EUROPEAN COMMISSION 
Brussels, 24.5.2011 
SEC(2011) 613 final 
  
COMMISSION STAFF WORKING PAPER 
SUMMARY OF THE IMPACT ASSESSMENT 
Accompanying document to the 
Proposal for a 
REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 
on entrusting the Office for Harmonisation in the Internal Market (Trade Marks and 
Designs) with certain tasks related to the protection of intellectual property rights, 
including the assembling of public and private sector representatives as a  
European Observatory on Counterfeiting and Piracy 
{COM(2011) 288 final} 
{SEC(2011) 612 final}  
 
EN 1   EN SUMMARY  OF THE  IMPACT  ASSESSMENT 
The Impact Assessment accompanies the proposal for a Regulation of the European 
Parliament and of the Council entrusting the European Observatory on Counterfeiting and 
Piracy to the Office for Harmonisation in the Internal Market (Trade Marks and Designs). 
1. PROBLEM DEFINITION  
The EU’s economic well-being relies on sustai ned creativity and innovation. Accordingly, the 
Europe 2020 Strategy1 highlights the need to strengthen th e EU’s research performance, to 
promote innovation throughout the Member States , ensuring that inn ovative ideas can be 
turned into new products and services that create growth and quality jobs. Intellectual 
property rights (IPR) are vital business assets , which help to ensure  that innovators and 
creators get a fair return fo r their work and investments. 
The protection of IPR, which is  guaranteed inter alia by the Ch arter of Fundamental Rights of 
the European Union (Article 17(2)), serves not  only the interests of right holders but also 
those of the market at large. Thus, IPR facilitate the entry of newcomers into markets, allowing them to attract venture capital etc.  Moreover, IPR protect consumers from being 
misled when acquiring products. 
Over the last ten years, however, IPR infringe ments have increased significantly. In 2009, the 
OECD estimated that international trade in  counterfeit and pirated goods accounted for 
USD 250 billion in 2007, which is larger than the national GDPs of 150 economies
2. Figures 
published by EU customs authorities reflect a clear  increase in customs activity, with a rise in 
registered cases from 26,704 in 2005 to 43 ,572 in 2009, i.e. up by about 60  % in five years. 
Various other studies, originati ng from industry as well as from international organisations, 
confirm the steady growth of trade in count erfeit and pirated goods and conclude that it: 
– significantly reduces investment in innovation and destroys jobs3; 
– threatens the health and safe ty of European consumers4; 
– creates serious problems for European SMEs5; 
– results in tax loss revenues due to  reductions in declared sales6; 
                                                 
1 Communication from the Commission: Europe 2020 of 3 March 2010, COM(2010) 2020. 
2 OECD, Magnitude of counterfeiting and piracy of tangible products – November 2009 update, 
http://www.oecd.org/document/23/0,3343. 
3 TERA Consultants, Building a Digital Economy: March 2010  
http://www.iccwbo.org/bascap/id35360/index.html. 
4 European Commission, Taxation and Customs Union Directorate General, ‘Report on EU Customs 
enforcement of intellectual property rights - 2009’,  
http://ec.europa.eu/taxation_customs/customs/custom s_controls/counterfeit_piracy/statistics/index_en.h
tm. 
5 Technopolis (2007), ‘Effects of counterfeiting on EU SMEs’,  
http://ec.europa.eu/enterprise/ent erprise_policy/industry/doc/Counte rfeiting_Main%20Report_Final.pdf 
 
EN 2   EN – is attractive to organised crime7. 
In a recent study, commissioned by the Internati onal Chamber of Commerce and carried out 
in 2010, the indication was that EU R 10 billion and more than 185  000 jobs were lost due to 
piracy alone in the EU in 20088. 
Therefore, unless more coordinated and sustainabl e action is taken to combat infringements of 
IPR, the EU faces a damaging trend that will have a real impact on its economic recovery, 
wealth and jobs. This trend includes a rise in products that can potentially cause serious harm 
to consumers, such as fake medicines, food products, cosmetics, and fake household 
equipment. The results of a Euroba rometer survey carried out in 20099 showed that one out of 
five EU citizens had, on at least one occasion, unintentionally bought a counterfeit product. 
Successful enforcement of IPR requires an appropriate legal framework and measures 
ensuring the rules are effectively applied. Currently, the following shortcomings are 
particularly prejudicial to effective enforcement: 
– Lack of reliable, objective data, due to  the absence of an agreed methodology and 
practical tools to collect and analyse data in order to identify trends and threats in 
counterfeiting and piracy; 
– Insufficient coordination and exchange be tween responsible authorities in the 
Member States on best practice, and real -time exchange of information between 
stakeholders on specific c ounterfeit products, trends  and potential threats; 
– Insufficient exchange on successf ul private sector strategies; 
– Insufficient knowledge of persons involved in enforcement matters; 
– Insufficient use of technologies to prevent counterfeiting; 
– Insufficient awareness of consumers about the effects and dangers of counterfeiting 
and piracy; and 
– Lack of expertise and structures in thir d countries to combat counterfeiting and 
piracy. 
Without measures to address these shortcomings , the number of IPR infringements is set to 
grow. 
At EU level, the primary initiative is the Eu ropean Observatory on Counterfeiting and Piracy 
(‘the Observatory’), which is administered by the Commission’s Directorate General for 
Internal Market and Services (DG MARKT). Th e Observatory’s functi ons were described by 
the Commission in its 2009 ‘Communication on enhancing the enforcement of intellectual 
                                                                                                                                                         
6 Frontier Economics, (May 2009), ‘The impact of counterfeiting on Governments and Consumers’: 
http://www.iccwbo.org/uploadedFiles/BASCAP/P ages/Impact%20of%20Counterfeiting%20on%20Gov
ernments%20and%20Consumers%20-%0Final%20doc.pdf. 
7 UNICRI, Counterfeiting: a global spread, 2008, http://counterfeiting.unicri.it/report2008.php. 
8 http://www.iccwbo.org/bascap/id35360/index.html. 
9 Available at: http://ec.europa.eu/public_opinion/. 
 
EN 3   EN property rights in the Internal Market’10 as improving data collection, exchange of public and 
private best practices and awareness-raising. 
In March 2010, a Council Resolution added a furthe r task, namely to explore the need for EU-
level training programmes fo r those involved in combati ng counterfeiting and piracy11. In 
September 2010, a European Parliament Resolu tion called on the Observatory to further 
extend its work12. Finally, a study commissioned by the Commission’s Direct orate General 
for Trade recommended that the Observatory shoul d become a single point of contact within 
the European Commission and an inte rnational source of  best practice13. 
Over the last two years, the Observatory’s in stitutional framework ha s been set up. However, 
due to a lack of funding, human resources, IT and meeting capacities and necessary expertise 
it does not have the appropriate infrastructure  to run the required operational activities. The 
Impact Assessment therefore aims at identifying solutions for carrying out the activities that 
are needed to improve IPR enforcement at EU level. 
2. SUBSIDIARITY  
Many of the tasks assigned to the Observator y are of a cross-border nature, based on 
cooperation and coordination. To be fully eff ective, they require the engagement and 
involvement of all 27 Member St ates. Therefore it would be mo st beneficial to develop EU-
level tools and structures, so that all Member States coul d benefit from the results. 
Furthermore, in relation to third countries, th ere has to be coordina tion between Commission 
services and other EU and international agencies , and therefore an EU-l evel initiative would 
be the appropriate way forward. 
3. OBJECTIVES  
The general objective is to enforce IPR more ef fectively, in order to avoid significant harm 
being caused by counterfeiting and piracy to the European economy and to the health and safety of European citizens. 
The specific objectives are to make public author ities and private stakeholders more aware of 
counterfeiting and piracy as rega rds their scope, impact and tre nds, and effective techniques to 
combat the problem and to improve day-to-day  cooperation; to inform consumers of the 
economic impact and dangers rela ted to counterfeiting and pir acy and to help them avoid 
being misled into buying fake products; and to improve the coordination of actions directed 
towards third countries. 
The operational objectives are to ensure that the Observatory has the necessary infrastructure 
(in terms of human resources, funding, IT and meeting capacities , expertise and independence 
                                                
 
10 COM(2009) 467. 
11 Council Resolution of 1 March 2010 on the enforcement of intellectual property rights in the internal 
market (OJ C 56, 6.3.2010, p. 1). 
12 European Parliament Resolution of 22 September 2010, 2009/2178(INI). 
13 ADE, Evaluation of the Intellectual Property Right s Enforcement Strategy in Third Countries, 
November 2010, http://trade.ec.e uropa.eu/doclib/cfm/doclib_sec tion.cfm?sec=180&langId=en. 
 
EN 4   EN from vested interests) to perf orm its tasks effectively, as quick ly as possible and at minimum 
cost to the EU budget. 
These objectives dovetail with existing EU policies and strategies, such as Europe 202014. 
They also fit in with the Commission’s main  priorities and proposals concerning its IPR 
strategy for Europe15. 
4. POLICY OPTIONS AND ANALYSIS OF THEIR IMPACTS  
Building on the baseline scenario (Observatory is run by DG MARKT with no increase in 
resources but with short-term support through an agreed Memorandum of Understanding with 
the Office for Harmonisation in the Internal Ma rket – OHIM), three main options have been 
explored: 
Option 1:  The Observatory continues to be admi nistered by DG MARKT, but with extra 
resources: 
– Sub-option 1a – DG MARKT’s human and budgetary resources are increased. 
– Sub-option 1b – The management of the Obse rvatory is outsourced to an external 
contractor. 
Option 2:  Tasks are performed by a private body or jointly under a public-private 
partnership: 
– Sub-option 2a – Industry-led initiative, fi nanced by private sector stakeholders. 
– Sub-option 2b – Industry-led initiative, financed by a Commission grant/programme. 
– Sub-option 2c – Public-pri vate partnership (PPP). 
Option 3:  The Observatory is entrusted to an EU agency: 
– Sub-option 3a – The tasks of the Observat ory are entrusted to a newly created EU 
agency. 
– Sub-option 3b – The tasks of the Observator y are entrusted to an existing agency. 
Whichever option is chosen, the Commission will retain political control of EU IPR 
enforcement policies, which is considered to be one of its core tasks. 
4.1. Baseline scenario: The Observatory is r un by DG MARKT without any increase 
in resources 
If no action is taken, the Observatory will be una ble to continue delivering on its aims and the 
objectives will therefore not be reached. Given the need to maintain momentum and increase 
the Observatory’s activities in  the short term, the Commission is concluding a Memorandum 
of Understanding (MoU) with the OHIM, the Eu ropean trade marks and designs Office. In 
                                                 
14 COM(2010) 2020. 
15 COM(2008) 465. 
 
EN 5   EN this, the OHIM commits to providing support th rough certain activities already being carried 
out as ‘accessory activit ies’ to its core registration functio ns and limited to issues involving 
trade marks and design rights, in accordance with the OHIM’s remit. The MoU is of a 
temporary nature and would probably not be extended beyond the end of 2011 if a decision 
was taken to tackle the current problems of  the Observatory by some means other than 
entrusting OHIM more permanently with the tasks of the Observatory. 
4.2. Option 1: Increase of DG MARKT’s resources 
Under option 1a , DG MARKT would continue to mana ge the Observatory but be provided 
with additional staff and budget. However, in this option, where the Observatory would remain within the Commission, OHIM would not be expected to continue its assistance in the 
long term. 
In the Impact Assessment, it is estimated that  the Observatory would require an operational 
team consisting of 25 people at cruising speed. In view of the Commission’s commitment not 
to request any new posts between 2009 and 2013
16, such a rise in staff numbers seems 
unrealistic.  
Under option 1b , DG MARKT would act as a supervisin g contract manager to one or more 
external contractors and coordinate the overall functioning of the Observatory. 
However, there is a genuine risk that private stakeholders and public authorities would not be 
prepared to share sensitive data with an exte rnal contractor. Moreover, this option implies a 
considerable impact for the EU budget. It is estimated that between seven and ten different 
contractors, with specialised skills, would be required to ca rry out the Observatory’s work. 
The contracts would have to be managed by the Commission, leading to a total cost of 
between EUR 4.83 million and EUR 5.97 million / year  in the first two years, and between 
EUR 5.26 million and EUR 6.18 million / year in  the following years, depending on the 
design of the IT systems to be developed. 
4.3. Option 2: The tasks are performed by an external body or jointly under a 
public-private partnership 
Where the tasks are carried out through an industr y-led initiative (option 2a) , the same 
constraints would arise as under option 1b. Furthe rmore, there are no indications that the 
private sector would be able a nd willing to ensure the funding of such an initiative in the 
longer run. 
Under option 2b , the tasks could be financed thr ough a Commission grant. However, the 
disadvantages outlined for option 1b would be largely the same. Moreover, based on indicative contract costs, this method of financ ing would mean that the EU budget, in the first 
two years, would be burdened with lower-end costs of EUR 4.85 million / year, or EUR 5.99 
million at the upper end, depending on the design of the IT systems to be developed, and 
between EUR 5.25 million and EUR 6.17 m illion / year from year three. 
Option 2c  (public–private partnership) avoids a nu mber of disadvantages as the PPP contract 
would determine the level of influence of each partner and ensure continuous funding. The 
annual costs for the EU budget, based on an e qual share for the Commission and the private 
                                                
 
16 SEC(2007) 530. 
 
EN 6   EN sector, are estimated at between EUR 2.41 milli on and EUR 2.98 million /year in the first two 
years, and between EUR 2.61 million and EUR 3.07 million / year from the third year. 
4.4. Option 3: The tasks of the Observatory are entrusted to an EU agency 
Under option 3a , a specialised EU agency would be set up to carry out the tasks of the 
Observatory. 
EU agencies have established administrative structures, and sustaina ble financial and human 
resources, and are therefore in general suited  to carrying out tasks such as those of the 
Observatory. However, the number of staff re quired for the Observatory would not justify the 
creation of a new agency, in view of the consid erable overheads. Thus, the estimated cost of 
this option lies between EUR 4.33 million and EUR 5.33 million / year for the first two years, 
and between EUR 5.5 million and EUR 6.28 million / year from year three. In addition, the 
Commission undertook in 2008 not to propose an y new agencies for the time being17. 
Furthermore, it would take several years to get a new agency fully up and running. This 
would impact severely on the Observatory’s activities. 
Under option 3b , the Observatory would be run by an existing EU agency. This would allow 
it to become quickly operational and to profit from existing ad ministrative structures (e.g. 
human resources, IT and finances). 
The Office for Harmonisation in the Internal Mark et (OHIM) is the EU agency dealing with 
trade marks and design rights and could be a su itable host for the Observatory. It has already 
established a basis of expertis e in the enforcement area, th rough its training seminars and 
activities, and is planning to develop further en forcement projects, such as an IT information 
system on registered trade marks and designs. 
Synergies between the tasks of the Observat ory and those already carried out by the OHIM 
would significantly limit the number of additiona l staff required. Therefore, the total cost of 
this option is estimated at between EUR 3.3 million and EUR 4.3 million / year during the 
initial two years and between EUR 4.74 milli on and EUR 5.52 million from year three. 
Finally, these amounts could be financed from  the revenue that OHI M generates through its 
fees. Thus, the EU budget would not need to cover these costs and would even be freed from the costs of the activities that currently are carried out within  the Observatory. These savings, 
for the EU budget, amount to about EUR 40,000. 
                                                
 
17 COM(2008) 135. 
 
EN 7   EN 5. COMPARISON OF OPTIONS  
Table 1: Comparison of options 
Effectiveness (achievement of 
objectives) Efficiency Assessment 
 
Options Sustain
able funding Stable 
structure Human 
resources IT  
capacity Indepen-
dence from 
vested 
interests Time 
needed  Overall costs Implication 
for EU budget Overall 
assessment 
Option 0 
(baseline 
scenario) 0 0 0 0 0 0 0 0 0 
Option 1b + + + + 0 - between 
EUR 4.83 
million and 
EUR 6.18 
million / 
year between 
EUR 4.83 
million 
and EUR 
6.18 
million / 
year + 
Option 2b + - + + - -- between 
EUR 4.89 
million and 
EUR 6.21 
million / 
year between 
EUR 4.85 
million 
and EUR 
6.17 
million / 
year - 
Option 2c + + + + 0 -- between 
EUR 4.89 
million and 
EUR 6.21 
million / 
year between 
EUR 2.41 
million 
and EUR 
3.07 
million / 
year + 
Option 3a ++ ++ ++ + ++ -- between 
EUR 4.37 
million and 
EUR 6.32 
million / 
year between 
EUR 4.33 
million 
and EUR 
6.28 
million / 
year + 
Option 3b 
(as regards 
OHIM) ++ ++ ++ ++ ++ - between 
EUR 3.3 
million and 
EUR 5.52 
million / 
year - EUR 
0.04 
million / 
year ++ 
Magnitude of effectiveness and efficiency: ++ strongl y positive, + positive, 0 neutral, - negative, -- 
strongly negative, N/A not applicable. 
 
EN 8   EN As explained, option 1a (more staff in DG MARKT) is not feasible under the given 
circumstances. Options 1b (outsourcing on a co mmercial basis), 2a and 2b (tasks performed 
by industry-led initiative) are feasible, but are not suitable solutions si nce in particular the 
collection of sensitive information would pose considerable problems. These disadvantages 
could be partially avoided in option 2c ( PPP), which however would impose on the EU 
budget annual costs of between EUR 2.41 million and EUR 3.07 million. 
Option 3a (a new EU agency) offers solutions to allow the objectives to be delivered. 
However, this option would bri ng substantial costs for the EU  budget and a significant time 
delay. 
Option 3b (entrusting the tasks to an existing EU agency, preferably OHIM) would allow the 
Observatory to have access to expertise, re sources and financing a nd to become quickly 
operational. In budgetary terms it would offer a cost-efficient solution a nd allow costs to be 
covered by financial resources outside of the EU budget. 
Based on this comparison, option 3b is the preferred option. 
6. MONITORING AND EVALUATION  
Five years after the entry into force of the Regulation entrusting OHIM with the tasks related 
to the Observatory, the Commi ssion would publish a report assess ing whether the objectives 
pursued had been reached and whether new or different measures might be needed.