目次

はじめに ·······················································································

1

1.

序章 ························································································
1.1 背景 ················································································

3
3

2.

エグゼクティブサマリー ·····························································

53.

造船業の知的財産権保護に向けた欧州の法的枠組み ························· 9
3.1 概要、造船業知財権研究、ガードシップ································· 9
3.2 知的財産権の保護手段 ························································ 9
3.3 造船業における知的財産権の保護 ········································· 11
3.4 欧州造船・舶用機器産業における保護手段の活用····················· 12
3.5 知的財産の流出源 ······························································ 144.

欧州造船業の知的財産権保護強化に向けた動向 ······························· 16
4.1 ガードシップの設立と欧州業界の姿勢 ··································· 16
4.2 ガードシップのハンドブック ··············································· 18
4.3 業界の反応 ······································································· 20

5.

欧州における代表的な侵害事例の考察 ··········································· 216.

海事以外の欧州産業における知的財産権事例の考察 ························· 237.

結論および予防策の提言 ····························································· 27

付録参考資料：造船業の知的財産権に関する研究（Shipbuilding IPR Study）レポート················ 31

はじめに
世界の造船市場は、2008年秋のリーマンショックを契機とした未曾有の世
界同時不況の影響を受け、需給バランスが崩壊し、受注量は低迷するとともに、手持工事量についてもキャンセル、納期遅延も多く発生しており、世界造船業の競争環境は厳しさを一層増しているところである。
このように厳しさを増す競争環境の中で、欧州造船業は、「建造量」ではなく、「付加価値」の観点で世界のリーダーであり続けることを基本的な目標としている。すなわち、クルーズ船、オフショア船など高付加価値である特定分野において圧倒的な優位性とシェアを今後とも維持していくことを念頭に活動している。
具体的には、政策面では、2007年4月、欧州委員会は、欧州造船業の競争戦略
LeaderSHIP2015の経過報告書を発表しているが、この中で、「欧州造船業の将
来は、技術的リーダーシップに懸かっている。海事分野における欧州の卓越性
及び競争力は最高品質の製品を供給することに基づくとともに、このようなことを可能とする知識と経験に価値を与えるとともに保護することを確実にするために、政府と業界が活動すべきだ。」と述べられ、造船業の知的財産権の保護対策に一体となって取り組んでいくべきとの見解を示している。
こ れ を 受 け 、 2007 年 末 、 欧 州 委 員 会 は 、 欧 州 造 船 業 が そ の 知 的 財 産（Intellectual Property : IP）を如何に保護するか、造船業が知的財産権（Intellectual Property Rights : IPR）の侵害により被る打撃、既存の知的財産権保護システムは如何に改善され得るかなど、欧州造船業の知的財産権保護関連問題の分析レポートを作成している。また、欧州の造船業界においても、
GuardSHIP プロジェクトを立ち上げ、船主、舶用工業事業者、船級協会、修繕事
業者、船員等関係者が幅広いがために情報漏洩の潜在的機会が極めて高い造船業特有の IPR 問題の特質と、現行の IPR 法体系の整理と採り得る IPR 対策等について明らかにしたハンドブックを発行し、欧州造船業全体として知的所有権に懸かる問題に積極的に取り組みつつある。
我が国造船業も、今後とも引き続き世界の造船市場において競争力を維持していくためには、積極的な技術開発の展開と、その成果である高い技術開発力を背景とした次世代船舶の開発・普及により他国との差別化を図っていくこと－ 1 －が重要であるが、一方で知的財産権の保護に係る対策についても適切に講じていくことが不可欠である。したがって、欧州造船業における知的財産権保護対策に関する現状と今後の見込みを調査することを通じて、我が国造船業の今後の知的財産権保護対策研等の一助とするものである。

－ 2 －

1.

序章

1.1 背景知的財産保護は、造船や舶用製品産業のみならず、欧州の産業界全体にとっても大きな問題である。欧州委員会と欧州議会は、2000 年のリスボン欧州理事会1で採択された政策として、欧州連合（EU）を世界トップの知識経済とすることを目指している。この理事会では、欧州が「2010 年までに世界で最も競争力があり、かつ力強い知識経済となること」が目標として定められている。
EU はこの政策に基づき、造船産業の「リーダーシップ 2015」計画2を全面的に支援している。リーダーシップ 2015 は、欧州造船産業が、大手造船業に従事する市場リーダー企業に対する技術優位性を築き、そこから生まれる競争優位性を基盤として産業の発展を実現することを目指すものである。そして、こうした技術優位性は製品・製法開発を通じて獲得するとされている。リーダーシップ 2015 には、この目的を実現すべく、以下に挙げる 8 つの目標が設定されている（進展をかっこ内に記載している）。
•

世界造船業における平等な競争条件の整備（EU の世界貿易機関［WTO］での韓国造船業提訴の根底にあったのはこの問題である。欧州では、不公正な競争を支える公的助成の廃止は引き続き重要な取り組みとなっている）•

研究、開発、技術革新に向けた投資の拡大（これは「造船業に対する公的助成の枠組み［Framework on State Aid to Shipbuilding］」にも記されている。
この枠組みは、造船業に対する研究、開発、技術革新向けの政府支援を許容するもので、欧州において今なお許されている3数少ない造船業向け補助金の1 つである）•

先進的な資金調達および保証制度の構築（欧州委員会の企業・産業総局は 2009年 11 月 13 日、欧州における引き渡し前保証制度の実態を調査すべく、総額37 万 8,200 ユーロの「造船業の引き渡し前保証制度に関する調査」契約をプ
ライスウォーターハウスクーパースと結んだ4。調査期間は 12 カ月である）

2000 年 3 月 23～24 日リスボン欧州理事会 www.europarl.europa.eu/summits/lis1_en.htm。
www.cesa-shipbuilding.org にて入手可能。
3 この認可は、EU 域内で欧州委員会の競争政策総局が執行する競争法規に則したものである。欧州委員会
は、欧州議会に従属する「官僚」と見なすことができ、「総局」と呼ばれる数多くの部門から成る。総局は、政府の部局または省庁と捉えることができる。
4 契約番号 2009/S 230-329473、オフィシャルジャーナル 2009/S 98-140616。
1
2

－ 3 －

•

船舶の安全性向上および環境負荷低減（EU は「枠組み計画」を通じて、この分野での基礎研究を支援し続けている。欧州委員会のエネルギー・運輸総局は、環境負荷の低い船舶を支える技術の開発に向け、国際海事機関［IMO］
で積極的な役割を担っている）•

海軍船舶需要に対する欧州としての取り組み（欧州防衛機関は創設されたものの、欧州防衛産業の調和の実現については、解決すべき課題が山積している状態であり、これは依然として長期的な目標である）•

知的財産権の保護（本報告書の主題）•

熟練労働力の確保（CESA は 2008 年 6 月、報告書「欧州の造船・修繕産業
における就業者構成の変化と求められる技能［Demographic Change &Skills Requirements in the European Shipbuilding & Ship Repair
Industry］」を出版した。欧州委員会の資金援助を受けたこの報告書には、
今後 10～15 年に造船業で必要となる人的資源の見通しが記載されており、EU の政策のみならず造船業に対しても今後取るべき行動を示すものとなっている）•

持続可能な産業構造の構築（欧州委員会は業界再編を積極的に支援している
ものの、この目標は EU の支援が及ぶ分野ではない。）

言うまでもなく、知的財産権の保護は上記戦略において最も重要な要素の 1つであり、これまでにさまざまな議論や取り組みがなされてきた。CESA と舶
用機器業者の団体である欧州舶用工業会（EMEC）という 2 つの有力業界ロビ
ー団体は、知的財産権保護の強化に向けて積極的なロビー活動を展開するとともに、本報告書で取り上げたガードシップによるハンドブックの作成・普及に努めてきた。欧州委員会は 2007 年、過去の多くの事例と同様、客観的かつ公平な調査を行うべく外部コンサルタントを起用して、これらのロビー団体が後押しする問題の範囲と程度を見極めることを決定した。この結果、2007 年 12 月に発表されたのが、「造船業の知的財産権に関する研究（Shipbuilding IPR
Study）」5である（以下「造船業知財権研究」と称する）。

欧州委員会の企業・産業総局の依頼を受け、ハウトホフ・バルマ（Houthoff Buruma）N.V.
（www.houthoff.com）がポリシー・リサーチ・コーポレーション N.V.（www.policyresearch.nl）の協力の下で実施。2007 年 12 月 14 日公表。本レポート巻末に付録参考資料として添付。
5

－ 4 －

2.

エグゼクティブサマリー（1） 知的財産の保護は、造船業のみならず欧州の産業界全体にとっても重要な問題である。これを後押ししているのが、欧州を「2010 年までに世界で最も競争力があり、かつ力強い知識経済」とするという EU の政策であり、EU はこれに基づき、造船産業の「リーダーシップ 2015」計画を全面的に支援している。
（2） 知的財産権の保護は、リーダーシップ 2015 の主要目標の 1 つとして明確に掲げられている。目標にはこのほか、造船業における平等な競争条件の整備、技術革新の推進と支援、資金調達および保証制度の構築などが挙げられている。
（3） 欧州委員会の依頼で 2007 年に実施された造船業の知的財産問題に関する研究は、造船業における「知的財産保護のための法的枠組み自体は不十分ではない」が、「造船業では利用し得る手段が活用されていない」と結論付けている。利用可能な保護手段を活用しない主な理由には、知的財産保護手段に関する知識の欠如、保護に要する費用の大きさ、保護手段の効果に対する信頼不足、知的財産権の行使で顧客や納入業者との関係を損ないたくないとの思い、などがある。
（4） 造船業の知的財産保護のために利用可能な制度は、韓国や中国をはじめとするすべての主要地域で十分整備されている。中国では、知的財産文化の成熟度の低さから、権利を行使することは難しく、これまで知的財
産保護に関してそれほど真剣な取り組みはなされていなかった。しかしこの国においても、知的財産保護が根付くにつれて、こうした状況は変わるものと見込まれる。今や中国は特許の国際出願ランキングの上位国となっており、変化はすでに始まっている。
（5） 2007 年の欧州委員会向け研究のために行われた調査によると、欧州造船業における知的財産流出の約半分は他の欧州諸国、残りの約半分は極東諸国がかかわる侵害であり、中国の造船会社による侵害が最も深刻だとする一般的な見方とは異なる結果となっている。この調査はまた、実際に法的措置を取り得る侵害行為は少数にとどまり、流出問題は実態よりも大げさに考えられていることも明らかにしている。業界関係者はこれに異を唱えるかもしれないが、2007 年の 1 年間をかけ、多額の予算を投－ 5 －じた研究によっても、保護措置実施の有無にかかわらず、さしたる数の侵害事例を見つけられなかったという事実には注意を払う必要がある。
業界関係者は多くの侵害事例があると主張するが、今回の研究を通じても深刻な侵害に関する具体的事例を見いだすことはできなかった。この理由の一部は、特許をはじめとする実施可能な手段は欧州造船業において限定的にしか使われていないことにあろう。また、知的財産侵害の実態は考えられているよりも深刻でないことも理由と考えられる。
（6） 欧州の造船会社が問題を深刻に捉えているにもかかわらず、保護手段に対する業界一般の姿勢は消極的であった。CESA は、リーダーシップ 2015の策定に向けた議題に知的財産保護を加えることを強く主張しなければならなかった。欧州造船産業の知的財産保護に対する理解と活用レベルを改善するために CESA が立ち上げたのが、ガードシップ計画である。
2004 年に取り組みが開始されたガードシップは、2008 年 8 月に法人化され、同時に「造船業知的財産ハンドブック」を刊行した。ガードシッ
プの活動資金は全額業界が出資しており、欧州委員会からの資金援助は受けていない。
（7） このハンドブックは欧州外の企業も含め、誰でも購入することができる。
これは製作費を賄うためでもあるが、それに加えて、知的財産保護手段に関する知識と活用レベルが向上すれば業界全体にプラスの効果をもたらすことを CESA が固く信じているためでもある。
（8） ガードシップのハンドブックの内容は、業界関係者に知的財産保護にかかわる問題と手法を理解させることを目的としている。また、社内組織の運営と契約条項に関する指針という形で、知的財産の外部流出を防ぐための実務的な支援も提供している。
（9） ガードシップ計画の対象は単なるハンドブックにはとどまらない。CESA
は会員企業がかかわる知的財産紛争に政治レベルで関与する予定であり、また法的手段に直接関与する可能性もある。ガードシップの将来計画には、研修、共同特許の保有、情報収集、監視その他の知的財産関連の活動が盛り込まれている。
（10） ガードシップに関して業界関係者と意見を交わした結果、欧州造船業における知的財産問題に対する意識レベルは 2007 年の研究が実施された－ 6 －時点よりは確実に向上していると言える。しかし進展は緩やかなものにすぎず、実際、業界はいまだ知的財産保護に対して懐疑的であるように思える。その背後には、高額の費用がかかる、効果が低い、顧客関係を損なう恐れがあるといった、2007 年の研究で指摘されたものと同じ理由が存在する。さらに、状況の変化の結果、欧州造船業が目下対処すべき問題の筆頭には、新規受注が緊急に必要であることなど、より差し迫った問題が存在していることも挙げられる。短期的な市場見通しからすると、極東、すなわち韓国・中国における余剰生産能力の支援やその結果として出される補助金に関する問題が、業界の関心の中心となる可能性が高い。
（11） 特許の出願件数は、世界の産業界全体で大幅な増加を続けており、中国においても、経済成長に歩調を合わせて知的財産文化が育ち始めているという兆しが強く表れている。知的財産の保護は、電子機器、通信、自動車その他数多くの産業において競争戦略上欠かせないものとなっており、知的財産紛争の数は増え続けている。保護対象となる知的財産は、
新 規 の 意 匠 や 特 徴 に 加 え て 、 製 品 の 「 独 自 の 売 り （ unique selling
proposition）」にまで広がっている。「独自の売り」は、造船業においても、今後低炭素技術の開発が進む中で重要性が高まっていくことが予想される。知的財産保護に向けて産業界全体で提唱されている施策は、ガードシップが提案しているものと同一で、従業員教育、実効性ある知的財産管理、利用可能な保護手段の活用などが挙げられる。
（12） 欧州の造船会社が建造する船舶と極東地域の主要造船会社の船舶の複雑性を比較した結果、予想通り、欧州の船舶の方が極東の競合企業が建造する船舶よりも複雑性が高く、ゆえに知的財産保護は欧州の造船会社にとって極東の造船会社よりも重要な問題であることが明らかになった。
極東の競合企業が大量建造を志向しているという事実は、これらの企業にとって製法関連特許は欧州の造船会社よりも重要なものであることを示唆している。このことは、韓国の造船会社のホームページ上で紹介されている特許例によっても実証されている。
（13） ニッチ分野の船舶を手掛ける欧州の造船会社が、大量建造を志向する韓国造船会社の持つ製法に関する特許権を侵害しても何のメリットも得られない。しかしその逆は真ではない。最近の市場環境下で新規受注の獲得に必死になっている韓国造船会社は、浚渫船や沖合補給船など、従来－ 7 －はニッチと見なされていた分野においても契約獲得に動いており、欧州造船産業にとって極めて憂慮すべき事態となっている。こうした状況において、知的財産の保護と権利行使は死活問題となる。
（14） 船舶のバンカー油や炭素課金が今後導入される可能性を受け、船舶設計における技術開発が進んでおり、製品開発分野での知的財産保護も重要性が増していくものと思われる。こうして開発された新たな特徴は確実に「独自の売り」につながることから、知的財産保護は、欧州造船業の長期的な競争力において極めて重要な役割を担うものとなることが見込
まれる。

－ 8 －

3.

造船業の知的財産権保護に向けた欧州の法的枠組み

3.1 概要、造船業知財権研究、ガードシップ
知的財産には十分に整った保護制度が存在する。これは研究開発投資に伴うリスクを低減させ、その投資収益率を高めるためには、こうした保護制度が必要であるとの理念に支えられたものである。造船業は、知的財産侵害に対して、
他のあらゆる産業と同じ程度の保護策を利用可能であるが、船舶の持つ国際的な性格ゆえに、業界特有の難しい問題も抱えている。この点は「造船業の知的財産権に関する研究」（造船業知財権研究）が導き出した主な結論の 1 つでもあり、そこでは先に本報告書で引用したように「知的財産保護のための法的枠組
み自体は不十分ではない」が、造船業では利用し得る手段が活用されていない、と記されている。
本章は造船業知財権研究の結論に基づいて分析を行っており、ガードシップには言及していない。しかしこれは、造船業知財権研究がガードシップより上位にあることを示唆するものではないし、この研究の結論がガードシップ計画の成立に活用されたことを意味するものでもない。どちらかといえば、その逆が真実である。この点は第 4 章で詳述する。
3.2 知的財産権の保護手段
知的財産保護のための法的枠組みはすでに十分に整っている6。最も一般的な手段は以下の通りである。
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特許：最長存続期間（EU では 20 年間）と領域による限定があり、対象領域ごとに別途登録が必要となる。ただし特許協力条約の締約国 133 カ国については、世界知的所有権機関（WIPO）を通じて複数領域を対象とする特許を取得することが可能である。締約国には、すべての主要造船国（中国、韓国、
日本、EU 諸国）が含まれている。

•

実用新案：実用新案は、特許の簡易版と言える。保護期間は 7～10 年と特許より短く、更新はできない。全く新しい設計形状というよりも発展形と捉え

6

国際的には、これらの手段は各国の裁判所と世界知的所有権機関（WIPO）の両者の管轄下にある。WIPO
は、1967 年に採択された WIPO 設立条約（その後 1979 年に改正）に基づく国際連合の専門機関である。
WIPO 設立条約の下、これを支える数多くの条約が締結されている。造船業にとって重要なのは、中国が1980 年に、そして韓国が 1979 年にそれぞれ WIPO 設立条約の締約国となっていることである。知的財産
保護は、WTO の諸条約、特に不公正競争に関するものとのつながりを深めている。特筆すべきは、1994
年に WTO において「知的所有権の貿易関連の側面に関する協定（TRIPS 協定）」が採択されたことであ
る。

－ 9 －

るべき場合のように、保護対象となる発明の独自性が特許より明確でない場合に利用できる。実用新案権はすべての国で認められているわけではない。
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商標：無限に更新可能。

•

意匠権：登録された場合には、最長存続期間（EU では 25 年間）の制限を受ける。

•

著作権：著作者とその承継人に与えられる排他的権利であり、長期の保護期間が認められている。

•

ライセンス：特許権者への使用料支払いにより特許を使用する権利を得る排
他的契約。

•

不公正競争：WTO などでは通常、損害に対する遡及的請求が可能。

•

契約法：秘密保持条項や競合禁止条項が例として挙げられる。これらの条項
は契約当事者のみを拘束するものであり、契約当事者以外の者によるリバー
スエンジニアリングなどに対する保護手段とはならない。いわゆる「企業秘密」を保護するための条項である。

知的財産は極めて高い専門性が要求される法律分野であり、適切な手段が常に明確になっているとは限らない。例えば、理論上は著作権を用いて新船型に対する保護を実現することは可能であるが、これまでの判例ではこれは認められていない。知的財産の適切な保護を実現するためには、複数の手段を組み合わせて活用することが適当な場合もある。
本報告書は、これらが正しい方法で使用されれば、海事産業における知的財
産を保護するためには十分な手段となることを明らかにしていく。また、主要造船国である中国と韓国の知的財産権制度は少なくとも紙の上では十分に整っているが、両国とも制度や加盟条約の実効的な執行という点については、まだ大きく遅れをとっているということも実証する。
EU 自体についていえば、知的財産保護に関する特定の指令や規則は数多く存在する。ただしその大多数は、加盟国商標法の調和や、統一された「欧州共同体」商標の創設に関するものである。EU はまた、模倣品対策やこれにかかわる－ 10 －

製造・販売業者に対する措置の執行において、世界のけん引役としての役割を強めている。こうした EU の活動は海事産業にとって、模倣部品を使用した船舶への措置といった形で特に大きな恩恵をもたらす可能性がある。ただし EU
域内の造船会社が依拠しているのは主として国内法、その法的手段、および関連条約である。
造船業知財権研究は、要約すると、現在利用可能な知的財産保護手段や条約
は、造船・舶用製品産業の保護には概して十分であると結論付けている。ただし、実際にはいくつか問題があり、これについては次章で扱う。
3.3 造船業における知的財産権の保護
知的財産権保護手段の利用がいかなる産業においても難しいのは、保護を得るために満たさなければならない数多くの一般的責任の存在である。造船業知財権研究には、以下の責任が挙げられている。
•

立証責任：独自性や新規性を立証するのは難しい場合があり、たとえ特許が認められても、後にその適法性が問われることもある7。

•

保護および訴訟の費用：通常、特許料は出願する国ごとに支払い、特に中小企業8にとっては重い負担となる可能性がある。権利行使が必要となった場合、訴訟費用には当該案件の費用のみならず、それを裏付ける十分な証拠を積み上げるための費用も含まれる。結果、訴訟費用は極めて高額に上る可能性があり、これも特に中小企業にとっては障壁となる。

•

パリ条約9第 5 条は、他国の船舶（またはその他の輸送手段）が一時的にある特許の保護国の領海を航行する場合、かかる特許の行使権は制限されると規定している。造船業知財権研究には海事関連の事例研究がいくつか掲載されているが、うち 1 つの事例の根幹を成すのがこの問題である。事例は、豪州で建造され、アイルランド・英国間で運航されるフェリーに対して、ステナ社が法的措置を講じることができなかったというものである。この理由は、同社の特許は英国では登録されていたものの、当該フェリーが籍を置くアイ
ルランドでは登録されていなかったため、英国への一時的な航海は英国の知

造船業知財権調査で紹介されている欧州の 2 事例（船体の保護）では、船体形状の独自性や革新性の実証が、著作権制限を適用するには不十分とされた。
8 中小企業のうち、小規模企業とは従業員 50 人未満で売り上げ 1,000 万ユーロ未満の企業を、中規模企業とは従業員 250 人未満で売り上げ 5,000 万ユーロ未満の企業を指す。
9 WIPO の主要条約の 1 つ。
7

－ 11 －

的財産保護規定の対象外とされたことにある。なお、第 5 条は特許に対してのみ適用され、著作権などその他の権利は対象としないため、模倣品にとっての抜け道とはならない。
造船業知財権研究は、欧州造船産業において知的財産保護手段が広く活用されていない背景には、これらの一般的責任に加え、知的財産やその保護・救済措置に対する認識不足があると結論付けている。
知的財産権保護については、中国をはじめとする極東地域に特有の問題もある。中国は知的財産関連条約の締約国ではあるが、知的財産を守るという伝統がなく、これらの条約が十分に執行されていない。これは WTO など高いレベル
での政治的圧力を必要とする問題である。韓国も、欧州その他の国・地域の公約達成レベルと比べると、中国よりは勝るとはいえ、遅れをとっている。また、中国の法制度は理解するのが難しく、利用には高額の費用がかかるという問題もある。たとえ中国の法廷で勝訴を勝ち取ることができたとしても、判事は損害賠償額を 50 万人民元（約 7 万ドル）までに制限し、勝訴者はこの額から訴訟費用を支払わなければならないという可能性もある。ただし、中国企業が知的財産権保護からの恩恵を受け始め、知的財産権文化が育ち始めてきたことから、こうした問題も中国経済の成長に伴って改善されるものと期待されている。第 6
章ではこの点をさらに掘り下げ、近年中国産業界が取る知的財産手段の件数が急増していることを示す。
3.4 欧州造船・舶用機器産業における保護手段の活用
造船業知財権研究では、EU の造船・船舶機器産業が利用可能な知的財産保護
手段をどの程度活用しているか、そしてこの問題に対してどのような姿勢を取っているかを見極めるべく調査を実施している。この調査から得られた主な結論は以下の通りである10。
•

造船業では、保護手段はある程度利用されているが、一般的に知的財産保護の可能性についての情報が不足していることが判明した11。特に製法発明に関してはその傾向が強い。

10 サンプル数は、
造船業知財権研究には記載されていないものの、少数にとどまっているものと思われる。
欧州造船業界がこの研究をどう見ているかは、第 4 章に記載している。業界関係者は、知的財産侵害問題
は造船業知財権研究に示されているよりも深刻であると主張している。
11 この結論は、2008 年 8 月にガードシップがハンドブックを刊行するより前のものであることに留意されたい。

－ 12 －

•

舶用機器製造業の回答者の約 3 割は、わざわざ発明を保護することはないと答えた。その理由は主として、利用可能な手段はさしたる効果をもたらさな
いと考えられていることにある。

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造船産業と舶用機器産業では、利用する保護手段の組み合わせが異なることが分かった。主に利用されている手段は契約書の条項と特許であるが、これと併せて舶用機器産業では商標権が、造船産業では意匠権が利用されている。
不正競争防止法規への依拠はどちらの産業においても限定的である。

•

知的財産の流出先、つまり侵害者の国籍の約 4 割ずつを欧州と極東地域が占める。これら以外の地域は 3 パーセントとごくわずかであり、約 2 割は流出を経験したことがないと回答している。

造船業知財権研究には書かれていないが、提示されている限られたデータを分析すると、2 つの興味深い結論が得られる。まず、回答者が発見した侵害の半分は、一般的に多いと考えられている中国ではなく、EU 諸国間の問題であったという点である。これは EU 域内での競争や対抗の激しさを露呈する結果であり、EU は生産地としては、域外から欧州産業を観察する人々が考えるほどには一枚岩となっていないと言える。2 つ目は、8 割超の回答者が知的財産の流出先を示し、それにより流出が起きていることを裏付けている（流出が起きたことがないと回答したのは 19 パーセントにすぎない）にもかかわらず、造船業知財権研究では知的財産侵害についてわずかな数の具体的事例しか紹介されていないという点である。匿名または伝聞形式を取っていてこれほど数が少ないというのは、驚きに値する。この背景としては、a）侵害は発生しているが回答者はこれについて語ることを避けている、および b）知的財産侵害は実態よりも大げさに考えられている、という 2 つの仮説が考えられる。当該調査では、業界関係者との議論（第 4 章を参照のこと）を踏まえ、この両方を合わせたものが実情であると考えている。他者によるアイデアの利用が、単なる通常の事業の範
囲内の行動ではなく、知的財産権の法的侵害を構成するものであると実証するのは極めて難しい。
造船業知財権研究は、欧州造船業において生み出される知的財産の類型を分析した上で、特許による保護が最も一般的に用いられる手段であるとしている。
ただし本報告書は、調査では特許が重要な対策と見なされていることが判明したとしても、この手段は欧州造船業ではそれほど一般的に用いられているわけではないと考えている。

－ 13 －

3.5 知的財産の流出源
流出経路は、リバースエンジニアリング（すなわち手本となるものの模倣）、
または第三者もしくは従業員経由の 2 つに分かれる。造船業知財権研究は、造船産業と舶用機器産業の第三者経路は異なるとしている。
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造船産業に関しては極めて深い分析が示され、最大の流出源は納入業者と見られていると記載している（過去に受け取った技術情報の再利用と思われるが、詳細は記されていない）。これに続くのが、船主（購入船舶に関して受
け取った技術情報の他造船会社12への横流し）、そして船級協会（承認のために必要な機密扱いの技術情報の横流し――不注意によるものであるとないとを問わず――との疑惑と思われるが、もしそうであるとしたら、具体的な例や案件が全く示されていないことは驚きである）である。加えて、大学研究室および造船会社自身からの流出の疑いについても短い記述がある。

•

舶用機器産業に関しては、はるかに浅い分析しか示されておらず、造船会社が最大の流出源であり、これに船級協会が続くとされている。加えて、顧客や大学経由での流出疑惑に関してもほんの少しだけ触れられている。

造船業知財権研究で提示された証拠を読んだ結論として言えるのは、欧州企業間における侵害の具体的事例として納入業者の設計（超大型ヨット向けのヘリコプター用エレベーターに関するもの）を造船会社が模倣した事例の対策が進められているとの記述はあるものの、厳然たる事実と疑惑やうわさとの間できちんとした線引きがなされていないように見えるということである。造船業
知財権研究は、「これまでのところ、これらの強く信じられている点（すなわち船級協会が知的財産の主要流出源であるという点）については、わずかな証拠しか示されていない」としている。これは大した問題ではなく、得られた結論とそれに基づく行動は有効なものであると言うこともできる。しかし、業界にいたずらにはびこる疑惑を解消し、最重要課題への注力を実現できる機会であったのに、残念にもそれを逃したとも言える。調査時に回答者が指摘した案件
が、実際に知的財産権の侵害にあたるのか、もしくは単にそう考えられているだけなのかを見極めるための努力は一切なされていない。
本調査では、船級協会が主要流出源であるとの疑惑について、欧州業界の代表者と話をした。その中で CESA に、なぜこの問題を国際船級協会連合（IACS）と話し合わないのかと尋ねたところ、IACS は世界的な会員組織であり、単なる
12

造船会社は、通常は顧客関係を考慮して、これに関する措置を取ることはできないと述べている。

－ 14 －

欧州レベルの団体との会談に応じる義務はないとして、この問題についての議論を拒んだとの回答であった。CESA はこのため、欧州の主要船級協会との間で単独の話し合いを行っている。CESA は、一部の船級協会はいわゆるマトリックス構造を採用し、承認業務を行う一方でそこから得た知識を利用して収入の最大化を図っており、これが侵害の温床となっていると語った。これは確かに利益相反につながるように思える。
船主からの流出の可能性については、IMO での目標指向型基準の策定に関する議論の中で、「船舶建造ファイル」には具体的にどのような情報を含むべきか、
そこで船主に提供する技術情報の量を制限することは可能か、といった問題についての話し合いがなされている。例えば、船主が船体線図を必要とする理由はあるのだろうか、といった点である。

－ 15 －

4.

欧州造船業の知的財産権保護強化に向けた動向

4.1 ガードシップの設立と欧州業界の姿勢
ガードシップは、欧州造船産業における知的財産保護手段の知識向上および活用促進策の一環として設立された、造船業の知的財産集中管理団体である。
欧州の造船会社は、過去には、知的財産問題に対して特に関心を示さず、知的財産保護のために取り得る手段についても概して認識が欠けていた。ただし、おそらくこれはどの国の造船会社にも共通する状況であると思われる。過去の設計を出発点として使うことで、より優れた設計を将来に向けて生み出すとい
うのは、ある程度、造船工学などの工学分野の特性と言える。また欧州造船業には、知的財産保護手段は費用がかかる上に効果が小さいという共通認識も存在していた。しかし「リーダーシップ 2015」の目標を策定する中で、業界が技術革新による競争力強化戦略を押し進める場合には知的財産保護が重要な問題となることが明らかになった。このため CESA は、検討課題を策定する際にこの問題を業界による提案事項の一覧に加えたのである。業界自体は、これを重要な検討課題とはしていなかった。
ガードシップは、2004 年にプロジェクトが立ち上げられ、2008 年 8 月に法人化された。またこの時、ハンドブック13の初版が併せて出版された。ハンドブ
ックは 10 名から成る編集陣により作成され、引き続き更新作業が進められている。活動資金は全額 CESA が出資しており、EU からの資金援助は受けていない。
ガードシップのハンドブックは、EU 域外の企業も含めて誰でも購入することができる。このようにしたのは製作費を賄うためでもあるが、それに加えて
CESA が、世界中の造船産業において知的財産権とその保護手段に関する知識が向上すれば業界全体にプラスの効果をもたらすと固く信じ、EU 域外の事業者にもハンドブックを購入し提言を実行に移すよう後押ししていることもその背景にある。
ガードシップは、ハンドブックを刊行するとともに、権利行使に対する最大の障壁の 1 つは顧客関係維持の必要性であることも認識している。造船会社は、同じ顧客から可能な限り再受注を獲得することが死活問題であるため、顧客に対して措置を取ることは難しい。このためガードシップは、現実的に可能であ
13 ガードシップ知的財産ハンドブック－ 16 －

って、権利が行使され、テストケースとして直接関与したいという意欲が示された場合には、EU 企業に対して法律問題に関する支援も含めた協力を行うとしている。ただしおそらく最も重要なのは、顧客関係上、直接措置を取ることが望ましくない場合には、CESA が政治的圧力をかけることで会員企業を支援し得るということである。
ガードシップ計画は 4 つの段階に分けて進められる予定であり、現在は第 1段階の途上にある。これらの 4 段階を以下に示す。
表 4.1

ガードシップ計画の予定

段階

施策
造船業知的財産権ハンドブック
造船業に向けた知的財産権の標準利用条件（ハンドブックに掲載されているが、まだ完全なものではない）

1

抗議状のひな型（加入者が軽微な侵害案件に対処する際に利用可能）
特許の共同監視（ガードシップが特許権侵害の恐れがある案件調査を支援）
テストケース（詳細未定）
専門家ネットワーク（EU 域内の加入者に対して提供）
研修コース、セミナー

2

造船知識の管理・保護システム、知的財産管理を支援するためのコン
サルティングとソフトウエア製品の提供
初期の法的対応支援（第 1 段階ですでに限定的に提供される可能性もあり）

3

共同特許（カルテルの疑いをかけられないよう、特許プールは第三者組織に管理させる必要あり）
使われなくなった知的財産の新興造船国に対する売り込み「船舶建造ファイル」の保管
共同情報収集、会員を代行して知的財産侵害の兆候を監視

4

権利行使の支援（政治的圧力などの手段は、第 1 段階ですでに限定的に提供される可能性もあり）和解交渉の支援ガードシップが極めて野心的な計画であることが見て取れよう。本計画がこの通り実現できるかどうかは、加入者の意欲に加え、特に欧州造船業が実施に－ 17 －

向けてどれだけの力を傾注できるかにかかっている。
ガードシップ計画は CESA が造船業知財権研究とは別に進めてきたもので、実際、取り組みは造船業知財権研究より何年も前に開始されていることには留意する必要がある。欧州造船業界から造船業知財権研究に対する意見を直接聞くことは容易ではなかったが、非公式に得た意見を基に判断すると、造船業知財権研究は若干期待を下回るものであったと見られていると言える。具体的な知的財産権侵害事例に関する分析を行っていない上に、知的財産問題は実際には業界で考えられているほど深刻な状態にはないとの印象を与えており、後者について業界関係者は異を唱えるものと思われる。知的財産流出が業界にもたらす損失について行った専門的分析も浅いものにとどまっており、また欧州造船・舶用製品産業の規模を概して過小評価しているという問題もある。
4.2 ガードシップのハンドブック
ガードシップは、企業を以下の面で支援することを目的に、助言をまとめた「造船業知的財産ハンドブック」を作成・販売している14。
•
•
•
•
•
•

課題の把握
予防策の策定不備の発見取り得る解決策の模索
知識管理システムの改善
知的資本に関するあらゆる潜在能力の探究

CESA は、知的財産権保護という問題の抱える複雑さ、およびこの問題に対して造船会社に関心を持たせることの難しさを十分に認識している。このため、
ハンドブックは簡潔で使いやすいものとなるよう配慮されている。ハンドブッ
クは、後日新たな内容が提供された場合に更新できるよう A5 版のルーズリーフ
形式を取り、以下の 3 つの部分に分かれている。
•

第 1 部：知的財産の定義、最もよく使われる保護手段、および最も一般的な流出経路（計 26 ページ）•

第 2 部：社内・社外それぞれからの流出を防ぐための実務指針など、侵害発
見と流出防止の方法に関する助言と提言（計 28 ページ）

14

www.guardship.eu－ 18 －

•

付録：用語集、編集陣 10 名の紹介、および（これは極めて有用であると思われるが）実際に知的財産保護のために使用されている契約条項（計 19 ページ）

本ハンドブックはよくまとめられており、数時間もあれば読了して、内容や提示されている問題点を理解できる。また、情報は造船会社にとって最も使いやすい形で提示されている。記載する保護手段の範囲は造船業にとって役立つものに限定せず、可能な手段すべてを網羅しており、各手段には造船業関連の例を付記している。一方、流出経路に関しては造船業にとって最も重要度が高いものを以下の通り特定している。
••••

造船会社自身の従業員：営業上の秘密に対する認識不足または転職が原因。
顧客：入札過程で受け取った情報などを他者に横流しし、模倣を招く場合がある。
納入業者：製法革新など、共同開発した解決策の第三者への販売を防ぐ手立てが不十分。
船級協会：設計図面の承認に加え、コンサルティングサービスの提供が原因。

知的財産流出の防止に向けたハンドブックの提言は、知的財産の価値とその保護義務に関する従業員の意識向上に重点を置いている。一般的な指針として、意識向上を図るための研修を行うことや社内に方針の策定や実施を行う「知的財産委員会」を設置することが推奨されている。ハンドブックはこれに加えて以下の 2 つの内容も盛り込み、知的財産保護の強化に向けた実務的な情報源にもなっている。
•

知的財産保護に関する社内手続きの指針。現時点では、販売・マーケティン
グ部門、購買部門、設計・エンジニアリング部門向けの指針が提供されている。2010 年前半に予定されている次回更新版には、アフターサービス部門
向けの指針、および知的財産流出の管理（企業内における情報の流れ）に関する一般的な指針集が盛り込まれることになっている。

•

社外からの保護のために契約書に記載される利用条件の条項。現時点では、船級協会、顧客（船主）、および納入業者と締結される契約書向けの条項が提供されている。ハンドブックの次回更新版には、大学と結ぶ契約書向けの利用条件が盛り込まれることになっている。

最後に、ハンドブックには知的財産侵害の発見に役立つ簡単な指針も記載されている。

－ 19 －

4.3 業界の反応
造船業界の代表者にガードシップに関する意見を聞いてみたが、その反応は比較的控えめなものであった。大半のインタビュー回答者はガードシップを知ってはいたが、どちらかといえば低いレベルの関心を示すにとどまった。問題の根本は、欧州業界の関心は知的財産の保護ではなく、より差し迫った問題に集中していることにある。特に、現在最も深刻なのは、受注不振の長期化に端を発する問題、倒産、造船所の閉鎖危機などである。また、不公正競争なども、近い将来リーダーシップ 2015 計画の最重要課題に返り咲く可能性が高い。
これを除けば、造船業界はこれまでの取り組みを支持しており、今後役立つものとなることを期待している。ガードシップを現在支えているのは、一部の小規模造船会社やアジアの造船会社、および一握りの納入業者といった比較的少数の支持者である。しかし、引き続き知的財産問題の推進やガードシップを通じた解決の普及を目指すことで、長期的には業界による利用や関与も高まる
ものと期待されている。

－ 20 －

5.

欧州における代表的な侵害事例の考察

造船業知財権研究は「知的財産権の明確な侵害事例は見つかってはいるものの、その数は多くはない」と述べている。知的財産権侵害が業界にもたらす損
失については「最大でも売り上げの数パーセント程度」と評価する一方、これは一般論であり、高い技術力を持つ小規模企業などの一部の企業にとって知的財産権侵害は極めて深刻な問題となりかねないとしている（実例は記載されていない）。この点について、欧州造船業界の代表と話をし、その後訴追に至った事例があるかどうかを調べた。
CESA は上記の結論に対し、問題の深刻さを過小評価するものであり、知的財産の流出が欧州において重大な問題であることは確かだ、と答えている。しかし、企業は一般的に自身の顧客に対する追及については消極的であるため、実際に訴訟にまで至ることはめったにないものとみられる。より広く取られている可能性があるのは政治的圧力をはじめとする水面下での活動であるが、本研究のために行われたインタビューにおいて、対処中の事案に関する情報は業界関係者からは一切明かされなかった。
事案について語りたがらないのは、造船会社、顧客、納入業者間の関係の微妙さに起因している部分もある。ただし、審理中の事案の詳細が明かされないのは当然のことである一方、事案の存在自体は公的記録に載るものである。そうした証拠が見つからないのは、訴訟に至る事例はまれであるとの見方を裏付けている。これは造船業知財権研究の結論と一致するものでもあり、後者においては 1 年という期間と多額の予算を投じても、報告すべき重要な事案は何ら見いだせなかったのである。
本研究のために行った質問に対して、複数の回答者が指し示した事案が 1 つある。現在政治的圧力を通じて解決が図られているが、まだ訴訟には至っていないとされているもので、業界関係者と話をしたところから判断すると、独フ
レンスブルガー社が伊グリマルディ社の入札に向けて提出した RORO フェリーの設計に関するものである。入札の結果指名を受けたのは韓国の現代尾浦造船であったが、話によると、現代尾浦造船は当該図面を、表題欄の設計者名やロゴを変えることさえせずにそのまま使用したといわれる。ただし、本事案の確認は取れておらず、このうちどの程度がうわさ話にすぎないのかも解明できていない。

－ 21 －

ガードシップのハンドブックにも、造船産業における特定の具体的事例は記載されていない。造船業知財権研究は、代表的事例を特定するという付託条項の一環として、ごく少数の事例を記載している。
•

オランダの法廷で船体形状の設計に関する著作権の利用が争われた 1997 年のオフショア・コマンダー（Offshore Commander）事件と 1999 年のムス
カリ船体（Muscari Hull）事件。裁判所はいずれの件においても、当該設計に新規特徴がないことを理由に著作権の侵害を認めなかった。

•

水密扉の施錠機構の製造会社がアジアのある国において複製を発見し、それが特許当局によって確認された事例。ただし、当該国における訴訟費用が高額に上ることから、法的措置は見送られた。

•

ステナライン社が、英国で取得した特許がアイルランドのフェリーに侵害されたと申し立てた最近の事例。このフェリーは英国にも寄港するが船籍はア
イルランドにあり、当該特許はアイルランドでは効力がないため、申し立ては受け入れられなかった。

•

欧州の舶用機器会社がドイツの造船所で建造されたヨットのヘリコプター
用エレベーターの設計を模倣し、他の船舶に転用した事例。現在、知的財産権侵害に関する訴訟が進められている。

•

欧州で開発された複雑な浚渫機構が中国の造船会社に模倣された事例。法的措置には至らず、欧州の当該造船会社が以後中国向け輸出は行わないと決断しただけに終わった模様としている。これは適当な事例とは言えず、結論も
信じ難い。

•

韓国の造船会社が極地船向けの一部技術を模倣した事例は、船級協会からの流出によるものと疑われ、法的措置が検討されている。シンガポールの造船会社への流出に関する同様な事例も記載されている。

これらの事案が伝聞的なものであること、および記述に明確さが欠けることは、実際に知的財産侵害が訴訟にまで至るのはまれであるとの結論を裏付けるものと言える。

－ 22 －

6.

海事以外の欧州産業における知的財産権事例の考察

欧州のあらゆる知識集約型産業では、知的財産管理に対する取り組みに移行や変化が見受けられる。こうした動きは個別の知的財産侵害事案よりも大きな意味を持つ。
欧州では、知的財産の戦略的重要性は高まり続けており、エコノミスト・イ
ンテリジェンス・ユニット（EIU）社は、欧州で最も貴重な資源をアイデアとしている。世界的にも知的財産保護手段の実施数は急速に拡大しており、WIPO15によると 2007 年の特許付与数は 76 万件、実用新案申請数は 62 万 1,000
件、商標登録数は 220 万件に上った。また WIPO は、2007 年現在有効な商標の数は世界で約 1,640 万件にもなると推定している。
EIU 社が 2007 年に公表した欧州企業 405 社の経営陣に対する調査によると、
欧州企業において、知的財産の重要性はますます高まっており、単なる保護の対象から、収入拡大の機会と見なされるものへと進化を遂げている。調査は、知的財産はもはや投資家のために保護するだけのものではなく、戦略的な価値創出手段としての役割をも強めていると示唆している。またこれに関連して、
知的財産保護の対象となる企業資源はエンドユーザー市場の分析や顧客の魅力度に従って集中する傾向を強めており、これは最も商業的価値の高いものを保護することで将来の利益を最大化したいとの意図の表れであると指摘している。
欧州の大手電気機器メーカーであるエレクトロラックス社は、商品の「独自の売り」を見極め、これを知的財産措置で保護することを狙っていると記されてい る 。 知 的 財 産 を よ り 広 い 視 点 か ら 見 る 「 知 的 財 産 の 俯 瞰 的 分 析 （ IPlandscaping）」と呼ばれる手法を用いて、現在知的財産措置でカバーされていないが多額の使用料収入をもたらしそうな機会を見いだそうとする企業が増えていることも判明している。
知的財産保護に向けた取り組みが明らかに変わりつつある一方で、引き続きカギとなっているのが保護手段である。英フィナンシャル・タイムズ紙は、2008
年に英国で発生した知的財産紛争は、企業が景気後退下で市場シェアを守るべ
く努力していることを背景に 33 パーセント増加したと伝えている。ただし、近年いくつかの事案が注目を集めたために、問題全体の規模が誇張されている可能性はある。例えば EIU 社の調査によると、回答者の 57 パーセントは、特許または使用料に関する紛争は一度も経験したことがなく、76 パーセントは過去
15 世界知的所有権機関－ 23 －

2 年間に受けた損害はゼロもしくは最低限のものであったと答えている。また、同調査は侵害の恐れに関しては、新興市場の競合企業による特許侵害と従業員の不正行為が最も危険性が高く、加えてオフショアリング16の増加が企業の侵害リスクを高めているとしている。最大の懸念の対象となっているのは中国であるが、中国内での知的財産知識が向上するにつれ、こうした状況は改善するとともに、中国自身が知的財産保護から受ける恩恵も高まることが見込まれる。
このような傾向は、近年の中国における特許出願や商標申請件数の大幅増加という形ですでに表面化している（図 6.1、6.2 参照）。外国企業は中国などの国で意匠を登録することにより、模倣意匠の他国への輸出を食い止めることもできる。2008 年に最も多くの国際特許を出願したのは、中国の通信機器メーカー華為技術で、出願件数は 1,737 件であった。

図 6.1：特許出願件数の推移

図 6.2：商標申請出願件数の推移

16

オフショアリングとは、事業活動（生産や技術機能）の低コスト国への移転を意味する。

－ 24 －

興味深いのは、EIU 社の調査で、知的財産侵害リスクの高い国として 2 番目に多くの回答者が挙げたのが米国であることだ。これは米国の法制度そのものから生じる懸念である。米国では一般に、原告が敗訴した場合であっても被告の訴訟費用を支払う必要はないため、行き過ぎた訴訟社会を招く結果となっている。例えばフィリップス社の発言として、企業を困らせる、またはその手を煩わせるためだけに訴訟を起こす市民が存在すると記されている。近年には欧州企業がかかわる知的財産侵害訴訟で高い注目を集めているものが複数あるが、これは自らの市場を守りたいという企業の意図とともに、被疑侵害者当たりの侵害規模が拡大していることを映し出しているとも言える。
•

近年、ノキア社が米アップル社に対する訴訟を提起したところ、アップル社
もノキアを相手に対抗訴訟を起こし、後者を守勢に立たせている。

•

ダイムラー社は、中国の双環汽車が製造する小型車「小貴族」は自社「スマート」の模倣であり、デザインに関する自社著作権の侵害であるとして法的措置に訴えた。その最大の懸念材料は、模倣車が欧州に輸入される可能性にあったとみられる。BMW 社の X5 に酷似した双環汽車製の別の製品は、ドイツの裁判所により同国内での販売禁止が命じられた。

•

イタリアの裁判所は、中国の長城汽車が製造する「精霊」はフィアット社「パンダ」の模倣車であるとの判決を下し、欧州での販売禁止を命じた。長城汽車はこれに対抗して産業スパイの訴訟を提起した。これはよく用いられるよ
うになっている手法である。

調査の回答者は、企業が短期間で取り得る最も効果的な知的財産保護手段は、
しっかりとした戦略と組織づくり、および専門スタッフの配備であると答えている。これはガードシップの提言とも一致する。知的財産の使用料収入は今後拡大が予想され、技術革新はより広く共有されるようになっている。企業は知的財産を自社で保有する一方、ライセンスやクロスライセンスも行っている。プロクタ
ー・アンド・ギャンブル社は、革新的技術の半分は外部から調達すること、3 年経過時に未使用状態の特許は他者にライセンスすることを公約にしているとされている。アイデアを守るための措置を取らないと、その潜在価値を実現する前に他者にアイデアを盗まれる、または模倣されることで、陳腐化を招く可能性が高
いため、アイデアの価値を失うことになりかねないとの認識が強まっている。EIU
社は、知的財産の効果的な保護手段として 2 番目に多く挙げられたのは、新製品の市場投入までの期間の短縮、すなわち一歩先んじることだとしている。

－ 25 －

産業界では、知的財産管理に向けた取り組みや権利行使による知的財産保護の動きが明確に変化しており、それに合わせて欧州および世界レベルでの特許政策や審査基準の調和が進むことも望まれよう。2009 年 12 月現在、EU 単一特許制度の創設は政策担当者によって 30 年超も棚上げにされてきた後、再度議題に載せられ、大筋で承認されるに至った。これは欧州産業界にとって朗報となり得る動きである。

－ 26 －

7.

結論および予防策の提言

知的財産が造船産業において頻繁に論じられている問題であることは言うまでもない。欧州造船業は、「リーダーシップ 2015」に記されているように、技術開発がもたらす競争力を基盤とすることを戦略としており、この点は業界で建造される船舶の複雑さに反映されている。これを示しているのが、2009 年 9月時点での各国造船業受注状況の平均 CGT （標準貨物船換算トン数）ファクタ
ーに関する数値を掲載した以下の表である。
表 7.1：手持工事量統計（2009 年 9 月）

CGT 係数を複雑さの尺度とすることで、欧州造船業は一般にアジア主要造船諸国と比べて、はるかに複雑性の高い船舶を建造していることが見て取れる。
これが示唆しているのは、船舶の設計に関する知的財産の保護は、欧州造船業にとって他のいかなる国よりも圧倒的に高い重要性を帯びているということである。反対に、大量建造を支える製法革新関連の知的財産の保護は、規模の経済を追求する韓国、中国などアジアの造船会社にとって、より重要性の高い問題となる。韓進重工業は自社ホームページ（www.hanjinsc.com）上で、製造技術関連の特許を数多く紹介している。例えば、水中での船体部分の接合、大型ブロックのはめ込み、水中での船尾大型ブロックの建造、クレーン船を使った進水、無溶接整形システムなどである。世界造船業に関する知見を基に言えば、これらの技法はどれも特に新しいものではなく、すべての技法に関して「先行技術」を示すことができる。浮きドックを使った進水に関する韓国他企業の特許についても同じことが言える。しかしこうした点は、特許保有企業がその特許を盾に、韓国その他の競合企業によるこれらの技法の使用をやめさせようとする行為を妨げるものとはならない。

－ 27 －

欧州造船業が大量生産技法を模倣しても、そのメリットは限られている。対照的に、欧州が生み出した製品革新に対するアジア造船会社による侵害の恐れは高まる一方である。本研究のインタビューに応じた造船会社の多くは、韓国
造船会社は従来関心を示していなかった分野での競争にも参入してきていると語った。その一例が沖合補給船の建造である。こうした船舶は通常、非常に小型または特殊なもので、大量建造を志向する韓国造船会社にとっては関心外の分野であった。しかし、キャッシュフローが悪化する中で必要性に迫られている韓国造船会社は、どのようなものであっても新規受注を獲得しようと必死になっている。サムスン重工業はクルーズ船建造の意図を最近再度発表しており、また STX 造船海洋の欧州造船業への参画は EU の造船産業にとって懸念の種となっている。こうした状態の背景にあるのは、昨年から大型の発注が不足しており、直近で回復する見込みもないという事態である。この根本にある原因は、船舶建造量と世界貿易量の均衡状況を示した以下の図から明らかに見て取れる。

図 7.1：船腹量と世界貿易量の関係
船舶量と貿易量の間に存在する不均衡の程度は、来年中の注文取消しや不履
行によって実数は変わる可能性があるとはいえ、この図において明確に示されている。このような不均衡に直面したのは、1975～1995 年の期間が最後であった。こうした状況においては、競争条件の公平化、補助金、景気減速下での生－ 28 －

き残りといった問題が、少なくとも造船業の経営努力という点では、欧州における最重要課題となるのは必然と言えよう。そうであっても、アジア諸国が受注獲得に必死になっている状況からみて、知的財産保護は欧州造船業にとって引き続き優先すべき課題である。欧州の造船技術に対する侵害の恐れは、かつてないほど高まっている。
本報告書で取り上げた過去の研究ではわずかな数の侵害事例しか見つかっていないとはいえ、これらの事例は、船体形状など船舶の設計プロセスのうち日
常的に行われている部分の情報は、極めて保護が難しいことを示している。特許が活用できるのは、新規の設計による解法が生み出された場合に限られる。
現在のところ、一般的な大量建造においてこうした保護が使える余地はほとん
どない。しかし環境負荷の低い船舶の開発を通じて競争優位性を確立すれば、こうした状況は変わることとなろう。目下検討されているバンカー課金は高額に上る可能性があり、炭素ガス排出量や燃料消費量の削減につながる技術革新
は、今後数十年にわたりあらゆる種類の船舶にとって極めて重要なものとなることが見込まれる。こうした技術を守ることは死活問題である。
すべての造船会社は、たとえ保護手段がもたらすメリットが多くの場合限られたものにしか見えないとしても、激しい競争状況下においては、知的財産保護を日常の正しい管理行為と見なし、当たり前のこととして実施しなければならない。契約書にガードシップの提案に従った知的財産保護条項を加えない、
知的財産保護のための秘密保持条項や管理手続きを採用しないといった行動に、一体何のメリットがあるのだろうか。本報告書は主に以下を実施することを提言する。これらは国を問わず、すべての造船会社に当てはまる。
•
•
•
•
•
•
•

社内に知的財産問題を専門に検討する委員会を設立するとともに、自社が保有する知的財産の価値を把握し、その保護手段を理解すること。
すべての従業員に対して知的財産問題とその義務に関する研修を行うこと。
ガードシップを参考に、社内手続き指針を策定すること。
ガードシップを参考に、契約条項を作成すること。
すべての図面と情報を著作権で保護するとともに、すべての文書に「機密」と記すこと。
特許、意匠権をはじめとする知的財産保護手段を可能な限り利用すること。
流出に関する監視を怠らず、必要な場合には、最低でも手紙を出すといった必要な措置を取ること。

－ 29 －

付録参考資料：造船業の知的財産権に関する研究（Shipbuilding IPR Study）レポート17

17欧州委員会の企業・産業総局の依頼を受け、ハウトホフ・バルマ（Houthoff Buruma）N.V.
（www.houthoff.com）がポリシー・リサーチ・コーポレーション N.V.（www.policyresearch.nl）の協力の下で実施。2007 年 12 月 14 日公表。

－ 31 －

Shipbuilding IPR Study

An analysis of problems relating to the protection ofIntellectual Property Rights of the European shipbuilding industry

Disclaimer
Neither the European Commission nor any person acting on behalf of theCommission is responsible for the use which might be made of the information
contained in this Study. The views expressed in this report are those of theauthors and do not necessarily reflect those of the European Commission.

Final report

49100201/2285043.12

By Houthoff Buruma N.V. in association with Policy Research Corporation N.V.
For the European Commission, DG Enterprise and Industry
Date: 14 December 2007

－ 32 －

INDEX

Glossary ........................................................................................................................................6
Preface ..........................................................................................................................................849100201/2285043.12

Executive summary .....................................................................................................................91.

Introduction ....................................................................................................................11

1.1.
1.2.
1.3.
1.4.
1.5.

Background......................................................................................................................11
Problem description .........................................................................................................12
Aim of the study ...............................................................................................................13
Approach..........................................................................................................................13
Outline of the report .........................................................................................................15

2.

Legal framework ............................................................................................................172.1.
2.1.1.
2.1.2.
2.2.
2.2.1.
2.2.2.
2.3.
2.3.1.
2.3.2.
2.3.3.

Classic IPR Protection .....................................................................................................17
Common instruments.......................................................................................................17
Utility models....................................................................................................................21
Alternative means of IPR protection ................................................................................22
Contract clauses ..............................................................................................................22
Law of unfair competition.................................................................................................24
The international perspective...........................................................................................25
EC Instruments ................................................................................................................25
International instruments .................................................................................................29
IPR protection in the Far East..........................................................................................32

3.

IP protection in the shipbuilding industry: burdens and possibilities.....................33

3.1.
3.1.1.
3.1.2.
3.1.3.
3.2.
3.2.1.
3.2.2.
3.2.3.
3.2.4.
3.2.5.
3.2.6.
3.2.7.

General burdens to protection .........................................................................................33
Proof of evidence .............................................................................................................33
Costs of IP protection and litigation .................................................................................33
Article 5ter of the Paris Convention .................................................................................35
Specific burdens to IPR protection in the Far East..........................................................39
Low commitment to respecting and enforcing IP laws ....................................................39
Lack of independent judiciary ..........................................................................................40
Local protectionism..........................................................................................................41
Lack of technical training and experience .......................................................................41
Procedural requirements .................................................................................................42
Lack of enforcement tools................................................................................................43
Low amount of damages and fines in case of infringement ............................................44

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49100201/2285043.12

3.2.8. Future outlook ..................................................................................................................45
3.3.
Effective protection: some guidelines ..............................................................................47
4.

Knowledge, innovation and IPR in the shipbuilding industry ..................................50

4.1.
4.2.
4.3.
4.4.
4.4.1.
4.4.2.
4.4.3.
4.4.4.
4.5.
4.6.
4.7.
4.8.

Knowledge and innovation: some key concepts..............................................................50
Particularities of the European shipbuilding industry.......................................................52
Ship elements ..................................................................................................................54
The use of IPR protection in practice ..............................................................................57
Protection attitude ............................................................................................................57
Protection mechanisms ...................................................................................................58
Leakage destinations.......................................................................................................59
Number of leakages.........................................................................................................59
Leakage sources..............................................................................................................60
Use of patents..................................................................................................................65
Measures to reduce leakages and reasons for non-protection .......................................67
Knowledge and innovation trends....................................................................................68

5.

The economic importance of the European shipbuilding industry..........................71

5.1.
5.2.
5.2.1.
5.2.2.
5.2.3.

The European shipbuilding industry: market structure and profile ..................................71
The economic importance of the European shipbuilding industry...................................73
Direct and indirect effects ................................................................................................74
Key figures on EU 27 + Norway ......................................................................................76
Key figures per country....................................................................................................78

6.

Scope and size of the knowledge leakages ................................................................81

6.1.
6.2.
6.3.
6.4.

Measuring the leakages...................................................................................................81
Value of innovations ........................................................................................................82
Value of IPR infringements ..............................................................................................83
Value of knowledge diffusion ...........................................................................................85

7.

Other issues ...................................................................................................................87

7.1.
7.1.1.
7.1.2.
7.1.3.
7.2.
7.2.1.
7.2.2.
7.3.

Competition law aspects..................................................................................................87
Limitations stemming from competition law.....................................................................87
Joint R&D agreements.....................................................................................................88
Technology transfer and patent pooling agreements ......................................................89
Comparison with other sectors ........................................................................................90
Similar problems in other sectors ....................................................................................90
Action taken in other industries........................................................................................91
Safety, health and environmental issues .........................................................................93

3/158－ 34 －

8.

Conclusions and policy recommendations ................................................................95

8.1.
8.2.
8.3.
8.4.
8.5.
8.6.
8.7.
8.8.
8.9.
8.10.
8.11.

General ............................................................................................................................95
Diminishing the burdens to obtaining IP protection .........................................................96
Sharing the burdens to innovation and protection ...........................................................97
Increase of awareness (in particular for SMEs)...............................................................99
International cooperation and coordination ...................................................................102
Consider amending Article 5ter Paris Convention.........................................................105
Action by Customs authorities and Port State Control ..................................................106
EU IP Charter to manage public-private research cooperation.....................................107
Reviewing the role of classification societies.................................................................107
Use of identification methods to distinguish between original and fake ........................109
Open innovation as a complementary or an alternative concept ..................................110

49100201/2285043.12

LIST OF ANNEXES ...................................................................................................................111
Annex I:

Questionnaire.......................................................................................................112

Annex II:

List of major European yards and suppliers ....................................................114

Annex III:

List of contacted companies and persons ......................................................118

Annex IV:

IPR protection in China and South Korea........................................................119

Annex V:

Competition law aspects of cooperation in the field of R&D and IP ..............143

Annex VI:

Bibliography........................................................................................................155

4/158－ 35 －

LIST OF TABLES

Table 2.1:

Schematic overview of the legal protection instruments .........................................19

Table 4.1:

Basic ship elements and examples of innovation....................................................55

Table 5.1:

Number of ships on order as of April 2006..............................................................73

Table 6.1:

Example of cost breakdown ....................................................................................83

LIST OF FIGURES

Figure 4.1: RD&I chain for knowledge-intensive industries .......................................................52
Figure 4.2: Use of various protection mechanisms by the shipbuilding industry.......................58
Figure 4.3: Leakage destination for European shipyards and marine equipment suppliers .....59
Figure 4.4: Number of leakage cases for the European shipbuilding industry ..........................60
Figure 4.5: Leakage sources for European shipyards and marine equipment suppliers ..........61
Figure 4.6: Number of patents of European shipyards and marine equipment suppliers .........66
Figure 4.7: Network model.........................................................................................................70
Figure 5.1: A selection of major European shipyards and marine equipment suppliers ...........72
Figure 5.2: Direct and indirect economic impact of the European shipbuilding industry ...........75
Figure 5.3: Direct economic impact of European shipyards ......................................................76
Figure 5.4: Direct economic impact of European marine equipment industry...........................77
Figure 5.5: Key figures European shipbuilding industry ............................................................77
Figure 5.6: Distribution of employment of top-10 shipbuilding industry countries .....................79
Figure 5.7: Distribution of value added of top-10 shipbuilding industry countries .....................8049100201/2285043.12

Figure 6.1: Value cascade .........................................................................................................82

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49100201/2285043.12

Glossary
ACEA

European Automobile Manufacturers’ Association

AIC

Administration of Industry and Commerce

AQSIQ

Administration for Quality Supervision, Inspection and Quarantine

ARC

Authorised Release Certificate

ASEAN

Association of South-East Asian Nations

BASCAP

Business Action to Stop Counterfeiting and Piracy

CDR

Community Design Courts

CESA

Community of European Shipyards Association

CGT

Compensated gross tonnage

COREDES

Committee for Research and Development in European Shipbuilding

DWT

Deadweight tons

EC

European Community

ECJ

European Court of Justice

EEC

European Economic Community

EJV

Equity Joint Venture

EMEC

European Marine Equipment Council

EMECrid

EMEC working group on Research, Development and Innovation

EPC

European Patent Convention

EPLA

European Patent Litigation Agreement

EPO

European Patent OfficeEU

European Union

GAC

General Administration of Customs

GT

Gross tons

IATA

International Air Transport Association

ICC

International Chamber of Commerce

ICT

Information and Communication Technology

IPIntellectual Property

IPRIntellectual Property Right

IPTIntellectual Property Tribunal

JV

Joint Venture

KCS

Korea Customs Service

KFTC

Korea Fair Trade Commission

KIPO

Korean Intellectual Property Office

LNG

Liquefied Natural Gas

LPG

Liquefied Petroleum Gas

MEMA

Motor & Equipment Manufacturers Association

6/158－ 37 －

49100201/2285043.12

MOCT

Ministry of Culture and Tourism (South-Korea)

NACE

Nomenclature générale des Activités économiques dans lesCommunautés Européennes

NCA

National Copyright Administration

OHIM

Office for Harmonisation in the Internal Market

PCT

Patent Cooperation Treaty

PRC

People’s Republic of China

PSB

Public Security Bureau

R&D

Research and Development

RD&I

Research, Development and Innovation

Rmb

Chinese Ren Min Bi

RoRo

Roll-on Roll-off

SAIC

State Administration for Industry and Commerce

SIPO

State Intellectual Property Office

SME

Small and Medium-sized Enterprise

SPPO

Supreme Public Prosecutor’s Office

TFA

Technology Transfer Agreements

TRIPs

Trade-Related Aspects of Intellectual Property Rights

UN

United Nations

WCO

World Customs Organisation

WFOE

Wholly Foreign Owned Enterprise

WIPO

World Intellectual Property Organisation

WTO

World Trade Organisation

7/158－ 38 －

Preface
At the beginning of 2007, the European Commission awarded the contract to conduct the‘Shipbuilding IPR Study’ to Houthoff Buruma and Policy Research Corporation. These
two parties subsequently worked closely together to provide the Commission with anadequate and comprehensive report.
In essence, the report sets out to answer the related questions of how the European
shipbuilding industry protects its Intellectual Property (IP), the damage the industry
suffers from infringements on their Intellectual Property Rights (IPR) and how the present
system of IPR protection could be improved.
It goes without saying that this report has not been a sole effort by Houthoff Buruma andPolicy Research Corporation. CESA and EMEC, the European umbrella organisations forthe shipbuilding and the marine equipment industry respectively, have in particular played
an important role by providing data and contacts, as well as feedback to earlier versionsof this report. For this we are very grateful.
We also kindly acknowledge the contributions of many individual European shipbuilders,equipment providers, their national organisations and all other persons and organisations
that have contributed to this report. To our mind, the responsiveness of these parties
illustrates the seriousness of the problem under investigation and the urgency felt by theindustry.
Finally, we would like to express our gratitude to the other members of the team of
Houthoff Buruma (Freya van Schaik, Folkert Wilman, Valerie-Anne Houppermans andGrégoire Ryelandt) and Policy Research Corporation (Gosse Corstiaensen) as well as
the European Commission for the pleasant and constructive cooperation throughout thecourse of this study.

49100201/2285043.12

Gerard van der Wal
Houthoff Buruma N.V.

Harry Webers
Policy Research Corporation N.V.

8/158

－ 39 －

Executive summary
The European shipyards (as key organisers in the complex shipbuilding process) and themarine equipment suppliers (as producers of often innovative parts and complex
integrated solutions) have jointly demonstrated over the years that they are in manycases able to fight the competition through innovation. Besides product innovation,
design and process innovation are the key driving forces behind the evolution of the
shipbuilding industry.
This study reveals that even though especially the bigger players do use both theclassical instruments of IP protection and contractual clauses, a significant part of theinnovations in the shipbuilding industry is not (fully) protected. This is, however, notprimarily due to the substantive characteristics of the current legal framework on thenational, European or international level. Though there is indeed room for improvement(e.g. the introduction of a Community patent), overall the legal framework is in itself notinadequate for the protection of IP. Rather, the suboptimal use of the existing possibilities
of IP protection appears to be caused by a range of other issues, including enforcement
difficulties, the costs of adequate protection, a lack of awareness in the industry andhesitations with regard to taking legal steps out of fear of harming business relations .
Clear examples of IPR infringements can be found, but are not abundant. The fieldresearch suggests that the direct economic impact of the (detected) IPR infringements
amounts on average to a few percent of turnover at most. This number should beinterpreted with care however. Firstly, the present study illustrates that by no means all
IPR infringements will be detected and pursued by the companies concerned. Secondly,
the indirect effect that the sector’s position is undermined by the constant threat of‘leakage‘ of innovations may be of significant importance as well. Thirdly, on a company
level, IPR infringements that represent a relatively limited direct financial loss may very
well drive certain companies out of the market when the IPR infringed upon is crucial totheir competitive position. The value at stake rises considerably with these
considerations, but the data availability is insufficient to determine this impact.

49100201/2285043.12

Taking into account the relativity of the direct economic effects of the leaking away oftechnological knowledge and the fact that other sectors clearly struggle with similar
problems, with a few notable exceptions there does not seem to be a justification for
special legislative measures that exclusively apply to the shipbuilding industry. However,this does not mean that nothing can be – or indeed should be – done to support theEuropean shipbuilding industry in this regard. On the contrary, the present study indicatesthat the industry could significantly benefit from a range of practical, well-targeted

9/158－ 40 －

measures. Concretely, ten policy recommendations aimed at achieving a more effective
protection of IPR are suggested.
The first group of policy recommendations focuses, broadly speaking, on making betteruse of the existing instruments. In particular, this could be done by diminishing burdens to
obtaining IP protection, investing in methods of (cost-) sharing with regard to innovationand the protection thereof, increasing awareness (especially for SMEs) as well asworking towards an EU IP Charter to manage public-private research cooperation.

49100201/2285043.12

A second group of policy recommendations relates primarily to tackling enforcement andIP ‘leakage’ issues. Given the international nature of the problem under consideration,
solutions to the pressing matter of ensuring effective enforcement in particular need to befound through international cooperation and coordination. A more specific matter thatdeserves consideration is the limitations that follow from Article 5ter of the Paris
Convention. Furthermore, through specific customs measures and the use ofidentification methods to distinguish between original and fake, the scope for effective
enforcement could be further improved. In this context, the role of the classificationsocieties also needs reviewing. Finally, it is submitted that the concept of ‘open
innovation’ deserves more attention as a potentially very useful complementary or
alternative manner of viewing innovation and intellectual property in the European
shipbuilding industry.

10/158－ 41 －

1.

Introduction

1.1.

Background

It is no exaggeration to state that innovation lies at the heart of European policy towards
industry in general and towards its shipbuilding sector in specific.
The background to this policy is primarily made up by the 2000 Lisbon European Council,
which sets an ambitious strategic goal for Europe: to become, by 2010, the mostcompetitive and dynamic knowledge-based economy in the world. Additionally, theEuropean shipbuilding industry has initiated and developed the LeaderSHIP 2015
programme. This programme is a response to the competitive challenges the sector
faces and aims at maintaining and consolidating the global number one position in termsof innovative capacity. More specifically, it aims at improving leadership in selectedmarket segments, continuing to drive and protect innovation, strengthening customer
focus, improving the structure of the industry, implementing a network-driven operating
mode, emphasising production optimisation and shifting towards knowledge-based
production.
In order to achieve these goals, innovation and maximising the benefits of knowledge areimportant prerequisites. Stepping up efforts to innovate is, of course, an importantelement in this respect. Much attention has therefore already been paid to facilitate andstimulate innovation in the European shipbuilding sector.
The industry1 will, however, not fully reap the benefits of these efforts without sufficientmeans to protect this innovation adequately. The European shipbuilding industry can only
maximise the benefits of its innovation and knowledge if it is sufficiently secured against
competitors that illegally copy the products of its innovation. Intellectual property rights(IPR) are the principal means to provide such security. The current system of IPR
protection nevertheless confronts the industry with several important challenges.

1

The industry which is the subject of this report is in essence composed of the shipbuilding industry on the
one hand and the marine equipment industry on the other hand. For the sake of brevity, this report
generally refers to the shipbuilding industry without distinguishing between these two components, except
when explicitly indicated otherwise. Understood in a wider sense, the shipbuilding industry also includes a49100201/2285043.12

variety of service and knowledge providers. Attention will be paid to this latter group where appropriate.

11/158－ 42 －

1.2.

Problem description

It is generally felt that the European shipbuilding sector is confronted with newtechnologies being copied rapidly by its competitors. Many fear that the leakage ofknowledge will lead to the disappearance of the European competitive advantage and will
impede European companies to recover their investments in innovation. The leakage ofknowledge has a negative effect in the short run, because European shipbuilders andequipment suppliers will lose turnover and market share. Knowledge leakage also has anegative impact in the longer run, because it functions as a disincentive for future
innovation efforts of the sector. Thus the leading position of the European shipbuilding
industry, and the economic well-being of the EU more generally (loss of competitiveness,
loss of employment), could ultimately be negatively affected.
Though technological leakage is by no means confined to the shipbuilding industry, it isparticularly sensitive and threatening for that industry due to its specific history and theposition it currently has on the global market. It is generally acknowledged that innovation
is a key for European producers to stay ahead of competition, having regard to(especially) the relatively low labour costs and other advantages that often benefit its
competitors in the emerging countries.

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The evidence on the scope and seriousness of these challenges has been largely
anecdotal up to now. Little was known, for example, about the precise attitudes andpractices of European shipbuilders with regard to the protection and enforcement of theirintellectual property rights. The truly global nature of this problem poses an additional
challenge in this regard. Although there are clear signals that technological leakages canhave substantial adverse consequences in specific cases, it is to date largely an open
question what the actual or potential consequences of such leakages are in economic
terms.

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1.3.

Aim of the study

This study aims at gathering further insights into the challenges and possibilities of IPR
protection and the economic value of infringements on IPR in the European shipbuilding
industry. The aim is to investigate what the actual size and scope of the IPR
infringements is, and to assess to what extent the current system of IPR protection canbe considered sufficient.
Against this background, the report will address a number of questions:

What is intellectual property from a legal point of view?



To what extent does this match with the sector’s view on innovativeness?

Which examples of IPR infringement can be given?



How wide-spread is the infringement problem and what is the sense-of-urgency?

What does this mean in economic terms?

What can be done to overcome the problems?



Does this require changes in the legal framework?



To what extent could the current evolutions in the innovation landscape (openinnovation) be captured in the policy framework?

Based on the in-depth understanding obtained in answering these questions, the ultimate
goal of this study is to recommend practical ways to further improve the policy currently inplace, in order to tackle the challenges the European shipbuilding industry is confronted
with to the highest possible extent.

1.4.

Approach

In light of the nature of the problem, Houthoff Buruma and Policy Research Corporation
have analysed the problem both from a legal and from an economic point of view, while
having given much attention to the interaction between the legal and the economic
considerations in order to sketch a complete, coherent and realistic picture.

49100201/2285043.12

Relatively little factual information on the issues under consideration is available.
Therefore, a pragmatic approach has been followed, in which desk and field researchwere combined to gather the necessary information for pinpointing the essence of thevarious issues at stake and to subsequently suggest ways to address these.

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As part of the field research, around 80 shipyards and marine equipment suppliers havebeen approached by means of a questionnaire.2 These companies have been selectedon the basis of CESA and EMEC membership lists; the comprehensiveness of thisselection has been discussed with several key players.3 The rate of response to thequestionnaires was roughly 40%. To complement the picture that emerged, further
interviews have been held by phone as well as in person with representatives of bothindividual companies and umbrella organisations.4 This field research was primarily
focused on gathering information about the protection policy of the respondents and theirexperiences with IPR infringements to date.
Further research has been done into the use of patents by the selected shipyards andmarine equipment suppliers, making use of the objective information available throughthe Espacenet database.5 The outcomes of this database study have also been
discussed with stakeholders in order to guarantee a correct understanding thereof.
Furthermore, the current legal instruments and mechanisms of IPR protection that are(potentially) of relevance in this context were mapped through studying the available
literature and case-law. Based on, inter alia, the main elements of a ship and interviews
with stakeholders, an inventory was made of the practical and theoretical availability ofthe various instruments. In order to guarantee that the sketch of the legal situation in the
Far East is up-to-date and realistic, external Chinese and South Korean legal experts

2

The questionnaire is attached as Annex I. The questionnaire was initially sent out in April 2007. In
cooperation with CESA, the questionnaire has also been distributed through the national CESA member
societies in May 2007, in order to broaden the basis for analysis and complement the preliminary results.

3

See Annex II for an alphabetic and relatively comprehensive overview of the major European shipyards
and marine equipment suppliers, from which the questioned market players has been selected. The
membership lists of CESA and EMEC contain roughly 290 and 1250 members respectively. Thoughlargely addressing the same questions, the scope of the survey conducted within the framework of thepresent study is somewhat broader than the CESA survey on IPR carried out in 2005. The present survey
is better suited to yield a sample of quantitative data from both shipyards and marine equipment
suppliers, also because the number of respondents provides a broader basis for analysis. Due note has
been taken of the outcomes of the earlier CESA survey.

4

See Annex III.

5

Available at http://www.espacenet.com. While using this database, corrections have been made as muchas possible with regard to companies that may have changed their names over the years (e.g. Aker
Yards), as well as the fact that many of these companies belong to broader industrial groups that may

49100201/2285043.12

have other, non-marine related patents.

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have been consulted.6 In the report, the emphasis is not so much on describing the legal
systems of countries such as China and South Korea, but rather on the actual functioning
and practical shortcomings of those systems.
As to the economic aspects, use has been made of earlier work done by Policy Research
Corporation in this field. Wherever possible and necessary, the available data have been
updated and tailored to the specific issues at stake in the present study. Added with fieldresearch and further desk study, the economic value and mechanisms of the European
shipbuilding and equipment industry have been determined. Based on the available data,
an estimate has been made of the economic value of the infringements.

1.5.

Outline of the report

Below the relevant legal framework will first be set out (chapter 2), outlining the ‘classical’
instruments of IPR protection. Furthermore, an overview will be given of some of theother possible methods of protecting innovations, in particular the use of contract clauses
and the law of unfair competition. The relevant EC and International framework forprotection will also be sketched here.
Chapter 3 focuses on the protection of IPR in the shipbuilding industry in practice. Firstly,
the burdens to protection that the industry experiences in practice will be discussed, withspecific emphasis on the question of enforceability. Besides a discussion of the burdensof a more general nature, attention is paid to the burdens that are specific to enforcementin the Far East. Then some guidelines will be given as to how intellectual property can beprotected most effectively.
Chapter 4 looks into the role of knowledge, innovation and IPR in the European
shipbuilding industry. After an analysis of the functioning of these concepts in thisparticular context, the outcomes of the field and database research will be discussed,
giving an insight into how the industry views these issues in practice. Finally, the conceptof ‘open innovation’ will be introduced.

6

Input on the Chinese system of IPR protection was provided for by Jun He Law Offices (Beijing), which ispart of the global Lex Mundi network of independent law firms of which Houthoff Buruma also is amember. For South Korea, this role was fulfilled by the firm Kim & Yang from Seoul. Information on thelegal system and the enforcement issues China and South Korea has also been obtained from othersources. For practical reasons, this study was limited to China and South Korea, as these are the49100201/2285043.12

countries that are generally of most importance to the European shipbuilding industry in this context.

15/158－ 46 －

The following two chapters are dedicated to the economic component of this study.
Chapter 5 first sketches the broad economic structure and importance of the shipbuilding
industry, using key indicators such as turnover, value added and employment. Based on
this foundation, chapter 6 looks into the scope and size of knowledge vehicles, broadly
estimating the economic value at stake.
Chapter 7 deals with various issues. Some particular issues related to competition law
are addressed, and a comparison is drawn with other relevant sectors of economic
activity. The last part of the chapter is dedicated to health, safety and environmental
issues that can be a result of counterfeit and piracy.
Finally, chapter 8 contains the conclusions of this study as well as the policy
recommendations that are suggested on the basis of the foregoing.
Throughout this report, various real-life problems and challenges experienced by theindustry are illustrated by brief case studies.7

7

Please note that these cases concern a representation of the facts as presented by the company or

49100201/2285043.12

companies involved and do not necessarily represent the opinion of the authors of this report.

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2.

Legal framework

This chapter sets out the relevant legal framework. Firstly, an overview is given of boththe ‘classical’ instruments of IPR protection and other methods of protecting knowledge
and innovations. Then the relevant EC and international framework for IPR protection will
be sketched.

2.1.

Classic IPR Protection

2.1.1.

Common instruments

Intellectual property rights can be defined as rights granted to creators and owners ofworks that are results of human intellectual creativity. IPR protection forms an incentive
for creativity and innovation by guaranteeing exclusivity for a certain time period. IP law
strikes a balance between the (intellectual) right of a creator/owner and the generalinterest by putting in place time-limits on the right of exclusive protection. During a periodof exclusivity, costs of creation/innovation can be recovered by the creator, which isthought to have a positive effect on innovation. Classic IP protection is based on the idea
that, without a mechanism to give the creator the possibility to get a reasonable return on
investment,8 companies will often not be willing to invest in innovation.
From a legal point of view, not every use of technological knowledge by a third party
constitutes an IP infringement. It is important to distinguish between:knowledge that can be protected through the use of IP law instruments on the
one hand and knowledge that cannot be protected because it does not fulfil thecriteria for IPR protection (e.g. patent protection can only be obtained if aninvention is truly new) on the other hand;knowledge that is in theory ‘protectable’, but is not protected in practice (e.g.
because the creator is not aware of the possibilities of protection, or because thecreator deliberately chooses not to protect its knowledge given the costs ofregistration, expected enforceability problems, etc.).

8

Although there is little empirical evidence, it is thought that high levels of counterfeit and piracy can affectinnovation negatively, because they affect the return of the rights holder:-the presence of counterfeit products will have a downward influence on prices;-

counterfeited or pirated products may damage the image and reputation of firms over time;-

IP holders do not receive royalty payments that they would otherwise be entitled to;-

IP holders will incur costs in combating counterfeit and piracy.

49100201/2285043.12

See the OECD-report ‘The Economic Impact of Counterfeit and Piracy’, p. 18.

17/158－ 48 －

It follows from the case-law that IP litigation in the shipbuilding industry is not always
successful, because the plaintiff has not protected its IP adequately and has to (try to)resort to unregistered copyright or design law or the law of unfair competition. Althoughsuch claims can be successful,9 the plaintiff would sometimes have been better off with a(timely) registered IP right.

The protection of hulls
In a case that was decided by the District Court of Amsterdam on 19 June 1997 theplaintiff argued that the defendant infringed on their copyright and/or design right bycopying the hull of their fast planing vessel the “Offshore Commander”. The Court was ofthe opinion that copyright law did not provide protection for the hull of the ship, because
the shape served a purely functional purpose.10 A similar decision was taken by the Courtof Rotterdam on 30 December 1999 with respect to the so-called Muscari hull.11 Because
the parties had – in earlier negotiations – attached great importance to the weight of thehull (which was much lower than usual), the Court was of the opinion that the shape ofthe hull was primarily determined by technical aspects, which led the Court to theconclusion that copyright was not available for the hull. On appeal, design protection for
the Muscari hull was refused because the design was not “new” at the time of filing on 17
April 1998, since a (very similar) hull had already been in use in 1993/1994.12

It is very difficult to provide general rules as to which innovation can or should beprotected by what type of IPR instrument. For example, one cannot say that manuals are,as a general rule, protected by copyright. The extent to which a product is protectabledepends very much on whether the content of the manual has an own character and apersonal mark of the creator, which can only be established on a case-by-case basis.
The same applies to the protection of calculations, drawings, documentation, etc. Table
2.1 below provides an overview of the objective criteria for the different categories of IP
protection.

9

See e.g. District Court of The Hague 8 December 1994, BIE 1996, 42 (De Breedendam/Makma), where
the President of the Court held that the used combination of clinker-built upper ship was unique andprotected by copyright. The defendant was therefore not allowed to exhibit the motor sloop “Makma E

49100201/2285043.12

173” on the HISWA-exhibition in Amsterdam in 1994.
10

See District Court of Amsterdam 19 June 1997, BIE 1998, 74 (Mandemaker/Cygnus Marine).

11

See District Court of Rotterdam 30 December 1999, BIE 2001, 80 (Van Dijke/Dutch Marine Associates).

12

Court of Appeal of The Hague 27 December 2001, Van Dijke/Dutch Marine Associates, not published.

18/158－ 49 －

Table 2.1:

Schematic overview of the legal protection instruments13

IPR types

Characteristics

Requirements

Remarks

PatentExclusive rightPublication
For certain time (EUmax 20y) and certain
countries
Licensing

NoveltyInventive step
Industrial application

EPC (European Patent Convention)
gives directly right to a patent, EPO(European Patent Office) converts thepatent in national patents
Provisional examination PCT (Patent
Cooperation Treaty)

Trademark

Unitary character
Exclusive rightEssential function
Right of priority
Unlimited renewable(periods of 10y)publication
Licensing
Exhaustion of rights

Marks: Word,
Figurative marks (incolour or not), Colours(also combination),
Three-dimensionalmarks, Shape of
goods or packaging,Sound marks
Certain ground ofrefusal (absolute andrelative)

Exclusion of registrability:
Shape resulting from nature of goods
Shape necessary to obtain a technicalresultShape giving substantial value
Examination ex parte by OHIM (Officefor Harmonisation in the Internal Market)

Design right

RegisteredExclusive right
Renewable (EU max
25y)

Novelty
An individual
character

Applicable to the appearance of thewhole or a part of a productExclusion of protection: the technicalaspects of a design
CDR (Community Design Rights) does
not apply to component parts not visible
once incorporated into complex products& spare parts and does not requiredetailed examination
Design Directive does not fully
harmonise the law applicable to designs,
as it expressly states that theselegislative acts do not affect theapplicability of other laws to industrial
designs.
WIPO: International Designs Treaty

A production in theliterary, scientific andartistic domain,whatever may be themode or form of its
expression
Author’s own
intellectual creation

Protection through the whole world

Unregistered
Right to act
restricted to copying(EU 3y)To identify the shapeof a productExhaustion of rights
Licensing

Copyright

13

Exclusive right
Right to claim
authorship of theworks and to object
against any
distortion, mutilation,
modification, etc
Continuous via

Protection on the basis of the law of unfair competition and/or contract clauses is this table, but does not
qualify as classic IPR protection. These protection mechanisms will be described further in section 2.2

49100201/2285043.12

below.

19/158－ 50 －

IPR types

Characteristics

Requirements

successors
Presumption of
authorship
Licensing

Expression of acomputer program in
any form

Licensing

Exclusive agreement
on right to use apatentContains agreementon production andsales, infringement
consequences,royalties

Unfaircompetition

Any act ofcompetition contrary
to honest industrial
or commercial
practice
Complementarycharacter

Acts to create
confusion towards acompetitor
False assertions
Indications of allegations

Contractuallaw

No exclusive rightProtection only
among agreed parties
Freedom of contract
Penalty clause

Infringements of theprovision of the contract
Validity of the provision

Remarks

No obligation to register the licence inthe public Patent Registry(recommended)

Hard to enforce when business relations
have to be preserved

Several types of IP protection (patent, trademark, copyright, industrial design or trade
secret) can be appropriate for one product. Although a functional product is traditionally
best protected by a patent, the product may contain various forms of intellectual property,
each capable of independent protection. By seeking different forms of IP protection forvarious aspects of a product, it may be possible to create layers of IP protection aroundthe product that are much more effective in hindering competitor duplication than a single
form of IP protection.14 To give a concrete example: patent protection could be available
for the functional features of a new steering mechanism, while at the same time its brandname could be protected under trademark law, the method of manufacture by trade
secret and the shape of the device by industrial design.

14

See Smart & Biggar/Fetherstonhaugh, ‘Layers of IP protection’, International Law Office of 8 October

49100201/2285043.12

2007.

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2.1.2.

Utility models

The utility model is – just like a patent – an exclusive right granted for an invention, whichallows the right holder to prevent others from commercially using the protected invention,
without his authorisation, for a limited period of time. The main differences between utility
models and patents are the following:15
The requirements for acquiring a utility model are less stringent than for patents.
While the requirement of "novelty" always has to be met, that of "inventive step"or "non-obviousness" may be much lower or absent altogether. In practice,protection for utility models is often sought for innovations of a rather incremental
character which may not meet the patentability criteria.



The term of protection for utility models is shorter than for patents and varies
from country to country (usually between 7 and 10 years without the possibility ofextension or renewal).

In most countries where utility model protection is available, patent offices do not
examine applications as to substance prior to registration. This means that theregistration process is often faster.



Utility models are generally cheaper to obtain and to maintain than patents.

In some countries, utility model protection can only be obtained for certain fieldsof technology and only for products but not for processes.

In short, even though the scope of the protection is more limited for utility models than forpatents, protection through utility models is generally easier and cheaper to obtain.
Especially for small and medium-sized enterprises this can prove a useful additional
instrument of IP protection. However, the utility model is a concept that does not exist in
all Member States.16 The European Commission proposed a Directive with respect toutility models, but this proposal has been withdrawn in 2005 in view of the lack ofprogress towards its adoption.17 This might (partly) be due to the fact that utility model
protection systems still differ widely between Member States.18
15

See: http://www.wipo.int/sme/en/ip_business/utility_models/utility_models.htm.

16

The utility model does not exist in the United Kingdom, Sweden and Luxembourg (seehttp://ec.europa.eu/internal_market/indprop/docs/model/consultation_en.pdf). Although the Netherlands
has a ‘short term patent’ (protection for the duration of 6 years), it has recently decided to abolish that
instrument. In countries where the national legislation does not provide for utility model protection, SMEs
may either apply for a patent or keep the invention as a trade secret.

17

See 1997/0356/COD.

18

See Commission Green Paper of 19 July 1995 on the Protection of Utility Models in the Single Market,

49100201/2285043.12

COM(1995) 370 final.

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2.2.

Alternative means of IPR protection

2.2.1.

Contract clauses

In addition to the use of the ‘classical’ instruments of IPR protection, contractual clauses
regarding protection of IPR can be used in contracts with employees, customers,
designers, classification societies and other relevant parties, in order to protect sensitivetechnological information. Some market players have indicated not to apply for patent
protection, because that entails publishing their invention, while they prefer to keep theinformation to themselves (by imposing contractual non-disclosure obligations) in order toprevent other companies from copying or elaborating on their invention.
Examples of contract clauses are:

Confidentiality obligations (trade secret) – technological information can becontractually protected as confidential information;Non-compete clauses – it is quite common to include post-termination noncompetition clauses in employment contracts;19



Licensing agreements – the agreement that another person or company canmake use of your protected knowledge against payment of royalties.

It is important to note that a trade secret – the most important type of contract clauses inthis connection – is no property and does not protect the inventor against third parties’
independent discovery or legal acquisition of the information, for example by accidental
revealing or reverse engineering.20 Contracts merely lay down mutual rights andobligations between the parties to a contract. Apart from exceptional circumstances, third
parties are not bound by the contract. In practice this lack of erga omnes action may
prove to be an important disadvantage.
An additional disadvantage of protection through contractual clauses is that – especiallyto parties that have business relations involving the exchange of sensitive information
with a great number of other parties – it may in practice take considerable time andenergy to negotiate individual contracts, which should be drafted in a precise manner toavoid interpretation disputes. Furthermore, market players are sometimes reluctant to19

To be compliant with competition law, those clauses should be limited to a reasonable geographic area
and time limit.

49100201/2285043.12

20

See A. Pianon, ‘Trade Secret vs. Open Source’, ELER 2004, p. 54.

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enforce contracts, because they fear that business relations will be harmed.21 In thisconnection one should also note that concluding a contract outlining non-disclosure
obligations presupposes willingness to subscribe to such obligations on both sides, aswell as a more or less balanced bargaining position between the parties concerned. This
may in practice not always be the case, especially when small and medium-sizedenterprises are confronted with larger, more powerful counterparts.

Hesitations about biting the hand that feeds you (2002)
A southern European yard experienced a serious consequence of leakage. A respected
and crucial client of the yard ordered several cruise vessels at a Japanese shipyard. They
made copies of a cruise vessel previously developed and built by the European yard.
Afraid of losing the customer, the yard decided not to take any legal steps.

However, protection through contractual clauses also has advantages over classic IP
protection:a)

trade secret protection can be obtained immediately and at a relatively low cost;b)

trade secret has a broader scope of protection: almost all useful information canbe protected by trade secret, while only novel and inventive innovations can bepatented. Although innovation in the shipbuilding industry might regularly rise tothe (required) level of invention, it often does not and is the product of the skilled
use of know-how;c)litigation costs are often lower. The violation of a trade secret consists of a breachof a non-disclosure obligation, which has to be proven, whereas patent litigation
often requires extensive legal and technical discussions about the validity and thescope of protection of a patent, which imply higher costs of litigation and more
uncertain outcomes.22

21This problem, which is often felt by SMEs in particular because of their more modest position on themarket, may of course also exist when a company considers enforcing classical IPR instruments.
Nevertheless, taking enforcement action will generally be more sensitive when protection is ensured
through contract clauses, as this typically concerns a direct and exclusive relationship between the twoparties concerned.

22

See A. Pianon, ‘Trade Secret vs. Open Source’, ELER 2004, p. 49-51, where an inventory of the49100201/2285043.12

advantages of trade secret in the software industry is provided.

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2.2.2.

Law of unfair competition

In most Member States, there is also (a limited) scope to act against counterfeit andpiracy on the basis of the doctrine of unfair competition, which can provide a useful tool if
no classic IPR protection has been obtained or if the term of IP protection has ended. In
the Beele judgment,23 it was confirmed by the Court of Justice of the European
Community (ECJ) that there can be a role for the law of unfair competition next to thesystem of classic IPR protection.

The Beele judgment
A preliminary question was raised in the context of an action between a Dutch
undertaking, the sole importer of cable ducts manufactured in Sweden which had beenmarketed in the Netherlands since 1963, and another Dutch undertaking which since1978 has marketed cable ducts in the Netherlands that had been manufactured inGermany. The Swedish cable ducts were previously protected by patent rights inGermany, the Netherlands and elsewhere, and the German cable ducts were first madeand imported into the Netherlands after the period of validity of those patents had
expired. The German cable ducts being a precise imitation of the Swedish cable ducts,
the first undertaking sought an order restraining the defendant from marketing theGerman cable ducts or causing them to be marketed in the Netherlands.
The Dutch court of appeal asked the ECJ whether it could order an injunction, despite
the fact that the duration for patent protection had already expired. Under the Dutch
doctrine of unfair competition (that is comparable with the protection against precise
imitation in the laws of most other Member States), the importing company competed
unlawfully by importing counterfeit products. On the other hand the Dutch court fearedthat the imposition of an injunction could be contrary to the free movement of goods,
because the products had been lawfully marketed in Germany (Article 28-30 EC).24
The ECJ considered that, although an injunction would indeed pose an obstacle to thefree movement of goods between the Member States (Article 28 EC), that obstacle could
be justified as being necessary in order to satisfy mandatory requirements relating to theprotection of consumers and fairness in commercial transactions (Article 30 EC),
because the injunction could prevent confusion between the two products.

23

ECJ 2 March 1982, case 6/81, BV Industrie Diensten Groep v. Beele, ECR 1982, 707.

24

See e.g. ECJ 20 February 1979, case 120/1978 , Cassis de Dijon, Rec. 1979, 649 and ECJ 17 June

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1981, case 113/80, Commission v. Ireland, Rec. 1981, 1625.

24/158－ 55 －

The Beele judgment forms a clear recognition of the importance that the law of unfair
competition can have if companies do not have recourse to classic IP rights.25 Althoughmost Member States have rules against unfair competition, (the application of) thoserules may vary between the Member States, because the law of unfair competition has
not been harmonised on the European level.

2.3.

The international perspective

2.3.1.

EC Instrumentsa.

General IP Directives and Regulations26

On the EU level, attention was initially focused on trademarks. The measures adopted
were designed, on the one hand, to harmonise laws on national trademarks and, on theother, to establish a Community trademark. A Directive harmonising the conditions forregistration of a national trademark and the rights conferred by such a mark was adopted
in 1988.27 A few years later, the Council adopted the Regulation on the Community
trademark in 1993,28 enabling holders of a Community trademark to market their products
throughout the Community and to benefit from a single set of rules of protection. One
single registration with the Office for Harmonisation in the Internal Market (OHIM) suffices
to obtain Community-wide protection.
The approach taken towards designs is similar to the one followed for trademarks. In
1998, the European Community adopted a Directive approximating national laws to bringthem into line with the rules on Community designs.29 A regulation to set up a Community
design was adopted in 2001 with the aim of establishing a unified system for obtaining a
Community design which enjoys uniform protection in the internal market.30

25

Often the requirements for protection on the basis of the law of unfair competition are higher than forprotection on the basis of classic IP rights, meaning that the law of unfair competition has an important –but restricted – complementary role in cases of clear counterfeit. See e.g. Dutch Court of Cassation 31

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May 1991, NJ 1992, 391 (Borsumij/Stenman).
26

See the Commission website http://europa.eu/scadplus/leg/en/lvb/l26021.htm.

27

The Trademark Directive (89/104/EC).

28

The Community Trademark Regulation ((EC) 40/94).

29

The Design Directive (98/71/EC).

30

The Community Design Regulation ((EC) 6/2002.

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For patents, there is currently no EU system in place that is comparable to the systemthat has been created for trademarks and designs. However, there are two conventions in
the patents field. The first, the Munich Convention on the European Patent, which wassigned in 1973 by a number of Member States and non-EU countries in Europe, provides
for patents to be obtained for a number of countries through a single application to theEuropean Patent Office. All the EU Member States are now party to this Convention. The
second, the Luxembourg Convention, was signed in 1975 and is intended to give unitaryeffect to European patents applied for in Community territory.
In 1997, the Commission adopted a Green Paper on the Community patent and thepatent system in Europe,31 describing the situation as regards the protection of innovationby the patent system and looking at the scope for new initiatives in this field. On the basisof this Green Paper, a proposal for a Regulation was adopted in 2000, aiming to set up a
Community patent which would coexist with national patent systems and with the Munich
Convention system (European patent).32 By offering appropriate legal certainty and asingle patent for the whole of the Community, it should allow Europe to derive full benefit
from research and new knowledge. At the same time this should fulfil one of the key
principles of the Internal Market by providing a patent right that is consistent acrossEurope.

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However, it has turned out to be difficult to reach a final agreement on this dossier. So
far, the Council of Ministers has been unable to agree on a compromise regarding theissue of the translation of patent claims. More recently, the Commission has, after abroad consultation, issued a Communication on enhancing the patent system in Europe
outlining the Commission’s vision on this topic and attempting to revitalise the debate.33
Moreover, a separate and comprehensive Communication on IPR is planned for 2008. At
the same time several (transitional) alternatives or complements to the Community patent
have been created, such as the London Agreement, the European Patent Litigation
Agreement (EPLA) and the Translation Protocol. These measures generally aim at
reducing the costs of patent translation and litigation. Creating the possibility of filing

31

See COM (1997) 314 final.

32

See COM (2000) 412 final.

33

See COM (2007) 165 final.

26/158－ 57 －

patent applications in just one language in all Member States of the EU and shortening
the application procedure will save the European shipbuilders considerable costs and will
make it more attractive to seek patent protection.34b.

The combat against counterfeit and piracy

The counterfeit and piracy of goods cannot only cause harm to the European economy(the fact that no intellectual property payments are included in the purchase price may
stifle future innovation and creation35), but also to the health and safety of consumers andthe environment. On the European level much is done to combat counterfeit and piracy:36


In 1998, the Commission presented a Green Paper on the fight against
counterfeiting and piracy in the Single Market in order to launch a debate on thissubject with all interested parties.37 This consultation exercise confirmed that the
disparities between the national systems of IPR had a harmful effect on theproper functioning of the Internal Market. The consultation exercise was, in 2000,
followed by a Communication to the Green Paper proposing an action plan to
improve and strengthen the fight against counterfeiting and piracy.38

The so-called Anti-Piracy Regulation39 sets out measures and conditions for thecustoms authorities to take action against goods found to have infringed IPR.



Among the initiatives proposed in the action plan of 2000 was the presentation of
a Directive aimed at harmonising the national provisions on the means ofenforcing IPR. The so-called Enforcement Directive40 was enacted in April 2004

34

In the Commission’s Communication enhancing the patent system in Europe, the saving in costs is
estimated. Although a European patent currently costs approximately € 12,448, those costs would
amount to € 8,800 once the Translation Protocol has come into force. In the Netherlands it will shortly
become possible to file patent applications in English. However, in all other Member States, apart from
Luxemburg, it is required to file a patent application in the language of the respective country.

35

Also see D.J. Gervais, ‘The International Legal Framework of Border Measures in the Fight against
Counterfeiting and Piracy’, in O. Vrins & M. Schneider (eds.), Enforcement of Intellectual Property Rights
through Border Measures, Oxford University Press, 2006.

36

These

instruments

andmechanisms

are

also

summarised

on

the

website

of

the

EU

(http://europa.eu/scadplus/leg/en/lvb/l11016.htm).
37

COM (98) 569 final.

38

COM (2000) 789 final.

39

Council Regulation 1383/2003/EC of 22 July 2003 concerning customs action against goods suspected of
infringing certain IPR and the measures to be taken against goods found to have infringed such rights(Official Journal L 196 of 02 August 2003).

40

Directive 2004/48/EC of the Parliament and of the Council of 29 April 2004 on measures and procedures

49100201/2285043.12

to ensure enforcement of intellectual property rights (OJ L 157, 45 dd. 30 April 2004).

27/158－ 58 －

and had to be transposed into laws of the Member States in April 2006 at thelatest.


In a Communication of 11 October 2005 from the Commission to the Council, theEuropean Parliament and the European Economic and Social Committee on
customs responded to the latest trends in counterfeiting and piracy andpresented a range of initiatives aimed at cracking down on counterfeiting andpiracy.41

In March 2006, the Council adopted a Resolution on a customs response tolatest trends in counterfeiting and piracy.42

Another recent development is the Commission proposal for a Directive on
Criminal Measures Aimed at Ensuring the Enforcement of Intellectual Property.
This proposal was amended on 27 April 2006.43 The Commission has proposeda Directive on Criminal Measures Aimed at Ensuring the Enforcement ofIntellectual Property and strengthening criminal measures to combat
counterfeiting.44 These measures are aimed at approximating the Member
States' criminal legislation on combating infringements of intellectual property
rights. The Commission proposes that a minimum level of criminal penalties belaid down.45 A report on the proposed Directive on criminal measures has now
been adopted by the European Parliament and has been forwarded to theCouncil.46

41

COM(2005) 479 fin.

42

Council Resolution 2006/C 67/01 of 13 March 2006 on a customs response to latest trends incounterfeiting and piracy (Official Journal C 67 of 18.03.2006).

43
44

See Council doc. no. 8866/06.
See COM (2005) 276 final, "Proposal for a European Parliament and Council Directive on criminal
measures aimed at ensuring the enforcement of intellectual property rights" and "Proposal for a Council
Framework Decision to strengthen the criminal law framework to combat intellectual property offences".
This is in line with Article 61 TRIPs which obliges Members to “(...) provide for criminal procedures andpenalties to be applied at least in cases of wilful trademark counterfeiting or copyright piracy on acommercial scale. (...)”.

45

At least four years' imprisonment where the offence is committed under the aegis of a criminalorganisation or where the offence carries a serious risk to personal health or safety and a fine of at least
EUR 100,000, or EUR 300,000 where there is a link to a criminal organisation or a risk to personal healthor safety.

46

The Commission's initial proposal of the Enforcement Directive already contained provisions on criminal
sanctions against fraudsters, but those provisions were removed due to their political sensitiveness. The
Enforcement Directive now merely stipulates that the Member States are free to apply other sanctions,which go further than the provisions set out, to prosecute offenders (see Article 16 Enforcement

49100201/2285043.12

Directive).

28/158－ 59 －

2.3.2.

International instruments

Having regard to the global context in which the problems in the shipbuilding industry
occur, it is of particular relevance that the international framework for protection is set out.
The Paris Convention for the Protection of Industrial Property (1883) introduced minimum
standards for the protection of IPR at an international level. The protection of intellectual
property is now governed by more international treaties and conventions, which are
implemented by two main organisations, (a) the World Intellectual Property Organisation(WIPO) which administers 23 treaties47 and has 183 Member States48 and (b) the World
Trade Organisation (WTO).

a.

Word Intellectual Property Organisation (WIPO)

The WIPO is a specialised agency of the United Nations (UN) that promotes creative
intellectual activity and facilitates the transfer of technology related to the industrial
property to the developing countries in order to accelerate economic, social and culturaldevelopment. WIPO is responsible for taking action in accordance with its basic
instruments, treaties and agreements administered by it. WIPO is increasingly involved inhelping developing countries, to receive full benefits from the creations of their citizens,
assisting them in the enforcement of laws, in the establishment of sound institutions, andadministrative structures, and in the training of the appropriate personnel. The WIPO also
assists developing countries in the implementation of WTO’s TRIPs Agreement.

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An important treaty that is administered by WIPO is the Patent Cooperation Treaty (PCT)that has seen its popularity rise in recent years. The PCT was signed in 1970 and now
has 133 countries as signatories. It allows inventors to apply for a patent via their national
patent office, where they can also choose for protection in the other contracting states(without filing applications in all countries). The procedure starts by filing an international
application at a national or regional Patent Office (in Europe, e.g. the European Patent
Office EPO) or the International Bureau of WIPO, The international application will
normally only be made public 18 months after the priority date. From that moment
onwards the invention enjoys the same provisional protection in national countries as it
would after national filings and publications. After the international phase, the applicant
has to start the national phase by fulfulling certain additional requirements (inter alia
payment of national fees, the provision of translation etc.) within 30 months from the47

See http://www.wipo.int/treaties/en/.

48

See http://www.wipo.int/members/en/.

29/158－ 60 －

priority date.49 The international route allows the applicant to delay entering the national
phase by up to 30 months from the priority date. As opposed to the otherwise applicablepriority period of 12 months from the filing to take a decision regarding the extension ofan application to further countries, the applicant thus gains an extra 18 months.50
The European Community recently also joined the International Designs Treaty that is
administered by the WIPO.51 That accession will allow EU companies – through a single
international application – to obtain protection of a design not only throughout the EU with
the Community Design, but also in the countries that are members of the Geneva Act.
This system, that will simplify procedures, reduces the costs for international protection
and make administration easier, will become operational for businesses on 1 January
2008.52b.

Agreement on Trade-Related Aspects of Intellectual Property Rights(TRIPs)IP law is increasingly harmonised through the effects of international treaties such as the
1994 WTO-Agreement on Trade-Related Aspects of Intellectual Property Rights(TRIPs).53 The TRIPs Agreement sets internationally recognised minimum standards forthe protection of IPR for incorporation into national laws.54 The TRIPs Agreement deals
with different aspects of the protection and enforcement of IPR. Members are under anobligation to ensure that they have enforcement procedures which enable rights holders
to take “effective action” against the infringement of any IPR covered by the Agreement.
This requires the availability of both preventive and deterrent remedies. Civil procedureand remedies should be available to cover all forms of IPR infringement and Members
are required to implement border controls and criminal procedures in respect oftrademark counterfeiting and piracy.
The TRIPs Agreement explicitly recognises that the protection of intellectual property cancontribute to technical innovation and the transfer of technology.55 The Agreement also
requires the substantive obligations of the main conventions of WIPO, the Paris
49

Also see Economist Intelligence Unit, ‘The value of knowledge – European firms and the intellectual
property challenge’, 2007, p. 11.

50

Also see www.ipr-helpdesk.org.

51

The Geneva Act of the Hague Agreement concerning the international registration of industrial designs.

52

See RAPID press releases of 25 September 2007, IP/07/1388.

53

The TRIPs Agreement came into effect on 1 January 1995.

54

The Agreement establishes minimum standards governing copyrighted literary, artistic works, rights
related to copyright law, patents, trademarks, geographical indication et cetera (Articles 9-39 TRIPs).

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55

Article 65 TRIPs.

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Convention and the Berne Convention in their most recent versions, to be complied with.
With the exception of the provisions of the Berne Convention on moral rights, the main
substantive provisions of these conventions are incorporated by reference and have thus
become obligations under the TRIPs Agreement between WTO Member countries.56
Non-discrimination is a basic principle of TRIPs and consists of two components:“national treatment”57 and “most-favoured-nation treatment”.58 By virtue of the national
treatment, each WTO member should treat the nationals of every other WTO member at
least as favourably as its own with regard to IP protection.59 The most-favoured-nation
treatment requires WTO members, if they grant any advantage, favour, privilege or
immunity with regard to IP to the nationals of another country, to immediately andunconditionally grant it to all other WTO members.60
A dispute settlement mechanism has been developed to control the implementation of theprovisions in the TRIPs Agreements and resolve any government to government disputes
regarding the interpretation of those provisions. It should be noted that TRIPs only setsminimum standards for IPR protection and enforcement, which leaves the way open forbilateral or regional agreements that go further than TRIPs.

c.

Bilateral and regional agreements

In addition to treaties such as the Paris Convention and the TRIPs Agreement, many
regional and bilateral agreements contain provisions on IPR, which sometimes go beyond
the minimum level that is required by TRIPs.

56

See http://www.wto.org.

57

Article 3 TRIPs.

58

Article 4 TRIPs.

59

TRIPs preserves some exceptions to that principle (Article 3 (1) TRIPs), but Article 3 (2) TRIPs limits theavailability of the exceptions in relation to judicial and administrative procedures, only where suchexceptions are necessary to secure compliance with laws and regulations which are not inconsistent withthe provisions of TRIPs and where such practices are not applied in a manner which constitute a
disguised restriction on trade.

60

Article 4 TRIPs contains a number of exceptions to that rule: favours which derive from international
agreements on judicial assistance or law enforcement of a general nature; granted in accordance with
provisions of the Berne or the Rome Convention authorising that the treatment accorded be a function notof national treatment but of the treatment accorded in another country; in respect of the rights ofperformers, producers of phonograms and broadcasting organizations not provided under TRIPs; derivingfrom international agreement related to protection of IP which entered into force prior to the entry into
force of the WTO Agreement, provided that such agreements are notified to the Council for TRIPs, and49100201/2285043.12

do not constitute arbitrary or unjustifiable discrimination against nationals of other WTO members.

31/158－ 62 －

d.

Non-governmental action

Also at the business level, a lot is done to combat counterfeit and piracy. BASCAP(Business Action to Stop Counterfeiting and Piracy) of the International Chamber ofCommerce (ICC), for example, unites the global business community to effectively
address intellectual property right issues and petition for greater commitments by local,
national and international officials in the enforcement and protection of intellectual
property rights. The goals of BASCAP are to increase public and political awareness andunderstanding of counterfeiting and piracy activities and the associated economic andsocial harm, to compel government action and the allocation of resources towards
improved IPR enforcement and to create a culture change where intellectual property isrespected and protected.

2.3.3.

IPR protection in the Far East

A comprehensive overview of the legal systems to protect IPR in China and South Korea
is attached to this report as Annex IV. This overview indicates that this system is, in bothcountries, on the whole rather complete and up-to-date. As will become clear in theremainder of this study, the shortcomings and problems that do exist in this regard relate
primarily to the working of this system in practice. In short, on paper an adequate level ofprotection is granted in China and South Korea, but those countries are still lagging
behind when it comes to the enforcement of IPR in practice.
China has been a member of various international IPR protection agreements, treaties
and organisations for many years. The country joined the World Intellectual Property
Organisation (WIPO) in 1980 and acceded to the Paris Convention for the Protection ofIndustrial Property in 1985. China entered the World Trade Organisation (WTO) in 2001.
Since the early 1980s, China has a patent law and a trademark law in place, which havebeen regularly updated since. Furthermore, China has a copyright law and a law against
unfair competition.

49100201/2285043.12

South Korea is also a member of various international IPR protection agreements,
treaties and organisations, including the WIPO (1979), the Paris Convention (1980), thePatent Cooperation Treaty (1984), the Universal Copyright Convention (1987), the Berne
Convention (1996), the Trademark Law Treaty (2003) and the WIPO Copyright Treaty(2004). In 1995, South Korea entered the WTO. Korea’s national legislation includes laws
to protect patents, utility models, designs, copyrights, trademarks and trade secrets aswell as a law against unfair competition. Many of these laws date from the 1960s andhave been updated since.

32/158－ 63 －

3.

IP protection in the shipbuilding industry: burdens and possibilities

This chapter discusses the functioning of intellectual property mechanisms in practice inrelation to the European shipbuilding industry. The first section of the chapter expands onthe most important general burdens to effective protection, while the following section
looks into (potential) burdens that are specific to IPR enforcement in the Far East (inparticular China). Finally the question of how stakeholders could use the current system
of IP protection more effectively will be addressed.

3.1.

General burdens to protection

3.1.1.

Proof of evidence

An important burden in IP litigation is the general rule that the plaintiff has to supply proofof the IP infringement. In some cases that proof is difficult to furnish. This is especially thecase for complicated patent cases, where the other party often contests the validity of thepatent (on the basis that it is not new or inventive).61 It usually requires a detailed
technical expert report to demonstrate that. A positive aspect of the Chinese Patent Law
is that it already regards the copying of a patent number as a patent infringement,
because it misleads the public about the technology used.62 However, we will set out
below that the proof of evidence also forms an important burden to enforcement in
China.63

3.1.2.

Costs of IP protection and litigation

An often-heard complaint is that the costs of protection and litigation are so high thatcompanies (in particular, but not exclusively, SMEs), for that reason, choose not toprotect their knowledge. Obviously, the costs of obtaining adequate protection depend on
the instrument and the legal system concerned.
Generally speaking, the costs for patent filings range between € 2,000 and € 7,000 per
country. Although the Munich Convention on the European Patent provides for central
filing at the European Patent Office in Munich, that does not change the fact that fees61

See e.g. District Court The Hague 25 July 2007, Nexans Norway A.S. v. Aker Kvaerner, HA ZA 06-3850(published on www.boek9.nl, B9 4438), where the Court required a further explanation about theinventiveness of some of the conclusions of Aker’s patent with respect to a construction for the49100201/2285043.12

manufacturing and unrolling of a connection cable.
62

See S.A.L. Josaputra, ‘Recht over de grenzen: de strijd tegen namaak in China’, AA 2006, p. 871.

63

See section 3.2.5.

33/158－ 64 －

have to be paid according to the number of patents and that the conclusions will have to
be translated into the languages of the other countries. A European patent filing costs
approximately € 4.500 per country (with a discount that increases according to thenumber of countries in which protection is applied for) and translation costs easily amountto € 1.500 and € 2.500 per country.64

Costs of patent protection
To give a concrete indication of the costs involved in patent protection, a Dutch patentapplication costs between € 90 and € 884, the amount being largely dependant onwhether one also applied for an investigation into the state of the art. Only if such aninvestigation has been carried out, the patent can be valid for the period of 20 years. If a
company calls in a specialised patent attorney, the costs vary between € 3,500 and €5,000. After the registration of a patent, a company has to start paying a special fee forregistration from the fourth year onwards (the annual costs increase progressively from €242 in the fifth year to € 1,106 in the twentieth year).65 In principle, similar costs will haveto be paid in all other countries where a company wants to enjoy patent protection.

In order to ensure the protection obtained in practice, the protection may have to be
enforced through litigation. The costs of litigation do not only entail legal costs – which
can especially be very high in complicated IP cases – but also the costs of investigationand the collection of evidence to be able to prove that an IP infringement has occurred
and to prove which damages have been suffered (to prove that often (economic) experts
have to be involved in the case). Although the European Enforcement Directive
prescribes that Member States shall ensure that reasonable and proportionate legal costs
and other expenses incurred by the successful party shall, as a general rule, be borne by
the unsuccessful party,66 the fact that the outcome may be unsure can already be enoughreason not to litigate a case. In non-EU countries, it is not always possible to receive
payment of the incurred legal (and other) costs by the infringing party,67 which makes
litigation even less attractive.

64

See the website of the Dutch Patent Centre, www.octrooicentrum.nl. See on the costs of IPR protection
also the Commission’s Communication enhancing the patent system in Europe, COM(2007) 165.

65

If the annual fee is not paid, the patent expires.

66

See Article 13-14 Enforcement Directive (2004/48/EC). The downside of Article 14 is that the plaintiff
does not only risk spending a significant amount of money on the preparation of the case, but also that - if
the case is lost – he will have to pay all costs the defendant incurred.

49100201/2285043.12

67

In section 3.2.7 it will be set out that this is the case for China, for example.

34/158－ 65 －

Disincentives to protect (recent)
A European marine equipment supplier owns a patent on the central locking mechanismthat enables a quick handle action of the watertight door. In the past three years several
copies have been made by Asian suppliers. The European supplier gathered informationon the copies and handed this over to the patent office to verify their rights. The patentoffice could determine that the copies are look-a-likes (but not 100% identical), while
indicating that it will be very difficult – and expensive – to win such a case in court in the
Asian country concerned. The patent office merely warned the infringers that there is apatent on the product. Recently, the European supplier has decided not to continue thepatent on this product, because of the enforcement problems and the high costs oflitigation, on top of costs to maintain the patent filing.

3.1.3.

Article 5ter of the Paris Convention

Article 5ter of the Paris Convention for the Protection of Industrial Property (Paris
Convention) also forms a burden to enforcement. This provision – that has existed since
1925 and was based on earlier case-law68 – limits the right of patent owners in the eventthat a ship enters a country temporarily under the flag of a foreign nation:“Patents: Patented Devices Forming Part of Vessels, Aircraft, or Land Vehicles
In any country of the Union the following shall not be considered as infringements of therights of a patentee:(i) the use on board vessels of other countries of the Union of devices forming the
subject of his patent in the body of the vessel, in the machinery, tackle, gear and otheraccessories, when such vessels temporarily or accidentally enter the waters of the said

68

1851, Caldwell v. Van Vlissingen, referred to by D. Stauder, ‘Die Freiheit des internationalen Verkehrs im
Patentrecht – Schiffschraube, Gaffelklaue und Sonnenpaddel’, GRUR 1993, 306. In that case an English
patent holder claimed that a Dutch company infringed on its patent rights by using a certain ship propeller
for its vessels “Burgemeester Huidekoper”, “Stad Dordrecht” and “Feyenoord”. However, those vessels
were produced lawfully in the Netherlands. The judge acknowledged the danger for the international trade
if he would allow an injunction on the basis of English patent law, but considered this to be a problem forthe legislator. In 1857, the Supreme Court of the US decided differently in a comparable matter (Brown v.

49100201/2285043.12

Duchesne, also referred to in footnote 59).

35/158－ 66 －

country, provided that such devices are used69 there exclusively for the needs of thevessel;(ii) the use of devices forming the subject of the patent in the construction or operationof aircraft or land vehicles of other countries of the Union, or of accessories of suchaircraft or land vehicles, when those aircraft or land vehicles temporarily or accidentallyenter the said country.” (underlining added)

70

Article 5ter Paris Convention demonstrates a concern to leave the channels ofinternational commerce free from the burdens that would result if vessels had to conformto the patent laws of all nations that the vessel or vehicle visits during its lifetime. Different
inventions are likely to be patented in different countries, and the same invention may bepatented by different parties in different countries. Article 5ter Paris Convention places
foreign-owned means of transport beyond the reach of domestic patentees’ exclusive
rights.71 This prevents the international traffic of goods and persons from being
obstructed by seizures at the borders and other measures.
The case-law on Article 5ter of the Paris Convention (and its implementation Articles innational legislation) is not abundant. The provision seems to have been applied mostfrequently in the US:72(i)

United States Court of Appeal for the Federal Circuit, case 03-1256, National
Steel Car Ltd. v. Canadian Pacific Railway73

In this case National Steel Car accused Canadian Railway of having infringed its patentright on its so-called “depressed center-beam flat car”. Canadian Railway defended itself
by relying on Section 272 entitled “Temporary presence in the United States” (which
69

The provision only covers the use of patented devices. It does not allow the making of patented devices
on board a means of transportation, nor the sale to the public of patented products or of products
obtained under a patented process.

70

In the middle of the nineteenth century, the US Supreme Court already held that the owner of a patent on
an invention related to the rigging of a sailing ship had no cause of action against the master of a Frenchschooner that voyaged between Boston and a colony of France and that embodied the invention. Given“that the improvement in question was placed on [the ship] in a foreign port (...) and was authorised by
the laws of the country to which she belonged” (see United States Court of Appeal for the Federal Circuit,case 03-1256, National Steel Car Ltd. v. Canadian Pacific Railway, p. 7). The underlying reason for thedecision was that infringement suits “would (...) seriously embarrass the commerce of the country withforeign nations” (Brown/Duchesne, 60 U.S. (19 How.) at 197).

71

Cf. United States Court of Appeal for the Federal Circuit, case 03-1256, National Steel Car Ltd. v.
Canadian Pacific Railway, p. 9.

72

There have also been some German cases: Landgericht Hamburg 11 July 1973, GRUR 1973, 703,
Rolltrainer and Hanseatisches OLG Hamburg 18 February 1988, GRUR 1988, 781.

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73

Published on http://caselaw.lp.findlaw.com.

36/158－ 67 －

provision was drafted to satisfy the obligations of the US under Article 5ter of the Paris
Convention):“The use of any invention in any vessel, aircraft or vehicle of any country which affords
similar privileges to vessels, aircraft or vehicles of the United States, entering the UnitedStates temporarily or accidentally, shall not constitute infringement of any patent, if theinvention is used exclusively for the needs of the vessel, aircraft or vehicle and is notoffered for sale”.

The Court considered that the depressed center-beam flat car owned by CanadianRailway was a foreign vehicle and was therefore not disqualified from the non-infringing
status created by section 272 on that basis. The Court also concluded that the vehicle
entered the US “temporarily”, defining “temporarily” as entering for the purpose ofcompleting a voyage, turning about, and continuing or commencing a new voyage withthe sole purpose of engaging in international commerce.74(ii)

Eastern District Court of New York, Cali v. Japan Airlines75

In this case the Eastern District Court of New York held that the use of a patented
invention in the jet engines of planes belonging to international air carriers during “theirflights to and from the United States in the course of the regular prosecution of theirscheduled air services” was within the scope of the non-infringing uses specified in
Section 272. The Court was of the opinion that, even if a foreign plane comes to the US
regularly, it can qualify as being in the US only “temporarily” in the sense of Section 272.
Patent rights would be enforceable if an American company were to buy the plane andwere to use it for domestic flights.
(iii) Court of Federal Claims, Hughes Aircraft Co. v. United States76
In this case it was held that a spacecraft brought into the US for being launched into outerspace prior to 1981 were outside the scope of section 272 (“When a spacecraft isdelivered to the US for the purpose of allowing the United States to launch it, thespacecraft is the cargo that is brought here for an essential use, not a “vessel” of “vehicle”
which enters the US as a means of conveyance.”).
74

Cf. United States Court of Appeal for the Federal Circuit, case 03-1256, National Steel Car Ltd. v.
Canadian Pacific Railway, p. 9. Not temporarily would e.g. be a Caravelle, manufactured in France andpowered with such an [allegedly infringing] engine, delivered in the US for use of an airline for domestic

49100201/2285043.12

use.
75

Cali v. Japan Airlines, Inc. 380 F. Supp. 1120 (E.D.N.Y. 1974).

76

29 Fed. Cl. 197 (1193).

37/158－ 68 －

In recent years, there has also been an Article 5ter case in the United Kingdom.

Stena vs. Irish Ferries (recent)
Irish Ferries bought a vessel which was built in Australia, based on a patent of theSwedish company Stena without having obtained a license or permission from Stena.
The vessel of Irish Ferries travels between Holyhead and Dublin on a daily basis. Stena
had patent rights in eight European countries, including the UK but not Ireland. Stenabrought the case to court in the UK.77
Although the UK court found Stena’s patent to be valid in the UK, it was of the opinion
that the UK Patent Act could not govern the case because the vessel in question was
only in UK waters on a temporary basis. The Court relied on the American case-law cited
above and considered that – according to the UK Patent Act and the Paris Convention –,the carriage of goods and passengers between countries should not be hindered bypatent rights applying to the means of transport. Another decision would interfere withinternational trade or the movement of people. Had Stena registered its patent in Ireland(the home country of the vessel in question), it would have been able to proceed with thecase there.

Although the cited case-law mainly concerns American judgments, it is clear that theprovision poses restrictions to the exclusive right of the patent holder.78 Since ships usedin the international trade area are moving all the time and never stay in one placepermanently, it is not unthinkable that there are cases where ship owners can (almost)always claim to be in a country only temporarily, giving them the immunity that Article 5ter
Paris Convention provides for. That, however, does not mean that the rights holder isalways left empty-handed: in cases of counterfeit and piracy, he might be able to revert toother IP instruments, such as copyright, design law or the law of unfair competition. The
possibilities that these other instruments could offer are not always fully exploited atpresent and may deserve further consideration.79

77

In an action on the merits. Stena did not ask for preliminary measures. Although Stena was aware of thepossibilities of a seizure by customs, it did not consider asking for conservatory measures because it wasafraid to bear economic consequences if it would not win the case.

78

Also see F. van Bouwelen, ‘BIG Problem with IPR for Marine Equipment – a Possible Solution’, Paper toaccompany presentation Split conference of 23 October 2007.

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79

See section 3.3 below.

38/158－ 69 －

3.2.

Specific burdens to IPR protection in the Far East

In addition to the burdens of a general nature discussed above, the present section looks
into (potential) burdens that are more specific to the Far East (especially China).80 At theonset it should be pointed out, however, that IPR protection and enforcement within
Europe is, of course, also not without problems (due to costs, burden of proof etc.). Thissaid, the burdens in the Far East appear to be considerably more pressing anddisproportionate in the Far Eastern countries under investigation.

3.2.1.

Low commitment to respecting and enforcing IP laws

Due to the – government supported – overriding goal of rapid economic development and(particularly for China) the lack of a tradition in IP protection, there is a relatively low
commitment to the protection and enforcement of IP laws (especially in less-developed
areas). Another study for the European Commission also shows that China is not
performing the commitments it has made within the WTO framework and that is
especially lagging behind in the field of IPR protection.81 A substantial part of the problem
can be attributed to a general lack of awareness of both industry and authorities in China
about what is and what is not allowed. Despite the implementation of IP laws, theenforcement of those laws is now still sometimes regarded as an ‘abuse of rights byforeign companies’.
In South Korea IP enforcement is facing a similar lack of commitment, however to a lower
extent. Although South Korea has considerably improved its compliance with WTO
obligations, particularly in the field of copyrights there are still certain disparities with theTRIPs Agreement.

80

Because the problems of enforceability appear to be the biggest in China, this section focuses mainly on
China. However, many of the problems mentioned are, broadly speaking, similar to the problems in South
Korea.

81

See also Study on the Future Opportunities and Challenges of EU-China Trade and Investment

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Relations, Study 12: Exploring China’s IP Environment – Strategies and Policies.

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Problems of enforceability (recent)In the marine equipment industry a North-European producer possessing a significant
market share indicated to be frequently confronted with IPR infringements. Within therelevant business, the producer is almost the only one investing in development of new
products and services. The infringements are mainly caused by a large Asian competitor.
The copied parts are nearly the same as the original products, but it has turned out to bevery hard to enforce the legal rights.
The producer has considered litigation in South Korea several times. However, theKorean Intellectual Property Office (KIPO) signalled that the chances to win the cases arevery limited. The high costs and the long time legal proceedings will probably take,discourage the disadvantaged equipment supplier to bring the case to court.

3.2.2.

Lack of independent judiciary

Another problem is that Chinese judges cannot act wholly independently. The
Constitution promulgates that the People’s Courts exercise their judicial power
independently, without any interference by any administrative organ, public organisation
or individual. However, in contradiction to this principle, Article 128 of the Constitution82
states that courts report to the corresponding level of the people’s congresses thatcreated them. At the highest level, the Standing Committee of the National People’s
Congress is superior to the Supreme People’s Court, because it has the final word whenit comes to the interpretation or invalidation of laws by the Supreme People’s Court.83

82

Article 128 Constitution states “The Supreme People's Court is responsible to the National People's
Congress and its Standing Committee. Local people's courts at various levels are responsible to theorgans of the state power which created them.”

83

See D. Friedmann, ‘Paper Tiger or Roaring Dragon – China’s TRIPs Implementation and Enforcement’,p. 67, who points to the fact that also the People’s Procuratorate Bureau exercises supervision over the
judiciary, leading to the situation where procurators are subject to the authority of the court when they
appear before the court as a prosecutor and yet they have the authority to challenge the “final” decisions

49100201/2285043.12of the court.

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3.2.3.

Local protectionism

In some Chinese regions, there is still a strong sense of local protectionism: it occurs that
infringers do not pay their penalties, or that the infringer's goods are confiscated, butinstead of being destroyed, are returned to the infringer.84 The fact that infringing
products often find their way back into the channels of commerce85 is at odds with (theratio of) Article 46 TRIPs, which provides that - in order to create an effective deterrent toinfringement – the judicial authorities shall have the authority to order that goods that they
have found to be infringing be, without compensation of any sort, disposed of outside thechannels of commerce in such a manner as to avoid any harm caused to the right holder,or, unless this would be contrary to existing constitutional requirements, destroyed.
That some local courts favour local companies can be explained by the fact that local
judges are appointed by the local party and financed by the local government, who in turnis dependent on the tax revenues and management fees paid by local companies. It istherefore not in the interest of the local government that the infringing company is forced
to go out of business (most certainly not if the infringing company is a state company,
with direct connections to the local government).86 Despite the existence of courts thatappear strongly in favour of local companies, there are other courts that have beenreported to be more objective (e.g. the courts of Beijing, Shanghai, Qingdao andGangzhou).87

3.2.4.

Lack of technical training and experience

A logical consequence of the Chinese not having a long tradition of IP protection is thatsome judges lack the technical training and the experience to give sound decisions,which is also made more difficult by a lack of court rules regarding evidence and expert
witnesses.88 Although Article 41 (3) TRIPs prescribes that decisions on the merits of acase should be in writing and reasoned, decisions are not always based on evidence in84

See D. Friedmann, lc, p. 32-33 and 38.

85

Which is the rule, rather than the exception. Article 30 (1) Customs Implementation Regulation 2004
namely states that only if donating to a charitable organisation and auctioning is not possible, theinfringing products shall be destroyed.

86

See D. Friedmann, lc, p. 69.

87

The differences between the courts has as a consequence that the result of litigation depends largely on
the place where the plaintiff sues and where the defendant is located.

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88

Also see D. Friedmann, lc, p. 72.

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respect of which parties were offered the opportunity to be heard.89 This lack oftransparency hampers the predictability of court judgments.
Similarly in South Korea, due to the current judicial system whereby judges rotate
periodically, there often appears to be a lack of technical expertise and experience with
IP cases.90

3.2.5.

Procedural requirements

Important burdens to protection in countries in the Far East are discriminatory procedural
requirements (e.g. the need to notarise and legalise powers of attorney and evidence
from other countries than China). Although the duration of civil cases (in particular patent
cases) is generally quite long in China, it sometimes happens that cases come up for trial
very quickly, which can make it difficult to adduce evidence created overseas, especiallysince time-limits in China are maintained quite strictly and it takes about 2 months to haveevidence notarised.91
Another procedural requirement that poses a burden to protection is that the Customs
Implementation Regulation92 imposes a deadline of three days for a right holder to apply
for seizure of suspected infringing goods held by Chinese customs. If the rights holder
does not take action within that limited time frame, the goods are not detained bycustoms. That provision is questionable in the light of Article 41 (2) TRIPs, which statesthat procedures concerning the enforcement of IPR shall not be unnecessarily
complicated or costly, or entail unreasonable time-limits or unwarranted delays.93
No serious problems have been noted regarding unbalanced procedural requirements
concerning South Korea.

89

Stanley Lubman, ‘Prospects for the Rule of Law in China After Accession to the WTO,’ 1999, available at
http://www.law.berkeley.edu/institutes/csls/lubmanpaper.doc.

90

A possible solution could be to reorganise the judicial system so as to allow judges to stay longer in the91

See D. Friedmann, lc, p. 44.

92

See Article 21 Customs Implementation Regulation 2004.

93

See D. Friedmann, lc, p. 39.

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same place and position to be able to build up expertise with IP cases in the field of a certain technology.

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3.2.6.

Lack of enforcement tools

Article 43 (1) TRIPs states that although the plaintiff has the responsibility to substantiate
its claim, the judicial authorities should be able to order the opposing party to hand overevidence which is under their control. Although that requirement is implemented by
Chinese Civil Procedure Law,94 the workload of the courts is so excessive that thepossibility to obtain evidence for the other party becomes illusory.95 The understaffing
also results in unwarranted delays.96
The potential efficacy of customs control is seriously undermined by a lack of manpowerboth in China and South Korea. Although the number of infringement cases handled by
Chinese customs has increased over the last years, approximately only 4% of the
products leaving China are physically checked at over 300 ports.97
Likewise many cases that meet the criminal thresholds98 are not prosecuted,99 becauseof a lack of manpower.100 One could even question whether China acts in conformity with
Article 61 TRIPs, which requires Members to provide for criminal procedures andpenalties to be applied at least in cases of wilful trademark counterfeiting or copyrightpiracy on a commercial scale. The remedies available should also include imprisonment
and/or monetary fines sufficient to provide a deterrent. If the criminal procedure isfollowed in China – which only happens scarcely – prison sentences are often not served
and fees not paid, which hardly serves as a deterrent for criminal behaviour.

94

See Article 64 Chinese Civil Procedure Law.

95

Also see D. Friedmann, lc, p. 23.

96

A patent case can, for example, take four to seven years to complete. A good example is the Chinese
Viagra-case, where Pfizer sued a Chinese company for infringement on its patent for the pharmaceuticalproduct Viagra. Despite the long duration of the case (already 6 years), the judge has not granted any
injunctive relief. Since the patent already expires in 2011, that means that Pfizer will – even if it wins thecase – hardly be able to obtain any return on its patent. Unwarranted delays are prohibited by Article 41(2) TRIPs.

97

See D. Friedmann, lc, p. 35.

98

The valuation method used also has a significant influence on the question whether the case meets thecriminal liabilities thresholds. See E. Papageorgiu, C. Bailey, ‘Effective intellectual property enforcementin China’, BMM bulletin, volume 113, no. 1/2007, p. 7.

99

Less than one percent of the total trademark and copyright cases handled by administrative authorities
were turned over to the PSB for prosecution in 2005. See D. Friedmann, lc, p. 51.

100

Other reasons are a reluctance of administrative officials to transfer the case to the criminal enforcement
route, because they are assessed by the number and size of successful cases or because of local

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protectionism.

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Equally in South Korea, criminal prosecution of patent infringements is rare, mainly due toa lack of human resources and expertise.101

3.2.7.

Low amount of damages and fines in case of infringement

Apart from the relatively high costs of litigation in China,102 foreign companies have hardly
succeeded in receiving an adequate level of damages (despite the fact that the Chinese
Trademark Law103 and the Chinese Patent Law104 have implemented Article 45 (1) TRIPs
that requires the infringer be ordered to pay the rights holder adequate damages). In caseof infringement, compensation is defined to include either an account of profits or thelosses incurred by the party during the period of infringement. However, in cases where
the amount of compensation is difficult to determine, the statutory damages are limited toan amount of Rmb 500,000.105 If the judge also orders the destruction of the infringing
products, which is to the discretion of the court, IP holders are often also required to bear
the costs of destruction.
Furthermore, neither the Patent Law nor the Patent Implementing Regulations provide foraward of attorney’s fees to a plaintiff in a patent infringement case (which can – due tothe complexity of patent cases – be very substantial). Attorney’s fees are usually notawarded in China.106 Another reason why China’s IP laws do not guarantee that theplaintiff can recover his damages is that the infringer may have no or hidden financial
resources.107
The administrative enforcement route does not have a real deterrent effect either, since
usually only low fines are imposed. The fines are often kept artificially low because many
administrative authorities do not treat the infringing goods as having the value of thegenuine articles, but rather establish value based on the price charged for the counterfeit
or pirated goods. Moreover, evidence showing that a person was caught warehousing
infringing goods is not sufficient to prove an intent to sell them, which means that
101

First, often the police has difficulty understanding the relevant technologies. Second, unless the patent
infringement case is simple and very strong, prosecutors are very cautious with issuing indictments.

102

Especially the costs of investigation and bringing cases for civil litigation are relatively high, in particular
the civil enforcement of patents. Court costs may also be expensive, since court filing fees are calculated
as a percentage of the plaintiff’s claim. See M. A. Powelson, G. Li & E.J. Kelly, ‘Getting the Black Market
to Knock It Off: Strategies to Enforce Trademark Rights in Asia’, May 2006, p. 7.

103

Article 56 Trademark Law.

104

Article 60 Patent Law.

105

Article 56 Trademark Law.

106

AIPPI China Group, ‘Punitive Damages as a Contentious Issue of Intellectual Property Rights’, Q186,
2005, p. 2.

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107

See D. Friedmann, lc, p. 23.

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administrative authorities do not include those goods in the value of the infringing goods
when determining the fine amounts.108 Also the fines that can be imposed by customs are
relatively low. The Implementing Regulations for the Imposition of Administrative
Penalties by the General Administration of Customs, provide for fines not to exceed 30%of the value of the goods confiscated, or Rmb 50,000, whichever is lower.109
In contrast with the relatively low fines imposed on Chinese IPR infringers, the Chinese
courts have awarded high fines against foreign companies. One of the Chinese courts,
for example, has ordered the French company Schneider Electric to pay a Chinesecompany € 31m in damages for infringing its patent, the largest amount ever awarded in
an intellectual property case in the country.110
The conclusion that enforcement problems form the most important burden to protection
is in line with an earlier survey conducted by the WIPO in 2002, which clearly showedthat the basic principal barriers to eliminating counterfeiting and piracy do not exist
because of the substantive law but rather in the remedies and penalties available (or notavailable) to stop and deter counterfeiting and piracy The ineffectiveness of theenforcement system is often due to a lack of human resources, funding and practicalexperiences in IP enforcement of relevant officials, including the judiciary; insufficientknowledge on the side of the right holders and the general public, concerning their rights
and remedies; and systematic problems resulting from insufficient national andinternational coordination, including the lack of transparency.111
Similarly in South Korea, damages awards in civil litigations in case of a patent
infringement often appear to be too low to be effective.

3.2.8.

Future outlook

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Notwithstanding the serious current enforceability problems in the Far East, these
problems are expected to diminish once the IP systems in South Korea and – in particular– China mature, mainly through more and more experience with IP protection andlitigation in that field. Especially when companies in those countries start carrying out
more innovation themselves and when it is noticed that big companies stay away

108

See US Trade Representative, 2005 Report to Congress on China’s WTO Compliance, p. 72.

109

See US Trade Representative, 2005 Report to Congress on China’s WTO Compliance, p. 68.

110

See ‘China fines Schneider €31m’ in the Financial Times, 1 October 2007, p. 19.

111

See IPR-Helpdesk, Guide to border Enforcement of IPRS in the EU, p. 9f.

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because of the ‘unfriendly’ investor climate,112 the importance of an adequate andeffective IP protection will also be felt in those countries.113 China and South Korea havealready become more innovative in the last years.114
There are signs that the standards of IP protection in China (and South Korea) are
gradually rising:In a recent trademark infringement case involving the trademark holder “Lacoste”
and three Chinese companies the Beijing People’s Court ruled in favour of theFrench apparel company, ordering the defendants to pay $ 97,500 in damages.
The case is encouraging for trademark proprietors, since it demonstrates
willingness on the part of local administrations for industry and commerce toinvestigate trademark infringement complaints and impose fines on infringers.
The amount of damages awarded also sends a clear message that theauthorities are serious about clamping down on infringement.115

In September 2007, the Supreme Court in Beijing upheld the Zhejiang Provincial
High Court ruling ordering Chinese motorcycle manufacturer Zhejiang Huatian to
pay Rmb 8,3 m to Yamaha of Japan for infringing its trademark.116



Already the vast majority of IPR cases in Chinese courts concern exclusively
Chinese parties. The risks to public health and consumer safety incurred byfrequently unaware purchasers, will also be an important reason for a stricter IP
protection, since consumers in those countries are particularly exposed to salesof these dangerous products.

112

Research by the OECD also shows that strong patent rights have a positive effect on foreign trade,unless excessive levels of strength are achieved (see the report ‘The impact of trade-related intellectual
property rights on trade and foreign direct investment in developing countries’ of 28 May 2003
(TD/TC/WP(2002)42/final), p. 4).

113

Companies in the Far East already start making more and more use of the existing possibilities of IPR
protection themselves. E.g. the South Korean concern LG Electronics has recently sued the Chinese
television manufacturer TTE for infringement of its patents in the field of digital television.

114

The UN Agency for IP has made public that the number of patents that have been applied for from China,
in 2005 rose by 33% in comparison to the year before. With 420,000 applications, China ranks third
behind Japan (approx. 420,000 applications) and the United States (approx. 390,000 applications). The
patent applications by South Korean companies doubled between 1995 and 2005.

115

See ‘Lacoste Case is evidence of Protection for Well-Known Brands’, International Law Office 1 October
2007.

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116

See ‘China fines Schneider € 31m’, Financial Times of 1 October 2007, p. 19.

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Effective enforcement of IP rights is also essential in order to attract foreign investment,
transfer of technology and know-how. Moreover, it is an indicator of international
credibility and respect of the rule of law. Finally, in the mid-to-long term, it will encourage
more domestic authors, inventors and investors and contribute to the development ofthese countries.

3.3.

Effective protection: some guidelines

Having regard to the foregoing, the question may raise as to what is the most effective
tool or manner to protect the knowledge and innovations of a particular company that is
active in the shipbuilding sector. There is no easy answer to that question, as the answer
will depend to a high extent on the specific circumstances of the case at hand. Thissection nevertheless aims to set out some practical guidelines that may be of help tocompanies that are considering protecting their technology.
Firstly, it is important to note that it may be possible to use more tools of IP protection at
the same time, e.g. patent protection for the technological invention itself, design
protection to protect the shape and trade secret for the process. Such a combination oftools (layers of IP) will normally ensure better protection (although possibly at higher
costs), as it enables a company to match each innovation with the tool best suited toprotect it. Even though such a layered approach might not entirely take away especiallythe concerns related to enforceability, it could nevertheless help an individual company toensure better and more effective protection for its innovations.
Secondly, the advantages and disadvantages of contractual protection deserve somefurther attention. As was noted in the previous chapter,117 trade secrets (non-disclosure
contractual clauses) have some important advantages compared to the classicalinstruments of IP protection (relatively low costs and little delay, broader scope, often
lower litigation costs, focusing awareness). Despite these advantages, protection by trade
secret is not always the most effective protection strategy.
Especially in the shipbuilding sector – where inventions often inevitably become publicly
available soon after the ship is finished (or even before118) – it can be more beneficial to117

See section 2.2.1 above.

118

The risk that information becomes available is substantial, due to the many players that are involved in
the manufacturing process, the assessments by different classification societies, necessary maintenanceetc. In big companies a great deal of the work can be done 'within the concern’ which can diminish therisk of leakage to outsiders (an example is the company Odense that almost exclusively works for mother49100201/2285043.12

company Maersk).

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be able to resort to classic IP protection that can be invoked against any infringing party
and not (as with trade secrets) only against the persons that have breached theircontractual non-disclosure obligations. Of course, trade secrets can still be useful for
specific processes that are difficult to copy, such as integrating systems and complicatedprocesses (which is especially important for yards). Although process-related inventions
are also eligible for patent protection if they fulfil the criteria of novelty, inventiveness andindustrial application, that will usually not be the case for the mere assembly of existingproducts for lack of the required degree of innovativeness.
Some market players have indicated that they prefer not to apply for a patent, becausethat necessarily entails that their invention will be revealed to others (patent information is
publicly available) which would make it even more vulnerable for copying. However, it
should be borne in mind that the fact that patents are made publicly available also
benefits the industry as a whole, because the consultation of patent information can
prevent companies from spending time and money on the R&D of products that alreadyexist. Often creation that occurs is innovation that follows on other innovation, whichmostly required some access to the learning of the first innovation.119
A factor that is also worth considering when assessing whether to apply for patent
protection or to choose for contractual protection, is whether the (expected) benefits ofpatent protection will outweigh the (expected) costs of patent protection. In fields where
innovations are made in rapid succession, a patent may become outdated within arelative short time period. In that event, it is not obvious that patent protection is the most
(cost-)effective way of protection. For that reason technological companies sometimes
refrain from applying for classic IP protection and try to take the utmost advantage ofbeing ahead of their competitors for a short time. If the gains from protecting ideas arelower than the gains from sharing them, it is recommendable to do the latter.120
Thirdly, for certain actors in the shipbuilding sector it may be worth considering IP
aspects when designing a new product or a production process. In practice rather
complex or unique products and processes will generally run a lower risk of being copied.
Although such ‘technical’ solutions are not available to all market players, in some cases
it may be a useful instrument to deter possible infringers.

119

See Susan DeSanti, ‘Antitrust, Intellectual Property and Innovation: another view’ in Hugh C. Hansen,
International Intellectual Property Law & Policy- Volume 6, p. 99-3.

120

See A. Pianon, ‘Trade Secret vs. Open Source’, ELER 2004, p. 61, who rightly states that all instruments
aimed at protecting and “fencing” ideas (both classic and contractual IP protection) are artificial

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constructions of the legal system, which entail administration and litigation costs.

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49100201/2285043.12

Lastly, it is submitted that trademarks may be broader applicable than their current use in
the shipbuilding industry suggests. This study reveals that some shipyards and marine
equipment suppliers already consistently mention their protected trade name on theirproducts whenever possible, so that when a competitor copies its product, this normally(also) constitutes an infringement of trademark law. Given that (i) most companies will
have registered trademarks anyway; (ii) trademarks are normally quite cheap and easy toapply to products; and (iii) a trademark infringement is often relatively easy to prove, thisexample may be worth following.

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4.

Knowledge, innovation and IPR in the shipbuilding industry

This chapter focuses on the relevance of knowledge, innovation and IPR in the
shipbuilding sector. By means of introduction some key concepts relating to knowledge
and innovation are outlined, before turning to the meaning of these concepts in theparticular shipbuilding context. Then the practical use that the industry makes of theexisting instruments of IP protection will be discussed, mainly based on the outcomes ofthe field and database research that was carried out within the framework of this study.
Finally, an alternative or complementary way of looking at innovation and the interactionof companies will be introduced.

4.1.

Knowledge and innovation: some key concepts

Knowledge and innovation are considered more and more as drivers for growth. The
impact of innovation on export capabilities and economic performance is deemedsignificant.121 These concepts are normally defined as follows:Knowledge can be defined in several ways. Usually a distinction is madebetween know-how (referring to explicit knowledge) on the one hand, and knowwhat (referring to implicit knowledge) on the other hand. Even though both typesof knowledge are obviously important, the latter type has become increasingly
important given that information comes and goes faster and faster. Know-what is
primarily embedded in human capital.



Innovation can be seen as a measurement of the changes in knowledge base.

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The strengths and weaknesses of innovation can be monitored by five key dimensions ofinnovation.122 The five dimensions are:


Innovation drivers: indicators on human resources notably the structural
conditions required for innovation potential;Knowledge creation: measures of the investments in R&D activities, consideredas key element for a successful knowledge-based economy;

Innovation & entrepreneurship: measures of the efforts towards innovation at thelevel of firms;

Application: measures of the performance, expressed in terms of labour andbusiness activities, and their value added in innovative sectors;

121

See for example the European Innovation Progress Report, EC DG Enterprise and Industry, 2006.

122

European Innovation Scoreboard-Inno Barometer.

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

Intellectual property: measures the achieved results in terms of successful knowhow.

In this study the emphasis mainly lies on the issues relating to the fifth dimension of
innovation: intellectual property which measures the achieved results in terms of
successful know-how. This may, in turn, lead to the establishment of intellectual property
rights.123 For the purpose of this study, a knowledge ‘leakage’ is defined as the action oftransferring information or knowledge to third parties without the explicit permission ofthat company.
Innovation is often a result of research and development (R&D) efforts or learning-bydoing. Innovation can be related to products or services, logistics, marketing, internal
processes, changing a business model, etc. Clearly, breakthrough product-innovations
are most easily viable, but their occurrence is relatively limited.
The concept of innovation efficiency measures how good countries are at transforming
their innovation assets (education, R&D and innovation expenditures) into innovation
results (turnover coming from new products, employment in high tech sectors and/or
patents).
Additionally, it is useful to distinguish between incremental innovations (small changes
which help to perform better) and radical innovations (which are new to the world). Thus
innovation includes both the development of ‘new’ knowledge, and the innovative
combination of existing knowledge with the objective to provide new concepts that are thebasis for new processes, products and, increasingly important, new services.
Figure 4.1 on the next page visualises the RD&I (research, development and innovation)
chain for knowledge-intensive industries.

123

Defined in chapter 2 as rights granted to creators and owners of works that are results of human

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intellectual creativity.

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Figure 4.1: RD&I chain for knowledge-intensive industries

Source: Brainport, 2007

4.2.

Particularities of the European shipbuilding industry

As a general proposition, it can be said that the shipbuilding industry has a positive
attitude towards innovation and is indeed rather innovative. There are several indications
supporting this assumption.
In the first place, the 2006 Innobarometer of the European Commission revealed that
50% of the whole EU-25 economy is pro-innovation. This barometer also indicated thatindustry – including shipbuilding – is on average more innovative than other (nonICT/computer related) services. Furthermore, the ‘transport equipment’ (NACE DM)124
and industry related to ‘machinery and equipment not elsewhere classified’ (NACE DK29) on average are rather innovative. An investigation in 2000 with regard to theinnovativeness of the Dutch Maritime Cluster found that about 58% of the shipyards could

124

NACE DM includes DM 35.1 (shipbuilding), but also DM 35.2 (railway) DM 35.3 (aerospace) and DM 35.4

49100201/2285043.12(vehicles). See also section 5.2 below.

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be labelled as pro-innovative, whereas this would be somewhat more for the marine
equipment industry.125
Moreover, the European shipbuilding industry has put its shoulders to the LeaderSHIP
2015 programme. Crucial in this regard is a focus on innovative measures and concepts
in order to enable the industry to maintain or retain its market position. Much attention
goes to shipbuilding manufacturing processes as well as the environmental protection
systems (painting systems, ballast water management, monitoring of hazardous
materials). The shipbuilding industry and the European Union jointly support innovative
efforts. Through the LeaderSHIP 20015 the parties involved aim at creating morefavourable conditions to stimulate innovation, with attention being paid to fields such as
education, employment, level playing field, financial and guarantee schemes, protectionof IPR, etc.
Typically, innovations in the shipbuilding industry are found in the processes and designof the ships, and are mostly related to the development and diffusion of knowledge on the
one hand and application on the other hand. In addition, yards often share technologicalknow-how with their suppliers and vice-versa. Shipyards and marine equipment suppliers
often work closely together from the start (design stage) of the building of a new ship.
These parties therefore often stimulate and influence each other to a high extent.
Consequently, the yards and the suppliers often know about or are familiar with eachother’s technological know-how and know-what. Moreover, it is not always clear to all theparties involved to what extent an innovation can legitimately be claimed by a particularparty. Taking into account that especially marine equipment suppliers often supply parts
to different (international) shipyards and thus have relationships with several competing
yards, clear and comprehensive agreements are necessary to prevent disturbed
relationships.
On the other hand, the shipyards are often able to use the latest technology because of
the innovations of the marine equipment suppliers. It is particularly relevant to note in thisregard that many marine equipment suppliers are also active to an appreciable extent inother sectors, such as aerospace, aviation or heavy industry. This enables these
suppliers to use knowledge in and from different kinds of areas, which enhances
innovation.

125

De innovativiteit van de Nederlandse maritieme cluster, Dutch Maritime Network Series no. 16, 2000

49100201/2285043.12(NML 2000a).

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Independent research centres and (technical) universities are often also involved in the
shipbuilding process and support or participate in the innovation efforts as ‘knowledge
providers’. One could for example think of the testing of new parts or products, such asmeasurements of extreme forces, sea keeping performance, design and used materials,
noise and vibrations, and resistance.
In the past, innovation in the shipbuilding industry has often been re-active. Nowadays,
much of the European shipyards are becoming increasingly pro-active to meet theircustomer’s needs. Even though innovation in shipbuilding can be related to all ship
elements, the main fields of innovation are related to the propulsion and other machinery,cargo handling systems, ship design concept, steel construction, hull design andstructure, logistic integration and system integration.126

4.3.

Ship elements

A ship can be seen as being comprised of elements related to floating and sailing on the
one hand – hull, propulsion (including steering equipment) and stability system – anddifferent supporting systems related to the function and type of ship on the other hand.127
Innovation in shipbuilding is related to all ship elements but the main fields of innovation
are related to shipbuilding process, propulsion and other machinery, cargo handlingsystems, ship design concept, steel construction, hull design and structure, logistic
integration and system integration.
The various ship elements with innovation examples are listed in table 4.1 on the next
page, covering both past and on-going R&D projects.

126

See section 4.3 below.

127

Following the conceptual approach as in the courses ‘Shipbuilding’ of Delft Technical University / VNSI,
the elementary parts of a ship to be distinguished are hull, propulsion (including steering equipment) andstability system. These elements are necessary for the functions floating and sailing which are common
for all types of ships. Depending on the type of ship and its purpose (carrying goods and/or people)
different supporting systems are to be added. From a yard’s perspective the parts usually are categorised
from a cost breakdown approach. In that respect ‘materials costs’ (hull, propulsion, cargo handling),‘labour costs’ (production, sub-contractors, design, administration), ‘ship-specific financing costs’ and49100201/2285043.12‘other direct costs’ are to be distinguished.

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Table 4.1:

Basic ship elements and examples of innovation

Ship element
Environmental protection system

Hull

Propulsion

Examples of innovation–

Painting systems–

Ballast water management–

Monitoring of hazardous materials–

New shapes–

Double hull–

Air-lubrication–

Noise and vibration reduction–

Fatigue–

Light strong materials–

Screw design–

Screw without propeller shaft–

Alternative–

Development of engine components–

Hydraulic stabilisers–

Stability tank systems–

System integrations–

Safety measures–

Automation and monitoring–

Air-conditioning–

Waste disposal–

Life saving

systems(e.g.,

newenergysources; sails)
Stability system

Central commanding (bridge)

Ship board systems

Power generation
Navigation
Loading and unloading system
Shipbuilding manufacturing process–

Emission reduction–

Safety redundancy–

Radar instruments–

Integration bridge system–

Remote operation–

Cargo handling (RoRo, dry and wet, heavy)–

Joining techniques–

Modularisation

Source: Policy Research Corporation in cooperation with the CESA IPR expert group

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The hull can have many different shapes. Small changes can make a shape different,
which means that this ship element cannot always be protected easily. On the other
hand, specific coatings or technological innovations like air-lubrication can generally beprotected through patent law. Other examples of innovations that will, in principle, be

55/158－ 86 －

protectable are the double hull or new designs which reduce noise and vibrations.
Besides the use of patents, there may also be scope to protect a certain hull shapethrough design law or copyright.
The propulsion is an important and complex ship element which has a great impact on
speed, noise, air-pollution, weight and space. This element typically represents 10 to 30%of the total value of a ship. In some cases it can be said that propulsion is the main
innovative element of a ship. These innovative efforts are, for example, related to thedevelopment of engine components and light but strong materials. Patenting appears tobe the most obvious protection mechanism here. The steering equipment is rather
innovative as well. Although the hardware components like the screw, shaft and wheel
are innovative and offer scope for being copied, the software integrating other functionsof the bridge is rather complicated and is therefore more difficult to copy. An importantpart that counts many innovative efforts is the screw design, which has an impact on theresistance and the noise of the ship.
The stability system is generally speaking a low innovative element, which means that
there is generally only limited scope for protection through classic IPR. Because theimpact on the environment can be considerable, however, the ballast water management
is subject to innovation. The same applies to hydraulic stabilisers, for example.
The supporting systems could include the instruments on the bridge, power generation,navigation equipment, loading and unloading systems, or specific equipment related tothe type of ship, such as waste disposal and air-conditioning systems for cruise vessels.
Some of these parts may be highly innovative and can represent up to 35% of the total
value of a ship. The more complex the production process of the product or thenecessary integration of the products (e.g. navigation equipment which includes
hardware and software), the more difficult and expensive it will often be to copy. Standalone components can be copied most easily, followed by the subsystems. Total
systems, including software, generally offer less scope for being copied, because of thehigher degree of complexity. It also occurs that shipowners explicitly demand their
shipbuilder to install original, non-copied components. This is done to reduce risks and toensure that maintenance can be carried out worldwide.

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The level of innovativeness is certainly related to the type of ship concerned. For a typicalship that on average consists for 70% of parts purchased from equipment suppliers, amore detailed cost breakdown analysis reveals that 20 to 30% of the ship's value can

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reasonably be labelled as innovative.128 Although the value of innovations hardly everrepresents the total ship value, it should be stressed that the innovativeness of certain
ship parts can determine whether a ship as a whole will be sold or not – and may
therefore have a crucial impact from a commercial point of view.

4.4.

The use of IPR protection in practice4.4.1.

Protection attitude

The field research conducted in the framework of this study reveals that a clear majorityof the participating shipyards protects their knowledge and innovations to a certain extent
by making use of the existing protection mechanisms. Shipyards point out that the main
reason for not using protection mechanisms is the unawareness of the possibilities andthe value of solid legal protection. Much of the (process) innovation development is partof the daily business, and some companies seem to be unaware of the long-term benefits
from protection of these innovations.
About 30% of the marine equipment suppliers indicate that they generally do not actively
protect knowledge and innovations. Several suppliers indicate that, in their perception,using the existing protection mechanisms does not always result in sufficiently‘waterproof’ protection. The enforcement of intellectual property rights – or rather the lackthereof – is mentioned as being a key problem in this regard.
The finding that not all market players are fully aware of IPR-related risks and possibilities
is, of course, understandable to some extent as most companies will choose to invest
their resources primarily in more direct means of staying ahead of competition. Especiallyfor SMEs this could mean that limited resources are left for mapping (potential) leakages
and taking preventive or corrective measures. This attitude can also be observed in othersectors.129 Nevertheless, the outcomes of the field research underline that, generally,
there is scope for improving awareness.

128

This number of 70% has been indicated by the marine equipment suppliers and confirmed by several
shipyards as an industry rule of thumb. This indicative percentage is also found in Drewry’s report on the
Marine Equipment Market (Drewry, 2002). For reasons of confidentiality of the cost-structure information,
the details of this cost break-down (and the differences per ship type) have not been included in thepresent report. Clearly, as the 70% is an average figure, for certain types of (complex) ships, this mighteven be larger. See also section 6.2 below.

129

See e.g. the Commission Communication on enhancing the patent system in Europe, COM (2007) 165

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final, p. 13, and the Community Innovation Survey CIS-4.

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4.4.2.

Protection mechanisms

Although most shipyards and marine equipment suppliers choose to protect theirknowledge and innovations, the choice for a specific protection mechanism differs. The
yards mainly use contractual clauses to protect information and knowledge throughout
the whole production process. The second mechanism used by the yards to protect
products and (parts of) processes is patenting. Trademarks, design rights and the law of
unfair competition are used to a much lesser extent.
The choice of instruments is somewhat different for the equipment suppliers. Herepatents are the preferred means of protection, followed closely by both contractual
protection and trademarks. None of the responding suppliers indicated to use design
rights (which is not surprising, given that this type of protection excludes the technicalaspects of a design).
Figure 4.2 shows the distribution of the protection mechanisms used by the European
shipbuilding industry. Some of the respondents indicate that they use several protection
mechanisms.
Figure 4.2: Use of various protection mechanisms by the shipbuilding industry

14
12
10
8
6
4
2
0
Contractual
clauses

Patents

Trademarks

Shipyards

Design rights

Marine equipment suppliers

Source: Houthoff Buruma and Policy Research Corporation

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Law of unfair
competition

58/158－ 89 －

No protection

4.4.3.

Leakage destinations

In the inquiry the European shipyards and marine equipment suppliers indicated that inabout 40% of the cases of an observed leakage the destination is a country in the Far
East, e.g. China or South Korea. But according to the respondents, the same percentage
of leakages occurred within Europe. The results from the inquiry, as shown in figure 4.3,
indicate that the leakage problem within Europe may indeed be as prominent as theleakage problem to the Far East.130
Figure 4.3: Leakage destination for European shipyards and marine equipment suppliers

Other
3%

No leakage
19%

Far East
39%

EU
39%

Source: Houthoff Buruma and Policy Research Corporation

4.4.4.

Number of leakages

Figure 4.4 presents the distribution of the number of leakages for the European
shipbuilding industry. In the past five years about 40% of the major yards were confronted
with 2 to 3 leakage cases. One third indicated that leakage occurred between 5 and 10
times. Also, about 20% of the responding marine equipment suppliers detected between

130

Although here it should be noted that one should, eventually, look at who is benefiting in the end from theleakage; when a leakage channel is labelled ‘European’, does not necessarily mean that the final

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destination of the leakage is within Europe (or the Far East, for that matter).

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5 and 10 leakage cases, while 60% states not to have been confronted with any leakage
at all.131
Figure 4.4: Number of leakage cases for the European shipbuilding industry

Shipyards
0
24%

5-10
35%

1
0%

4-5
0%

2-3
41%

Marine equipment suppliers
5-10
20%

4-5
10%

0
60%

2-3
0%
1
10%

Source: Houthoff Buruma and Policy Research Corporation

4.5.

Leakage sources

Infringements on IPR imply that the offender has knowledge about the exact
characteristics of a product or process. Product knowledge can, for example, be obtainedby reversed engineering (the infringer achieves the product and dismantles it whichallows him to measure or determine the characteristics), or on the basis of publicly
available information (such as marketing brochures).
131

For the sake of completeness, please note that not all of the respondents gave concrete examples orillustrations of the leakages. Furthermore, it should be borne in mind that the inquiry mainly covered thelarger yards. Most smaller yards are, generally, likely to have a less profound (protected) knowledge
base, which would imply a larger share of the ‘no leakage’ observations on a sector wide basis. On theother hand, no observation of leakage does not necessarily mean, of course, that there is no leakage.

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This could also signal a lack of awareness.

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Knowledge about products and processes can also be obtained via third parties throughdifferent channels. Such channels are the leakage sources from the point of view of the
shipbuilding industry. In answering the questionnaire both shipyards and marine
equipment suppliers pointed out that they experience leakage of knowledge or
innovations through different channels. These various channels are summarised in figure
4.5 on the next page.
Although this figure demonstrates how frequent a leakage source is determined by the
shipyards and the marine equipment suppliers in the sample, it does not necessarily
represent the impact of the leakage. The economic value of a certain leakage may varywith the leakage source. Consequently, the economic impact of one leakage by a lessfrequently mentioned leaking source could be more cumbersome than the consequencesof leakage by another, more frequently mentioned leakage source.132
Figure 4.5: Leakage sources for European shipyards and marine equipment suppliers

14
12
10
8
6
4
2
0
SupplierOw ner/customerClassification
Societies

Shipyards

Othersources

University/
Research Center

Marine equipment suppliers

Source: Houthoff Buruma and Policy Research Corporation

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132

In chapter 6 below the economic impact of leakages will be further investigated.

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Yards

The Houthoff Buruma and Policy Research Corporation survey indicates that, according
to shipyards, suppliers are the most important source of leakage.133 As was mentioned
before, suppliers and subsuppliers are often involved in the design and the building of aship from a very early stage on. From the point of view of the yards, the suppliers are
expected not to transfer this knowledge to other yards. Nevertheless, in the yards’ opinion
knowledge and innovations are not infrequently leaked via the (sub) suppliers.
Perhaps not surprisingly, the impression that the project partner sometimes leaks
sensitive information is mutual: marine equipment suppliers list the yards as the main
source of leakage. These outcomes illustrate the close collaboration that often exists. To
some extent, suspicions that the other party does not treat ‘its’ business secrets with
sufficient care may therefore be inevitable. These findings could, however, also function
as an incentive to making clearer agreements on who owns what intellectual property(and which aspects are owned jointly). The impression exists that this is not always
sufficiently clear to the parties involved.

Infringements between suppliers (2007)
On behalf of a German yard, a European marine equipment supplier invested in theinnovation of a helicopter elevator for a mega yacht and requested another European
marine equipment supplier to check the calculations. The first supplier now accuses thesecond one that he sold his elevator design to the shipyard, which can now order thiselevator elsewhere (for a lower price) now it possesses the drawings of this innovation. A
lawsuit is currently in progress.

Some shipyards also point to their direct competitors, i.e. other yards, as being a sourceof leakage. Several yards report that they sometimes consider not to subcontract orders
to another yard (partially) out of fear that their knowledge will be used for other purposesby the subcontracted yard, even though this may mean that they will have to refuse anorder of their costumer (e.g. due to a lack of capacity). Obviously, the latter will only occur
in exceptional circumstances, as yards will generally not be inclined to refuse orders. In
any case such statements can be understood as confirmation of the importance that theconcerned yards attach to safeguarding their IPR.
Although the customers or owners do not receive the information about all the suppliers
that were involved in the production of the ship, usually the design blueprints are (or have133

The 2005 CESA survey (see footnote 3) put suppliers on a more equal footing with customers and49100201/2285043.12

classification societies as the most important leakage channels.

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to be) handed over together with the ship. Normally this is done with the legitimate aim ofenabling later repairs and maintenance worldwide. This practice, however, makes it
relatively simple for an owner to ask another yard to copy the ship in order to get a(cheaper) duplicate. The yards indicate that this is the second main source of knowledge
leakage. They also note that it is often very hard to take action against this source ofleakage, because of their business relationship with the customer. Typically, yards only
have a few large customers.

A disincentive to export (2006)
A European shipyard built a dredger for a Chinese customer. After the ship had beendelivered, the Chinese owner invited several shipyards to tender for the production of
more, identical dredgers. The European yard failed to win this second contract, but was
confronted with a nearly exact copy of its ship in a magazine after a certain time. At the
moment, the shipyard is preparing a lawsuit and has decided not to export complex
vessels or elements to China anymore.

For the equipment suppliers, this alleged leakage through (final) customers seems less of
an issue. This can be explained by the fact that their customers are often the yards, andnot the end users of the ship.
Both yards and suppliers point to classification societies as a notable source of leakage.
Classification societies are organisations which develop and apply technical standards tothe design, construction and assessment of ships (and other marine facilities) and whichcarry out survey work on ships.134 Flag states often authorise classification societies forthe inspection and statutory certification of their ships. The main issues here is that yards
and suppliers are obliged to give the classification societies a profound insight into theworkings of their (innovative) products in order to get the product, or the ship as a whole,approved. Although it is undisputed that classification societies need to have a sufficientinsight in order to perform their tasks, it is less evident that the classification societies
indeed need to receive all the information they currently require. This does not always
seem to be the case. The question as to which information classification societies actually
134

There are more than 50 organisations worldwide which define their activities as providing marine
classification, but only 13 classifications societies are presently recognised by the EU. These are: Bureau
Veritas (BV); China Classification Society (CCS); Det Norske Vertias (DNV); Germanische Lloyd (GL);Hellenic Register of Shipping (HRS); Korea Register of Shipping (KR); Lloyd’s Register of Shipping (LR);
Nippon Kaiji Koykai (NK); Polish Register of Shipping (PRS); Registro Internacial Naval (Rinave);
Registro Italiano Navale (Rina) and Russian Maritime Register of Shipping (RS). See OJ C 135/04 of 19

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June 2007 and www.emsa.europa.eu.

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need in order to perform their tasks is particularly relevant given that several yards andsuppliers feel that the classification societies do not treat sensitive information with
sufficient care and confidentiality.135
Several companies point forcefully to the combination of functions of many classificationsocieties: on the one hand they act as de facto public bodies testing, certifying andregistering products and ships, while on the other hand they perform a range of purelycommercial, consultancy type of services. To the extent that classification societies haveseparated (de facto or de iure) these two roles, the contacted shipbuilding companies areoften of the opinion that that such ‘Chinese walls’ mean little in practice.136 On the other
hand, it should be noted that to date only little proof can be shown of these often strongly
held beliefs.

The role of a classification society (2006)
A European shipyard has developed specific arctic ship technology. The yard indicatesthat a classification society received information and documentation about this technology
and forwarded this to a Korean yard. This Korean yard even published elements of thisinformation in their brochures. The European yard discovered this and approached the
Korean yard about the matter. The issue is now under consideration.

Another source of leakages that has been identified in the inquiry is universities andresearch centres. These institutions are often hired to test specific innovations during thedesign and construction process, which provides them with information on new
knowledge and innovations. Some claim that these parties use this information in otherresearch requests or in their own investigations. There appears to be, however, little
proof to support this claim. More generally, this issue does not seem to be a crucial
leakage vehicle to most shipbuilders and equipment providers.

135

SMEs may be affected in particular, as they (in cases where they are sufficient aware of the problem ofpotential leakages) often lack the bargaining power vis-à-vis the classification societies to negotiate andimplement adequate contractual clauses or to take other measures.

136

A related complaint with regard to the classification societies is that, in testing and certifying new
products, they do not always apply equal standards. In particular, this is said to imply that sometimes
products of inferior quality or copied products are tested and certified. Allegedly it also occurs that certain
marine equipment products (particularly the smaller products) that are tested are not the same as the
products that are eventually applied onboard the ship. This may not only result in unfair competition, but

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also in safety and liability risks.

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The last category of leakage vehicles consists of other sources. This category includes
leakage through consultants, designers or employees of the yards and the suppliers.
Consultants and designers are generally in a similar position as suppliers. Examples ofleakage by employees can be the result of corruption, or a change of employer. Withinorganisations the awareness of the importance of protecting intellectual property is often
not recognised at all levels, and employees sometimes simply seem to share information
too easily (e.g. at congresses or during contacts with third parties). Furthermore,
technological information is sometimes disclosed through joint venture partners. It has
occurred several times that, after a successful cooperation, the business partner, e.g.
from the Far East, later ran off with the obtained know-how.137

Leakages through third parties (2004)
A European shipyard developed the technology for an artic ship to make it double acting.
The yard obtained a patent on this technology. However, a European ship design
company is said to have transferred information about this technology to a Singaporean
shipyard and to European propulsion suppliers, which built three vessels based on thistechnology. The information was also leaked to a Korean yard, a Korean governmentorganisation and a European propulsion supplier which now have one ship underconstruction, using this double acting ship concept developed by the European yard. The
case is currently under investigation.

4.6.

Use of patents

Based on the outcomes of the inquiry discussed above, patenting can be considered theclassical instrument of IP protection (i.e. excluding contractual clauses) that is most often
used by the shipbuilding industry. Therefore, further research has been done into the useof this instrument.
Figure 4.6 on the next page visualises the number of patents owned by around 80 major
European shipyards and marine equipment suppliers according to the Espacenet

137

There are quite a number of shipbuilders and equipment suppliers that have engaged in such a jointventure type investment in China. A recent example is that of a joint venture between the China
Shipbuilding Industry Corporation group (China Shipbuilding), through Quingdao Qiyao Linshan Power
Development Company Ltd, Wärtsila Corporation of Finland and Mitsubishi Heavy Industries Ltd.,
creating the new company Quingdao Qiyao Wärtsila MHI Linshan Marine Diesel Compay(COMP/M.4286, approved by the Commission on 24 April 2007). The joint venture is active in the49100201/2285043.12

manufacturing and marketing of two-stroke low-speed marine diesel engines.

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database. Most of these patents are related to the propulsion, power generation andloading and unloading systems.
Figure 4.6: Number of patents of European shipyards and marine equipment suppliers

Number of major companies

50
45
40
35
30
25
20
15
10
5
0
0

1-5

5 - 2525 - 50

50 - 100> 100

Number of patents

Source: Houthoff Buruma and Policy Research Corporation based on Espacenet patent database

This database research indicates that the majority of the yards and marine equipment
suppliers that do own patents only have a relatively limited number of patents in theirintellectual property portfolio. The parties that possess a more substantial number ofpatents (over 25 patents) tend to be the bigger yards and suppliers, as is to be expected.
The relatively high proportion (over 50%) of yards and suppliers that do not appear topossess any patent at all may be more striking. It can reasonably be assumed that – withsome notable exceptions – small and medium-sized enterprises often only own a limited
number of patents at most.
This relatively low share of patents is in line with earlier research, which shows that –depending on the sector involved – companies often give priority to pursuing businessstrategies such as sales or service efforts, being first with an innovation, the ability tomove quickly up the learning curve, and secrecy, rather than obtaining the maximum
number of patents.138

138

Richard C. Levin et al., Appropriating the Returns from Industrial R&D, Brookings Papers on Economic
Activity p. 783, 795-96 (1987). See also Susan DeSanti, ‘Antitrust, Intellectual Property and Innovation:
another view’ in Hugh C. Hansen, International Intellectual Property Law & Policy- Volume 6, p. 99-3 andher reference to Wesly M. Cohen & Richard C. Levin, ‘Empirical Studies of Innovation and Market
Structure’ in Richard Schmalensee & Robert Willig (eds), Handbook of Industrial Organization 1989, p.

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1059, 1092-93.

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4.7.

Measures to reduce leakages and reasons for non-protection

All in all, the outcomes of the field and database research lead to a rather mixed picture.
On the one hand, shipyards and marine equipment providers tend to use both classicaland contractual ways to protect sensitive information. Moreover, they generally feel thatsuch protection is important for their competitiveness. About 70% of the shipyards andmarine equipment suppliers who experienced loss of knowledge through leakages
indicate that they do take certain measures in order to prevent leakage of knowledge.
These measures are of a diverse nature and vary from putting a radical stop to delivering
complex products to (Asian) countries to initiating law suits, sometimes with the partial
aim of establishing a reputation in the industry of not being afraid to go down this road.
The most cited measures, however, aim at increasing the awareness of a company’s
employees of the value of knowledge, whether this knowledge is legally protected or not.
On the other hand, it can be concluded that the shipbuilding industry does not always
fully exploit the protection mechanisms that are at its disposal to the highest extent legallypossible. In chapter 3 some possible burdens to effective IP protection were sketched.139
The field research confirms that many of these factors are in practice indeed a reason forcompanies not to protect their knowledge and innovations. It is to be expected thatcompanies strike a particular balance between (perceived) risks and (expected) costs;
from the inquiry it appears that the costs of protection are often considered too high inthis respect.
A further reason for non-protection appears to be a lack of awareness, both with regard to
the advantages and disadvantages of the available options to protect sensitive data andwith regard to the potential risks that may come with non-protection. The balance struck
between risks and costs referred to above sometimes appears to be based on rather
general assumptions, and not always on detailed factual or legal information. As has
been noted before,140 it is understandable and not typical for the shipbuilding sector that
especially SMEs may decide to dedicate their (limited) resources primarily to more directmeans of staying ahead of competition. Nevertheless, the outcomes of this study
underline that increasing the level of awareness of IPR-related issues, especially for
SMEs, can be valuable in addressing the challenges that exist at present.

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Furthermore, some innovative companies point to the obligatory publication that is often
implied in acquiring protection. Especially in combination with the problems ofenforcement that exist in the Far East – which many see as the most urgent problem in139

See section 3.1 above.

140

See section 4.4.1 above.

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this regard141 – this makes a significant number of companies decide not to apply forprotection in the first place. Often these companies prefer to dedicate all their time,energy and resources to innovating faster than their competitors, rather than investing too
much in establishing an expanded range of IPR.

4.8.

Knowledge and innovation trends

Over the years, the time to market innovations has become shorter. A useful innovation
today can be outdated tomorrow. Just working harder does not always guarantee
companies that they will stay ahead of competitors, whereas this could undercircumstances be achieved by working smarter and more efficiently. Furthermore, today
there is often a growing mobility of highly experienced and skilled people, a growing
presence of private venture capitalists, a decreasing time to market products andservices, and generally more demanding customers and suppliers.
For many decades, what can be described as the ‘closed innovation landscape’ has been
the basis for industrial or commercial success. This model implies that companies
generate their own ideas, which serve as the basis on which they then further develop,
build, market, distribute, service or finance. This generally makes these companies
internally focused and strongly self-reliant. From the perspective of a closed innovation
landscape, diffusion of knowledge is a threat because the ideas that start in a firm andsubsequently leak out (free-riding) can no longer be converted into cash. Consequently,
the incentives to invest in research and development diminish, causing the scope for vital
discoveries and breakthroughs to become smaller.
‘Open innovation’ takes quite a different approach towards the current trends sketchedabove.142 Broadly speaking, open innovation takes these trends into consideration andaims at making optimal use of factors external to the company. Companies can stimulate
each other to invest in R&D and seek the market for innovations that have no value forother companies, but may have high potential for themselves.
Open innovation is, however, not to be misunderstood as ‘publicly available’. It moregenerally provides a means to save costs and get rights to use the information gained,141

See section 3.2 above.

142

The concept of open innovation has received much attention over the last five to ten years. Openinnovation (2003) by H. Chesbrough can be seen as one of the main reference works in this field. See
also U. Suthersanen, G. Dutfield and K.B. Chow, Innovation without Patents (2007), in which it isdiscussed to which extent innovations should or should not be protected, and the implications this has

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upon the ability of local manufacturers to learn to innovate.

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while, clearly, pure ‘application’ driven research largely remains company specific.
Moreover, it offers the additional advantage that technology that is not used can be
developed further and more rapidly than otherwise would have been the case. In that way
the innovation processes can be accelerated through mutual gain.143 This openinnovation approach to R&D still finds its roots in classic IP law, but sees IP as a solution
to commercialise a new technology or product instead of a static proprietary concept.144
Companies are increasingly embracing open-innovation principles.145 Patent auctions
are, for example, a way to facilitate such IP-related transactions.146 Moreover, bigcompanies (such as Microsoft and Philips) now often share some of their knowledge withother companies by entering into patent pooling arrangements. Patent pools involve two
or more patent holders contributing patents to a pool and offering multi-patent licences.
Those pools can provide substantial pro-competitive benefits by integratingcomplementary technologies, providing an efficient mechanism to resolve patent claims
and reducing transaction costs associated with licensing.147 Another element of open
innovation is having companies and universities work together on developing innovations,
as is sometimes already experienced in the shipbuilding industry.148
Knowledge diffusion in an open innovation landscape is seen as an opportunity rather
than a threat, because it enables to differentiate on technologically advanced products,
services and knowledge, and it makes innovations (from other sectors or other countries)
more easily accessible for use.

143

Also see Economist Intelligence Unit, ‘The value of knowledge – European firms and the intellectual
property challenge’, 2007, p. 13.

144

Also see Economist Intelligence Unit, lc, 2007, p. 14. In the survey conducted by the Economist, it also
shows that companies expect a rise of the importance of IPR in the coming years (see p. 20). To have astrong negotiation position, one must have a good block of patents. Also see B. van Dijk, ‘Octrooien
inkopen als wisselgeld’, Financieele Dagblad of 12 March 2007.

145

Also see Economist Intelligence Unit, lc, 2007, p. 3.

146

Such patent auctions are already quite common in the United Stated of America. The American company
Ocean Tomo has recently organised a few auctions in Europe (inter alia in München and London). The
rising popularity of patent auctions has a spin-off effect in the sense that it becomes clear how valuablepatents can be.

147

A recent example is an agreement by Microsoft and Samsung to share a number of their patents byproviding each other with licences. That gives Microsoft the opportunity to use Samsungs patents in thefield of digital media and computer technology, whereas Samsung can use Microsoft’s knowledge for thedevelopment of music players and camcorders. Microsoft made comparable arrangements with Xerox,
NEC, Seiko, Epson and Novell. See ‘Microsoft deelt met Samsung patenten’ in Financieele Dagblad of 27
April 2007.

148

As an example, in the field of microelectronics and nanotechnology the Belgian research centre IMEC,
founded in 1984, has developed into an ‘interuniversity – interindustry’ research centre, hosting about 400

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industry residents on a total of 1,500 people.

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Clearly, an open innovation approach implies new challenges as well. Emphasis in an
open innovation landscape will move to issues as how to fund the seed costs and how tocapture a portion of the value (financial and/or image) coming from innovation. Such an
approach also requires some degree of strategic planning and management system withregard to intellectual property. Designing and maintaining a patent pool’s governancecan, for example, also prove challenging. Beside the presence of good knowledge
institutions, the open innovation (or ‘network’) approach also places greater emphasis on
mechanisms of knowledge transfer, the absorption capacity, entrepreneurial spirit ofcompanies and the government’s role to create favourable conditions.
In figure 4.7 the open innovation concept is visualised and the ‘network model’ is seen asa driver to shorten the time to market and to stay ahead.
Figure 4.7: Network model

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Source: Brainport, 2007

70/158－ 101 －

5.

The economic importance of the European shipbuilding industry

Attention now turns to the economic aspects of the topic under investigation in this study.
To this end, the present chapter maps the economic importance of the shipbuilding
industry in Europe in terms of key figures such as turnover, value added and employment
while distinguishing between direct and indirect effects.

5.1.

The European shipbuilding industry: market structure and profile

The European shipbuilding industry is composed of the shipyards on the one hand andthe marine equipment suppliers on the other hand. As has already been observed in theprevious chapter, both sectors in fact have close relationships within the production
chain. Often, already in an early stage, shipyards and marine equipment suppliers cooperate towards achieving the customers’ demands.
Not only products but also processes are continuously improved. Shipyards more andmore take the role of assembler: bringing together parts (e.g. hulls) built elsewhere andmaking an improved use of products and services from suppliers. The complexity and thechallenge in this approach lies in the fact that the yards continuously have to coordinate
the processes in which sometimes dozens of equipment suppliers are involved. Complex
and challenging as this may be, this often enables yards to work efficiently and to reduce
cost, which results in a stronger competitive position.

49100201/2285043.12

Figure 5.1 on the next page gives an overview of some of the major stakeholders in theEuropean shipbuilding sector. An alphabetic and more comprehensive list of theseshipyards and marine equipment suppliers can be found in Annex II.

71/158－ 102 －

Figure 5.1: A selection of major European shipyards and marine equipment suppliers

SwedenSweden
ABB;
ABB;
Alfa
Alfa Laval
Laval

NorwayNorwayAkeryards;
Akeryards; Jotun;
Jotun;
Kongsberg
Kongsberg

FinlandFinland
Aker
Aker yards;
yards; Turku
Turku repair
repairyard;
yard; Wärtsilä;
Wärtsilä; Cargotec
Cargotec
Corporation
Corporation (McGregor)(McGregor)

Germany
Germany
Blohm+Voss;
Blohm+Voss; Cassens;Cassens;
Meyer
Meyer Werft;
Werft; Aker;
Aker;
Volkswerft
Volkswerft Stralsund;
Stralsund; J.J.
J.J.
SeitasSeitas KG
KG Schiffswerft;
Schiffswerft;
Howaldtswerke-Deutsche
Howaldtswerke-Deutsche
Werft;
Werft; Nordseewerke;
Nordseewerke; MAN;MAN;
BeckerBecker marine
marine systems;
systems;
Muehlhan;Muehlhan; Siemens;
Siemens; Bosch
Bosch
Rexroth;Rexroth; Mecklenburger
Mecklenburger
Metalguss;
Metalguss; Liebherr
Liebherr
Maritime;
Maritime; Allweiler;
Allweiler;
SAM
SAM Electronics
Electronics

Denmark
Denmark
OdenseOdense Steel;
Steel; Hempel;
Hempel;Aalborg
Aalborg Industries;
Industries; Pres
Pres
Vac
Vac
PolandPolandStocznia
Stocznia Gdynia;
Gdynia; Nauta;
Nauta;
Gdanska
Stocznia
Gdanska Stocznia RemonRemontowa;
towa; Stocznia
Stocznia Gdansk;
Gdansk;Stocznia
Stocznia Pólnocna;
Pólnocna; SzczecSzczecinska
inska Stocznia
Stocznia Remontowa
Remontowa
Gryfia;Gryfia; Stocznia
Stocznia Nowa
Nowa

UnitedUnited Kingdom
Kingdom
A&P;
A&P; BAE;
BAE; Kelvin
Kelvin Hughes;
Hughes;Rolls-Royce
Rolls-RoyceTheThe Netherlands
Netherlands
Damen;
Damen; IHC;
IHC; Conoship;
Conoship;KeppelKeppel Verolme;
Verolme; Niestern
Niestern
Sander;
Sander; Volharding;Volharding; Ferus
Ferus
Smit;
Peters;Akzo
Smit; Peters; Akzo Nobel;
Nobel;
Imtech;Imtech; Alewijnse;
Alewijnse;
BakkerBakker Sliedrecht;
Sliedrecht;
SigmaKalon
SigmaKalon
FranceFranceChantier
Chantier Piriou;
Piriou; Aker
Aker Yards
Yards
France;France; DCNS;
DCNS; Thales
Thales Naval
Naval
Systems
Systems

Romania
Romania
Aker
Aker Braila;
Braila; Aker
Aker Tulea;
Tulea;
Damen
Damen Galati;
Galati; Constantza
Constantza
Croatia
Croatia
Brodosplit;
Brodosplit; Brodotrogir;
Brodotrogir;
Uljanik;
Uljanik; 3M
3M MajMaj
PortugalPortugal
Lisnave;
Lisnave; Estaleiros
Estaleiros
NavaisNavais dede Viana
Viana dodoCastelo
Castelo

Spain
Spain
Astillero
Astillero La
La Naval;
Naval;
Cartagena;
Cartagena; San
San Fernando;
Fernando;
Navantia
Navantia

Italy
Italy
Fincantieri;
Fincantieri;
Cantiere
NavaleCantiere Navale E.NOE
E.NOE

GreeceGreeceElefsis;Elefsis; Hellenic
Hellenic

Source: Policy Research Corporation

The position of the European shipbuilding industry on a world scale is related to theinnovativeness of the sector. In Europe, mainly ships of high complexity are built.
Typically dredging vessels, offshore vessels, naval ships, tugs, cruises and otherpassenger ships consist of high technology and complex system integration. This
becomes apparent when considering the compensated gross tonnage (CGT) measure,which enables a more sophisticated macro-economic evaluation of shipbuilding workload
than would be possible when purely considering measurements on a deadweight tons
(DWT) or gross tons (GT) basis.149
Although in terms of tonnage a large part of the world production is built outside Europe,
Europe hosts many specialist yards. In specialised segments they hold a leading market
position. In total, the European shipyards’ (CESA members150) new orders in 2006

149

CGT stands for compensated gross tons. It is an international unit of measurement agreed within theOECD intended to express in a standardised way the amount of work at the shipyards when building newcommercial ships. The CGT of a ship is calculated by multiplying the Gross Tons (GT) of the ship by aconversion factor (= CGT coefficient). The conversion factors vary with ship type and ship size. (CESA,
Shipbuilding Market monitoring Report n° 6, March 2007, page 37).

150

The CESA member countries are Croatia, Denmark, Finland, France, Germany, Greece, Italy, the49100201/2285043.12

Netherlands, Norway, Poland, Portugal, Romania, Spain and the United Kingdom.

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represent 9.4% (EU 25 = 7.3%) of the world’s new orders (57.3 MCGT worldwide), led by
Korea (38.2%), China (23.3%) and Japan (19.5%). Container vessels represented 19.0%
of total new orders, while crude oil tankers and product and chemical tankers account for
29.2%. The European order book at the end of 2006 reached 16.9 MCGT.151 In financials
terms, the European order book represents a relatively higher value than the order booksof the Asian countries mentioned before, because of the complexity of the ships built in
Europe.
Table 5.1 represents the number of ships on order as of April 2006. This tabledemonstrates that Europe-based companies play a leading role for different types ofcomplex ships and passenger ships. Tankers and bulk carriers, however, are orderedless frequently at European shipyards.
Table 5.1:

Number of ships on order as of April 2006

Miscellaneous*
Container
Dry cargo
TankerPassengers ship
Offshore
RoRo
Bulk carrier
Total

EU
273
255
200
146
91
85
47
10
1107

Korea
7
445
11
637
3
10
20
36
1169

Japan
9
82
56
354
1
7
98
491
1098

China
48
260
125
250
2
61
14
175
935

US
27
2
8
13
7
27
1
0
85

Other
38
108
123
145
49
195
24
90
772

Total EU/Total
402
68%
22%
1152
38%
523
9%
1545
59%
153
22%
385
23%
204
1%
802
5166
21%

Note: including naval, patrol, anti-pollution, fishing, dredging and research vessels, tugs and icebreakers.
Source: Lloyd’s Register Fairplay

5.2.

The economic importance of the European shipbuilding industry

Determining the economic importance of the European shipbuilding industry equals, inpractice, making an estimate; the information in the tables in this section should beinterpreted accordingly. The Eurostat data for the shipbuilding industry also includes
pleasure and yachting boats, yet the allocation of companies to this segment is not clear
and may be doubtful. For the marine equipment industry, Eurostat can not deliver
instantly sector figures as the sector does not match with a clear or single statisticalclassification. Due notice is taken from the employment figures published in 2006 by DG

151

Figures published by CESA in their Shipbuilding Market monitoring Report no. 6, March 2007. At the endof the first quarter of 2007, the order book indicates the following market shares: EU 9%, Japan 10%,49100201/2285043.12

Korea 33% and China 38% (with the remaining 10% ordered elsewhere in the world).

73/158－ 104 －

Fish and Maritime Affairs, although these figures are also rather rough estimates.152 For
the marine equipment industry the employment figure is in line with the one provided
below, whereas for the shipbuilding in those figures only the employment related to thebuilding and repair of sea-going (civil) vessels and vessels intended for travel on inland
waterways and scrapping is listed (being part of the Eurostat figures for shipbuilding).

5.2.1.

Direct and indirect effects

In terms of employment and value added, both shipyards and marine equipment
suppliers generate a direct effect on the domestic (and European) level. Furthermore,they create economic activity in other sectors by purchasing goods and services which
generates an indirect effect.
Figure 5.2 on the next page visualises these rippling effects. The purchase ofintermediate goods and services, used to realise the direct production, requires economic
activity and employment from suppliers which are counted as an indirect effect. On
average the shipyards purchase some 70% of the ship value from marine equipment
suppliers. The indirect effect as a result of the yards’ activities is therefore relatively high.

152

In Dynamic European Maritime Clusters (chapter 11), ed. by Niko Wijnolst on behalf of the Maritime
Forum / Dutch Maritime Network / European Network of Maritime Clusters, Chris Peeters and Harry
Webers of Policy Research Corporation discuss the definition and data issues at stake in more detail.
From the earlier research on the Economic Impact of Maritime Clusters in Europe where a screening of allavailable data sources had been performed, it was clear that the overall availability and quality of data israther low. Since then some improvements have been made (in particular the set-up of maritime clusterorganisations in different countries has had a positive effect), yet to date providing a comprehensive EU27 wide fact sheet still remains an estimate. Recently Eurostat launched an invitation to tender for thearchitecture and elaboration of an integrated socio-economic database in the field of the maritime, sea-

49100201/2285043.12

related sectors.

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Figure 5.2: Direct and indirect economic impact of the European shipbuilding industry

Direct economic impact

Indirect economic impact
Intermediate
goods and services

Intermediate
goods and services

Value added(indirect)

ImportdirectoutputPersonnel costs
Depreciation

directvalue
addedProfit/loss

Source: Policy Research Corporation

Because of the interactions between shipyards and marine equipment suppliers, adding
up of the key economic figures should be done with utmost care.153 The calculations todetermine the indirect and total effects of the shipbuilding industry in this report are in linewith the earlier work of Policy Research, in particular the 2001 study for the European
Commission.154
For the shipyards in stricto senso, Eurostat statistics provide clear figures for the direct
economic impact following NACE classification DM 35.1. However, this also contains thestatistics related to building and repairing of pleasure and sporting boats besides building
and repairing of naval and merchant vessels.155 For the marine equipment suppliers
figures are not readily available and have been estimated in line with the approach used

153

Of the direct effects of the marine equipment industry, a part must be seen as indirect effects of the
shipbuilding industry. Also, the effects in one country can also be the indirect effect of activities in anothercountry. When accumulating direct effects a correction is therefore necessary to avoid double-counting.

154

Economic impact of maritime industries in Europe. Policy Research Corporation (2001).

155

Nomenclature générale des Activités économiques dans les Communautés Européennes (NACE – General Industrial Classification of Economic Activities within the European Communities). NACE DM 35.1
contains building and repairing of ships and boats and consists of NACE 35.11 (building and repairing ofships) and 35.12 (building and repairing of pleasure and sporting boats). Note: the sum of categories DM
35.11 and DM 35.12 may not equal the total amount of DM 35.1 because some countries only release the49100201/2285043.12

total values.

75/158－ 106 －...

in the earlier 2001 study which departs from a (rather broad) definition of the marine
equipment industry put forward by BALance in their 1998 study.156

5.2.2.

Key figures on EU 27 + Norway

In figure 5.3 the direct economic impact of the European shipyards is summarised.157 The
turnover accounts for some € 39 billion, value added is € 11.5 billion and the shipyards
employ directly some 293,000 persons (all figures including Norway).158 Clearly, if one
would not take into account the building and repair of pleasure and yachting boats, onewill end up with a smaller sector size.
Figure 5.3: Direct economic impact of European shipyards

Direct effecteffectDirectShipyards
Shipyards
TurnoverTurnover

Value
Value added
added

Employment
Employment€€ 39
39 billion
billion€€ 11.5
11.5 billion
billion293
293 000
000

Source: Policy Research Corporation based on Eurostat

156

Although no single NACE classification is readily available to measure the direct economic impact of themarine equipment industry, at least category DK 29.1 (manufacture of machinery for the production anduse of mechanical power; except aircraft, vehicle and cycle engines) has to be taken into account. Other
categories which contribute partly to the economic impact of the marine equipment industry are
categories G 51.1 (wholesale on a fee or contract basis) with subcategory G51.14 (agents involved in thesale of machinery, industrial equipment, ships and aircraft), G 51.6 (wholesale of machinery, equipment
and supplies) with subcategory G 51.65 (wholesale of other machinery for use in industry, trade andnavigation) and I 63.2 (other supporting transport activities) with subcategory I 63.22 (other supportingwater transport activities).

157

Based on the most recent Eurostat data, both commercial vessels and pleasure and sporting boats areincluded. If one would only consider commercial shipbuilding, including naval shipbuilding, this would
yield an employment of 230,000.

49100201/2285043.12

158

Excluding Norway turnover is € 33 billion, value added € 9.7 billion and employment 265,000 people.

76/158－ 107 －

In figure 5.4 the direct economic impact of the European marine equipment industry issummarised.159 It is understood that turnover amounts to approximately € 26 billion, value
added to € 10.8 billion and employment amounts to some 287,000 persons.
Figure 5.4: Direct economic impact of European marine equipment industry

Source: EMEC (based on study ‘Economic impact of maritime industries in Europe’)Figure 5.5 provides key figures on the total economic impact of the European shipbuilding
industry. The total economic impact is the sum of the direct and indirect impact of the
shipyards and the marine equipment industry, filtered for double-counting.
Figure 5.5: Key figures European shipbuilding industry

Source: Policy Research Corporation

159

For the purpose of this study the recent EMEC update of the 2001 figures has been followed. In thesefigures, classification societies and other service and knowledge providers are not included. See

49100201/2285043.12

www.emec-marine-equipment.org/marine_equipment/facts_and_ figures.asp (28 November 2007).

77/158－ 108 －

These figures reveal that:

the indirect effects of the shipyards are much higher than the indirect effects ofthe marine equipment industry; each direct job in the shipyards generates
another job elsewhere in the economy, while for the marine equipment industry
this is around one additional indirect job per two direct jobs;



about half of the direct impact of the marine equipment industry has to be seenas the indirect effect of the European shipbuilding industry.

Taking into account these considerations, the total value of the European shipbuilding
industry can be estimated (in terms of employment) between 750,000 and 800,000
persons. The total value added of the industry is estimated at € 32 to € 34 billion.

5.2.3.

Key figures per country

The numbers presented in the sections above, illustrate the economic importance of thetotal shipbuilding industry at European level. It is important to note that also naval
shipbuilding is included in these figures. For a better insight, a more detailed view on thegeographical distribution of the industry in Europe is given per country in the next section.
For the shipyards per country the top-10 countries employ about 90% of the total
workforce. France is leading with nearly 12%, followed by the United Kingdom, Poland,
Italy, Spain, Romania, Norway and Germany, in a range between 11.4 and 8.7%. The
Netherlands and Finland employ 3.5% and 3.2% respectively, followed by Sweden,
Denmark, Lithuania, Portugal and Greece which employ between 1 and 2% of the total of
293,000 persons. Countries which employ less than 1% are Latvia, Estonia, Belgium,
Slovakia, Slovenia, Czech Republic, Ireland, Hungary, Austria and Cyprus.

49100201/2285043.12

The top-10 countries for the marine equipment industry are comparable to the
shipbuilders’ top-10. Spain is surpassed by Denmark and Greece and has a relatively
weaker position in the marine equipment industry. Germany has by far the largest marine
equipment industry representing more than 20% of the total employment. It is followed by
the United Kingdom and Italy which account for 14.1% and 12.8% respectively. Poland,
France and Romania account for about 7%. The following countries in line are theNetherlands, Denmark, Greece and Finland with shares varying from 5 to 4%. The top-10
marine equipment supplying countries together employ over 90% of the total workforce.

78/158－ 109 －

Figure 5.6 provides a comprehensive view on the direct employment in the shipbuilding
industry as a whole.160 Although shipyards represent most of the employment in every
country, the top-3 countries – being Germany, the United Kingdom and Italy – have arelatively large share of employees in the marine equipment industry. The top 5 in termsof employment for the shipbuilding industry further consist of France and Poland. Poland
and Romania are the two leading Central and Eastern Europe countries in this regard.
Figure 5.6: Distribution of employment of top-10 shipbuilding industry countries

80000
75000
70000
65000
60000
Number of employees

55000
50000
45000
40000
35000
30000
25000
20000
15000
10000
5000

fi
Fi
nl
an
d

nd
s
nl
N
et
he
rla

Sp
ai
n
es

ay
N
or
w
no

om
an
ia
ro

R

pl
Po
la
nd

fr
Fr
an
ce

it
Ita
ly

U
ni
te
d
uk

de

G

Ki
ng
do
m

er
m
an
y

0

Shipyards

Marine equipment suppliers

Note: naval shipbuilding is included.
Source: Policy Research Corporation based on Eurostat

Figure 5.7 on the next page shows the distribution of value added for the top-10
shipbuilding industry countries which for the four largest shipbuilding countries is in linewith the order of the employment figures. It can be noted that countries such as Norway,
the Netherlands and Denmark have a stronger position in terms of value added than in
employment.

160

The distribution on country level of the values for the marine equipment suppliers is based on the NACE
figures. The nominal values are calculated through the total value added and employment presented in

49100201/2285043.12

figure 5.4.

79/158－ 110 －

Figure 5.7: Distribution of value added of top-10 shipbuilding industry countries

4 000

3 500

Value added in million €

3 000

2 500

2 000

1 500

1 000

500

Shipyards

Marine equipment suppliers

Note: naval shipbuilding is included.

49100201/2285043.12

Source: Policy Research Corporation based on Eurostat

80/158－ 111 －

pl
Po
la
nd

fi
Fi
nl
an
d

D
en
m
ar
k
dk

Sp
ai
n
es

nl
N
et
he
rla
nd
s

N
or
w
ay
no

fr
Fr
an
ce

it
Ita
ly

U
ni
te
d
uk

de

G

Ki
ng
do
m

er
m
an
y

0

6.

Scope and size of the knowledge leakages

Having discussed both the legal aspects in theory and in practice as well as the general
economic outline of the European shipbuilding sector, this chapter looks into the scope,
size and impact of the leakage of knowledge and innovation.

6.1.

Measuring the leakages

It should be noted at the outset that measuring the scope and size of knowledge leakage
is challenging, as little reliable and objective information is available. Indeed, thecompanies concerned are themselves often not fully aware of leakages andinfringements on their IPR, let alone of the value that such cases represent. It is therefore
not possible to gather a comprehensive picture of all infringements cases, at least notwithin the scope of this project.
The assessment undertaken here is further complicated by the fact that the effects of
infringements on individual companies may be life-threatening, while sector-wide this may
not lead to a large effect. In this connection it should be stressed that even relatively
small design, product or process innovations can have a very substantial economic effecton individual shipbuilders or marine equipment suppliers, in particular when suchinnovations distinguish the product from its competitors’ in a way that is fundamental forthe customers’ decision to actually purchase the product concerned or not.
In order to create a clear understanding of the economic impact of IPR infringements, twodifferent analyses have been performed. First, the economic importance of innovations isdetermined, which serves as a ‘threshold’ in between the total sector impact and thevalue of the infringements on the protected parts. Second, the economic impact of IPR
infringements is measured.

49100201/2285043.12

The cascade of production value, the value of innovation and the value of (infringementsof) IPR is visualised in figure 6.1. As a benchmark one could bear in mind that the larger
patent-owning companies account for a 10 to 15% share of total employment in the
shipbuilding industry.

81/158－ 112 －

Figure 6.1: Value cascade

Derived from (a.o.) Eurostat(shipbuilding and marine
equipment suppliers)

Related to the total
ship value, based oninterviews and CESA
information

VALUE OF TOTAL SECTOR’S PRODUCTIONVALUE OF INNOVATIVE PARTS

Size determined frompatent database
investigation

VALUE OFPROTECTED PARTS

Estimation based oninquiry

INFRING.
ON IPRPROTECTED
PARTS

Source: Policy Research Corporation

6.2.

Value of innovations

In order to measure the total value of innovations for the shipbuilding industry, the cost
breakdown of different ship types have been studied with the aim of classifying the (sizeof the) ‘innovativeness’ in the different ship parts and deriving benchmark figures. Of
course, this way of splitting up a ship in more and less innovative parts is merely‘technical’, as you either sell a ship with a certain intrinsic innovative character or you do
not sell it. However, it allows to pinpoint the types of innovation at stake (and to beprotected or defended in IPR terms) and to understand clearly where they originate from.

49100201/2285043.12

Table 6.1 on the next page illustrates an example of the average cost breakdown ofseveral different types of ships (ferry, LNG carrier, container ship, product tanker and bulk
carrier). Material costs represent the largest portion of costs; it includes the steel for thehull, the cargo handling and deck equipment, other major equipment, the propulsion andengines. Especially the propulsion and engines are rather innovative parts. The second
largest part of costs concerns the labour input which includes the production but also the

82/158－ 113 －

design and technical engineering. Typically, the design and technical engineering will be
the most innovative.
Table 6.1:

Example of cost breakdown

Type of cost

Average cost

Average innovation value*

Material costs

About 68%

Between 15 and 25%(Between 60 and 70%)
Labour costs

About 24%Between 4 and 5%(Between 15 and 30%)
Ship-specific financing costs

About 2%0%

(Between 1 and 3%)
Other direct costs

About 6%0%(Between 2 and 15%)
Note: based on the value of the parts which are to be seen as innovative, yet the innovation can be allocated toeither the yards or the marine equipment suppliers.
Source: CESA based on First Marine International Limited

As already indicated,161 the estimated value of innovation compared to the total shipvalue varies between 20 and 30%. The major part of this percentage is represented by
the value of the propulsion and engines and specific parts. About 4 to 5% is represented
by the design and engineering labour effort. The innovations, representing this value, arepotentially protectable. However, not all these innovations are protected and therefore
potentially at risk of being infringed in a legal sense. Consequently, the value of loss at
risk can be determined. Nevertheless, it has been decided not to determine thesevariables into further detail. In particular, one should be aware that an innovative part witheven a relative small value can be of substantial economic importance as it may trigger
the buy or not-buy decision.

6.3.

Value of IPR infringements

The leakage of knowledge from the European shipbuilding industry can definitely haveserious economic consequences. Not without reason the feeling in the sector is thatmuch is being copied, which substantially harms the industry, not only in the short run but
specifically in the longer run.

49100201/2285043.12

161

See section 4.3 above.

83/158－ 114 －

From the research point of view this feeling is understood and it is agreed in a broad
sense. However, when determining the value of IPR infringements in a strict sense it
concerns the parts that are indeed protected by IPR. As many of the shipyards andmarine equipment suppliers appear not to have use of IPR protection mechanisms to the
maximum extent legally possible, the consequent value of IPR in the legal sense issomewhat limited, and the value of IPR infringements will only be a subpart of that which
was visualised before in figure 6.1.
Therefore it is important to make a distinction between non-protected and protected
products and processes. The value of copied non-protected products or processes is,
economically speaking, lost. This can also result in a serious loss of market share. To
keep or regain its market share, a company is forced to continuously put effort ininnovation. On the other hand, the value of copied protected products or processes can –at least in theory – legally be secured.
The patent database research162 indicates that roughly half of the major European yards
and marine equipment suppliers do not possess any patents. This makes it plausible thatthe number of patents held by the smaller companies will, in general, also be rather
limited.
The inquiry amongst yards and equipment suppliers163 has made it possible to determine
the type of and the expected loss resulting from (detected) IPR infringements. The
responses to the inquiry indicate that on average only a relatively limited percentage ofthe yards’ turnover, a few percent at the most, is directly at risk due to IPR
infringements.164 However, this number should be interpreted with care. Firstly, thepresent study illustrates that by no means all IPR infringements will be detected andpursued by the companies concerned. Secondly, the indirect effect that the sector’s
position is undermined by the constant threat of ‘leakage‘ of innovations may be ofsignificant importance as well. Thirdly, on a company level, IPR infringements that
represent a relatively limited direct financial loss may very well drive certain companies
out of the market when the IPR infringed upon is crucial to their competitive position. The

162

See section 4.6 above.

163

See in particular section 4.4 above.

164

As indicated before, it is notoriously difficult to estimate the economic burden as leakages andinfringements might often not even be noticed by the companies concerned. The calculation made here
starts from the data provided by the firms participating in the Houthoff Buruma and Policy Research
Corporation inquiry. As the sample comprises in particular the larger firms, the qualification “at most” inthe sentence stipulates that for smaller firms one may expect this to be less than average. Nevertheless,for specific areas or companies, infringements and the burden thereof might be well be above this49100201/2285043.12

average.

84/158－ 115 －

value at stake rises considerably with these considerations, but the data availability is
insufficient to determine this impact.
From the sector’s point of view, the distinction between the unwanted use of ideas or
products that are, and the unwanted use of ideas or products that are not (fully) protected
through legal instruments is not always made; many in the industry consider bothsituations to be infringements. From a legal point of view, however, the use by third
parties of knowledge and innovation that is not protected will normally not constitute an
IPR infringement. Hence, from this viewpoint not much can be done against such use.
Nevertheless, it is important to keep in mind that, economically speaking, also the nonprotected knowledge and innovations are at stake. If more innovations, which currently
are copied, were protected, the value of IPR infringements would be much higher. It istherefore worth noting that, notwithstanding the problems that exist with regard to theeffectiveness and the enforceability thereof, IPR protection may not only open the scopefor defence, but also that better organised control systems might be beneficial to detect
unsolicited use of innovations.

6.4.

Value of knowledge diffusion

Diffusion of knowledge as a result of leakage can have a negative impact on the resultsof the shipbuilding industry, which is frequently confronted with copies of their sometimes
non-protected knowledge and innovations. Although legal measures could be taken to
discourage these practises, realistically speaking it will be impossible to completely stop
any such leakages.
The shipbuilding industry is not the only sector which is confronted with copied products.
Instead of continuously putting energy in the counteracting of the leakages andinfringements, other industries have turned this threat into an opportunity.165 To the extent
that it is not possible to totally protect one’s knowledge, it may in some cases be better tosearch for ways to share and use available knowledge and innovations in the best
possible way so that the cooperating parties can mutually benefit.
As has been stressed before, the value of an innovation can actually determine the valueof a complete ship. Therefore it is important for shipyards to increase the innovativenessof the shipbuilding (both the process and product). In combination with a well-organised
legal protection policy, the value of innovations can be increased by developing an active
policy that not only stimulates the continuing creation of innovations, but that also

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165

See section 4.8 above.

85/158－ 116 －

improves the search in the market for useful knowledge and innovations. In otherindustries, these efforts have been successful.

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The European shipbuilding industry has evolved to a specialised market player,
specialising (inter alia) in building cruises, dredgers, naval and passengers’ ships. To
maintain and increase its market share, the shipbuilding industry should invest in theactivities, in line with the LeaderSHIP 2015 efforts, which will keep the industry at least at
the current innovative level. Cooperation in the field of R&D can be beneficial to all, but it
requires a coherent European approach.

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7.

Other issues

This final chapter addresses three issues of a somewhat different nature that are of
relevance for this study. Firstly, attention is paid to the possible limitations that follow from
European competition law. Secondly, a brief comparison is made with related
developments in other sectors of economic activity. Lastly, some important issues relating
to safety, health and the environment will be discussed.

7.1.

Competition law aspects

7.1.1.

Limitations stemming from competition law

In the course of this study it has become clear that quite often companies in the
shipbuilding sector refrain from establishing full and adequate IP protection, because of
the high costs involved. One of the solutions to this problem could be closer cooperation
by European companies in the fields of R&D and (collective) protection of intellectual
property. In that way these companies can spread the costs related to these activities,
thereby reducing the costs per company. Another, related manner to address theseshortcomings is patent pooling.166
However, such cooperation between (potentially) competing companies may also raisecompetition law issues. Article 81 (1) of the EC Treaty is in particular relevant.167 This
article prohibits, as a general rule, any form of agreement and other collusive behaviour
between undertakings that appreciably restrict or are intended to restrict competition. Itshould be noted, however, that not all cooperation between undertakings is by definition
caught by the prohibition of Article 81 (1) EC. The European competition rules containsome notable exceptions for situations where the cooperation is, in principle, caught by
the general prohibition (see below).
Moreover, both Article 81 and Article 82 EC, which latter article prohibits in essence any
abuse by one or more undertakings of a dominant position, can in practice limit theexercise of the IP right of a particular undertaking. The mere exercise of IP rights,
however, will generally only be found to infringe these articles in rather exceptional
circumstances. For that reason this latter aspect will not be further looked into here.
166

The concept of patent pooling was explained in section 4.8 below.

167

The present overview is limited to European competition law. Depending on the circumstances of thecase at hand, national competition law may (also) apply. Generally speaking national competition law of
the Members States of the EU tends to be in line with European competition law, although on some

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particular issues relevant differences may exist.

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Giving a full and comprehensive analysis of all the relevant considerations of acompetition law nature would exceed the scope of the present study. Nevertheless, an
overview of the most important possibilities and limitations that exist has been attachedas Annex V to this report.

7.1.2.

Joint R&D agreements

While referring to that annex, it can be pointed out here that agreements on the joint
execution of research work or the joint development of the results of the research, up to
but not including the stage of industrial application, generally do not fall within the scopeof Article 81 (1) EC. In other words, this article will normally not apply to agreements
relating solely to a stage prior to commercial exploitation and having as their sole object
the cooperation on pure R&D projects, nor to the placing of R&D contracts, typically withspecialised companies or research institutes, which are not active in the exploitation of
the results. Neither does the prohibition of Article 81 (1) EC in principle apply to R&D
cooperation between non-competitors and to outsourcing agreements.
On the other hand, if an agreement for example entails that the parties will not carry out
other R&D developments in the same field, thereby foregoing the opportunity of gaining
competitive advantages over the other parties, such an agreement will normally becaught by the prohibition of Article 81 (1) EC. The same goes for other agreements that
restrict innovation, access to the results of the R&D, the exploitation thereof, oragreements that serve in fact to facilitate disguised cartels.
Given that cooperation between undertakings in research and technological development
may represent an essential tool in making Community industry internationally competitive,
certain agreements falling under Article 81 (1) EC may be exempt. In this context the‘block exemption’ Regulation 2659/2000 on the application of competition law to researchand development agreements is of particular relevance. This Regulation basically
exempts two types of agreements having as their main purpose the joint R&D: those forjoint R&D and those for the exploitation of the results of R&D jointly carried out pursuant
to a prior agreement between the same undertakings, provided that six thresholdconditions are met (discussed further in the annex). One of these conditions is that the
combined market share of the participating undertakings does not exceed 25% of therelevant market for the products capable of being improved or replaced by the contract

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products.

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7.1.3.

Technology transfer and patent pooling agreements

As will be discussed in further detail in Annex V, technology transfer agreements willusually be considered to improve economic efficiency and to be pro-competitive.168 In
particular, a technology transfer agreement will normally fall outside the scope of Article
81 (1) EC if it contains no provisions that restrict competition, when the restrictions areancillary to the opening of new markets or when the agreement is of minor importance(i.e. between parties with an aggregate market share of below 10%). Technology transfer
agreements that do fall under the scope of this article may be exempted under the block
exemption Regulation 772/2004, provided that the agreement is limited to two parties,
concerns the production of the contract products and is concluded between parties with alimited combined market share (of less than 20% in case of competing parties).
Patent pooling between actual or potential competitors may also raise issues related toEuropean competition law in general and the restrictions that follow from Article 81 (1) ECin particular. It is important to distinguish between the various possible objects of a patentpool. Pooling technologies required to produce a product or to carry out the process towhich the technologies relate (complementary technologies) shall usually fall outside thescope of Article 81 (1) EC, provided that the pool includes only essential technologies.
Where non-essential but complementary patents are included in the pool there is a risk offoreclosure of third party technologies and the agreement is likely to be caught by Article 81(1) where the pool has a significant position on any relevant market.
Pools of substitutable technologies generally infringe Article 81 (1) EC. It may not always
be possible to satisfy the (rather strict) conditions for exemption, which include therequirements that the pool must be indispensable, open and non-exclusive, the pool must
not extend to non-essential technologies and that the parties involved must not be
prevented from creating or participating in alternative pools. Technology pools for the
purpose of creating industry standards, on the other hand, are often pro-competitive.
Even though such pooling agreements can infringe Article 81 (1) EC when the members
have a strong collective market position and create difficult market entry conditions forthird parties, they will usually be exempted if the pooled technologies are selected in an
objective way and if they are non-exclusive.

168

Given that such agreements can reduce duplication of R&D, strengthen the incentive for the initial R&D,

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spur incremental innovation, facilitate diffusion and generate product market competition.

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7.2.

Comparison with other sectors

Although there are, obviously, relevant differences between other sectors such as theautomotive and aviation industry on the one hand and the shipbuilding industry on theother hand,169 it is clear that the shipbuilding industry is not the only sector that has tocope with the leaking away of knowledge and innovations. Therefore it is worthwhile tolook into other sectors to see whether lessons can be learned.

7.2.1.

Similar problems in other sectors

Just as the European shipbuilding industry, European car manufacturers are confronted
with numerous infringements on their IPR, especially regarding the copying of car partsand car models:170
Infringements of both trademarks and design rights constitute the majority ofviolations, originating in specific regions such as Asia (particularly China, Taiwan
and Thailand), the Middle East, South America and Southern and Eastern
Europe.171

France’s Anti-Counterfeit Agency estimates that up to one in ten car parts sold in
Europe are fake and the Motor & Equipment Manufacturers Association (MEMA)
conducted a survey indicating that the global automotive industry loses 12 billion
dollars to counterfeiting.172



It appears to occur quite often in the automotive industry that a renegade
authorised distributor who has been “helpful” to a trademark owner by registering
the owner’s trademarks in the local country, begins to import knock-off products
at lower margins while “owning” the trademark registrations in the local country
and hijacking the trademark from the rightful owner.173

169

For example, in the shipbuilding industry the scope for production in large series is smaller than in theautomotive and the aviation industry (vessels are often produced on a tailor-made basis), the regulatory
framework and the degree of state intervention differ, etc.

170

For an illustrative list of products subject to IP infringement in the automotive industry, see the executive
summary of the OECD report on ‘The Economic Impact of Counterfeiting and Piracy’, 2007, p. 12.

171

Article: Protecting Intellectual Property, see website ACEA (European Automobile Manufacturers
Association.

172

See Fact sheet The impact and scale of counterfeiting, used during the First Global Congress on
Combating Counterfeiting held on 25 and 26 May 2004 (www.anti-counterfeitcongress.org).

173

M. Powelson, G. Li & E.J. Kelly, Getting the Black Market to Knock Off: Strategies to Enforce Trademark

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Rights in Asia, May 2006, p. 2.’

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In some instances the deficiencies of counterfeited parts seriously impaired thesafety of the vehicles.174 Daimler Chrysler has been held liable for an accident
that was caused by a fake car part. Already being put on a considerable
disadvantage by the copying itself, Daimler Chrysler even had to prove that itwas not the producer of the car (part).

The problems of counterfeit and piracy likewise cause a lot of inconvenience in theaircraft industry and the pharmaceutical sector:175

7.2.2.

Action taken in other industries

A few of the measures that are being undertaken in other sectors:

Just like the shipbuilding industry, the automotive industry has expressed serious
concerns about the enforcement of IPR in some areas of the world, particularly in
the Far East.176 In its Communication on a Competitive Automotive Regulatory
Framework for the 21st Century, the Commission promised to continue its policyof ensuring that IPRs are promoted and enforced globally through existing
international agreements and to include comprehensive IP provisions in futurebilateral agreements.177

Automobile companies such as General Motors, Honda Motors and Hyundai
Motors are currently undergoing legal battles against Chinese companies for
trademark violations.178



Together with many other international companies General Motors has formed a
Global Brand Protection Team to monitor counterfeiting and other deceptive
practices. The team coordinates its efforts with other car producers, parts
manufacturers and other deceptive practices.

174

Also see the OECD report on ‘The Economic Impact of Counterfeiting and Piracy’, 2007, p. 19.

175

The World Health Organisation (WHO) estimates that counterfeit medicines account for 10% of all
pharmaceuticals, with the number rising as high as 60% in developing countries. See Fact sheet The
impact and scale of counterfeiting.

176

See the Commission’s position on the CARS 21 High Level Group Final Report A Contribution to theEU’s Growth and Jobs Strategy, SEC (2007) 77 and 78.

177

See section 3.4 of the Commission’s position mentioned above.

178

GM Daewoo’s “Matiz” is a well-known case in which the entire exterior design of the car was copied,manufactured, advertised and sold under a different name by China’s Chery Automobile Company. See

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the European Union Chamber of Commerce in Korea, A growing concern: counterfeit auto parts.

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The European Automobile Manufacturers Association (ACEA)179 has opened
representative offices in Tokyo and Beijing. These offices support and develop
the common interests of ACEA members, closely coordinating with ACEA
members’ own representations in China and liaising with the Chinese authorities
on automotive-related issues.

The car industry uses modern technologies to identify genuine parts throughencrypted markings.180 The pharmaceutical industry also uses authentication
technologies for pharmaceuticals, including colour shifting inks, holograms, finger
prints or chemical markers embedded in a drug or its label, as an important partof an effective anti-counterfeiting strategy.181

Some companies have chosen to withdraw their investments from countries withweak IP protection. The pharmaceutical company Novartis, for example, decided
to stop investments in India after having lost a controversial patent case in thatcountry. In a press statement, the company announced that it intends to invest
only in countries with an adequate level of IP protection.182



The automotive sector also works through existing structures, such as the IPR
helpdesk and the network of European Information Centers.183



The international aviation authorities184 mandate a preventive measure that when
an airplane part changes place a custodian authorised release certificate (ARC)
must accompany it. This process became necessary as a result of the rise ofcounterfeit parts, which are of a lower quality and create a risk to the safety of theaircraft. Asset pedigree is becoming a vital aspect of any successful aircraftbusiness.185

Taking into account that the problem of technology leakages also affects other sectors,
general policy measures may often be more appropriate than a piecemeal approach of
introducing policy measures that only apply to the shipbuilding sector.

179

GM, Scania, Peugeot, Citroën, Renault, Volkswagen, DAF, Volvo, Porsche, MAN, Daimler Chrysler and
BMW are members of ACEA.

180

Motor Magazine, Tom Nash, Counterfeit Parts: A poor Fit for Your Shop.

181

See U.S. Department of Health and Human Services, ‘Combating Counterfeit Drugs – A Report of theFood and Drug Administration’, published in February 2004, p. 3 (under b).

182

See “Novartis mijdt India na verlies patentzaak”, in Financieele Dagblad of 23 August 2007.

183

See Commission Working Document, COM 2006/631, Closer Partners, Growing Responsibilities – a
Policy Paper of EU-China Trade and Investment.

184

Including the European Aviation Safety Agency (EASA), Federal Aviation Administration (FAA), Transport
Canada Civil Aviation (TCCA) and Australia’s Civil Aviation Safety Authority (CASA).

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185

See Counterfeit.com, New program to combat aircraft parts counterfeiting.

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7.3.

Safety, health and environmental issues

Although not being a main theme of this study, counterfeit and piracy do not only pose athreat to the technological leadership of the European shipbuilding industry and will
therefore have adverse economic consequences, but can also result in lower productquality and pose a serious threat to safety, health and environment.186 The European
shipbuilding industry has a very considerable development lead in, for example,
environment-friendly innovations such as ballast water purification systems.
The Commission already acknowledges the importance of product safety and is – at leastin the field of consumer protection – building partnerships with China and South Korea on
a range of issues related to product safety, including enforcement, rapid alert systems
and effective market surveillance.187 Irrespective of the economic importance of theEuropean shipbuilding industry, these safety, health and environmental issues in itself
form a reason for policy measures to strengthen the protection of IPR in the shipbuilding
sector and to design product safety and environmental monitoring and certification
systems.188 The use of copied products of inferior quality can indeed have very serious
negative consequences for safety, health or the environment.
SANCO Commissioner Meglena Kuneva has recently signalled that China may facecounter measures if there is no improvement of the product safety of products originatingfrom China (with a threat of no access to the European markets as the ultimate
weapon).189 Those threats do seem to have at least some effect: the Chinese
government has drawn up a black list of Chinese manufacturers that are not allowed toexport anymore.

186

The European shipbuilding industry has an enormous development lead in environment-friendly
innovations (e.g. ballast water purification systems etc).

187

In January 2006, the Commission and the Chinese government signed a Memorandum of Understanding
with the objective of establishing better communication and collaboration on consumer product safety andto support Chinese authorities in their efforts to ensure product safety, in particular for consumer products
exported to the EU.

188

A Rapid Alert Systems is already in place for dangerous consumer products (RAPEX). The European
Commission has presented the ‘Third Maritime Safety Package’ COM (2005) 0585 final of 23 November2005) which includes legislative proposals with respect to Inspections and Survey Organisations,
Investigation of Accidents and Civil Liability.

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189

See ‘China zet makers onveilige producten op zwarte lijst’, Financieele Dagblad of 6 August 2007.

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Unequal standards (2004/2005)
A European marine equipment supplier invested considerably in the development of an
innovative high-velocity valve. According to this supplier, this product was subsequently
copied by an Asian supplier, possibly through reverse engineering. The European
supplier got hold of the copied product, which had been approved by a class society, anddecided to have it tested by a respected European testing body. However, it first replaced
the name tag of the Asian supplier on the product by its own name tag.
The tests confirmed that the replica was of inferior quality and the product was not
approved. The replica was then banned by the national authorities of the Member State
concerned. After new tests had confirmed the earlier results, this national ban was

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upheld. Nevertheless, the replica can still be legally used onboard other European ships.

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8.

Conclusions and policy recommendations

Based on the foregoing, this chapter draws conclusions and formulates policy
recommendations. These recommendations are primarily addressed to the European
Commission, but also to the shipbuilding industry and other actors involved.

8.1.

GeneralThe European shipyards (as key organisers in the complex shipbuilding process) and themarine equipment suppliers (as producers of often innovative parts and complex
integrated systems) have jointly demonstrated over the years that they are in many casesable to fight the competition through innovation. Besides product innovation, design andprocess innovation are the key driving forces behind the evolution of the shipbuilding
industry.
This study reveals that even though especially the bigger players do use both theclassical instruments of IP protection and contract clauses, a significant part of theinnovations in the shipbuilding industry is not (fully) protected. This is, however, notprimarily due to the substantive characteristics of the current legal framework on thenational, European or international level. Though there is indeed room for improvement(e.g. the introduction of a Community patent), overall the legal framework is in itself notinadequate for the protection of IP. Rather, the suboptimal use of the existing possibilities
of IP protection appears to be caused by a range of other issues, including enforcement
difficulties, the costs of adequate protection, a lack of awareness in the industry andhesitations with regard to taking legal steps out of fear of harming business relations.

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Clear examples of IPR infringements can be found, but are not abundant. The fieldresearch suggests that the direct economic impact of the (detected) IPR infringements
amounts on average to a few percent of turnover at most. This number should beinterpreted with care however. Firstly, the present study illustrates that by no means all
IPR infringements will be detected and pursued by the companies concerned. Secondly,
the indirect effect that the sector’s position is undermined by the constant threat of‘leakage‘ of innovations may be of significant importance as well. Thirdly, on a company
level, IPR infringements that represent a relatively limited direct financial loss may very
well drive certain companies out of the market when the IPR infringed upon is crucial totheir competitive position. The value at stake rises considerably with these
considerations, but the data availability is insufficient to determine this impact.

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Taking into account the relativity of the direct economic effects of the leaking away oftechnological knowledge and the fact that other sectors clearly struggle with similar
problems, with a few notable exceptions there does not seem to be a justification for
special legislative measures that exclusively apply to the shipbuilding industry. However,this is not to say that nothing can be – or indeed should be – done to support theEuropean shipbuilding industry in this regard. On the contrary, the present study indicatesthat the industry could significantly benefit from a range of practical, well-targetedmeasures. The following ten policy recommendations could be considered in order toachieve a more effective protection of IPR. These recommendations will subsequently be
discussed below:
i.
ii.
iii.
iv.
v.
vi.
vii.
viii.
ix.
x.

Diminish the burdens to obtaining IP protection;
Stimulate measures to share the burdens of innovation and protection;
Increase the IP awareness in the industry (in particular for SMEs);
Reinforce international cooperation and coordination;
Consider amending Article 5ter Paris Convention;
Take specific customs and Port State Control measures;
Create a EU IP-Charter to manage public-private research cooperation;
Review the role of class societies;
Stimulate the use of methods to distinguish between original and fake;Consider open innovation as a complementary or an alternative concept.

8.2.

Diminishing the burdens to obtaining IP protection

IP protection can be expensive and difficult to obtain. A more efficient IP protection could
be achieved through the introduction of a Community patent, as it would allow individuals
and companies to obtain a unitary patent throughout the European Union and reducetranslation costs. The current European patent is merely a bundle of nationally
enforceable patents in the designated states. This can be expensive for the patentee
because enforcement must be carried out through national courts in individual countries,
and for a third party because revocation cannot be accomplished centrally once theopposition period has expired.

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Market players in the shipbuilding industry would undoubtedly be better off with aframework that does allow their inventions to be protected by national authorities in all
countries of the European Union. This seems all the more important, since the research

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shows that technological knowledge does not always leak away to the Far East, but also
within the EU. Due attention should therefore be paid to the legitimate interests of theEuropean shipbuilding industry when discussing the possible creation of a Community
patent.
Other measures to diminish the administrative and financial burdens for obtaining IPR
protection include:

Stimulate (transitional) alternatives to the Community patent that reduce thecosts of patent translation and litigation, such as the London Agreement and theEuropean Patent Litigation Agreement (EPLA).

Taking into account the advantages in terms of costs and (relative) simplicity,which may be of particular importance to SMEs, the Commission could consider(re)introducing a proposal aimed at creating a ‘European’ utility model.



Since the costs involved are an important burden to adequate IP protection, ageneral lowering of the costs for IP protection would certainly form an important
incentive for making better use of the existing instruments of IP protection.

8.3.

Sharing the burdens to innovation and protection

Besides diminishing the existing burdens to effective IPR protection, manners to sharethese burdens should be considered. Often a better protection could be achieved throughmethods of cost-sharing. This could, in particular, be achieved through the following
measures:

Stimulating the conducting of joint R&D efforts, the sharing of (collective) IPR or
the joint development of integrated design and manufacturing processes forcomplex ships. This is currently already being done through a variety of platforms
involving a range of organisations.190 Such initiatives deserve further support.



Costs related to the protection of IP could also be shared between companiesand (semi-)public institutions. Such measures191 could include reimbursing (partof) the costs of patent applications and IP enforcement actions in case of

190

COREDES (Committee for Research and Development in European Shipbuilding), EMECrid (EMEC’s
working group focussing on Research, Development and Innovation), the Waterborne Technology
Platform that establishes an industry-broad technology platform that benefits from numerous synergies
and IP INTERSHIP, in which major European shipyards work together with suppliers, universities andresearch institutes. See CESA’s Annual Report 2005-2006, p. 10, 17-19.

191

The measures referred to here will, of course, have to be consistent with the European framework for49100201/2285043.12

state aid.

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infringements;192 awarding companies (SMEs) “innovation vouchers” that they
can use to file (their first) IP registrations; or using special tax measures. The
recent Community framework for state aid for research and development andinnovation activities is in particular a positive development in this regard.193
An interesting possibility may be offered by setting up a central, European
database for the protection of shipbuilding IPR to improve the chances of yards
and suppliers to enforce their IPR at acceptable costs.194 CESA has alreadyfinalised a detailed business plan for a collective management organisation to
manage, monitor and enforce IPR for European yards.195 This organisation will
start focussing on the production of a European shipbuilding handbook,establishing standard shipbuilding IPR/confidentiality terms and conditions,developing a security system to control knowledge flows, building up an expert
network, setting up a joint patent monitoring system and seeking a pilot case.196
Once such a collective management organisation has matured, it could also
contribute to solving the problem that IPR infringements are often left
unpunished, because individual market players do not want to harm theirbusiness relations. Taking (legal) action may prove less sensitive if it is primarily
taken by the collective management organisation instead of by the IPR holder
concerned.197 Such activities could be coordinated and stimulated by a taskforce,
established under the wing of LeaderSHIP 2015.

192

This is done for SMEs in Austria through the Austria Wirtschaftsservice (AWS), which is the federal
promotional bank of Austria, to promote Austrian SMEs to patent their technological innovations in China
and other emerging markets by reimbursing up to fifty percent of patent applications and IP enforcement
actions in case of infringements. See D. Friedmann, lc, 2007, p. 81.

193

This Community framework for R&DI (2006/C 323/01) foresees that aid to SMEs for the costs associatedwith obtaining and validating IPR shall normally be compatible with the internal market within the meaningof Article 87 (3)(c) EC up to the same level of aid as would have qualified as R&D aid in respect of theresearch activities which first led to the IPR concerned.

194

The situation in Japan might be able to serve as an example, where three industry wide projects on
information exchange among shipping, shipbuilding and marine equipment companies can be identified.
The “Senpaku CALS project” consists of a series of experiments for the purpose of establishing coretechnology for electronic exchange of technical information among shipbuilders, ship owners and shipclassification societies. The “Senpaku EC project” and “Zohaku Web project” extend the scope of
information exchange to data between shipbuilders and ship machinery/equipment suppliers. All projects
cover a very substantial part of the Japanese maritime industry.

195

Again it should be noted that such schemes should, of course, be in conformity with Community law in

196

See CESA’s Annual Report 2005-2006, p. 12 and CESA’s Annual Report 2006-2007, p. 31.

197

This is possible under Article 4 of the Enforcement Directive.

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general and EC competition law in particular.

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8.4.

Increase of awareness (in particular for SMEs)

As is the case in many other industries, not all market players in the shipbuilding industry(especially small and medium-sized enterprises) appear to have a sufficiently wellestablished culture for the protection of intellectual property. Although attention for this
topic appears to be increasing, these parties are not always fully aware of the financial
value of their knowledge and innovations, the possibilities to benefit from those
immaterial assets (by using their IP in a strategic manner) and the existing possibilities toprotect IP. In an era of rapid technological developments, the importance for a company
to think in a businesslike way about its assets becomes more and more important. The
protection possibilities may be larger than expected at first sight, especially if one takes
into account less traditional means of protection of technological knowledge.
Therefore, all possible efforts should be made in order to reach the maximum level ofawareness. Even for the many companies that have already taken measures, it can beimportant to be reminded of the challenges and the possible solutions. In line with themore general Commission approach198 the following measures could be considered:Companies should endeavour to improve the ‘management’ of their intellectual
property. Depending on the resources available, it can be beneficial forcompanies to appoint an employee responsible for managing the company’s IP;
sometimes technology may simply not be protected, because it is unclear who is
responsible for protection. Another step to stop leakages of the value of IP is toperform a royalty investigation to verify the royalty revenues.199

Companies should take measures to increase the awareness with regard to IP
protection, e.g. by publishing internal guidelines.200 Given the importance as aleakage vehicle, special attention should be paid to the interaction between
shipyards and marine equipment suppliers. Companies should also be careful
not to spread confidential information in specialist magazines and trade shows tolimit the risks of product piracy and industrial espionage.201



The Commission (and other authorities) should involve the shipbuilding
companies and associations as much as possible in current and future measuresto raise awareness, to better exploit existing instruments and to try to ensure that198

See e.g. the Commission’s Communication on Research and Innovation, COM (2005) 488 final/

199

In practice, often a great percentage of royalties is not reported to the license holder (who, as aconsequence, receives less revenue than he is entitled to).

200

Commission Working Document LeaderSHIP 2015 Progress Report (COM (2007) 220, Chapter 6.

201

The fact that such measures should not be confined to dealing with the Far Eastern countries isunderlined by the very significant percentage of knowledge leakages that takes place within Europe

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according to companies questioned as part of the inquiry.

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all competitors play by the rules. Special attention could be given to SMEs.
Examples are the organisation of a series of one-day seminars,202 running
information campaigns on IP protection203 and specific workshops and guidance
sessions that could, for example, be organised by national Chambers ofCommerce or other European or national institutions.204
The Commission could in particular play a helpful role in stimulating the draftingof protocols or guidelines outlining under which conditions other organisations
should be provided with internal data. Such protocols or guidelines could be
drafted by the industry itself with the help of experts.205 Sector specific guidelines
on the sharing of technological knowledge already exist in other countries, suchas the United States.206



Shipbuilding industry organisations such as CESA and EMEC can have – andalready have207 – an important role by informing their members about IPR ingeneral and updating them on relevant IPR issues. It would be desirable if
industry organisations could also pursue other activities for their member
companies (e.g. stimulate the legal transfer of technology; advise on the use oflegal means to protect IP, assist in the drafting of the guidelines referred toabove), possibly with the (financial) support of the Commission.208

Companies should be aware of the IP-related risks involved in trading with andinvesting in countries in the Far East, such as China and South Korea. Especially
SMEs209 tend to be not fully aware of potential leakage risks involved in, for202

Through DG Trade and the National Patent Offices.

203

E.g. including a special website dedicated to (the importance of) IP protection. Such a website can also
be used to create a forum for European market participants to share their experiences with respect to IP
protection and enforcement.

204

In the Netherlands, these sessions – that are being organised by OCNL (Dutch Patent Centre) – havebecome increasingly popular. Staff members of OCNL have also reported that some SMEs have little
idea of how to use the enormous wealth of information that is available at the Patent Centre or how topatent their products (see ‘Niemand weet iets van patenten’, Financieele Dagblad of 8 June 2007).

205

Although there will be an important task for organisations such as CESA and EMEC to develop cooperative understandings between shipyards and suppliers, the European Commission can guide thesetting up of such system. An additional advantage of a system that is set up by the industry itself is thatit enhances the awareness of the importance of protecting intellectual property.

206

In the US, the National Infrastructure Protocols for Shipbuilding Partners and Suppliers (NIIIP SPARS)
have been set up. This American project, which involves big technology partners, shipyards andsuppliers, serves as a thorough basis for controlled cooperation between shipbuilding partners and othermarket operators.

207

E.g. the IPR Working Group of CESA is a very useful body to exchange information on IPR protection.

208

Although competition law issues will also have to be taken into account in this respect. See Annex V.

209

Bigger companies tend to be aware of the risks and either choose to postpone investment or take specificprotective measures (e.g. by employing Europeans in key managerial positions and making sure that49100201/2285043.12

employees in the country of investment only have access to some of the key information).

100/158－ 131 －

example, establishing a joint venture with a local partner.210 Leakage risks can bediminished by being more careful in disclosing know-how to business partners in
the Far East. Concrete measures could include locating R&D units only incountries with strong IP regimes or putting safeguards in place at R&D units.211 If
technology is transferred, it may be advisable to licence that technology in order
to increase the control over that technology and to generate royalty payments.


The Commission could step up and expand the IP-related support it is currently
providing to the European shipbuilding industry in dealing with the Far East. That
support ranges from giving advice and providing training on registration andenforcement of IPRs,212 developing public-private partnerships with EU industry
federations and others to improve the protection of IPR,213 to establishing a
special EU body that monitors the potential risks for western investors in the Far
East and provides European companies with this information.214 Further support
could be given (e.g. by this EU monitoring body, preferably in cooperation withindustry associations) with regard to the gathering of evidence against andblacklisting of IPR infringers in order to enhance the chances of successful IP
litigation and to reduce the scope for IPR infringements in the Far East.



As part of the measures to stimulate shipbuilding-innovation, an obligation toprotect the results of government (co-)subsidised projects by IPR could be
introduced, either at the European or at the national level. Recently the Dutch
government has for example adopted a new Aid Scheme for Innovative

210

The establishment of such joint ventures with foreign partners is often an important source of know-how
to companies in the Far East. See D. Bennett, M. Hall, H. Jinsheng, K. Vaidya & W. Xing Ming, ‘The
reality of transferring technology to China: What has been learned after 15 years’, IAMOT 2006, p. 6. See
also D. Bennet’s contribution to the seminar organised by the European Commission on Transfer ofTechnology to China on 29 November 2006.

211

See also Economist Intelligence Unit, ‘The value of knowledge – European firms and the intellectual
property challenge’, 2007, p. 9 and ‘An Unconventional Approach to Intellectual Property Protection: The
Case of an Australian Firm Transferring Shipbuilding Technologies to China’, Jai Press 2000, accessible
through www.accessmylibrary.com.

212

Through the EU IPR Helpdesk and Innovation Relay Centres.

213

See Communication of the Commission determining the priorities and optimising the use of resources inorder to obtain the most effective results in terms of IPR enforcement in third countries (seeMEMO/04/255 Brussels, 10 November 2004, EU strategy to enforce Intellectual Property Rights in third
countries - facts and figures, What is in the Enforcement Strategy?).

214

See Trade Commissioner Mandelson’s recent report with respect to the European-Chinese relation in thefield of trade and investment, “Future Opportunities and Challenges in EU-China Trade and Investment
Relations 2006-2010” at http://ec.europa.eu/trade/issues/bilateral/countries/china/legis/index_en.htm).
The establishment of such a ‘risk watchdog’ would also signal to the Chinese authorities that IPR-related

49100201/2285043.12

problems have to be solved in order to attract European investors.

101/158－ 132 －

Shipbuilding, in which the protection of IP and know-how is an explicit
requirement.215

8.5.

International cooperation and coordination

Part of the problem concerned lies in its global scope. Although the standards of IP
protection are relatively high in the EU, that is not of any avail to European companies
whose rights are infringed in third countries. Despite the implementation of many
international IPR agreements (e.g. TRIPs) in their respective intellectual property laws,
the enforcement of IPR protection in countries such as China and South Korea is not as
effective as it should be. This poses serious problems for the European shipbuilding
industry. It is therefore imperative to consider all possible measures to address these
problems.
It is important to note that, of course, the EU (or any of its Member States) cannot
unilaterally impose substantive or procedural changes to the legal framework applicablein other sovereign countries such as China and South Korea, let alone change the waythat these rules are implemented in practice. The desired results will generally have to beobtained through international cooperation and coordination, with all the limitations andcomplications this may involve. The EU is already involved in many efforts aimed atraising the standards of IPR protection in the Far East. The European shipbuilding
industry could contribute by continuing to provide sufficiently detailed input to theauthorities involved in these efforts.
Apart from the measures mentioned above,216 the following steps could be considered inorder to improve the position of the European shipbuilding industry in those countries:

The European Union and its Member States could consider providing assistanceto emerging market governments to strengthen enforcement mechanisms andagencies, and continuing to exert political influence on these countries tosafeguard the protection of IPR. The parties concerned are incited, insofar as
possible, to intensify the existing processes and to take into account theparticular challenges that the European shipbuilding industry faces.

215

See IP/07/554 of 24 April 2007 ‘Maritime transport: Commission authorises an aid scheme for Dutch
shipowners to promote innovation’, and Aid Scheme for Innovative Shipbuilding of 19 April 2007, no. WJZ
7043864, Article 9 in conjunction with Article 33 Economic Affairs Framework Regulation (EZKaderregeling).

49100201/2285043.12

216

See in particular section 8.4 above.

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217a.

In its Enforcement Strategy,217 the Commission explicitly mentions IPR
mechanisms in multilateral (including TRIPs), bi-regional and bilateralagreement. This includes: raising enforcement concerns in the framework ofthese agreements more systematically, consulting trading partners with theaim of launching an initiative in the WTO TRIPs Council, sounding the alarmon the growing dimension of the problem, identifying the causes, proposing
solutions and strengthening IPR enforcement clauses in bilateralagreements.

b.

The EU has concluded several agreements with China, such as the
Customs Cooperation Agreement, which provides for reinforced EU-China
cooperation, IPR controls and supply chain security, and there have been
recent negotiations with Korea on a Free Trade Agreement.218c.

Patent infringements by companies in China and other emerging markets
are a heated issue in bilateral and multilateral trade discussions.219 In thisyear’s EU-China Joint Trade Ministerial, Trade Commissioner Mandelsonfor example urged his Chinese counterpart to protect EU businesses
against intellectual property theft.220 More recently, he has sought a
mandate from all Member States to join the proposed Anti-Counterfeiting
Trade Agreement (ACTA) aimed at curbing the piracy and counterfeiting of
consumer goods around the world. The initial "leadership group" also
includes the US, Japan, South Korea, New Zealand, Mexico andSwitzerland.

d.

Some Member States have also engaged in cooperation agreements withcountries in the Far East aimed at a better protection and enforcement of
IPR.221Communication of the Commission determining the priorities and optimising the use of resources in orderto obtain the most effective results in terms of IPR enforcement in third countries (see MEMO/04/255
Brussels, 10 November 2004, EU strategy to enforce Intellectual Property Rights in third countries - facts
and figures, What is in the Enforcement Strategy?).

218

Commission Working Document LeaderSHIP 2015 Progress Report, COM (2007) 220, Chapter 7.

219

Also see Economist Intelligence Unit, ‘The value of knowledge – European firms and the intellectual
property challenge’, 2007, p. 3.

220

See MEMO/07/237, EU-China Trade Ministerial Meeting of 12 June 2007.

221

In October 2006, for example, the Dutch government and China agreed to collaborate to achieve a better

49100201/2285043.12

protection of IP and to increase the awareness of Chinese companies in that field.

103/158－ 134 －

e.

Fundamental IP issues, such as the patent approval criteria and theworkability of the global IP system, should be continuously addressed on
the global level (e.g. in a WIPO and WTO context).222

The European Union could consider establishing a joint consultative body withthe governments of China and South Korea in particular to ensure thattechnology is not being copied without prior consent. Apart from exchanging
officials and expertise, it could be useful to develop a specific information systemthrough which the EU and these governments can exchange information to avoid
counterfeit and to close down production of counterfeited products.223

Having regard to the substantial number of organisations that are involved in the
combat against counterfeit and piracy on the national, European andinternational level, it may be worthwhile to improve the exchange of informationand the coordination between the different institutions involved in the different
aspects of IPR enforcement224 in order to ensure effective enforcement.225



Other problems related to IPR infringements, such as safety and environmental
issues, could also be addressed through cooperation with the governments
concerned, e.g. by educating local manufacturers about the European safety
requirements and making European safety requirements easily accessible.
Furthermore, the European Commission could have a (supporting) role in theidentification of possible manufacturers of infringing, dangerous products foundon the European market and passing on this information to national authorities
for follow-up action.

222

See also Economist Intelligence Unit, ‘The value of knowledge – European firms and the intellectual
property challenge’, 2007, p. 17.

223

See the Communication from the Commission to the Council, the European Parliament and the European
Economic and Social Committee on a Customs response to latest trends in Counterfeiting and piracy of
11 November 2005, COM(2005) 479 final, p. 13-15.

224

In particular the most involved international enforcement bodies such as the World Customs Organisation(WCO), Europol and Interpol. See the Communication from the Commission to the Council, the European
Parliament and the European Economic and Social Committee on a Customs response to latest trends in
Counterfeiting and piracy of 11 November 2005, COM(2005) 479 final, p. 13-15.

225

See the Enforcement Strategy of the Commission (MEMO/04/255 Brussels, 10 November 2004, EU
strategy to enforce Intellectual Property Rights in third countries - facts and figures, What is in the
Enforcement Strategy?). Close cooperation can also be used to both pick up international trends (byestablishing a common approach to collect enforcement data) and to help spread the EU's practical

49100201/2285043.12

approach to a broader audience.

104/158－ 135 －

8.6.

Consider amending Article 5ter Paris Convention

Article 5ter Paris Convention poses an important burden to protection, because thisprovision results in European patent holders often not being able to take action if foreign
vessels infringe on their patent rights. Although the European Union could consider to (tryto) negotiate a stronger position in the Treaty for patent holders,226 this will undoubtedly
be very challenging in practice since the EU cannot unilaterally amend an international
convention. Apart from the difficulties involved in amending an international Treaty, there
is also en important downside to an amendment of Article 5ter Paris Convention which
will have to be taken into account carefully (see below).
Being able to use the threat of litigation would undoubtedly form a great boost for theprotection of IP of the European shipbuilding industry.227 If the pure presence ofcounterfeit or piracy constituted a patent infringement in all circumstances (regardless ofwhether a vessel is only temporarily in a European country), that would – in all European
countries – also imply that criminal measures can be taken against the patent infringer.228
This makes it likely that the industry, in that respect, would benefit from an amendment of
Article 5ter Paris Convention.
On the other hand, an amendment of Article 5ter Paris Convention can also adversely
affect European shipowners and shipbuilders, since that would imply that they could also
be confronted with seizure of their non-protected ships or products in foreign ports. It isby no means inconceivable that, for example, a Chinese company would take advantageof the amended Article 5ter to sue a European shipowner or other company for patent
infringement when visiting a Chinese port. There are reports of Chinese companies suing
European (or other Western) competitors more aggressively in China, particularly incases where the Chinese company has been able to obtain IP protection in China (even226

Article 18 Paris Convention provides for the possibility of revision of Articles 1-12 and 18-30 of theConvention.

227

European IP holders will probably be reluctant to use drastic measures such as seizure if they are notsufficiently sure that their IPR have indeed been infringed, since they can be held liable for the costs of awrongful seizure.

228

Article 61 TRIPs also obliges Members to “(...) provide for criminal procedures and penalties to be appliedat least in cases of wilful trademark counterfeiting or copyright piracy on a commercial scale. (...)”. These
measures will be harmonised if the proposed Directive on Criminal Measures Aimed at Ensuring the
Enforcement of Intellectual Property and strengthening criminal measures to combat counterfeiting (COM49100201/2285043.12(2005) 276 final) will be adopted by the Council.

105/158－ 136 －

though the European company may be the undisputed holder of those rights in
Europe).229
All in all it is submitted that the possible amendment of Article 5ter Paris Convention
should be on the European agenda, given the serious problems it poses to European
shipbuilders whose technological knowledge has been copied. The topic deserves further
consideration paying due regard to both the potential advantages and disadvantages ofsuch an amendment as well as to the scope for amendment in practice.

8.7.

Action by Customs authorities and Port State Control

The Anti-Piracy Regulation provides for powers to take action when custom authorities
encounter counterfeit or piracy.230 Instructing the customs and Port State Control
authorities to closely monitor the ships that arrive at the European ports and to makethem more aware of the problem of counterfeit in the shipbuilding and equipment industry
would undoubtedly contribute to the safeguarding of the interests of the European
shipbuilding industry. From the industry’s point of view such measures are to be
encouraged.
Practically speaking it will probably not be feasible to fully inspect every ship entering a
European harbour on illegally copied products, if only because it will often be extremely
difficult to distinguish original products from (good) copies and because the costs anddelays involved would be very substantial. In practice there will be more scope fortargeted measures. In order to achieve an effective and goal-oriented combat against
counterfeit and piracy, it is indispensable that the IP holder provides the relevant
authorities with factual information that is as specific and detailed as possible, and that it
pursues the case which may arise as a consequence whenever expedient. The role ofcustoms could be reinforced by a closer coordination between the various (EU andnational) Customs and Port State Control authorities. In order to facilitate the exchange of
information between IP holders and the relevant authorities, the Commission could
consider establishing an effective reporting system – preferably including low-threshold
contact points so that market players know where to report their suspicions of counterfeit.
The effectiveness of customs cooperation could be further reinforced by cooperation withcustoms authorities in third countries and by sending customs officials to key production
229

Article 5ter Paris Convention does not apply exclusively to the shipping sector. The effect of a possible
amendment as described here could therefore also be felt by, in particular, the aviation industry. This
aspect also deserves further consideration.

49100201/2285043.12

230

Although Article 5ter of the Paris Convention may pose a burden to action (see section 8.6 above).

106/158－ 137 －

regions from a shipbuilding point of view.231 In that way, the problem of counterfeit andpiracy can be taken on at the source as much as possible.

8.8.

EU IP Charter to manage public-private research cooperation

Although universities and research centres are not amongst the most important leakage
channels, it is certainly recommendable to pay attention to the possibility of losing
technological knowledge through this channel. In particular there is a certain tension
between academia and businesses in the sense that universities and research centres
are usually focussed on a rapid publication of research results, whereas the industry
benefits from the confidentiality of inventions until patent protection has been obtained.
In this connection the 'IP Charter for universities and research centres' that was proposedby the German EU Council Presidency in April 2007 as well as the Commission’s work on
this topic, are to be welcomed in particular.232 It is expected that these initiatives will help
put a stop to the uncontrolled outflow of knowledge and will help boost European
competitiveness, because it will initiate a process of awareness-raising on the importanceof better IP management and promote a better understanding of research partners'
positions. A common approach to IP management would also ensure that research
partners from Europe are in a better position to negotiate contracts with international
partners.233

8.9.

Reviewing the role of classification societies

Classification societies play a crucial role in worldwide shipping by guaranteeing that all
relevant safety requirements have been complied with.234 That classification societies
need to receive technological information in order to perform this important task is

231

See the Communication from the Commission to the Council, the European Parliament and the European
Economic and Social Committee on a Customs response to latest trends in counterfeiting and piracy of
11 November 2005, COM(2005) 479 final, p. 13-15, where it becomes clear that the Commission
envisages Customs Agreements with countries such as India, Japan, members of ASEAN15, Mercosurand Pakistan.

232

See the Commission’s Communication on improving knowledge transfer between research institutions
and industry across Europe, COM (2007) 182 final. A variety of national and supra-national tools alreadyexist to help universities and other public research establishments to better manage their knowledge.
These tools include the UK Lambert Agreements, the Responsible Partnering Initiative, and European
Commission guidelines. Meanwhile, collaborative research under the EU Framework Programme is49100201/2285043.12

governed by rules of participation, which provides an IP framework for the project partners.
233

The proposal is published on http://www.bmbf.de/pub/Eckpunkte_IP_eng(2).pdf.

234

Classification societies can also play an important role as knowledge providers.

107/158－ 138 －

undisputed. However, this can, of course, be no justification for infringing the IPR ofEuropean shipyards and marine equipment suppliers. This study indicates that thepossibility of at least some leakages through that channel can certainly not be excluded.
In the interest of all parties concerned, it is necessary to strike a balance between theobvious need of classification societies to receive adequate information on the one hand
and the justified IP-related concerns of the shipbuilding industry on the other hand. A
range of measures could be considered:

Ideally, safety checks should be carried out by independent bodies that do not
engage in consultancy as well. A parallel could be drawn with the aircraft
industry, where planes are checked by IATA. In the automotive industry it has
been proposed to introduce safety requirements or a testing procedure on theEuropean level in order to ensure that copied parts provide an equal degree ofprotection in impact situations to those produced legitimately by
manufacturers.235 Such a European framework or institutional agency could, also
in the shipbuilding industry, ensure a fair and equal assessment of new vessels
or products without the risk of information being leaked.236

Ships and pieces of equipment are normally inspected by several classificationsocieties. If the number of inspecting entities could be limited to only one, the riskof information leakage is likely to diminish accordingly (since sensitivetechnological knowledge would then only come to the knowledge of a smaller
circle of people and organisations). On the European level there is already aclear development visible towards mutual recognition, which implies inspections
by fewer entities.237 From the viewpoint of the IP protection in the European
shipbuilding industry, this development is to be encouraged strongly.

235

See an article on the website of ACEA, Protecting Intellectual Property, 1 April 2007.

236

This could also help to address the concerns expressed by the industry that some classification societies
do not sufficiently verify that (especially the smaller and/or less visible) products that are tested, certified
and actually installed onboard a ship are indeed one and the same product. To the extent that this is not
sufficiently assured at present, this may not only harm fair competition but could also lead to health andsafety risks. There are reports that the current procedures are sensitive to fraud.
Furthermore, assigning to this authority the task of ensuring that the products tested have been producedin conformity with IPR could be another option that is worth considering.

237

The Marine Equipment Directive (96/98/EC as amended) ensures that the equipment on ships under EU
flag is certified according to a harmonised system based on mutual recognition. Moreover, in 2005 theEuropean Commission has proposed to introduce the principle of mutual recognition of the certificatesissued by recognised organisations (classification societies), which is part of the Third Maritime Safety
Package. See the proposal for a Directive on common rules and standards for ship inspection and surveyorganisations and for the relevant activities of maritime administrations, COM (2005) 587 final of 23

49100201/2285043.12

November 2005.

108/158－ 139 －



Rules ensuring the confidentiality of sensitive information could be included in theregulatory framework applying to classification societies.238 The respect for suchrules could also be part of the regular assessment of the functioning of thesocieties that are already undertaken at present. The “Chinese walls” thatclassification societies may currently have in place between the society’s
regulatory tasks on the one hand and its consultancy work on the other hand are
difficult to enforce as an outsider; many in the shipbuilding industry have serious
doubts as to whether it can be certain that the present rules and structuressafeguard their interests in a sufficient manner and that the rules are appliedconsistently. More transparency could address these concerns. The
consequences of such rules should be very limited for classification societies that
do respect the intellectual property of the yards and the equipment suppliers. A
clear set of rules can also contribute to a better understanding by all the parties
concerned to which extent technical information should be disclosed and how thenecessary disclosure can be best combined with respect for the IPR of the yardor the equipment supplier concerned.



Shipbuilders and marine equipment suppliers should be critical about thecontracts they sign with classification societies and the information that they
disclose. Well-drafted confidentiality clauses and more comprehensive
agreements on classification societies’ control regarding IPR should help toaddress the existing concerns at least to some extent.239

8.10.

Use of identification methods to distinguish between original and fake

An important problem when enforcing IPR is the evidentiary burden of proof. In IP
litigation, the IP holder will have to prove that the other party has infringed on his IP
rights, which can be rather difficult in practice. In the car industry use is being made ofmodern technologies to identify genuine from fake car parts (usually by encoding symbols
in the materials used). Especially for expensive parts, it would be worthwhile to use such
identification systems in the shipbuilding sector as well. The Commission could play arole in stimulation the use of such systems in the shipbuilding sector, also with an eye on
the potentially disastrous consequences of the use of copied, inferior maritime products(such as spare parts).

238

See e.g. Amendment 69 of the European Parliament to the Commission proposal (see previous footnote),
adopted in first reading on 25 April 2007 (A6-0070/2007).

239

It has been noted before that especially smaller companies may lack the bargaining power vis-à-vis theclassification societies to agree on such contract clauses. Raising awareness may nevertheless, at the49100201/2285043.12

very least, come some way to address this issue.

109/158－ 140 －

Less sophisticated ways of identifying counterfeit from genuine – such as the use of
specific trademarks, company symbols and designing – can also prove helpful infacilitating the authentication and/or detection of genuine versus fake goods. Trademarks
and symbols can, however, be copied more easily by counterfeiters and pirates thanadvanced encoding. Nevertheless, the use of protected trademarks can have theimportant advantage that the victim of counterfeit can also take action on the basis oftrademark law.240

8.11.

Open innovation as a complementary or an alternative concept

In addition to the foregoing, both the Commission and the industry should also consider
other means to cope with the fast evolution of innovations and try (whenever possible) toshare knowledge within Europe as effectively and efficiently as possible. From an ‘open
innovation’ point of view, the emphasis lies on sharing knowledge and innovations in aconstructive way. This can result in better economic performance because of increasing
market share and increasing profits. In many European countries shipbuilding and otherindustries are already moving in this direction through a variety of initiatives, such as theorganisation of patent pooling and patent auctions. For example, selling patents that are
valuable but not directly of use to the owner himself, does not only benefit the owner (whoreceives a return for the R&D expenditures through royalties), but also offers the
additional advantage that unused technology is being developed further and more rapidly
than otherwise would have been the case. In that way, the innovation processes can be
accelerated through mutual gain. This will benefit the industry as a whole and therefore
deserves further support.

240

Which has the additional advantage that the problems related to Article 5ter Paris Convention (see49100201/2285043.12

section 8.6 above) are evaded, because this article only applies to patent law and not to trademark law.

110/158－ 141 －

49100201/2285043.12

LIST OF ANNEXES

Annex I:

Questionnaire

Annex II:

List of major European yards and suppliers

Annex III:

List of contacted companies and persons

Annex IV:

IPR protection in China and South Korea

Annex V:

Competition law aspects of cooperation in the field of R&D and IP

Annex VI:

Bibliography

111/158－ 142 －

Annex I:

Questionnaire49100201/2285043.12

1. What product does your company produce?
0 Hull0 Central commanding
0 Propulsion & power systems
0 Pipework, pumps, compressors
0 Steering equipment
0 Navigation
0 Stability system
0 Loading and unloading system
0 Deck equipment
0 Interior construction
0 Other …..…………………………………………………………………………...
……………………………………………………………………………..................
2.

Is your company confronted with a leaking away of technologicalknowledge?
0 Yes
0 No

3.

If yes, how did the technological knowledge leak away?
0 Through shipyards
0 Through classification societies
0 Through suppliers
0 Through universities and research centres
0 Through other ways, namely ………………………………………………….…
…………………………………………………………………………………………
Please provide us with an example (if possible)...………………………………………………………………………………………
…………………………………………………………………………………………

4.

If yes, does most technological knowledge leak away:
0 Within the EU
0 To the Far East (e.g. China, South Korea)
0 To other parts of the world, namely ..........................................................
………………………………….……………………………………………………...

5.

How many cases of leakage of technological knowledge did you
experience in the last five years?
01
0 5-100 2-3
0 10-30
0 4-5
0 30-100112/158－ 143 －

49100201/2285043.12

6.

What was the estimated loss of profit (or damage) as a result of theleakage of technological knowledge?
………………………………………………………………..……………………..…
…………………………………………………………………………………………

7.

Did your company take any measures to end the leakage of technologicalknowledge?
0 Yes
0 No
If yes, which measures did you take?
…………………………………………………………………………………………
…………………………………………………………………………………………

8.

Does your company generally protect its technological knowledge?
0 Yes
0 No

9.

If yes, how does your company protect its technological knowledge?
0 Via patent law
0 Via trademark law
0 Via design law
0 Via law of unfair competition
0 Via intellectual property rights protection clauses in our contracts10.

If no, for what reason(s) does your company not protect its technologicalknowledge?
0 We are not fully aware of the possibilities of how to protect our knowledge
0 It causes an administrative burden
0 The benefits of protecting our knowledge do not outweigh the costs
0 Even if we protect our knowledge, there is still a problem of enforcement
0 We do not want to harm the business relations
0 Other, namely ..…………………………………………………………………….
…….…………………………………………………………………………………...

11.

May we contact you for further questions regarding our investigation if
necessary?
0 Yes
0 No
If yes, please correct and/or complete contact details on the next page.

113/158－ 144 －

Annex II:

List of major European yards and suppliers

Shipyards

49100201/2285043.12

3M Maj Shipyard
A&P Birkenhead
Aker Finnyards
Aker MTW Werft
Aker Warnemünde Operations
Aker Yards France
Akeryards
Astillero La Naval
BAE
Blohm + Voss
Brodosplit Naval & Special Vessel Shipyard
Brodosplit Shipyard
Brodotrogir Shipyard
Cantiere del Mediterraneo
Cantiere Navale De Poli
Cantiere Navale
Cassens Werft GmbH
Chantier Piriou
Conoship International
Damen Shipyards GroupDCNS
Elefsis Shipyards
Estaleiros Navais de Viana do Castelo
Fincantieri CantiereFlensburger Schiffbau-Gesellschaft
Gdanska Stocznia Remontowa im. Pilsudskiego
Hellenic Shipyards
Howaldtswerke-Deutsche Werft
Husumer Dock- und Reparatur
IHC Holland
J.J. Sietas KG Schiffswerft
Keppel Verolme
Lisnave, Estaleiros Navais
Lloyd Werft Bremerhaven
Meyer Werft
Navantia Astillero Cartagena
Navantia Astillero San Fernando-Puerto Real
Niestern Sander
Nordseewerke GmbH
Odense Steel Shipyards
S.C. Aker Shipyards Braila
S.C. Aker Shipyards Tulcea
S.C. Damen Shipyards Galati
S.C. Santierul Naval
Scheepswerf Ferus Smit
Scheepswerf Peters
Stocznia Gdansk

114/158－ 145 －

Croatia
United Kingdom
FinlandGermany
Germany
FranceNorwaySpain
United Kingdom
Germany
Croatia
Croatia
Croatia
Italy
Italy
Italy
Germany
FranceNetherlands
Netherlands
FranceGreecePortugal
Italy
Germany
PolandGreeceGermany
Germany
Netherlands
Germany
Netherlands
Portugal
Germany
Germany
Spain
Spain
Netherlands
Germany
Denmark
Romania
Romania
Romania
Romania
Netherlands
Netherlands
PolandStocznia Gdynia
Stocznia Pólnocna
Stocznia Remontowa Nauta
Stocznia Szczecinska Nowa
Szczecinska Stocznia Remontowa Gryfia
Turku Repair Yard
Uljanik Shipyard
Volharding Shipyards
Volkswerft Stralsund

PolandPolandPolandPolandPolandFinland
Croatia
Netherlands
Germany

Marine equipment suppliers

49100201/2285043.12

Aalborg Industries
ABB
ABC
Akzo Nobel industrial paints
Alewijnse
Alfa Laval
Alfing Kessler
Allen Gears
Allweiler
AmeronAmot
Atlas Copco
ASI Robicon
Autronica
Bakker Sliedrecht Electro Industrie
Becker Marine Systems
Beele
Bloksma
BohlerBoll + Kirch
Bornemann
Bosch Rexroth
BP Marine
Brunvoll
Cargotec Corporation (incl. MacGregor)
Caterpillar MaK
C-Map
Converteam
Croon
DamcosDanfoss
Daros
Deerberg
Deltamarine
Dose
Elomatic
Evac
Exxon Mobil Marine
Fassmer

Denmark
SwedenBelgium
Netherlands
Netherlands
SwedenGermany
United Kingdom
Germany
Netherlands
United Kingdom
Belgium
Italy
NorwayNetherlands
Germany
Netherlands
Netherlands
Austria
Germany
Germany
Germany
United Kingdom
NorwayFinlandGermany
NorwayFranceNetherlands
Denmark
Denmark
SwedenGermany
FinlandGermany
FinlandFinlandUnited Kingdom
Germany

115/158－ 146 －

49100201/2285043.12

Fläkt
Garbarino
Geislinger
Goltens
GrencoHamworthy
Hatlapa
Heinzmann
HempelHMS
Hoerbiger
HRP
HSV
ICH
ImtechInmarsat
Jotun
KaeferKelvin Hughes
Kone
Kongsberg Maritime
Kral
KumeraLeistritz
LeutertLiebherr
Loipart
Mahle
MAN
Marin
MCI
McMurdoMecklenburger Metalguss (MMG)
Miba
MTU
MuehlhanNavalimpianti
Neuenfelder
NK-Neuenhauser
Norac
Noske Kaeser
NovencoOMT
Palfinger
Pielstick (now MAN)
Piening
Pleiger
Pres-Vac
Radio Holland
Rayteon Anschütz
Reintjes

SwedenItaly
Austria
NorwayNetherlands
United Kingdom
Germany
Germany
Denmark
FranceAustria
Netherlands
Germany
Netherlands
Netherlands
United Kingdom
NorwayGermany
United Kingdom
Finland
NorwayAustria
NorwayGermany
Germany
Switzerland
FinlandGermany
Germany
Netherlands
Denmark
United Kingdom
Germany
Austria
Germany
Germany
Italy
Germany
Germany
NorwayGermany
Denmark
Italy
Austria
FranceGermany
Germany
Denmark
Netherlands
Germany
Germany

116/158－ 147 －

49100201/2285043.12

Renk
Rizzio Valvole
Rolls-Royce
Rockwell Automation
RoxtecSaab Trasponders
SAM Electronics
Sauer & Sohn
Scan Rope
ScheldeScheuerle
Schindler
SchottelSiemens
SigmaKalon
SimradSperreSSAB
Stromag
Teufelberger
TelenorThales Naval Systems
Thermax
Thrane & Thrane
Total Marine
TNO
TransasTurboNed
UlsteinUmoe Schatt Harding
VAF
VA Tech Escher Wyss
VikingVoith
VulkanWärtsilä
Wildenauer
Woodward
Xantic
ZF
Zollern

Germany
Italy
United Kingdom
Italy
SwedenSwedenGermany
Germany
NorwayNetherlands
Germany
Italy
Germany
Germany
Netherlands
United Kingdom
NorwaySwedenGermany
Austria
NorwayFranceAustria
Denmark
FranceNetherlands
United Kingdom
Netherlands
NorwayNorwayNetherlands
Germany
Denmark
Germany
Germany
FinlandGermany
Netherlands
Netherlands
Germany
Germany

117/158－ 148 －

Annex III: List of contacted companies and persons241
Aalborg Industries
Aker Yards
BAE Systems
Bakker Sliedrecht
Beele Engineering
CESA
Damen shipyards
EMEC
Ficantieri
HME
Howaldtswerke-Deutsche Werft
IHC
Lloyd’s register
Marin
Meyer Werft
NML
PadmosPres-Vac
ThyssenKrupp Marine Systems
TNO Quality
VNSI
Volkswerft Stralsund
Winel

Kim Sørensen
Eero Mäkinen*
John MacLean
Gert den Dunnen
Hans Beele
Reinhard Lüken*, Jing Shen*
Jan-Wim Dekker, Peter van Terwisga
Paola Lancellotti, John Kuehmayer
Piero Boico*
Martin Bloem, Gert-Jan Huisink
Ulf Kopf*
Fred Brouwer, Jaco van der Hoeven*
Flans Kemp
Henk Prins
Thomas Witolla*
Niko Wijnolst
Johannis Padmos
Eric Sørensen
Patrick Kaeding*
Ben van Baarle
Ruud Schouten, Marco Kirsenstein
Dietmar Simon
Bert Knijp* Also member of the IPR Working group of CESA

241

Please note that this list does not include the companies and persons contacted through thequestionnaire, and that some companies and persons that were contacted have not been included in this49100201/2285043.12

list at their request for reasons of confidentiality.

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Annex IV: IPR protection in China and South Korea
First a short overview of the existing laws with regard to the IPR protection in China andSouth Korea will be provided, after which the shortcomings of both systems will beconsidered in further detail.
IV.1

China

a.

Legal framework

China has been a member of various international IPR protection agreements, treaties
and organisations for many years. China became a member of the World Intellectual
Property Organisation (WIPO) on 3 June 1980. In March 1985, it acceded to the Paris
Convention for the Protection of Industrial Property. After more than a decade ofnegotiations, China entered the WTO in 2001.


Patent Law

In 1984, China adopted the Patent Law to protect and encourage patent rights forinventions-creations (the Patent Law has in the meanwhile been revised in 1992 and2000).242 Under the Patent Law protection can be obtained for inventions, utility models
and designs.
In the Chinese Patent Law, an invention is defined as “any new technical solution relating
to a product, a process or improvement thereof.”243 The invention patent consists of two
major categories which include product invention and process invention.244 First, theproduct invention is a man-made product which does not protect the process of making
such a product. Secondly, a process patent includes a special process that is used tomake a product with special characteristics. A patent granted for the process protects the
product made by such process.245

242

Article 1 Patent Law, via www.sipo.gov.cn.

243

Article 2 Rules for the Implementation of the Patent Law of the People’s Republic of China 2001, via
www.sipo.gov.cn.

244

Any improvement on a product invention or process invention should be deemed as a product invention
or process invention itself.

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245

Article 11 Patent Law.

119/158－ 150 －

The subject of a utility patent includes “any new technical solution relating to the shape,
the structure, or their combination of a product, which is fit for practical use” and requiresa much lower level of technical skills than an invention patent.246
The last subject conveys a design patent which refers to any new design of the shape,
the pattern or their combination, or the combination of the colour with the shape or
pattern of a product, which creates an aesthetic feeling and is fit for industrial
application.247
In order to obtain a patent right three conditions have to be fulfilled: novelty,
inventiveness and usefulness.
a)

The requirement of novelty means that “before the date of filing no identicalinvention or utility model has been publicly disclosed in publications in the
country or abroad or has been publicly used or made known to the public by anyother means in the country, nor has any other person filed previously with the
Patent Administration Department Under the State Council an application which
described the identical invention or utility model and was published after the said
date of filing.” 248b)The requirement of inventiveness for an invention conveys no technical solution
existing before the filing date. The invention has prominent and substantive
distinguishing features and represents a notable progress.249 A utility model
requires a lower level of inventiveness than an invention; whereas a design
patent requires an even lower level of inventiveness.250c)

The requirement of usefulness means that, “the invention or utility model can bemade or used and can provide positive results.”251 Generally, this means that aninvention has to be applicable in the industrial world and that it cannot just be
considered an imagination.

246

Article 2 Rules for the Implementation of the Patent Law of the People’s Republic of China 2001, via
www.sipo.gov.cn.

247

Article 2 Rules for the Implementation of the Patent Law of the People’s Republic of China 2001, via

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www.sipo.gov.cn.
248

Article 22 Patent Law.

249

Article 22 Patent Law.

250

Presentation by Ms. Ivy Lee May, Patent attorney at SHIIPS in California, U.S.

251

Article 22 Patent Law.

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In order for a design to qualify as a patent, it shall not be identical with or similar to any
design which, before the filing date of the application, has been publicly disclosed indomestic or foreign publications or has been publicly used within the country.252 Since a
design patent is being used for a particular product, the patent right is limited to such typeof product. That also implies that the use of a similar design on a different type of productdoes not constitute a patent infringement.253
The following inventions are excluded from patent protection: scientific discoveries, rules
and methods for mental activities, methods for the diagnosis or for the treatment ofdiseases, animal and plant varieties (processes used for producing such varieties may be
granted a patent right)254 and substances obtained by means of nuclear transformation.255
Applications for patent registrations have to be submitted to the (Patent Administration
Department of the) State Intellectual Property Office (SIPO) in Beijing. SIPO offices at theprovincial and municipal level deal with the administrative enforcement. A foreigncompany that wants to file a patent can only do so through an authorised Chinese patent
agent. China applies the so-called ‘first-to-file system’, meaning that the patent is granted
to the applicant that first files the patent (and not to the one that first invented the productor process).256 If there is no reason to reject a patent invention after substantial
examination and no reason to reject a utility model or design after preliminary
examination,257 SIPO issues the certificate of patent, and registers and announces thepatent. A patent invention can be protected for 20 years, while the duration of design
patents and utility patents is 10 years.
The Paris Convention obliged China to incorporate the right of priority in its PatentLaw.258

252

Article 23 Patent Law.

253

Xiang Wang, Chinese Patent Law and Patent litigation in China (Asian Studies, School of Law Universityof Maryland, number 5, 1998(148)), p. 17.

254

China promulgated Plant New Varieties Protection Regulation in 1997. Some plant varieties may be
granted a plant varieties right subject to such Regulation.

255

Article 25 of the Patent Law.

256

This is the same system as is applied in the European Union. In some other countries, such as the UnitedStates, the “first-to-invent” rule is applied. See U.S. Department of Commerce, International Trade
Administration, January 2003, via www.usembassy-china.org.cn/ipr/ovview.html.

257

Whether the patent certificate is issued by SIPO is based on the examinations for different categories ofpatents.

258

Since 1992 the right of priority applies to both foreign and Chinese applicants (see Article 29 Patent Law).
The applicant enjoys a right of priority during 12 months from the date that an applicant first filed an

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application for a patent in another country (or 6 months in case of a design patent).

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

Trademark Law

The Chinese Trademark Law was promulgated on 23 August 1982 and has been revised
twice after, in 1993 and 2001.259 China joined the Madrid Protocol in 1989 which obliged
China to extend its reciprocal trademark registration to all Member countries. The
Chinese Trademark Law now shows consistency with the international standards and therequirements which are outlined in the TRIPs Agreement, especially Articles 15-21 andArticle 24 (right of priority). In accordance with Article 15 (1) of the TRIPs Agreement, any‘word, design, letters of an alphabet, numerals, three-dimensional symbol, combination ofcolors and any combination of the above’ can be registered.260 However, trade names are
not expressly covered by the Chinese Trademark Law, as is required under the TRIPs
Agreement.261 In conformity with Article 16(1) of the TRIPs Agreement, the Chinese
Trademark Law states that to sell or make counterfeit products without authorisation, touse an identical or similar mark in respect of similar goods without authorisation or tocause prejudice to the exclusive right of the trademark registrant amounts to an
infringement of the right to exclusively use a registered trademark.262 If a trademark has
not been used for three consecutive years it may be annulled. This rule does not provide
in any exception in case there is a valid reason for non-use, although that is also provided
by the TRIPs Agreement.263 The trademark is protected for a period of ten years from thedate the registration is approved. The period of validity for each renewal of registration
shall be ten years.264
Comparable to the filing of a patent application, China has adopted a first-to-file system.
Although a foreign company could initially only register a trademark through an
authorised Chinese agent, recent amendments to the Implementing Regulations of the259

In addition to the Chinese Trademark Law, the Implementing Regulation also sets out rules that govern
Chinese trademark law.

260
261

Article 8 Trademark Law, via www.chinaiprlaw.com.
A. Gregory, Chinese trademark law and the TRIPs Agreement: Confucius meets the WTO, China and theworld trading system: entering the new millennium, Cambridge University Press (2003).

262

Article 52 Trademark Law.

263

Article 19 TRIPs Agreement.

264

The minimum term of protection prescribed by the TRIPs Agreement is seven years, Article 18 TRIPs
Agreement. According to Chinese Trademark Law, the trademark owner is entitled to renew the right of

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trademark within six months before expiration of the ten years.

122/158－ 153 －

Trademark Law have made it possible for operating establishments of foreign companies(such as a WFOE or an EJV)265 to directly register trademarks without use of a Chinese
agent.266
Unregistered trademarks are protected under the Anti Unfair Competition Law if suchtrademarks are well-known enough. The application of a trademark is published in the
China Trademarks Gazette and is open to opposition for three months.


Copyright Law

In 1990 China adopted the Copyright Law of the People’s Republic of China. Soon after
China acceded to the Berne Convention for the Protection of Literary and Article Works, itjoined the Universal Copyright Convention.267 To ensure the enforcement of theapplicable Copyright Treaties, China put into play a series of laws and regulations which
include the Enforcement Regulations of Copyright Laws of the People’s Republic ofChina, the Protective Regulations on Computer Software, the Rules on the Enforcementof International Copyright Pact, and the Resolution on Punishment of Infringing
Copyrights. In 2001, China revised its Copyright Law in order to meet international
standards and to respond to the challenges in copyright protection due to rapid scientificand technical developments.
Any work, published or not, may be protected by the Chinese Copyright Law. Without
registration, protection is in any case granted to individuals from countries that havejoined the International Copyright Conventions or bilateral agreements to which China isa member. If copyright owners wish to register their right, they can do so with the National
Copyright Administration (NCA) to establish evidence of ownership with a view topotential enforcement actions. According to the Chinese Copyright Law, copyrightableworks include “works of literature, art, natural science, social science, engineering
technology and the like which are expressed in the following forms: written and oral
works; musical, dramatic, quyi [a form of Chinese opera], and choreographic andacrobatic works; works of fine art and architecture; photographic works; cinematographic
works and works created by virtue of an analogous method of film production; drawingsof engineering designs, and product designs; maps, sketches and other graphic works
265

WFOE means ‘Wholly Foreign Owned Enterprise’, which is a limited liability company established in
China by foreign investor(s). EJV means ‘Equity Joint Venture’, which is a limited liability company
separate and distinct from its investors. An EJV is jointly established by one or more Chinese parties andone or more foreign parties.

266

Representing offices of foreign companies are however not authorised to directly register trademarks
without the use of a Chinese agent.

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267

China has been a party to the Universal Copyright Convention since 30 July 1992.

123/158－ 154 －

and model works; computer software and other works as provided for in laws andadministrative regulations”.268 Laws, regulations, resolutions, decisions and orders ofState organs and other documents of a legislative, administrative or judicial nature andtheir official translations as well as prohibited works are however not protected by the
Copyright Law either.269
A foreign work is protected if the work meets one of the following two conditions: 1) the
work is first published within the Chinese territory; or 2) if the works is first publishedoutside the Chinese territory, the author of the works belongs to a country which hasentered into an agreement with China on copyright or whose country has joined aninternational copyright agreement to which China is a party.270 If a work is created byadaptation, translation, annotation, compilation, or arrangement of a pre-existing work,
the copyright in the derivative work belongs to the adaptor, translator, compiler, or
arranger.271
The work of a citizen is protected during the lifetime of the author and fifty years after,
while the copyright of a legal entity or other organisation is protected for a period of fifty
years, expiring on December 31 of the fiftieth year after the first publication of suchwork.272 The Copyright Law mentions some circumstances where a work may be
exploited without the permission from, and without remuneration to, the copyrightowner,273 provided the name of the author and the title of the work are mentioned.274
Unfair Competition

The Anti-Unfair Competition Law275 provides protection for unregistered trademarks,
packaging, trade dress and trade secrets. The Fair Trade Bureau that belongs to the268

Article 2 and 3 Copyright Law, via www.chinaiprlaw.com.

269

Article 4 and 5 Copyright Law.

270

Article 2 Copyright Law.

271

Article 12 Copyright Law.

272

Article 21 Copyright Law.

273

If anyone other than the copyright owner wants to exploit a copyrighted work, he has to enter into alicensing agreement with the copyright owner (Article 24 Copyright Law).

274

See Article 22 Copyright Law. Examples are: the use of published work for the purposes of the user’s
own private study, appropriate quotation from a published work in one’s own work and reuse or citation ofa published work in newspapers, periodicals, at radio stations, television stations or any other media forthe purpose of reporting current events.

49100201/2285043.12

275

Via http://en.chinacourt.org.

124/158－ 155 －

State Administration for Industry and Commerce (SAIC) is responsible for theinterpretation and implementation of the Unfair Competition Law.276
Enforcement

In China, three different routes are available for the enforcement of IP rights:
administrative, civil and criminal enforcement.
Administrative enforcement can take place via the following agencies and offices:276

Administration for Quality Supervision, Inspection and Quarantine(AQSIQ)
This agency is primarily tasked with ensuring product quality, but also
deals with infringements of registered trademarks, when the infringing
products are in the form of an inferior quality.

State Administration on Industry and Commerce (SAIC), Trademark
OfficeThe SAIC is responsible for trademark registration, administrative
recognition of well-known trademarks and the enforcement oftrademark protection. The Fair Trade Bureau ensures the enforcementof the Anti-Unfair Competition Law. SAIC has the power to investigate
a case, as well as – in case of an infringement – the power to orderthat the sale of infringing items ceases and to stop further
infringement, order the destruction of infringing goods, impose fines
and remove machines that were used for the production of thecounterfeited goods.

State Intellectual Property Office (SIPO)
SIPO is responsible for the examination of foreign and national
patents.



National Copyright Administration (NCA)
NCA is responsible for the registration of copyrights and theenforcement thereof.

U.S. Department of Commerce, International Trade Administration, January 2003, via www.usembassy-

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china.org.cn/ipr/ovview.html.

125/158－ 156 －

General Administration of Customs (GAC)
The GAC bans the import and export of IPR infringing andcounterfeited goods. The GAC hands out a record certificate that is
valid for ten years as from the date of approval by the GAC. If theperiod of validity of an IPR is less than ten years from the effective
date of record, the period of validity for record shall be the period of thevalidity of the IPR. If a rights holder suspects infringing goods to enter
China, he may notify the GAC by submitting a written application at thesuspected point of entry. In case of a discovered infringement, the
GAC has the authority to confiscate the goods, destroy or remove
them and impose a fine.



Public Security Bureau (PSB) (police) / Procuratorate (prosecutors)
In accordance with the TRIPs Agreement, China’s IPR laws allow IP
administrative authorities to transfer IP infringing cases to the police
and the prosecutors for criminal investigation. Also IPR owners andlegal users may report infringing cases to PSB. However, it has beenshown that most IPR infringing cases continue to be dealt with by theadministrative authorities.



Regional IPR Bureau
Most local and regional IPR offices rather occupy themselves withcampaigning and the provision of information concerning IPR
enforcement to companies than enforcement itself.277

Appeals from administrative IPR decisions should in principle be made to the
Administrative Tribunals of the competent People’s Court with jurisdiction according to
the Administration Procedure Law of the PRC.278
Civil enforcement takes place through civil actions in the Local People's courts. There are
special Intellectual Property Tribunals in the Intermediate People’s Courts and Higher
People’s Courts. Although the route of civil litigation is not chosen as often as the route ofadministrative enforcement, there are arguments in favour of the use of civil litigation:

277

See U.S. Department of Commerce, International Trade Administration, January 2003, via
www.usembassy-china.org.cn/ipr/ovview.html.

278

People’s Courts at intermediate level or above have the right to review the appeals from administrative
IPR decisions. The Supreme Court merely has the jurisdiction over grave and complicated administrative

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cases in the whole country.

126/158－ 157 －



flexibility to determine forum for dispute. This flexibility enables the plaintiff toremove the case from the defendant’s influence sphere and to choose a courtthat is known for its IPR expertise;279public and open nature of litigation: civil litigation is more open thanadministrative enforcement, which enables the plaintiff to involve the press andthe public opinion;availability of “provisional measures”: certain provisional measures such as
preliminary injunctions, evidence preservation orders280 or property preservation
orders281 are only available in civil courts;

compensation and other remedies: civil courts may grant various forms ofredress to the plaintiff. They can:(i)order the cessation of infringing acts;(ii)

require the provision of undertakings of non-infringement;(iii)

order the confiscation and/or destruction of infringing products, tools andmoulds;(iv)

impose fines;(v)

require the issuing of public apology;(vi)order the defendant to pay damages.

Compensation for damage can only be claimed in a civil procedure(administrative courts are only allowed to impose fines). The Chinese courts cangrant compensation of damage based on the proven losses of the plaintiff, theprofit made by the defendant or on a multiple of 1-3 times the royalty of alegitimate licensee. In case none of the abovementioned compensations are279

The Beijing No. 1 and Shanghai No. 2 Intermediate People’s Courts are said to have considerable IPR
expertise, see E. Papageorgiu, C. Bailey, ‘Effective intellectual property enforcement in China’, BMM
bulletin, volume 113, no. 1/2007, p. 6.

280

Evidence preservation orders may even imply “the judge visiting the infringer’s premises and orderingthat relevant documentation and other media containing information about the alleged infringement be
seized and/or copied”, see E. Papageorgiu, C. Bailey, ‘Effective intellectual property enforcement in
China’, BMM bulletin, volume 113, no. 1/2007, p. 6 .

281

Property preservation orders usually involve “a petition to the court requesting, for example , that certain
assets of the infringer be sequestered to ensure they are not disposed of or lost, and remain available forany award made by the court in subsequent action”, see E. Papageorgiu, C. Bailey, ‘Effective intellectual

49100201/2285043.12

property enforcement in China’, BMM bulletin, volume 113, no. 1/2007, p. 6.

127/158－ 158 －

applicable the law also provides for statutory damages of up to 500,000 RMB(approx. € 50,000).282
The strongest form of enforcement is criminal enforcement, with potentially unlimited
fines and up to seven years imprisonment. The organs that are responsible for thecriminal enforcement are the Public Security Bureau (PSB) and the Public Procuratorate.
There are three ways criminal prosecutions can start:i.

by bringing a private criminal complaint and private prosecution before the court by
the rights holder;ii.

by requesting the PSB to bring a criminal enforcement action. The IP holder thenusually supplies evidence for the infringement (which has to meet the criminal liability
thresholds).

iii.

by bringing an administrative enforcement proceeding (AIC, AQSIQ or NCA),
seeking the evidence needed for the criminal liability thresholds and transferring thecase to the PSB (in practice this method is most used).

b.

Problems of enforceability

The analysis we have conducted shows that the theoretical legal framework is not somuch the problem (both China and South Korea are bound to the TRIPs Agreement andhave national intellectual property laws), but that the lack of enforceability forms the main
bottleneck. China was even the source of 80% of counterfeit goods intercepted at EU
borders in 2006.283
Important burdens of litigation in countries in the Far East are a lack of awareness ofindustry about what is and what is not allowed, the cost of litigation, ‘discriminatory’procedural requirements (e.g. the need to notarise and legalise powers of attorney andevidence from other countries than China) and a low commitment to supporting
intellectual property laws due to the – government supported – overriding goal of rapid
economic development and (particularly for China) the lack of a tradition in IPR
protection.284 A recent study of the European Commission also shows that China is not282

E. Papageorgiu, C. Bailey, ‘Effective intellectual property enforcement in China’, BMM bulletin, volume
113, no. 1/2007, p. 6. However, in legal practice it is understood that compensation for damages may be
more than statutory RMB 500,000, if evidences show that the losses of the plaintiff are apparently beyond
the statutory damages of 500,000 RMB.

283

See e.g. MEMO/07/237, EU-China Ministerial Meeting of 12 June 2007.

284

See also Ranjard P., Misonne B., Study on the Future Opportunities and Challenges of EU-China Trade

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and Investment Relations, Study 12: Exploring China’s IP Environment – Strategies and Policies.

128/158－ 159 －

performing the commitments it has made within the WTO framework and that is
especially lagging behind in the field of IP.
The Chinese Trademark Law encourages the parties to mediate settlement, including thequantum of damages, before exercising their right to institute legal proceedings.285 The
administrations of Industry and Commerce (AIC’s) and the People’s Court are both
authorised to order injunctions and to confiscate and destroy infringing products,
trademarks and manufacturing equipment.286 In case of infringement, compensation isdefined to include either an account of profits or the losses incurred by the party during
the period of infringement. Generally speaking, in cases where the amount ofcompensation is difficult to determine, the statutory damages may not be higher than
RMB 500,000.287 Although the amount of fines awarded is often so low that it hardly
seems worth while for foreign IP holders to engage in IP litigation, the Chinese courts
have awarded high fines against foreign companies. The Chinese court has ordered theFrench company Schneider Electric, for example, to pay a Chinese company € 31m indamages for infringing its patent, the largest amount ever awarded in an intellectual
property case in the country.288
Chinese vendors who have been caught selling infringing goods can even avoid liability ifthey do not know such goods are made and sold without the permission of the rights
owner and prove that they obtained their infringing products legitimately.289 All thesecircumstances provide the image of a rather protectionist environment.
Furthermore, many cases that meet the criminal thresholds are still not prosecuted for thefollowing reasons:a)reluctance of administrative officials to transfer the case, because administrative
authorities are often assessed on the number and size of successful cases;b)

local protectionism: often economic priorities seem to prevail over law
enforcement;c)lack of manpower and knowledge;

285
286

Article 54 Trademark Law.
A. Gregory, Chinese trademark law and the TRIPs Agreement: Confucius meets the WTO, China and theworld trading system: entering the new millennium, Cambridge University Press (2003).

287

Article 56 Trademark Law. However, as stated before, in legal practice it is understood that compensation
for damage may be more than statutory RMB 500,000, if evidences show that the losses of the plaintiff

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are apparently beyond the statutory damages of 500,000 RMB.
288

See ‘China fines Schneider €31m’ in the Financial Times of 1 October 2007, p. 19.

289

Art. 56 Trademark Law.

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d)IV.2

valuation of products: there are three different methods to value the value of
infringing products (the sales value, the average market price and value of
genuine goods). The valuation method has a significant influence on thequestion whether the case meets the criminal liabilities thresholds.290

South Korea

For many years South Korea has been a member of various international IPR protection
agreements, treaties and organisations, among which the World Intellectual Property
Organisation (1979), the Paris Convention for the Protection of Intellectual Property
Rights (1980), the Patent Cooperation Treaty (1984), Universal Copyright Convention(1987), the TRIPs Agreement of the WTO (1995), the Berne Convention (1996), theTrademark Law Treaty (2003) and the WIPO Copyright Treaty (2004).

a.

Legal frameworkPatent Law

The protection and registration of patents in South Korea is provided for by the Patent
Act, dating from 31 December 1961.291 Under the Patent Act, for a patent to be registeredit should fall under the definition of invention as well as have novelty, industrial
applicability and an inventive step.292 The following inventions are not patentable:
1)inventions publicly known or worked in Korea or in a foreign country before thefiling of the patent application;

2)

inventions described in a publication distributed in Korea or in a foreign country
before the filing of the patent application or inventions published through electric
telecommunication lines as prescribed by Presidential Decree;3)

inventions that could have been easily conceived by a person skilled in the art
from the prior art; and4)inventions likely to contravene public order or morality or to injure public health.293

290

E. Papageorgiu, C. Bailey, ‘Effective intellectual property enforcement in China’, BMM bulletin, volume49100201/2285043.12

113, no. 1/2007, p. 7.
291

Via www.kipo.go.kr.

292

Via www.kipo.go.kr or www.epo.org.

293

Article 29 Patent Act.

130/158－ 161 －

A patent application must be submitted to the Korean Intellectual Property Office(KIPO).294 The KIPO is in charge of intellectual property administration and grants IPR,
but also commercialises them and protects them from infringement. Either the inventor or
his assignee can file the patent application with the KIPO. The applicant may both be anatural or a legal person. The Korea Patent application is based on the principle of ‘firstto-file’, meaning that where two or more applications related to the same invention are
filed on different dates, only the applicant of the application with the earlier filing date canobtain a patent for the invention.295 After the application, a patent right is granted throughvarious steps: formality examination,296 laying open of publication for public inspection,
request for examination, substantial examination,297 rejection, registration
andpublication. Usually it takes about ten months to issue the first office action after a formal
request for examination of the application is made in South Korea.298
The duration of patent protection is twenty years from the filing date of the application(fifteen years for models) commencing upon registration and that term can, in principle,
not be renewed.299 However, in certain exceptional cases it is possible to obtain a fiveyear extension.300 South Korea has incorporated the right of priority in its patent laws.301
In order to benefit from the priority right, the application should be filed in South Korea
within one year from the filing date of the priority application. The priority document (acertified copy of the priority application together with a Korean translation) may besubmitted within one year and four months from the priority date. If the priority document
is submitted after that period of time, the claim of priority will become null and void.302
Additionally, the Patent Act provides for a series of provisions regarding the international
application procedure under the Patent Cooperation Treaty (which can be done directly to
the KIPO).303
294

See also on patent applications, Article 42 Patent Act.

295

Article 36 (1) Patent Act.

296

Article 11 Enforcement Regulation of the Patent Act. The application will be treated as if it had neverbeen submitted where the kind of application is not clear, where the name or address of a person is notdescribed, where the application is not written in Korean, where the application is not accompanied by the
specification/claims or drawings or where the application is submitted by someone who has no address orplace of business in South Korea, without using an agent in South Korea (www.kipo.go.kr).

297

A patent application will not be substantially examined until a formal request for substantive examination
is made by the applicant or a party in interest, within five years from the filing date of the application. If norequest for examination is made within the five-year period, the patent application is deemed to have49100201/2285043.12

been withdrawn.
298

Via www.epo.org/patents/patent-information/east-asian/helpdesk/korea/faq.html.

299

Article 88 Patent Act.

300

Article 89 Patent Act.

301

Article 54 Patent Act.

302

Korean Intellectual Property Office, Procedures for granting a Patent, via www.kipo.go.kr.

303

Article 192-224 Patent Act.

131/158－ 162 －

Article 96 Patent Act implements Article 5ter Paris Convention304
The effect of a patent right does not extend to any of the following subparagraphs:i)

working a patented invention for research or experimental purposes;ii)

vessels, aircraft or vehicles merely passing through The Republic of Korea, or
machinery, instruments, equipment, or other accessories used on the vessels,
aircraft or vehicles; oriii)

articles existing in the Republic of Korea when the patent application was filed.


Utility Models

Registering an invention as a utility model is another – less difficult and less expensive –way of protecting a product. The protection of utility models is laid down in the Utility
Act.305 The purpose of this Act is “to encourage, protect, utilise practical devices, thereby
improving and developing technology, and to contribute to the development ofindustry”.306 A utility model can be granted for “devices that are industrially applicable andrelate to the shape and structure of an article or combination of articles”.307
A utility model application can be filed with the KIPO. Shortly, the utility model application
proceeds in the same manner as a patent application, except that the request for
examination of the utility model application should be filed with KIPO by the applicant or
an interested party within three years from the filing date of the application.308 The ‘firstto-file’ rule is equally applicable to utility models.309
It is not possible to file a patent application and a utility model application at the sametime. Prior to 1 October 2006, it was possible to file these two applications in parallel inorder to get early protection for an invention. In case the patent was granted theregistered utility model had to be withdrawn. Since the abolition of the possibility of dual
filing in October 2006, South Korea decided to reintroduce the possibility of converting304

See section 3.1 where it is explained that this provision can form a burden to protection.

305

Via www.kipo.go.kr.

306

Article 1 Utility Model Act.

307

Article 5 (1) Utility Model Act.

308

The non-substantive examination system and the opposition system have been abolished and instead thesubstantive examination system has been commenced as of July 1, 2007.

49100201/2285043.12

309

Article 8 Utility Model Act.

132/158－ 163 －

patent applications into utility model applications and vice versa.310 The protection for autility model lasts for ten years.311
Design Law

Another way to protect inventions is offered by the Design Protection Act of 31 December
1961.312 To apply for an industrial design, the product needs to fall under the definition ofa design as given by the Design Protection Act: “the shape, pattern, colour or a
combination of these in an article that produces an aesthetic impression in the sense ofsight”.313 The same applies to a part of an article.314 When qualifying as a design theinvention needs to fulfil the following criteria. Firstly, the design should be industriallyapplicable,315 meaning that the design is mass-produced in an industrial method.316
Secondly, the design must be a novel, meaning that the design should not be identical orsimilar to any design that is already publicly known or worked or published in Korea or ina foreign country.317 Thirdly, the design must correspond to a certain level of creativity, or,to put it differently, “the design should be a design that could not have been easily
created by any person having an ordinary skill in the art to which the design pertains”.318

49100201/2285043.12

Applications for an industrial design should be filed with the KIPO. Currently, mostapplications are examined under the non-substantial examination system. This meansthat applications still need to fulfil the same requirements as with a substantial
examination system. However, if they do not fulfil the requirements they will be
invalidated through the post-grant opposition or trial. Due to the introduction of the nonsubstantial examination system an industrial design can be obtained much faster than
before, namely within two or three months. A right of priority may be claimed under theParis Convention or a bilateral agreement. To claim a right of priority the design
application should be filed in South Korea within six months from its first application in aforeign country, the priority date.319 The appeal and trial procedure are the same as thoseof patent and trademarks.320

310

Via www.epo.org/patents/patent-information/east-asian/helpdesk/korea/faq.html.

311

Article 36 (1) Utility Model Act.

312

Via www.kipo.go.kr.

313

Article 2 Design Protection Act.

314

Ibid.

315

Article 5 (1) Design Protection Act.

316

Via www.kipo.go.kr.

317

Article 5 (1) Design Protection Act.

318

Article 5 (2) Design Protection Act.

319

Article 23 Design Protection Act.

320

See under ‘Enforcement’ below.

133/158－ 164 －



Trademark Law

The protection and registration of trademarks is laid down in the 1949 Trademark Act,
which has been amended several times. The South Korean Trademark Law has beenrevised to conform with the Trademark Law Treaty and the Madrid Protocol.
A trademark is defined as ‘a sign, a character, a figure, a three-dimensional shape,
colour, hologram or any combination thereof, as well as others which are visually
recognisable’.321 Trademark registration may be obtained, except:
where the mark consists solely of a sign indicating the usual name of the goods;

where the mark is customarily used on the goods;

where the mark consists solely of a mark indicating one of the characteristic of
the product (such as origin, quality);

where the mark consists solely of sign indicating a conspicuous geographicalname (or abbreviation or map);

where the mark consists solely of a sign indicating a common surname or nameof legal entity;where the mark consists solely of a very simple and commonplace sign; orwhere the mark does not enable consumers to recognise the person whose
goods are indicated by the good.322

Article 7 of the Trademark Act sums up the grounds for not admitting the registration of a
trademark, such as similarity to senior mark, similarity to well-known marks, public orderor morality, etc.
The Madrid Protocol allows companies from the member nations to apply for trademark
ownership in several member nation countries simultaneously. In South Korea, a foreigncompany can register its trademarks and patents with the KIPO.323 Registration of a
trademark is no prerequisite for the use of a trademark; however, no protection isprovided without registration. Foreign applicants are required to retain a licensed local
attorney in order to prepare applications in Korea and to conduct necessary follow-up
correspondence locally. In South Korea the trademark registration system is based on

321

Article 2 (1) Trademark Act.

322

Article 6 (1) Trademark Act.

323

Via www.buyusa.gov/korea/en/iproverview.html. See also on the application procedure, Article 949100201/2285043.12

Trademark Act.

134/158－ 165 －

‘first-to-file’ instead of ‘first-commercial-use’ or ‘first-intend-to-use’.324 The duration of
trademark protection is ten years counting from the registration date of its establishment
and the registration may be renewed for another ten years.325
In order to enjoy the right of priority,326 an application should be filed in South Korea
within six months from the filing date of the priority application. The priority document (acertified copy of the priority application together with a Korean translation) has to besubmitted within three months from the filing date of the application.


Copyright Law

In order to comply with its obligations under the TRIPs Agreement of the WTO, South
Korea amended the Copyright Act and the Computer Program Protection Act.327 The
protection of copyrights is provided by the Copyright Act.328
The following works can be protected: “novels, poems, theses, lectures, recitations, plays
and other literary works; musical works; theatrical works; paintings, calligraphic works,
designs, sculptures, crafts, works of applied art; architectural works; photographic works;
cinematographic works; maps, charts, design drawings, sketches models or otherdiagrammatic works; and computer program works”.329 “A derivative creation produced bymeans of translation, arrangement, alteration, dramatisation, cinematisation etc. of an
original work”, as well as a compilation shall be independently protected”.330
Copyrights can be registered at the Copyright Commission331 designated by the Ministryof Culture and Tourism (MOCT).332 Korean copyright law provides copyright protection for
324

Article 8 Trademark Act.

325

Article 42 Trademark Act.

326

A right of priority can be claimed under Article 20 of the Trademark Act.

327

Y. Choi, ‘Development of Copyright Protection in Korea: its history, inherent limits, and suggested
solutions’, Brook J. Int’l L., Vol. 28:2, 2003, p.663. However, the Korean Copyright still fails to comply with
the TRIPs Agreement, for example, as it does not protect foreign works whose authors died before 1957.

328

Via www.kipo.go.kr.

329

Article 4 (1) Copyright Act.

330

Article 5 (1) and Article 6 (1) Copyright Act.

331

See www.copyright.or.kr.

332

The Copyright Team forms part of the Cultural Industry Office that falls under the Ministry of Culture andTourism. The Copyrights Team establishes, formulates, and executes a general plan of copyrights policy,
handles matters related to approval and registration of copyrights, is concerned with International
Cooperation and exchange regarding copyrights, prevents infringement of copyright and copyrightprotection, deals with matters related to establishing a foundation for the improvement of the copyrights
industry, affairs related to copyrights law education and publicity activities of the system and matters

49100201/2285043.12

regarding the Copyright Commission for Deliberation and Conciliation. See http://www.mct.go.kr/english/.

135/158－ 166 －

only 50 years from the date of ‘making it public’ for works authored by juridical persons,while individuals can receive protection for the lifetime of the author, plus 50 years fromthe date of creation.
Unfair Competition and Unfair Trade Practices

The protection against unfair competition and trade secrets misappropriation is coveredby the Unfair Competition Prevention and Trade Secret Protection Law (UCPA Act). The
Act was substantially amended on 31 December 1986. The purpose of the UCPA Act is‘to maintain the order of sound transactions by preventing unfair competitive acts, suchas unjust use of another person’s trademark, trade name, etc. known to the public in
Korea, and any act infringing on another person’s trade secret’.333 In 2004, the UCPA Act
was once more amended, strengthening penalties for disclosing trade secrets.
Anyone who discovers unfair trade practices within one year from the alleged
infringement and who can present concrete information and evidence, can rely on the Act
on the Investigation of Unfair Trade Practices and Remedies against Injury of Domestic
Industry (Trade Remedy Act334).335 Activities constituting an unfair trade practice underthe Act are:1)

the import or export of any products which infringe on intellectual property rights
such as patent, trademark, copyright, etc. and/or

2)

the sale of such infringing products in South Korea.336

Under this Act, the Korean Trade Commission (KTC)337 is empowered to initiate
investigation of and impose sanctions for unfair trade practices. In its investigation the
KTC may: 1) order testimony of parties or interested persons; 2) order inspection oflocations and materials and 3) appoint an expert. The KTC may impose provisional
measures (injunction or measures to prevent injury from unfair trade practices),338
corrective measures (suspending imports, exports, sales and/or manufacture, blocking

333

Article 1 UCPA Act.

334

Via www.ktc.go.kr. In 2000, the Trade Remedy Act was enacted for the purpose of increasing theeffectiveness of the Korean Trade Commission in preventing unfair trade practices. The Act, which issimilar to provisions in the Foreign Trade Act, became effective as a separate bill on May 4, 2001.

335

Article 5 (2) Trade Remedy Act.

336

Article 4 (1) Trade Remedy Act.

337

The KTC is a government agency responsible for supervising the relief system for import-related injuries
and preventing unfair trade practices in Korea. It is organised under the Korean Ministry of Commerce,
Industry and Energy.

49100201/2285043.12

338

Article 7 Trade Remedy Act.

136/158－ 167 －

customs clearance of or destroying infringing goods)339 and monetary penalties (basedon a transaction amount formula).340


Enforcement

The main form of patent enforcement in South Korea is a civil action in a District Court,
but criminal sanctions can also be imposed on a patent infringer by a District Court. A
criminal patent infringement action is handled by a public prosecutor; the patentee files acomplaint with the prosecutor's office but is not a party per se. Criminal actions for patent
infringement are not common. Appeals from the District Courts (in civil actions) arereviewed by the intermediate High Courts. The highest level of appeal is at the South
Korean Supreme Court.
Other actions related to patent enforcement may be initiated before the Intellectual
Property Tribunal (IPT). The IPT is an administrative tribunal within KIPO. The IPT is thefirst ex parte appeal review board for patent prosecution appeals. The IPT is also aninter-parties forum where opposing parties may resolve disputes on the validity andscope of enforceability for a granted patent. For issues on the validity of a patent, the IPT
has exclusive subject matter jurisdiction. The patentee, the alleged infringer or any otherparty in interest, may file such administrative patent related actions, either in parallel withor independent of a District Court action.

49100201/2285043.12

Jurisdiction for review of IPT decisions lies solely with the Korean Patent Court. The Patent
Court is an intermediate appeal court. It is a judicial court, which reviews IPT administrativedecisions. The Patent Court does not review patent infringement-related decisions from theDistrict Courts. Appeals from the Patent Court are reviewed by the Korean Supreme Court.

339

Article 10 Trade Remedy Act.

340

Article 11 Trade Remedy Act.

137/158－ 168 －

The following is a schematic overview of the Korean court system for patent lawsuits.

Korean Court System: Patent Litigation

Supreme
Court

High Court

Patent Court
KIPOIntellectual Property Tribunal- Invalidation Action- Confirmation of Scope Action

Examiner

District Court
Infringement Actions- Civil (Main Action orPreliminary Injunction Action)- Criminal- Application- Opposition Action

There are two types of civil actions possible for patent infringement:
1)

Preliminary injunction action (if there exists an immediate or present danger of
irreparable harm to the patentee, but no remedies other than injunction areavailable in this type of action);341 and

2)Main action (all civil remedies including permanent injunction and monetarycompensation are available in a main action).

Two types of administrative action are common:
1)

341

Invalidation action
An invalidation action may be filed with the IPT. It may be initiated by either aninterested party or by an examiner of the KIPO at any time, even after a patent has
expired. An interested party is defined as any person who is, or is likely to be,

South Korean courts have substantially raised the threshold for granting preliminary injunctions; and they49100201/2285043.12

are rarely granting preliminary injunctions in patent infringement actions.

138/158－ 169 －

affected because he may have the patent in question asserted against him by thepatentee. Therefore, any person who is in the business of manufacturing or selling
products made by using a patented invention or who is suspected of using apatented invention from the nature of his business, is an interested party for the
purpose of an invalidation action.
2)

Confirmation of the scope of action
An action to confirm the scope of a patent may be filed with the IPT.342 In such anaction, the petitioner seeks a decision on whether or not a certain article or process
falls within the scope of a patent's claims. Therefore, such actions are normallyinstituted by an interested party who seeks a decision that his article or process
does not fall within the scope of a patent right. In theory, a patentee may bring suchaction. However, in order for the patentee to establish standing for filing such anaction, it must show that the article or process presented in the action is, or at least
likely, to be actually used by a third party. Because of this burden of proof, there
have been much fewer cases brought by patentees.

A criminal action can be filed with the prosecutor’s office.343 The complaint must be filed in
the name of a designated company official of the patentee company. The complainant isgenerally a senior company executive; and may be called upon by the prosecutor's office
and/or the police. The complainant may be a foreign resident (i.e., he does not need to
be located in Korea), but will have to be available for the prosecutor and police
investigation.344 After the complaint has been filed with the prosecutor’s office, thecomplaint will go through the following phases:

342Preliminary investigation by the police345
The investigation can consist of taking the testimony of the complainant; thesuspect; the review of the physical evidence and interrogation of other
involved individuals. The investigation by the police takes about two

A District Court is, however, not bound by the decision rendered by the IPT as the administrative decision may
be considered only an advisory opinion.

343

Although there are exceptions, the complaint is usually filed with the Prosecutor’s Office having
geographic jurisdiction over the suspect’s place of business.

344

If the Complaint is later founded to be a false accusation, the table could be turned and the Complainant
may be found criminally liable for "false accusation." Such "false accusation" charges are rarely upheld –it will be found only if the original accusation was based on false facts. Nonetheless, such a charge "false
accusation" could be difficult and harassing for the individual.

345

The prosecutor has the discretion to refer the case to the police for investigation or to initiate an
investigation within the Prosecutor’s Office. For patent infringement cases, the Prosecutor is likely to49100201/2285043.12

refer to the police for the preliminary investigation.

139/158－ 170 －

months, where after the police will prepare a report for the prosecutor’s
office.
Transfer to the prosecutor and further investigation
The prosecutor will conduct his own investigation, which takes about threemonths.



The prosecutor’s decision: non-prosecution or indictment
The prosecutor has the discretion not to seek an indictment in all cases. In
practice prosecutors have generally taken a cautious approach to issuing
indictments. If an indictment is issued, the prosecutor will bring a criminal
action against the suspect.

Criminal action
The criminal action will be conducted before the District Court having
geographical jurisdiction over the case. The prosecutor may request the
court to apply a summary procedure to a case where the sought penalties
are limited to fines. In such case no trial is generally held, and the court
issues its judgment within thirty days from the suspect’s indictment. If thesought penalties involve relatively heavier fines and/or imprisonment, a trail
will be held before the District Court.



AppealThe defendant or prosecutor can appeal a District Court decision to theHigh Court within seven days of the District Court Decision. The High Court
decision can be appealed by either side to the Supreme Court, the final
court of appeal.

Generally speaking, criminal prosecution for patent infringements is rare in South Korea;
it is more common with regard to copyright and trademark infringements. First, police
often has difficulty understanding the relevant technologies. Second, unless the patent
infringement case is simple and very strong, it is very difficult to persuade the prosecutor
to indict.346

346

A decision by the prosecutor’s office not to indict could negatively impact other related cases and49100201/2285043.12

significantly affect the bargaining position between parties.

140/158－ 171 －

b.

Problems of enforceability

As Korea became more attractive for investment, the number of foreign companies hasgrown steadily. Understandably, these foreign companies often seek increased protectionof their IP rights. Despite efforts to comply with the TRIPs Agreement and the World
Trade Organisation rules, there have been serious problems with regard to a lack ofprotection and enforcement of IP rights in South Korea.347 There is (especially) room for
improvement in the field of trademark and copyright protection. Counterfeit goods, cybersquatting and copyright piracy committed by individual underground market players aremajor problems.
Part of the difficulties may be related to cultural factors.348 More specific, in South Korea
enforcement mechanisms are present in various sectors, but they are often not yet
effective enough to cope with the counterfeiting and piracy on broad scale.349
The following aspects could, in particular, be improved:350
More active participation by the government authorities in the IPR enforcement
policy and more support for actions against IPR infringements by government
authorities;

Improvement of human resources (i.e. judges, prosecutors, police men, customs
officials);

Improvement of the implementation of civil and criminal judicial procedures andremedies;Improvement of the damages awards in civil litigations;

Improvement of the customs procedures to prevent exports of IP infringing
goods;



Reorganisation of the current judicial system, placing more emphasis on
education and specialization with regard to IPR;Granting of exclusive jurisdiction to the Patent Court to avoid inconsistency andlegal uncertainty concerning all patents matters, including infringements (instead

347

H. Kim, ‘Korea’s experience with intellectual property protection and membership to the Agreement on
Trade-Related Aspects of Intellectual Property Rights’, Korean J. Int’l & Comp., Vol. 32, 2004, p. 129.

348

See also Y. Choi, ‘Development of Copyright Protection in Korea: its history, inherent limits, andsuggested solutions’, Brook J. Int’l L., Vol. 28:2, 2003.

349

See also trade.ec.europa.eu/doclib/docs/2006/november/tradoc_130596.pdf, www. amchamkorea.org,

350

Ibid.

49100201/2285043.12

2005 Annual Report KIPO (p. 23).

141/158－ 172 －

49100201/2285043.12

of a shared jurisdiction to review appeals from Patent decisions between the
Patent Court and the High Courts);

Amendment of the Copyright Act, as to protect the work authored by a juridical
person as well 50 years from the death of the creator (instead of 50 years fromthe date the work is first published);

Extension of the period of copyright protection from 50 to 70 years (in conformity
with the majority of other industrialised nations);

Shortening of lengthy trial procedures;

Increasing enforcement action by government authorities, especially in cases ofhigh quality counterfeits.

142/158－ 173 －

Annex V:

Competition law aspects of cooperation in the field of R&D and IP

INTRODUCTION
1.

Article 81 (1) EC Treaty prohibits any form of agreement and other collusive
behaviour between undertakings that appreciably restrict or are intended torestrict competition.

2.

Agreements on the joint execution of research work or the joint development of
the results of the research, up to but not including the stage of industrial
application, as well as technology transfer agreements will usually improve
economic efficiency and generally do not fall within the scope of Article 81 (1) EC
Treaty. In certain circumstances, however, such as where the parties agree notto carry out other research and development (hereinafter: “R&D”) in the same
field, thereby forgoing the opportunity of gaining competitive advantages over theother parties, or when a patent licensing agreement’s object restricts a party’s
ability to determine its prices when selling products to third parties, suchagreements may fall within Article 81 (1) EC Treaty.351

3.

For agreements falling under Article 81 (1) EC Treaty, the Commission or theCouncil may exempt certain types of agreements from the general prohibition in
Article 81 (1) by virtue of "block exemption regulations”. For example, Regulation
2659/2000 on the application of competition law to research and development
agreements352 and Regulation 772/2004 on the application of competition law totechnology transfer agreements.353

351

Preamble of Commission Regulation (EC) No 2659/2000 of 29 November 2000 on the application of
Article 81 (3) of the Treaty to categories of research and development agreements, Official Journal L 304(2000), point 3 and Commission Regulation (EC) No 772/2004 of 27 April 2004 on the application of
Article 81 (3) of the Treaty to categories of technology transfer agreements, Official Journal L 123 (2004),
preamble points 5-6 and Article 4(1)(a).

352

Commission Regulation (EC) No 2659/2000 of 29 November 2000 on the application of Article 81 (3) of
the Treaty to categories of research and development agreements, Official Journal L 304 (2000).

353

Commission Regulation (EC) No 772/2004 of 27 April 2004 on the application of Article 81 (3) of the49100201/2285043.12

Treaty to categories of technology transfer agreements, Official Journal L 123 (2004).

143/158－ 174 －

R&D AGREEMENTS
4.

As underlined in Article 163(2) EC Treaty, cooperation between undertakings inresearch and technological development represents an essential tool in making
Community industry internationally competitive. Collaboration in R&D may bringsignificant advantages, including a more efficient allocation of tasks andresources and the likelihood of earlier breakthroughs. However, an agreement
which restricts the parties’ freedom in R&D or which prevents one party obtaining
a competitive advantage in R&D over the other is likely to restrict thecompetition.354

5.

In 1985, the European Commission summarised the factors weighing on eachside as follows:“R&D collaboration has various economic advantages:
(i)
(ii)

(iii)

Investment in R&D can be kept to a minimum. Economies of scale
can be achieved.
Research budgets can be made to go further and risks spread bysharing the costs and benefits of a project between several firms or
spreading a given sum over a series of relatively independent
projects.
Cross-frontier R&D collaboration within the Community can help to
open up national markets. (…). International R&D collaboration canenlarge markets and supply for the products (high technology orotherwise) incorporating the results of the joint research to a
Community or even world scale.

But the economic effects on R&D are not always wholly beneficial:
(i)

(ii)

49100201/2285043.12

354

Powerful firms may enter into R&D agreements with potentially very
innovative rivals in order to be able to control technologicalprogress. In other cases, R&D collaboration may raise entry
barriers to non-participating competitors.
R&D collaboration can also facilitate coordination of pricing andproduction and enable abnormal profits to be made frominnovations. Such dangers are greatest where, as it is frequently
the case in the Community, there are non-tariff barriers between
national markets. In such cases, cross-frontier collaboration at the

Bellamy & Child, European Community Law of Competition, Sweet & Maxwell, 2001, p. 315.

144/158－ 175 －

R&D stage may give way to geographical division of the market on
national lines for the product resulting from the R&D.355”
6.

Below four questions will be addressed:
A. When will an R&D agreement not fall under Article 81 (1) EC Treaty?
B. When will an R&D agreement fall under Article 81 (1) EC Treaty?
C. When will an R&D agreement falling under Article 81 (1) EC Treaty be
exempted under Regulation 2659/2000?
D. Calculation of parties’ market share.
A.

Agreements that generally do not restrict competition

7.

In general Article 81 (1) EC Treaty should not apply to agreements relating solely
to a stage prior to commercial exploitation and having as their sole object thecooperation on pure R&D projects, nor to the placing of R&D contracts, typicallywith specialised companies or research institutes, which are not active in the
exploitation of the results.356

8.

The Guidelines on the applicability of Article 81 to horizontal cooperationagreements357 provide that there are essentially three types of R&D agreementsthat generally do not restrict competition under article 81 (1) EC Treaty:

9.

Agreements not involving joint exploitation

Those pure R&D agreements can only cause a competition problem, if effective
competition with respect to innovation is significantly reduced.358


R&D cooperation between non-competitors

R&D cooperation between non-competitors does generally not restrict
competition.359 However, the Guidelines state that even R&D agreements
between non-competitors may fall under Article 81 (1) EC Treaty when the

10.

355

Fifteenth report on Competition Policy (1985), point 282.

356

Bellamy & Child, European Community Law of Competition, Sweet & Maxwell, 2001, p. 317.

357

Guidelines on the applicability of Article 81 to horizontal cooperation agreements, Official Journal C 3

49100201/2285043.12(2001), p. 2.
358

Guidelines, para. 58.

359

Guidelines, para. 56.

145/158－ 176 －

agreement leads to foreclosure, i.e. if it relates to an exclusive exploitation of
results and if it is concluded between firms, one of which has significant market
power with respect to key technology.360
11.

Out-sourcing

Due to the complementary nature of the cooperating parties in these scenarios,

Article 81 (1) does not apply.361
B.

Agreements that generally restrict competition

12.

A restrictive agreement is an agreement between undertakings whose objective
is to limit or eliminate competition between them in order to increase the prices
and profits of the undertakings concerned without producing any objective
counterbalancing advantages. In practice, these agreements usually entail pricefixing; production quotas; sharing markets, customers or geographical areas;
restricted access to R&D results; or a combination of these practices. Suchagreements damage consumers and society as a whole since the undertakings
involved set prices higher than they would in conditions of free competition.362

13.

The following agreements will generally fall under Article 81 (1) EC Treaty:

14.

Restrictions on innovation363

If the effect of the agreement between potential competitors is that de facto theparties will no longer conduct research independently of one another, theagreement will restrict competition.


15.

Restricted access to the results364

Unless justifiable by objective reasons such as unequal contributions to the joint
R&D, provisions whereby the parties agree to pay royalties to each other may
infringe Article 81 (1) EC Treaty.

360

Guidelines, footnote 30.

361

Guidelines, para. 57.

362

http://europa.eu/scadplus/leg/en/lvb/l26102.htm

363

Van Bael & Bellis, Competition law of the European Community, 4 edition, Kluwer Law International,th2007, p. 491.

49100201/2285043.12

364

Bellamy & Child, European Community Law of Competition, Sweet & Maxwell, 2001, p. 318.

146/158－ 177 －


16.

Restricted exploitation of results365

An agreement will fall under Article 81 (1) EC Treaty if the parties accept
restrictions on their ability to exploit the results of the joint research.


17.

Disguised cartel

If the true object of an agreement is not R&D but the creation of a disguisedcartel, i.e. otherwise prohibited price fixing, output limitation or market allocation,
it falls under Article 81 (1).366
C.

Block exemption R&D agreements

18.

Regulation 2659/2000 has been adopted by the European Commission because
cooperation in the field of research and development is often essential toinnovation, particularly in high technology sectors where the technical andfinancial risks are high. Not only does such cooperation enable firms to share
their risks, but it also allows firms with complementary technologies to avoid
costly duplication of efforts and promotes economies of scale.367

19.

R&D agreements that fulfil the conditions of Regulation 2659/2000 will be
exempted from the application of Article 81 (1) EC Treaty.368

365

Bellamy & Child, European Community Law of Competition, Sweet & Maxwell, 2001, p. 319.

366

Guidelines, para. 59.

367

Van Bael & Bellis, Competition law of the European Community, 4 edition, Kluwer Law International,th2007, p. 487.
368

Where an agreement falls within Article 81 (1) EC Treaty and outside the exemption of Regulation
2659/2000, an individual exemption under Article 81 (3) EC Treaty will be necessary. This requires theparties to show that the agreement:(i)contributes to improving the production or distribution of goods or to promoting technical or
economic progress;(ii)

allows consumers a fair share of the resulting benefit;(iii)

does not impose restrictions that are not indispensable to the attainment of those objectives; and(iv)

does not afford the parties the possibility of eliminating competition in respect of a substantial

49100201/2285043.12

part of the products in question.

147/158－ 178 －

20.

Regulation 2659/2000 basically exempts two types of agreements having as theirmain purpose the joint R&D:
agreements for joint R&D; and

agreements for joint exploitation of the results of R&D jointly carried out
pursuant to a prior agreement between the same undertakings.369

The exemption only applies if six threshold conditions are met.370 The first four
conditions are:

21.

i.

All the parties must have access to the results of the joint R&D for the
purposes of further research or exploitation;371

ii.

Where the research and development agreement provides only for joint
research and development, each party must be free to exploit the results
independently;372iii.

Any joint exploitation must relate to results (i) which are protected byintellectual property rights or constitute know-how, (ii) which substantiallycontribute to technical or economic progress and (iii) the results must be
decisive for the manufacture of the contract products or the application of
the contract processes;iv.

Undertakings charged with manufacture by way of specialization in
production must be required to fulfill orders for supplies from all the parties,
except where the research and development agreement also provides for joint
distribution.

369

th

Van Bael & Bellis, Competition law of the European Community, 4 edition, Kluwer Law International,
2007, p. 494-495.

370

Article 3 Regulation 2659/2000.

371

However, research institutes, academic bodies, or undertakings which supply research and development
as a commercial service without normally being active in the exploitation of results may agree to confine
their use of the results for the purposes of further research (Article 3(2) of Regulation 2659/2000).

372

Such right to exploitation may be limited to one or more technical fields of application, where the parties
are not competing undertakings at the time the research and development agreement is entered into

49100201/2285043.12(Article 3(3) of Regulation 2659/2000).

148/158－ 179 －

The two last conditions373 are a market share threshold and a duration threshold:

22.

v.

Where the parties are not (potential) competitors, the agreement applies
for the duration of the R&D phase, and if there is joint exploitation, for atleast seven years374 after the products are first placed on the market;

vi.

Where at least two of the parties are (potential) competitors the exemption
will apply for the same period only if, at the time the research anddevelopment agreement is entered into, the combined market share of theparticipating undertakings does not exceed 25 % of the relevant market forthe products capable of being improved or replaced by the contract products.

23.

R&D agreements that fulfill these six conditions but that include hardcore
restrictions will not be exempted. The hardcore restrictions are territorial
restrictions, customer restrictions, restrictions on R&D carried out independently
or with third parties, no-challenge clauses, output limitations, price-fixing and therequirement not to grant licenses to third parties.375
D.

Market share

24.

Exemption under Regulation 2659/2000 requires that competitors do not have amarket share above 25% on the relevant market.

25.

The question we need to address is how to calculate this market share. In thisrespect, The European Commission has adopted a Notice on the definition of therelevant market for the purposes of Community competition law.376

26.

The Notice states that the relevant market combines the product market and thegeographic market, defined as follows:

a relevant product market comprises all those products and/or services
which are regarded as interchangeable or substitutable by the consumer byreason of the products' characteristics, their prices and their intended use;

373

Article 4(1) Regulation 2659/2000.

374

The exemption shall continue to apply as long as the combined market share of the participating
undertakings does not exceed 25 % of the relevant market for the contract products. Article 4(3)Regulation 2659/2000.

375

Article 5 Regulation 2659/2000 and Van Bael & Bellis, Competition law of the European Community, 4
edition, Kluwer Law International, 2007, p. 501-505.

49100201/2285043.12

376

Official Journal C 372 (1997) p. 5-13.

149/158－ 180 －tha relevant geographic market comprises the area in which the firms
concerned are involved in the supply of products or services and in which
the conditions of competition are sufficiently homogeneous.377

27.

It is not always easy to define the relevant market on the basis of the Notice. A
broad case-law developed by the European Commission constitutes a very
useful source of information to determine the relevant market.

28.

With regard to the shipbuilding industry the Commission has adopted a few
decisions that can be very helpful to verify whether the combined market share ofundertakings wishing to enter into a R&D agreement exceeds the 25% threshold.

29.

For example, in 2006 the Commission defined a market for commercial
shipbuilding in general that could be divided into several separate productmarkets according to the main groups of ships such as oil tankers, bulk carriers,
container ships, product and chemical carriers, LNG tankers, LPG tankers, rollon roll-off vessels, ferries, cruise ships, offshore-specialised vessels etc. Whether
there could be a further differentiation with the market for repair and conversionof commercial vessels has so far been left open by the Commission, but it islikely that the Commission will accept such a differentiation.378 The Commission
considered that most of these product markets are global in scope.379 The
Commission has also defined a separate market for naval vessels that could be
divided into several segments and that could be differentiated from the markets
for assembly for material packages for naval vessels and the market for repair
and minor conversions of naval vessels.380

377

http://europa.eu/scadplus/leg/en/lvb/l26073.htm.

378

Decision of 25 April 2002, Case No Comp/M.2272 – HDW/Ferrostaal/Hellenic Shipyard.

379

Decision of 27 March 2006, Case No COMP/M.4104 – Aker Yards / Chantiers de l’Atlantique. The
Commission considers that the market for ferries is at least European-wide and very likely global.

380

Decision of 25 April 2002, Case No Comp/M.2272 – HDW/Ferrostaal/Hellenic Shipyard. These markets

49100201/2285043.12

are national in scope when domestic producers exist.

150/158－ 181 －TECHNOLOGY TRANSFER AGREEMENTS
30.

Even if the European Commission states that technology transfer agreements(hereinafter: “TFAs381”) “will usually improve economic efficiency and be procompetitive as they can reduce duplication of research and development,
strengthen the incentive for the initial research and development, spur
incremental innovation, facilitate diffusion and generate product market
competition”,382 the exercise of intellectual property rights or of contractual rights
in accordance with limitations or restrictions in a license may infringe Article 81(1) EC Treaty.

31.

For the purpose of this section, TFAs can be divided in four categories:
A. TFAs that do not restrict competition;
B. TFAs that do restrict competition and qualify for an exemption under the
Block exemption TFAs;
C. TFAs that do restrict competition and do not qualify for an exemption underthe Block exemption TFAs;
D. Patent pooling agreements.

381

A TFA means a patent licensing agreement, a know-how licensing agreement, a software copyrightlicensing agreement or a mixed patent, know-how or software copyright licensing agreement, including
any such agreement containing provisions which relate to the sale and purchase of products or which
relate to the licensing of other intellectual property rights or the assignment of intellectual property rights,
provided that those provisions do not constitute the primary object of the agreement and are directly
related to the production of the contract products; assignments of patents, know-how, software copyrightor a combination thereof where part of the risk associated with the exploitation of the technology remains
with the assignor, in particular where the sum payable in consideration of the assignment is dependent on
the turnover obtained by the assignee in respect of products produced with the assigned technology, thequantity of such products produced or the number of operations carried out employing the technology,
shall also be deemed to be technology transfer agreements (Article 1(b) of Commission Regulation (EC)No 772/2004 of 27 April 2004 on the application of Article 81 (3) of the Treaty to categories of technology
transfer agreements, Official Journal L 123 (2004)).

49100201/2285043.12

382

Preamble of Commission Regulation (EC) No 772/2004, point 5.

151/158－ 182 －

A.

TFAs that do not restrict competition

An agreement falls beyond the scope of Article 81 (1) EC Treaty when:383

32.



it contains no provisions that restrict competition; or

the restrictions are ancillary to the opening of new markets; or

the agreement is of minor importance.384

B.

TFAs that do restrict competition and qualify for an exemption underthe Block exemption TFAs

33.

To be exempted of the application of Article 81 (1) EC Treaty, a TFA:
(i)

must be limited to two parties;385(ii)must concern the production of the contract products.386

34.

Where the undertakings party to the agreement are competing undertakings, theexemption shall apply on condition that the combined market share of the parties
does not exceed 20 % on the affected market.

35.

Where the undertakings party to the agreement are not competing undertakings,
the exemption shall apply on condition that the market share of each of theparties does not exceed 30 % on the affected market.387

383

th

Van Bael & Bellis, Competition law of the European Community, 4 edition, Kluwer Law International,
2007, p. 622.

384

In the Commission’s view, Article 81 (1) EC Treaty does not apply to agreements between competitors
where the parties’ aggregate market share does not exceed 10% (15% between non-competitors)(Commission Notice on agreements of minor importance which do not appreciably restrict competition
under Article 81 (1) EC Treaty, Official Journal C 368 (2001).

385

Nevertheless, the European Commission shall analyse multilateral agreements in a manner similar to theway is analyses two-party agreements (Guidelines on the application of Article 81 EC Treaty to TFAs,
Official Journal C 101 (2004), point 40.

386
387

Article 2 of Commission Regulation (EC) No 772/2004.
Article 3(1) and (2) of Commission Regulation (EC) No 772/2004. The market share of a party on therelevant technology market is defined in terms of the presence of the licensed technology on the relevant
product market. A licensor's market share on the relevant technology market shall be the combined
market share on the relevant product market of the contract products produced by the licensor and its

49100201/2285043.12

licensees (Article 3(3))

152/158－ 183 －

C.

36.

TFAs that do restrict competition and do not qualify for an exemption
under the Block exemption TFAs

Where a TFA caught by Article 81 (1) EC Treaty falls outside the scope of theBlock exemption, then an individual assessment of the TFA will have to be
carried out by the parties to determine whether the TFA merits an individual
exemption under Article 81 (3) EC Treaty.388
D.

Patent pooling agreements

37.

Pools between actual or potential competitors which bundle competing
technologies may raise serious competition concerns. They generally do not fallunder the framework of the Block exemption TFAs because they are notconcluded for the manufacture or provision of contract products, but instead foragreeing to grant bundled licenses to third parties or for supporting an industry
standard which is open for the industry concerned.389

38.

Pooling technologies required to produce the product or carry out the process towhich the technologies relate (“complementary technologies”) shall usually falloutside the scope of Article 81 (1) EC Treaty, provided that the pool includes only
essential technologies. Where non-essential but complementary patents areincluded in the pool there is a risk of foreclosure of third party technologies andthe agreement is likely to be caught by Article 81 (1) where the pool has asignificant position on any relevant market.390

39.

Pools of substitutable technologies generally infringe Article 81 (1) EC Treaty andit may not always be possible to satisfy the (rather strict) conditions for
exemption:391
388

they must be indispensable;

This requires the parties to show that the agreement:(i)contributes to improving the production or distribution of goods or to promoting technical or
economic progress;(ii)

allows consumers a fair share of the resulting benefit;(iii)

does not impose restrictions that are not indispensable to the attainment of those objectives; and(iv)

does not afford the parties the possibility of eliminating competition in respect of a substantial
part of the products in question.

389

Ritter, Braun, European Competition Law: A Practitioner’s Guide, 3rd Edition, Kluwer Law International,
2004, p. 842-844 and Guidelines on the application of Article 81 EC Treaty to TFAs, Official Journal C

49100201/2285043.12

101 (2004), points 215-235.
390

Guidelines, points 220-221.

391

Guidelines, point 219.

153/158－ 184 －

40.

392



they must not extend to non-essential technologies;

they must not extend to the exchange of sensitive information, such as priceor output data, which are likely to facilitate collusion;

they must be open and non-exclusive;

access must be granted to third parties in a non-discriminatory manner;the parties must not be prevented from creating, or participating in,alternative pools; andthe licence agreements concluded between the pool and third parties mustsatisfy the conditions of the Block exemption TFAs.392

Technology pools for the purpose of creating industry standards are often procompetitive, but can infringe Article 81 (1) EC Treaty when the members have astrong collective market position and create difficult market entry conditions forthird parties. Such pools shall be exempted only if the pooled technologies are
selected in an objective way and if they are non-exclusive.393

Guidelines, points 222-234 and Ritter, Braun, European Competition Law: A Practitioner’s Guide, 3rd
Edition, Kluwer Law International, 2004, p. 844.

49100201/2285043.12

393

Guidelines, points 225-233.

154/158－ 185 －

Annex VI: Bibliography
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BALance, 1999
Bejing Publishing House of law, 1992
Bellamy & Child, 2001
Bennett D., Hall M., Jinsheng H.,
Vaidya K. & Xing Ming W., 2006
Bouwelen, F. van, 2007,

Brainport Eindhoven, 2007
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CESA 2002

CESA 2005
CESA 2006
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Chesbrough H., 2003
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Cohen M., 1999
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49100201/2285043.12

Dinter M., 2006

Punitive Damages as a Contentious Issue ofIntellectual Property Rights
Competitiveness and benchmarking in the fieldof marine equipment
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155/158－ 186 －

Drewry Shipping Consultants, 2002
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49100201/2285043.12

Kim H., 2004

Marine Equipment Market – New insights into alucrative market sector
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156/158－ 187 －

Levin R.C. et al., 1987
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49100201/2285043.12

Ritter B.

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157/158－ 188 －

Smart & Biggar/Fetherstonhaugh, 2007
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The Economist, 2007
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Zhipei J.
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The value of knowledge, European firms andthe intellectual property challenge
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Competition law of the European Community
Chinese patent law and patent litigation in
China
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Up against a great wall: the fight against IP
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158/158－ 189 －

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