European Commission Moves Towards Stronger Enforcement Of IP Rights

The European Commission recently adopted two communications that aim to ensure a better enforcement of intellectual property rights (IPR) within the EU and in third countries.

The EU Action Plan sets out a number of actions to focus the EU's IPR enforcement policy on commercial scale infringements (the so-called 'follow the money' approach). The Strategy setting out an international approach examines recent changes and presents ways to improve the Commission's current means of action to promote enhanced IPR standards in third countries and to stem the trade in IPR infringing goods.

A recent study estimated that IPR-intensive sectors account for around 39 percent of EU GDP (around €4.7 trillion annually) and, taking indirect jobs into account, up to 35 percent of all jobs.

IP infringement is costly but difficult to calculate. A recent global fraud report surveying over 800 senior executives reported that 11 percent of their companies in 2013 were victims of IP infringements.

One EU Member State has estimated that 81 percent of IP-infringing products are associated with organised crime and that while the illicit revenue generated by organised crime in these activities was over €100 million, the cost to its economy as a whole - in terms of direct lost revenue to legitimate businesses, lost revenue to the exchequer, lost jobs and high enforcement costs - came to almost five times that amount (€470 million).

In 2012 alone, EU border control agencies registered 90,000 cases of goods suspected of infringing IPR (compared to fewer than 27,000 in 2005). The OECD estimates that the annual loss from IPR infringements to the world economy is around €200 billion.

"The adoption of this Action Plan shows how we want to re-orientate our policy towards better compliance with intellectual property rights by the private sector", said EU Commissioner for Internal Market and Services Michel Barnier. "Rather than penalising the individual for infringing intellectual property rights, often unknowingly, the actions set out here pave the way towards a 'follow the money' approach, with the aim of depriving commercial-scale infringers of their revenue flows."

"Our businesses, creators and inventors should be duly rewarded for their creative and innovating efforts”, said EU Commissioner for Trade Karel De Gucht. "For that, and to maintain the incentives that drive innovation and creativity, we must keep working on improving standards with our international partners. We will remain open to adapting our approach according to their levels of development, but underline the positive impacts that intellectual property can have on growth, jobs and consumers."

"Effective IPR enforcement must be underpinned by close cooperation amongst enforcement authorities, and between those authorities and business stakeholders. This is essential both within the EU and with our international partners," said Algirdas Šemeta, EU Commissioner for Customs. "Fostering this multi-stakeholder approach is challenging, but it is the only way to ensure proper protection of our intellectual property in the EU and in international trade."

Today's globalised economy relies increasingly on knowledge-based industries, which resisted the crisis well and are growing strongly. The number of new European patent registrations, registered Community Trade Marks and Community Designs more than doubled between 2003 and 2012. But the high numbers of infringements of IPR can harm this positive trend.

To address this challenge, the EU Action Plan against infringements of IPR foresees:

  • engaging in a dialogue with stakeholders (e.g. online advertising agencies and payment service providers) to reduce profits from commercial-scale infringements on the internet;

  • promoting due-diligence among all actors involved in production of goods with a high degree of IP, since responsible supply chain auditing and application of due diligence reduces the risk of IP infringements;

  • helping small businesses to enforce their IPR more effectively by improving court procedures; to achieve this, the Commission will look for the first time at national schemes directly assisting SMEs in accessing justice systems;

  • improving cooperation between Member States and facilitating exchanges of best practices;

  • providing a comprehensive training programme for Member State authorities with a view to achieving faster preventive actions against commercial scale IP-infringing activities across the EU and identification of barriers to cross-border cooperation.

As regards the international protection of IPR, the Commission proposes:

  • continuing multilateral efforts to improve the international IPR framework and ensuring that IPR chapters in bilateral trade agreements offer adequate and efficient protection for right-holders;

  • working with partner countries, through IP dialogues and IP working groups, to address systemic IP issues and key weaknesses in their IPR systems;

  • conducting regular surveys in order to identify a list of ‘priority countries’ for focused EU efforts;

  • assisting SMEs and right-holders on the ground through projects such as IPR Helpdesks whilst leveraging and strengthening IP expertise in the EU and Member States' representations in third countries;

  • providing and promoting awareness of appropriate IP-related technical assistance programmes to third countries (e.g. training, capacity building, how to leverage IP assets).

It is intended the actions set out in these Communications will be launched and carried out in 2014 and 2015. The Commission will monitor the delivery of these initiatives, and invites the European Parliament, the Council, Member States, the European Economic and Social Committee and stakeholders (including the Office for Harmonisation in the Internal Market (OHIM) through the European Observatory on Infringements of Intellectual Property Rights) to actively contribute to the work ahead. The Commission will consider at a later stage whether further, potentially legislative, measures are necessary.

The EU Action Plan is available for download here >

Written by Stuart Fuller, Director of Commercial Operations and Communications, NetNames.