On 25 November 2020 and coinciding with the publication of its proposal for a Data Governance Act, the EU Commission has published its Intellectual Property Action Plan to support the EU’s recovery and resilience, promising a comprehensive “upgrade” of the EU’s IP system. The Action Plan (which we summarise below) includes a variety of measures to upgrade the EU’s IP framework, support the EU’s Green Transition and encourage IP use by SMEs.
Upgrading the European IP framework
In its communication, the Commission hails the commercial importance of intangible assets and IP protection as “the cornerstones of today’s knowledge economy”. According to recent studies, industries that rely heavily on IP assets are a key contributor to Europe’s GDP (45 per cent) and job creation (30 per cent).
The Commission has identified IP as playing a key role in ensuring the green transition of the European economy and its digital leadership, in being able to compete globally, and reducing dependencies on critical innovations and technologies (eg in the context of COVID-19 crisis).
The Action Plan identifies five challenges where upgrades and improvements are needed:
- Too much fragmentation: According to the Commission, European patents are too expensive, due the necessary national validation procedures and potential parallel litigation in multiple EU countries. One-stop-shop procedures, offering the right coverage, should become the norm, and not just an exception. The Commission also notes that more clarity is needed in relation to IP protection in the context of new technologies like 3D printing, AI and blockchain.
- SMEs do not make full use of IP protection opportunities: Only 9 per cent of SMEs in the EU have registered IP rights, with numbers dropping further due to the pandemic. This situation is, the Commission states, largely due to a lack of knowledge, but also because of the cost and complexity of navigating the IP landscape.
- Tools to facilitate IP access are insufficiently developed: With reference to the COVID-19 crisis, the Commission proposes that the EU should enhance its tools to make innovations and technologies available where needed, whilst ensuring a fair return on investment for innovators. This relates also to standard-essential patents (SEP), for which the Commission sees the need for a clearer and more predictable licensing framework.
- Counterfeiting and piracy still thriving: According to data compiled by the Commission, imports of counterfeit and pirated goods into the EU amounted to as much as €121bn (representing up to 6.8 per cent of EU imports) in 2016, reflecting annual direct lost sales of €50bn. Cyber theft of trade secrets even accounts for an estimated €60bn of losses in the EU.
- Lack of fair pay on global level: The global playing field for IP protection is still not level, the Commission says. The EU should harness its potential to act as a global norm-setter by developing state-of-the-art regulatory solutions to global issues such as the licensing of SEPs or the way data can be shared.
In response to these challenges, the Action Plan identifies five key focus areas where the Commission sees a need to act:
1. Better IP protection
Under this rather general heading, the Commission seeks to ensure that EU innovators “have access to fast, effective and affordable protection tools”. More specifically, the Commission wants to reduce the fragmentation and complexity of the existing IP framework, moving to one-stop-shop tools and procedures.
As a step towards this goal, the Commission advocates the rapid roll-out of the unitary patent system (ratified by Germany on 30 November 2020) in 2021, which promises to make patenting in the EU more cost-efficient and transparent. For 2021, the Commission is also looking into improving the framework for supplementary protection certificates (SPCs), possibly including the introduction of a unified SPA grant mechanism or unitary SPC title.
In addition, the Action Plan envisages an update of the Community Design Regulation, aimed at further improving accessibility and affordability of design protection in the EU. This may include support for animated designs and graphical user interfaces, a clarification of the scope of protection and coherent provisions for spare parts. Similarly, the Action Plan aims at optimising the system for protection geographical indications for agricultural products and provides for an evaluation of the plant variety legislation.
Notably, the Commission also announced the introduction of stakeholder and industry dialogues around the use of IP in the context of new technologies such as AI and the blockchain, with a view to ensuring “a coherent and cutting-edge application of the rules”.
2. Promoting an effective use and deployment of IP
The Commission wants to incentivise European innovators, especially SMEs, to make full use of IPRs. To this end, it will introduce “IP vouchers”, covering partial reimbursements of trademark and/or design registration fees and some professional advice. The Commission also intends to offer tailor-made IP advice through its Horizon programme, to develop a “European IP Information Centre” platform as a one-stop-shop access to information and advice about IP, and to improve IP valuation mechanisms with the aim of making it easier for SMEs to commercialise their IP and access financing.
3. Easier access and sharing
According to the Commission, a resilient, green and competitive economy needs tools to facilitate access to critical IP-protected technologies, to facilitate licenses to copyright and standard essential patents, and to promote data sharing.
The Commission notes the need to improve tools to cope with crisis situations, including systems for issuing compulsory licenses. Regarding copyright, the Action Plan suggests to further explore digital opportunities to create a transparent “copyright infrastructure”, looking at copyright management systems based on technologies such as AI and the blockchain.
The Action Plan also emphasises the crucial role of standard-essential patents (SEPs) in the development of 5G and the Internet of Things (IoT) across sectors, and outlines the need for stable, fair and efficient rules governing the licensing of SEPs. In other words, the Commission may step into the current range of patent disputes between tech companies and industrial companies (in particular in the automotive sector). The Action Plan suggests that the Commission intends to facilitate an industry dialogue and to explore the possibility of effective licensing solutions. We will examine the potential implications of this initiative in a separate blog post.
In relation to data sharing, the Commission is currently evaluating the existing IP framework to ensure balance between the need to foster data sharing and the need to safeguard right holders’ legitimate interests. Notably, the Commission is also looking into clarifying the scope of the Trade Secrets Directive – especially as to which type of data or datasets could qualify as trade secrets. Finally, the Commission will also be reviewing the Database Directive, with a view as to whether it may be updated to facilitate access and sharing of data.
4. Fighting IPR infringements
To ensure a functioning enforcement system, the Commission is monitoring the application of the Enforcement Directive, intends to clarify and upgrade the responsibilities of digital services, in particular online platforms by way of the Digital Services Act (aimed to be enacted in the fourth quarter of 2021.
The Commission also wants to establish an “EU toolbox” against counterfeiting, setting out principles of cooperation and data sharing among right holders, intermediaries and law enforcement authorities).
5. Fair play at global level
As a last, more political point, the Commission stresses the EU’s unique position to act as a global standard-setter in IP and pledges to continue to negotiate IP provisions with a high level of protection in free trade agreements. The Commission also seeks to leverage monitoring tools like the Counterfeit and Piracy Watch List and the Third Country Report, and intends to utilise member states’ foreign investment screening mechanisms with a view to protecting European companies’ critical IP.
The Action Plan is certainly ambitious: it outlines a diverse set of measures to improve the EU’s IP landscape and the use of IP tools by European innovators, in particular SMEs. After the last Commission focused on trademark reform and new copyright rules (especially the DSM Directive), the Action Plan seemingly tries to identify the “missing pieces” in the IP acquis communautaire and to modernise them with a view to achieving a more user-friendly and less complex framework.
The implementation of the Action Plan will certainly be challenging: finding unified solutions for SEP licensing and compulsory licenses to other critical IP, and upgrading the design and database directives to cover new technologies are complex and affect many stakeholders. It remains to be seen to what extent the Commission can achieve its goals. Businesses should watch further developments closely and engage actively in the consultation processes to follow. Watch this space for updates!