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N. 30, November - December 2006
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 | Editorial
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Intellectual Property: How should the EU Proceed in the Next
Five Years?
Mr H. Zourek
Director General - DG for Enterprise and Industry
European Commission
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The EU economy is facing major challenges, such as fast
technological change, increasing globalisation, and increasingly competitive
capital markets.
Technological change is accelerating. New opportunities are arising,
especially in the knowledge-based ICT and life sciences industries. However,
traditional manufacturing industries are also shifting from mass production to
smaller, more adaptable production runs, with more emphasis on design and
constant innovation. Success in these circumstances depends increasingly on a
sound intellectual property system.
Globalisation is welcome, as the emerging economies take their place
in the international trading system. However, this puts an increasing premium
on the non-price factors that drive EU exports. Some two-thirds of EU exports
are from high or medium-high technology industries. This gives increasing
importance to the international recognition and enforcement of EU intellectual
property rights.
Increasingly competitive international capital markets greatly
facilitate the raising of capital by EU firms, especially SMEs. However, this
makes it all the more important for EU firms to be able to value their assets,
particularly intangible ones. Intellectual property rights are becoming an
important category of assets, especially in the most innovative industries. It
is a problem that in Europe we have not yet been able to agree upon a single
way of including such assets in the formal balance sheet accounts of
companies.
The EU’s response to these challenges is the re-launched
Lisbon strategy. Working closely with Member states, the EU has set the
objective of becoming the most dynamic and competitive knowledge-based economy.
A key element of this is the EU-wide target of raising R&D investment to 3%
of GDP. All Member states have now committed themselves to targets to move
towards this goal. The strengthening of the Community’s IPR framework
will play a key role in reaching these objectives.
In this context, the key priorities for IPR policy over the next few
years are, in my opinion, threefold:
- the achievement of a Community framework for patents,
- a substantial improvement in the international enforcement of
IPR rights, especially against the rising problem of counterfeiting and piracy,
and
- improving the usage and knowledge of IPR by EU firms, especially
SMEs.
First is the absence of a Community framework for patents. This is
partly about costs, but, even more importantly, it is about the absence of a
single framework of enforcement that can ensure legal certainty for rights
holders.
The costs issue is significant. Despite recent fee reductions, the
cost of a typical European Patent Convention (EPC) patent from the EPO is still
about three times that of a US patent. Even so, a typical EPC patent would only
cover six of the 25 Member states. The potential ratification of the London
Agreement would certainly serve to reduce costs somewhat further, but this
would not necessarily have the full coverage of a Community patent.
The lack of a single Community framework for the enforcement of
patents is even more significant. Recent work by Professor Harhoff has revealed
that almost 1% of EPC patents end up being litigated in the EU. While
considerably lower than the 2% litigation rate in the US, there are still about
400-500 cases per year. The absence of a single Community framework for such
litigation creates legal uncertainty and increases costs through “forum
shopping”. Only the Community patent could fully resolve this situation.
The proposed European Patent Litigation Agreement is clearly welcome, but would
probably at best result in a hybrid legal framework for the Community.
The second key issue is the international protection of IPR,
particularly the fight against infringement of trademarks and copyrights. EU
and U.S. customs statistics show not only that counterfeiting and piracy are
rising at an alarming rate, but also that the nature of such problems is
changing, increasingly switching to new categories of goods, such as
pharmaceuticals, auto parts, and foodstuffs. These new categories of
counterfeiting raise serious health and safety concerns. It is important that
we deal with them immediately.
However, while the EU itself is clearly a source of counterfeits,
the problem has a much wider and more global dimension. For instance, the WHO
reports that counterfeits account for some 10% of the global market for
pharmaceuticals, a relatively amount of which currently circulates in the EU
itself. We have agreed with the U.S. to work closely together to combat the
global counterfeiting problem, initially focussing on China and Russia. Over
the coming years, it is important to pursue this work further, and to ensure
that an international framework for IPR – including for patents –
is put in place through the implementation of the WTO’s TRIPs
agreement.
The third issue is improving the usage and knowledge of IPR by EU
firms. This is particularly important for SMEs, many of whom are highly dynamic
but currently have very poor protection for their IPR. Anecdotal evidence for
the EU – consistent with quantitative evidence for the US –
clearly points to the vulnerability of SMEs to litigation. A number of means
have been suggested to help SMEs – from patent angels to litigation
insurance - that need to be reviewed further. Moreover, it is important to
ensure that SMEs have the knowledge and best advice on IPR protection and are
able to judge which instrument is most appropriate to safeguard their IPR
– not necessarily always through European-wide IPR instruments. SME IPR
advice networks, including the IPR Helpdesk, need to be reviewed to achieve
this. I know that the EPO and national patent and trademark offices are keen to
join in these activities, and I would welcome their closer involvement.
Finally, we need to review the operation of IPR protection systems in light of
best international practices, for instance considering how to further reduce
the costs for SME applicants for patents and trademarks and how to improve the
access and usage of “sleeping patents”.
In my opinion, these three elements are the most important
challenges for EU IPR policy in the coming years. Given the importance of IPR,
in my view, it would make enormous sense to consider how these issues can be
more closely integrated into the Lisbon Strategy process, perhaps in the form
of a new IPR Action in the forthcoming Lisbon annual Progress Report to be
submitted to next year’s Spring European Summit. I fully expect that
such a move would receive wide support from Member states.
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