups to protect their valuable rights, reducing internet theft, improving sustainable production under the GI schemes, better tailoring schemes to producers in all EU regions, reviewing ways to promote and protect the EU traditional foods, and speeding up registration procedures.
The Commission also intends to address the current fragmentation of the protection of GIs for non-agricultural products such as Murano glass, Solingen cutlery and Donegal tweed. At EU level, producers of industrial and handcraft products are not able to certify the link between the quality and the geographical origin of their products, making these less attractive for investment and costly to protect such products across borders. Today it has published an assessment including possible options for the way forward, and it invites stakeholders to provide feedback.
How does the Action Plan address new digital technologies like AI or blockchain and what does it say about data?
New technologies create both challenges and opportunities for IP. A study on the implications of AI technologies on patent and copyright law is published today. The Commission is launching a study on the interaction between copyright and new technologies, which will examine issues related to the management of copyright data linked to protected content and present possible ways to improve the data infrastructure for copyright management'. The Commission will also continue its discussions at international and EU level on the impact of AI technologies on IP rights. Finally, the Commission will engage in stakeholder discussions including by encouraging the launch of an industry dialogue on IP, new technologies and evolution of the IP framework in the digital economy. The Commission will also, together with the EUIPO, further promote the use of new technologies, such as image recognition, AI and blockchain, to fight IP infringements.
Furthermore, as announced to the recent EU Data Strategy, the Commission considers reviewing the Database directive with a view to facilitating the sharing and trading of machine-generated and IoT-related data, especially to bring more clarity on the status of such data and databases under the Directive's “sui generis” right. The Commission will also consider the need to provide clarification on the Trade Secrets directive can be used in the context of the data economy, potentially as part of the Data Act.
-Boosting the uptake and deployment of IP
How will the Action Plan support SMEs?
The implementation of the Action Plan will help SMEs better manage their intellectual property and improve their competitiveness. EU SMEs will get easier access to information and advice on IP. The latter will be mainstreamed in the EU's public funding programmes and further rolled-out at the national level, in co-operation with EU IP offices. In these times of crisis, EU SMEs will also get financial aid to finance so-called IP scans ( comprehensive, initial, strategic and professional advice on the added value of IP for the individual SME's business), as well as certain costs related to IP filings.
How will the ‘IP voucher' support SMEs?
With the IP voucher, which is made available in co-operation with the EUIPO, any EU SMEs will be able to receive co-funding of up to € 1500 for:
-IP Scans: up to 75% of the cost and/or
-registration of trade marks and design rights in the EU and its Member States: up to 50% of the application fees.
SMEs will be able to apply as of mid-January for the IP voucher, through a dedicated website. The voucher will be provided on a “first come first served” basis and will require a minimum of formalities, such as a self-declaration to be an EU established SME. SMEs that will take an IP scan and are advised to apply for patent protection may also be able to receive additional EU funding.
How will the Action Plan support access to finance by SMEs relying on IP?
The Commission will discuss with the financial community how to ensure that IP is a recognised asset, including looking at most suitable valuation methods. We will test valuation methods in a tech due-diligence pilot. We will explore together how to build the financial community's capacity to better take intellectual property as an asset into account. We will also assess and expand existing guarantee facilities to help creators and SMEs obtain finance for high-risk projects.
What will the IP Action Plan do to support the R&I community?
The Commission will publish Guiding Principles for knowledge valorisation, which will aim to stimulate knowledge circulation and valorisation in Europe. They will be accompanied by a Code of Practice for the smart use of IP.
-Facilitating access to and sharing of IP sharing
Why do we need to facilitate IP access and sharing?
The development of the green and digital economy hinges on our capacity to mobilise key intangible assets, which can be IP protected. Thus, for instance, the development of the data economy requires effective tools to trade data on fair terms. We also need a stable and efficient system for licensing standard-essential patents. We should make full use of new technologies to improve the copyright infrastructure. And last but not least, the COVID-19 crisis has illustrated the need for effective ways to share out critical IP in times of crisis.
Why is the Commission considering action regarding standard-essential patents?
Standard-essential patents (SEPs) are patents related to technologies that are incorporated in standards, such as for instance connectivity standards. Despite guidance provided in the 2017 Communication ‘Setting out the EU approach to SEPs', we observe continued friction in the uptake of SEP-protected standards. In addition, we know that as we move to 5G and beyond, the number of SEPs, as well as the number of SEP holders and implementers is increasing - the landscape thus further gains in complexity. Many of the new players are not familiar with SEP licensing, but will need to enter into SEP arrangements. Navigating the SEPs landscape may pose particular challenges for smaller players, including SMEs and start-ups in the Internet of Things sector for example.
The current system does not offer the tools businesses need in order to come to fast, effective and fair SEP licensing arrangements. Licensing too frequently leads to conflict and litigation, which undermines EU businesses on all sides (notably SEP holders and implementers). To address all these issues, the Commission will encourage industry-led initiatives in the most affected sectors, combined with possible reforms, including regulatory if and where needed, aiming to clarify the SEPs framework and offer effective transparency tools.
-Improving the enforcement of IP rights
How does the Commission plan to step up the fight against counterfeiting and piracy?
To fight IP infringements, the Commission will in particular:
-clarify and upgrade rules governing responsibilities of online platforms, through the Digital Services Act;
-seek to enhance the role of law enforcement authorities, including OLAF, in the fight against counterfeiting and piracy;
-develop an EU Toolbox against counterfeiting, specifying principles for how rights holders, intermediaries and law enforcement authorities should act, co-operate and share data;
-develop awareness tools and offer targeted guidance to businesses to mitigate the economic impact of cyber theft of trade secrets in EU industrial ecosystems and other key sectors.
What is the EU Toolbox against counterfeiting about?
The objective of the EU Toolbox is to set out a coordinated European approach on counterfeiting. It should clarify roles and responsibilities and identify ways to upgrade data sharing and cooperation between right holders, online and offline intermediaries and public enforcement authorities. It also intends to further promote the use of new technologies such as image recognition, AI and blockchain. The Toolbox will be inspired by reported practices and principles developed in the context of various industry-led initiatives, such as the Memorandum of Understanding on the sale of counterfeit goods on the internet and the Memorandum of Understanding on online advertising and IPR. It will also largely benefit from the work of the European Observatory on Infringements of IPR (EUIPO).
What is the role of the European Observatory on Infringements of Intellectual Property Rights in reducing IP infringements?
The Observatory, created in 2012 and managed by the EUIPO, is a network of experts formed by representatives from EU bodies, authorities in EU countries, businesses and civil society organisations. Together with the Action Plan, the Commission has published today its evaluation of the first years of activity of the Observatory. While the evaluation identifies certain areas for improvement, it concludes that the EUIPO has become a hub of excellence on IP infringements, a central source of knowledge, development and sharing of best practice in the EU and internationally. Its activities will contribute to the implementation of the Action Plan.
-Promoting a global level playing field
How will the Action Plan address the need for fair play at global level on IP?
While IPR-intensive industries account for 93% of EU goods exports, our businesses still face major challenges when operating in third countries, including uneven protection standards in some third countries, or regulatory frameworks forcing transfer of IP as a de facto pre-condition for accessing local markets.
To promote fair play at a global level, the Commission will continue export our IP standards world-wide, including in new areas such as health, AI, and SEPs. In a global context, the EU's ambition is to be norm-setter, not norm-taker. To this end, the Commission will continue to seek ambitious IP chapters with high standards of protection in the context of Free Trade Agreements (FTAs). It will also continue to use, in the cooperation with EU's trading partners, the Counterfeit and Piracy Watch List (which reports marketplaces and service providers allegedly engaging in counterfeiting and piracy) and the Third Country Report (which identifies third countries in which the state of IPR protection and enforcement gives rise to serious concerns). Both the Watch List and the Report will be updated regularly, and actions to address identified shortcomings will be closely monitored. And it will expand its technical co-operation offer, including in relation to Africa.
At the same time, the EU will take stronger action to avoid any misappropriation of critical technologies by third parties. For instance, it is developing new framework conditions for international cooperation with research organisations in non-EU countries, based on a level playing field and reciprocity. It will also take a critical look at foreign take-overs targeting critical IP assets.