EUROPEAN COMMISSION Brussels, 24.11.2020 SWD(2020) 282 final COMMISSION STAFF WORKING DOCUMENT Accompanying the document REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL AND THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE Evaluation of the Application of the Regulation (EU) No 386/2012 of 19 April 2012 {COM(2020) 755 final}



COMMISSION STAFF WORKING DOCUMENT Accompanying the document REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL AND THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE Evaluation of the Application of the Regulation (EU) No 386/2012 of 19 April 2012 1.Introduction 2.Background to the intervention Description and objectives Baseline and points of comparison (2009-2012) 3.Implementation / state of Play Framework, resources and network of representatives to the Observatory Studies, surveys and reports Training, workshops and seminars Raising awareness Tools and databases International cooperation 4.evaluation methodology Limitations and robustness of findings 5.Answers to the Evaluation Questions

How relevant is the EU intervention in IP enforcement Effectiveness of the Regulation and its implementation Efficiency of the initiative and its implementation Coherence of EU intervention EU added value of the Office’s Observatory 6.Conclusions and lessons-learned Annex 1: Procedural information Annex 2: Stakeholder consultation – synopsis report Glossary Term or acronym Meaning or definition ACIST Anti-Counterfeiting Intelligence Support Tool ACRIS Anti-Counterfeiting Rapid Intelligence System Commission European Commission Council Council of the European Union CEPOL European Union Agency for Law Enforcement Training EDB Enforcement Data Base EU European Union EIPPN European Intellectual Property Prosecutors Network EUIPO European Union Intellectual Property Office Eurojust European Union Agency for Criminal Justice Cooperation Europol European Union Agency for Law Enforcement Cooperation Impact assessment Commission Staff Working Paper “Impact assessment” of 24 May 2011, SEC(2011) 612 final IP Intellectual property IPR Intellectual property rights IPEP IP Enforcement Portal Observatory European Observatory on Infringements of Intellectual Property Rights OECD Organisation for Economic Co-operation and Development Office European Union Intellectual Property Office (EUIPO) OLAF The European Anti-Fraud Office 1.Introduction The European Union Intellectual Property Office (‘the Office’) manages the European Union trade mark and the Community design systems (receiving, examining and deciding on applications for the registration of trade marks and designs as well as keeping public records of such rights, their proprietors, etc.) . In addition, the Office facilitates the activities of national authorities, the private sector and the EU institutions in the fight against infringements of intellectual property (IP) rights (that is, not only trade marks and designs but also patents, copyright, geographic indications, etc.). This second set of tasks were entrusted to the Office under Regulation No 386/2012 (‘the Regulation’) which further specifies that “In carrying out these tasks the Office shall organise, administer and support the gathering of experts, authorities and stakeholders assembled under the name ‘European Observatory on Infringements of Intellectual Property Rights’ (‘the Observatory’)”. This report evaluates the implementation and functioning of the Regulation, assessing whether its initial objectives are still valid and whether they were met in an efficient and coherent way. For that purpose, the evaluation examined the activities carried out by the Office under the Regulation, since its entry into force on 5 June 2012, until 31 December 2019. The evaluation is required by the reporting obligation under Article 8 of the Regulation . 2.Background to the intervention Description and objectives The share of intangible assets in companies’ overall value has risen from 17% in 1975, over 68% in 1995, to 84% in 2015 . Intellectual property rights (IPR) help businesses to ensure that investment in intangibles (such as inventions, brands, and product design) results in competitiveness gains, generating revenues, growth and jobs. Trade marks allow consumers to identify good quality products and repeat rewarding experiences, therefore providing incentives for manufacturers to continually improve their products. However, popular branded products are too often copied, using poor materials, assembled in clandestine sites that elude safety regulations, deceiving consumers and putting their health and safety at risk. At the same time, the advent of the Internet has made it easy to make available copyright content without rewarding authors and creators for their works. As with any illicit market, it is not easy to determine the volume of counterfeiting and piracy. According to a study from the Organisation for Economic Co-operation and Development (OECD) released in 2008 without regular, reliable and robust data on the scale, scope and impact of the problem, it is not possible to measure trends and threats, and therefore to improve the efficiency of IP enforcement. The same study found that “Governments, business and other interested stakeholders could do a far better job collecting and analysing information that is essential for designing and implementing effective strategies for combating counterfeiting and piracy”. In 2009, the Commission created the European Observatory on Infringements of Intellectual Property (‘the “Observatory’), an informal platform bringing together, and enabling close cooperation and dialogue between, the departments of the Commission, national authorities and private sector stakeholders concerned by the enforcement of IPR. Managed by the departments of the Commission, the Observatory’s main goals were to:

·collect data on the scope, scale and impact of infringements of IPR in the EU; ·improve cooperation between those engaged in protecting and enforcing IPR; ·share best practice in enforcement; and ·raise awareness among consumers. In 2010 , the Council of the European Union (“the Council”) invited the Commission to elaborate further on the scope of competences, tasks and role of the Observatory, supporting its activity through existing institutional structures. It also encouraged national authorities, right holders, consumer organisations and other stakeholders from all sectors, to actively participate in, and contribute to the work of the Observatory. Furthermore, the Council invited the Commission, the Member States and industry to provide the Observatory with available information and to jointly develop and agree on plans to collect further information, and to jointly develop a common methodology for collecting data. The Council also encouraged the Commission, the Member States and stakeholders to implement effective awareness campaigns. In addition, the Council also invited the Observatory to explore the need for the implementation of European Union level training programmes for those involved in combating counterfeiting and piracy. In addition, the Council requested the Observatory to facilitate regular experts’ meetings, involving representatives from public authorities, private sector bodies and consumer organisations, to promote successful and proportional solutions against counterfeiting and piracy. The Council also invited the Commission to assess, in close cooperation with Member States, how best to enhance coordination, cooperation, information exchange and mutual assistance between all national and European authorities involved in combating counterfeiting and piracy with the cooperation of the economic operators. Following the Council’s invitation to review the scope of competences, tasks and role of the Observatory, the Commission studied possible means of providing the Observatory with a sustainable infrastructure that would allow it to fulfil a broadened range of tasks, in a more effective way. As a result, and based on an impact assessment , on 24 May 2011 the Commission adopted a proposal for a regulation that would entrust the management and the tasks of the Observatory to the Office. The operational aim was ensuring “that the Observatory had the necessary infrastructure to deliver its activities effectively, as quickly as possible and with minimum costs for the EU budget.” The Regulation was adopted on19 April 2012 and assigns the Office with the following specific tasks : ·improving understanding of the value of IP and of the scope and impact of infringements of IPR; ·enhancing knowledge of public and private sector practices to protect IPR; ·assisting in raising citizens’ awareness of the impact of infringements of IPR; ·enhancing the expertise of individuals involved in the enforcement of IPR; and on technical tools to prevent and tackle infringements of IPR; ·providing mechanisms to improve the online exchange, between national authorities, of information on the enforcement of IPR, and fostering cooperation with and between those authorities; ·working to improve international cooperation with IP offices in non-EU countries to build strategies and develop skills and tools to enforce IPR The Regulation sets out in detail the activities that the Office should carry out to fulfil these tasks , namely; ·Collecting, analysing and reporting data and information on the economic value of IP, on infringements of IPR and their impact, as well as on best practices for preventing or combating infringements; ·drawing up publications and organising events to raise awareness amongst citizens of the impact of infringements of IPR, as well as assisting in national and European awareness actions ·monitoring legal offers of cultural and creative content, and raising consumer awareness in this respect ·identifying and promoting skills, tools related to preventing and combating IP infringement, including training for officials involved in protecting IPR ·improving information sharing on infringements of IPR between public administrations and relevant organisations;

·programmes providing assistance to non-EU countries. The Regulation also states that to carry out these activities, the Office “shall at least once per year invite to meetings of the Observatory representatives from public administrations, bodies and organisations in the Member States dealing with intellectual property rights and representatives from the private sector, for the purpose of their participation in the Office’s work under this Regulation” . The Regulation provides for the creation of working groups under the Observatory made up of representatives from Member States and the private sector . Under Article 3 of the Regulation, the Office “shall at all times ensure that the activities entrusted to it by this Regulation are carried out by making use of its own budgetary means”. Baseline and points of comparison (2009-2012) In 2009 there was little data available on the volume and impact of counterfeiting, piracy and IPR. One of the more reliable sources of information available were the reports published by the Commission on annual customs detentions at EU borders. Such reports remain today a major source of information on customs’ detentions. These relate to attempts to import physical goods into the EU. The reports on customs detentions do not cover seizures of counterfeits manufactured or placed on the single market. They also do not include data on other forms of infringement of IPR (such as online illegal offer of movies, music and live sport events protected by copyright). Statistical data were otherwise scarce and often supplied on a one-time-off basis. Business organisations representing the interests of owners of IPR, also published data, but using different and not always transparent, methodologies. There was also no coordinated effort for awareness raising and little was known about consumer behaviour towards counterfeiting and piracy, consumer’s perception of IP or the views of targeted groups such as young people. The Eurobarometer would sporadically include a limited number of questions on IP, with no follow-up in subsequent years. In addition, there was insufficient cooperation between the national authorities. Cooperation existed in customs, promoted and coordinated at EU level by the Commission, in the form of training, events and electronic systems to exchange information on IPR infringing goods. However, other authorities involved in the fight against counterfeiting and piracy, such as police forces not dealing with border issues, were not involved in this cooperation. There was no dedicated permanent mechanism enabling mutual learning through experience and knowledge sharing focusing on IP enforcement in a comprehensive manner, bringing together all the relevant authorities (customs, police, public prosecutors, officials from IP offices and ministries in the Member States, etc.). Moreover, there was little or no cooperation at EU level between public authorities and holders of IPR and there was no online tool making it possible for right holders to share with enforcement authorities throughout the EU data relevant to facilitate the enforcement of IPR. Table 1 Baseline (Commission own sources) Independent EU-wide data on the economic value of IP Non-existent on infringements of IP (business models, methods and routes, etc.) Non-existent on the volume and impact of infringement of IP (on loss of sales, jobs, taxes, etc.) Limited to customs data Awareness Campaigns, events, social media and publications National driven, sporadic and uncoordinated EU-wide independent research on IP awareness among consumers, young people, SMEs Sporadic, very limited in scope and inconsequential Best practices Enhance knowledge of best public and private sector practices to protect IPR Limited to customs and SMEs EU wide information on legal offers Dissemination information on the availability of copyright protected content to reduce demand for illegal offers Non-existent Developing skills Training officials involved in the enforcement of IPR Limited to customs Technical tools Identifying and promoting technical tools, including track and trace systems for genuine goods Non existent Exchange of information tools Tools to exchange information on infringements of IPR between national authorities Limited to customs Non-EU countries Technical assistance to non-EU countries, training programmes and events for officials from non-EU countries Limited to customs The launch of the Observatory was a first important step to changing the state of affairs. However, there were limited human and financial resources available within departments of the Commission. On 9 April 2012, the date of the adoption of the Regulation, the Observatory network was composed of 27 representatives from Member States and 38 representatives from the private sector, which was in need of enlargement (in particular civil society representatives, but also relevant international organisations). The Observatory was managed by a team of two administrators and one assistant (who was temporarily seconded to the department of the Commission by the Office). Table 2 Observatory Staff and Representatives by April 2012 (Commission own sources) Staff assigned to the Observatory 3 Representatives to the Observatory: 66 Breakdown of representatives: Public sector 27 Private sector 38 Consumers and civil society 1 Observers -- Members of the European Parliament -- The departments of the Commission created the foundations of what the Office’s Observatory is today. While it was not able to collect, assess and report on levels of infringement or on the value of IP, it paved the way for a comprehensive approach to statistical data on IPR and their infringement by launching a study on methodology to measure the impact of infringements of IPR. Due to the scarcity of human and financial resources, the Observatory’s remaining activities consisted mainly in organising meetings with stakeholders to exchange best practice. Indeed, there was no appropriate funding to organise events, trainings and campaigns, and there was no suitable structure to develop and operate a major set of online tools for public authorities and IPR holders. The following table summarises the Observatory’s activities during the two years and seven months that followed its creation (September 2009), until they were transferred to the Office (April 2012): Table 3 Observatory output from September 2009 to June 2012 (Commission own sources) STUDIES Legal studies on civil law enforcement of IPR 4 Economic studies on IP --- Studies on awareness of IP --- Studies on infringements of IPR --- Studies on enforcement of IPR --- Other studies --- Total studies 4 AWARENESS Awareness campaigns carried out or funded --- TRAINING Training events carried out --- Number of participants --- TOOLS & DATABASES Enforcement tools --- Legal use of IPR --- Training tools --- 3.Implementation / state of Play Framework, resources and network of representatives to the Observatory In order to implement the tasks assigned to it by the Regulation, the Office created the Observatory department . Its activities are funded by the Office’s budget which is financed by the fees the Office charges from the users of the EU trade marks and of the Community designs systems. The Office’s Observatory team had 34 members of staff at the end of 2012 . By 31 December 2019 this number had risen to 55, corresponding to 5,3% of the statutory Office staff . The Office’s expenditure on the Observatory increased from €2.44 million in 2012 to €11.74 million in 2019. The following table indicates the number of staff (at the end of year) and spending of the Office’s Observatory department: Table 4 Observatory staff and spending (source: EUIPO) 2012 2013 2014 2015 2016 2017 2018 2019 Number of staff 34 47 29 31 37 42 52 55 Spending (million €) 2.44 6.08 7.09 11.54 9.35 12.2 13.3 11,74

The number of representatives to the Observatory has also increased. Between 19 April 2012, the date of the adoption of the Regulation, and 31 December 2019, the Observatory network increased from 67 to 128 representatives. The public sector representatives are designated by the EU Member States, whereas representatives from the private sector are invited by the Office. The Observatory’s private sector stakeholders are organisations that are involved or experienced in the fight against infringements of IPR . In addition, the Office invites, to the meetings of the Observatory, members or other representatives of the European Parliament and representatives from the various relevant departments of the Commission , as well as other EU bodies and international organisations. The list of Observatory members and of organisations invited as observers is available online . Representatives to the Observatory contribute to the Office’s work by integrating working groups that follow-up on different clusters of projects. In 2012-2018, the Office structured the work of the Observatory around the following groups: (1) IP in the digital world; (2) Public awareness; (3) Legal & international; (4) Enforcement, and (5) Economics and statistics. The working groups meet twice a year. In these meetings, the Office reports on the different projects and invites stakeholders to present their views on the progress made and on the next steps. In 2019, the Office discontinued the Legal and international work group and created six expert groups: (1) Observatory outreach; (2) Impact of technology; (3) Cooperation with intermediaries and (4) SMEs, (5) Legal, and (6) International. While members of working groups represent organisations that are members of the Observatory (example, an association of owners of trade marks), expert groups are composed of experts selected in their individual professional capacity. Expert groups help the EUIPO in making concrete steps in specific projects and they meet as often as necessary. Working groups meet twice a year, and are used by the EUIPO as a means for to consult a broad range of representatives to the Observatory In addition, the Office organises ‘statutory annual meetings’: one public sector stakeholders’ meeting, one private sector stakeholder’s meeting and one plenary meeting. The plenary meeting assembles the whole Observatory network. In addition, the Observatory team conducts videoconferences with the Observatory’s civil society stakeholders two to three times a year. Studies, surveys and reports Between 5 June 2012, the date of the entering into force of the Regulation, and 31 December 2019, the Office has published 84 studies related to its tasks under the Regulation . IP contribution studies This first group concerns studies on the economic relevance of IP both for the EU economy and for the individual performance of businesses. So far, the Office has published eight studies in this area. Some of these studies are repeated in time to identify trends. In 2013, for example, the Office published the report Intellectual property rights intensive industries: contribution to economic performance and employment in the European Union. The report was updated in 2016, and again in 2019. According to the 2019 edition, IPR-intensive industries account for 45% of EU GDP and almost one third of all jobs (29.2%) in the EU . The Office also analysed the relevance of IP for business: Intellectual property rights and firm performance in Europe (2015). This study has shown that, on average, companies that own IPR generate 29 per cent higher revenue per employee, and they pay 20 per cent higher wages, than companies that do not use IPR. In 2019 the Office published the study High-growth firms and intellectual property rights. IPR profile of high-potential SMEs in Europe, revealing that companies that have IPR activity have a much more likely to achieve subsequent growth than other companies. IP infringement studies The Office has published 28 studies on the volume and impact of infringements of IPR and other related matters such as the operational aspects of infringement activities. Looking at the scale of IP infringement on a global level, the Office, in joint cooperation with the OECD, published a report Trade in Counterfeit and Pirated Goods: Mapping the Economic Impact (2016). According to its findings, in 2013 trade in counterfeit and pirated goods accounted for up to 2.5% of global trade (and 5% of the imports into the EU). The Office and the OECD repeated the exercise in 2019. The results revealed a rise of the volume of global trade in counterfeit and pirated products (up to 3.3 % of global trade and 6.8% of EU imports). The Office has also conducted research on the economic impact of IP infringements, in terms of loss of sales, loss of government revenue and loss of jobs. The Office has done so using a sector by sector approach and it has covered 12 sectors so far, from cosmetics to tyres and batteries to recorded music. The Office also looked to other impacts such as in the Qualitative Study on Risks Posed by Counterfeits to Consumers (2019). Looking at the operational aspect of IP infringement, the OECD and Office complemented these reports with a number of related studies, such as Mapping the Real Routes of Trade in Fake Goods (OECD/EUIPO 2017) where China is identified the top producer of counterfeit goods in 9 out of 10 categories of goods that were researched. Other studies include: Why do Countries Export Fakes (OECD/EUIPO 2018), Misuse of Small Parcels for Trade in Counterfeit Goods (OECD/ EUIPO, 2018) and Trends in Trade in Counterfeit and Pirated Goods (OECD/EUIPO 2019) Online Business Models Infringing Intellectual Property Rights - Phase 1 (2016) and Online Business Models Infringing Intellectual Property Rights - Phase 2 (2017). The Office has also joined forces with Europol. The two organisations carried out a study, which benefited from contributions by national enforcement authorities and the private sector, leading to the publication of the 2015 Situation Report on Counterfeiting in the European Union. This study identifies the main traits of the phenomenon and provides illustrative case studies. An updated version of the study was published in 2017 assessing the evolution and providing new insights into emerging trends. The two organisations published a third edition in 2019, titled Intellectual Property Crime Threat Assessment (2019). Enforcement studies The Office has published over 30 studies on the legal and practical aspects of enforcing IPR, including among others the following: Study on voluntary collaboration practices in addressing online infringements of trade mark rights, design rights, copyright and rights related to copyright (2016), Legislative measures related to online IP infringements (2018); Deposit systems for audio visual works (2017, with the European Audiovisual Observatory), Protection and Control of Geographical Indications for Agricultural Products in the EU Member States (2017), Voluntary Registration and Deposit Systems: United Stated and China (2018) IP Litigation Insurance Landscape (2018). To help European businesses in their exports or overseas investment operations, between 2014 and 2015, the Office published five guides to IP protection in non-EU countries (Turkey, Russia, India, China, Brazil and Ukraine). Furthermore, the Office prepared case-law collections, namely Recent European Case-Law on the infringement and enforcement of Intellectual Property Rights (2019), and IPR Enforcement Case-Law Collection - The liability and obligations of intermediary service providers in the European Union (2019). Raising awareness studies To support work in raising awareness, the Office has conducted research on Europeans including young people’s perception of IP and their behaviour towards counterfeits and piracy, as well as on best practice in IP and education. These studies include: European Citizens and Intellectual Property: Perception, Awareness and Behaviour, EUIPO (2013), Intellectual Property and Youth, EUIPO (2016), Intellectual Property and Youth, EUIPO (2019), IP and Education in Europe (2015), European Citizens and Intellectual Property: Perception, Awareness and Behaviour (2017), and IP in Education Best Practice Report, EUIPO (2019).

In Intellectual Property (IP) SME Scoreboard (first published in 2016 and then updated 2019), the Office has also reported on the extent to which SMEs use the IP system and why. In its studies Intellectual Property (IP) SME Scoreboard of 2016 and 2019, EUIPO has furthermore reported on the extent to which SMEs use, or not, the IP system, and why. Other studies The Office has also published studies such as Derivative Use of Public Domain Content - Film Industry Focus (2017), The Baseline of Trade Secrets Litigation in the EU Member States (2018), and A Satellite Account for the European Union Creative Industries (2019). Training, workshops and seminars Every year the Office organises more than three seminars with its network of judges. This network is composed of judges dealing with IP infringements. Additionally, every two years the Office organises a Judges Symposium, which includes members of the Court of Justice of the EU, the General Court and of the Office’s Boards of Appeal. In cooperation with Eurojust, the Office has set up the European Intellectual Property Prosecutors Network that brings together prosecutors from the EU and neighbouring countries working with IP crime cases. The network shares best practices and has discussed a number of case studies involving successful criminal IP prosecutions. The European Intellectual Property Prosecutors Network meets once a year and that meeting is usually followed by a smaller one-day exchange of best practice with a number of Chinese prosecutors. Furthermore, the Office provides training to law enforcement officers from national bodies such as customs or police. In total, the Office provided 88 training events and knowledge-building seminars between 2012 and 2019, gathering more than 4,100 participants. These events were often organised in collaboration with the departments of the Commission (DG TAXUD and OLAF) and EU agencies, such as the European Union Agency for Law Enforcement Training (CEPOL), the European Union Agency for Law Enforcement Cooperation (Europol) and the European Union Agency for Criminal Justice Cooperation (Eurojust). In addition, the Office created, together with CEPOL, a virtual training centre offering enforcement officers more than 60 courses, e-learning modules, webinars and other useful training materials. The Office has also collaborated with the departments of the Commission to organise high level international events on IP enforcement. These included the 2014 IP Enforcement Summit (London), the 2017 IP Enforcement Summit (Berlin) and the 2019 International Forum on IP Enforcement (Paris). The first two summits were co-organised with the UK and German authorities. The 2019 International Forum on IP Enforcement was co-organised with the OECD which assembled more than 60 speakers and panellists, in addition to more than 280 participants. Raising awareness As an integral part of its research, or building up on its results, the Office has, in cooperation with the relevant national authorities and private sector stakeholders, carried out a number of awareness-raising initiatives. These include Ideas powered, by which the Office interacts with young people using social media alongside with events titled IP Youth workshops . The Office also funded 30 awareness-raising campaigns. These campaigns were organised by private or public stakeholders under a grant scheme set up by the Office with a total budget of €1.5 million. These initiatives have enabled the Office to create a repository of awareness raising material, which is freely available for bodies active in this field . In addition, when the Office launches a major publication it carries out a media campaign to raise awareness. The Office has also made available online guidance on copyright (FAQs on copyright) aimed primarily at consumers, but also useful for creators and users of copyright protected content. The Office’s FAQs on copyright aims at making information on copyright easily accessible and easily understandable, therefore helping people, entrepreneurs and businesses to avoid involuntarily infringing IP rules. This information is country specific and therefore there is a set of FAQs for each Member State available online in at least two language versions: the official language of the Member State in question (or at least one of the official languages in case there are more than one) and English . Tools and databases The Office developed tools and databases that facilitate the work of, and cooperation between, different law enforcement authorities, namely the Enforcement Data Base (EDB), the Anti-Counterfeiting Rapid Intelligence System (ACRIS) and the Anti-Counterfeiting Intelligence Support Tool (ACIST): - EDB helps right holders to protect authentic products against counterfeiting by making information on products, registered IPR and contacts available to enforcement authorities. Police and customs officials from all the Member States, as well as staff from Europol and OLAF can access this tool to view information and product details, facilitating the identification of counterfeits . EDB also allows companies to submit applications for action (AFAs ) to custom authorities. - ACRIS is a web-based tool developed at the request of the Commission’s department for Trade. It allows users to report, in a structured format, all data relating to cases of infringements of IPR affecting EU companies in countries outside the EU. Users report on their cases and corresponding enforcement actions with local authorities . - ACIST includes statistics on detentions within the EU. Information is collected from the border and within the single market. It is harmonised between countries and authorities. Data from the borders of the EU-28 have been included since 2012 as well as data on single market detentions from authorities in 25 Member States . In June 2019, the Office launched the IP Enforcement Portal (IPEP) integrating EDB, ACIST and ACRIS into a single, secured EU platform that allows for the multilingual exchange of information between law enforcement authorities and right holders, which is available free of charge. The IPEP is accessible to 63 law enforcement authorities and over 800 IP right holders have registered to the IPEP. The Office has also developed tools to benefit Europeans. For example, the AGORATEKA portal helps consumers to identify legal content online (films, TV shows, music, e-books, games and sports events) in participating Member States . International cooperation

The Office acts as an agency implementing EU funded programmes, such IP Key China, IP Key south-east Asia, IP Key Latin America, and ARISE+ IPR (covering the ASEAN region), which aim at strengthening IP protection in these countries and regions. Moreover, the Office provides support to the Commission’s department for Trade in running an IP focused network for EU officials in EU delegations around the world. The Office has also carried out surveys intended to gather feedback from EU stakeholders on the level of IPR protection outside the EU and it has published guides on IP protection in non-EU countries (Turkey, Russia, India, China, Brazil and Ukraine). In addition, it has developed an extensive programme of bilateral cooperation involving the signature of around 50 cooperation agreements with IP offices in non-EU countries and regional organisations around the world, also covering matters related to the enforcement of IPR, sharing information and IP economic-related studies. 4.evaluation methodology The evaluation roadmap was published in September 2016. The roadmap sets out the purpose and scope of the evaluation. According to the roadmap, the evaluation would use the following sources of information: relevant documents (the impact assessment accompanying the Commission’s proposal leading to the adoption of the Regulation, the Office’s annual programmes and annual reports, public statements from stakeholders), a study from an external contractor and a public consultation. The study was commissioned in November 2016 to Technopolis (‘the contractor’). The methodology used in its preparation included desk research and interviews. A total of 113 interviews were carried out mainly with stakeholders participating in the work of the Observatory, but also with members of the Office’s Observatory team. The contractor also contacted officials from national customs authorities that are not involved in the Observatory’s work, but who are in charge on a daily basis of IPR enforcement at the EU border. The contractor also carried out an online survey, sent through the Members of the Observatory, and their constituencies . The study was concluded in August 2017 and it is available online . Another important means of data collection was the public consultation which ran between 3 July 2018 and 5 October 2018. The public consultation was announced on Your Voice in Europe, and it was carried out through an online questionnaire made available in the 24 EU official languages, using the EU’s EUSurvey consultation tool . The public consultation received 98 contributions. The synopsis report of the public consultation provides information on who participated in the consultation and summarises the main results (see Annex 2). The results of the consultation are assessed in Annex 2 with reference to the various categories of respondents, such as individuals, professionals and organisations (that is, legal persons or entities), Members of the Observatory (a sub-category of the latter) Limitations and robustness of findings The documents mentioned above provide a solid factual basis to assess of the Office’s activities under the Regulation, the resources employed, the extent to which the cooperation between stakeholders became a reality and the results obtained (the development of new research methodologies, development of tools and their use, how many people received training, how many studies were published, how many times they have been quoted in policy documents, how much attention did the Office’s publications received from the media etc.). The evidence is in general robust and publicly available. The body of evidence was independently examined by the contractor who complemented the analysis with the feedback provided by stakeholders, both members and non-Members of the Observatory, through interviews and a survey. The contractor faced some difficulties in reaching out to stakeholders not participating in the work of the Observatory, but it still succeeded in receiving input from a number of customs officials outside the network who enforce IPR rights. This limitation was largely compensated by the public consultation which received contributions from 98 respondents (of which only 18 are Members of the Observatory) including 52 individuals. Another limitation that the contractor referred to is the relative infancy of their evaluation work, given that during the first two years 2012-2014, the Observatory was in an inception phase. Therefore, the contractor’s quantitative basis for the evaluation mainly refers to data between 2015 and 2017. In order to render the evaluation more meaningful the period to be covered by the evaluation was extended until 31 December 2019. Finally, while the work done by the Office is well documented , the real impact of its activities is less so. The Office monitors the impact of some of its activities, such as measuring the outreach of publications through press clippings, monitoring downloads and quotations of its studies and carrying satisfaction surveys on meetings and training sessions, etc.). However, in the first years after the adoption of the Regulation, the Office focused on putting projects in action to fulfil its new tasks and did not have a comprehensive scheme for evaluating and measuring the impact of its activities. Naturally, the Office cannot be expected to be able to measure the extent to which it contributes to the ultimate policy objective of lowering levels of IP infringement, Still, it could offer better information on the possible impact of some its activities, such as its awareness-raising actions and campaigns.. By the end of 2018, the Office announced that it would be setting up a tool for internal use which helps monitoring at least some of its activities, for example its awareness actions and campaigns. 5.Answers to the Evaluation Questions This section assesses the relevancy, effectiveness, efficiency, coherency and added value of the EU’s intervention , taking in consideration the activity carried, and the main results achieved, by the Office in implementing the tasks assigned to it by the Regulation. How relevant is the EU intervention in IP enforcement The key question under the relevance criteria is whether the objectives of the Regulation are still valid and match the current needs and problems. There is no doubt that IP infringement continues to be a real problem having a major impact on the EU’s welfare: ·In 2017, customs authorities in the EU registered almost 60 000 detention cases (with 31 million articles suspected of violating IPR) . The retail value of the articles seized exceeded EUR 580 million. ·In 2013, 2.5% of value of the world trade (USD 461 billion) concerned IP infringing goods . In 2016, this value increased to USD 509 billion, equivalent to 3.3% of world trade. ·The EU is particularly hit: imports of counterfeit and pirated products into the EU rose from EUR 85 billion in 2013 (equivalent to 5% of total EU imports) to EUR 121 billion in 2016 (equivalent to 6.8% of total EU imports) . ·The figures above concern physical products only. Online illegal offer, and consumption, of copyright content such as movies, music and live sport events, is also widespread. Between 2012 and 2016 piracy in the EU caused the recorded music industry annual average losses of EUR 200 million and 1300 jobs .

IPR infringement, such as counterfeiting and piracy, hurt businesses and the economy but they also feed organised crime. In addition counterfeiters use manufacturing sites, processes, materials and ingredients that often do not comply with health, safety or environmental regulations. Therefore, consumption and use of counterfeited goods can have a serious impact on the health and safety of consumers, as well as negative environmental consequences. Counterfeiting and piracy can only be tackled through the cooperation of all those affected. In addition, counterfeiting is to a large extent carried out by criminal organisations operating globally , and cannot be tackled without cooperation with third countries. The establishment of the Observatory and its entrustment to the Office in 2012 was a key element of the EU’s response to counterfeiting and piracy, alongside with the EU secondary legislation on IP and other initiatives (such as in the area of customs, international trade, etc.). The contractors concluded that the most valued objective of the Regulation is to improve the knowledge of public authorities and private sector stakeholders. Most stakeholders also supported the objectives of improving day-to-day cooperation, and raising individuals’ awareness. A less consensual view seems to have emerged from the contractor’s interviews with stakeholders on the specific objective on cooperation with non-EU countries. However, these hesitations relate to the manner in which the Office has implemented the Regulation and not to the relevance of the objective itself . Stakeholders interviewed by the contractors agreed in that “(…) many counterfeited goods come from third countries. Much could be done to better understand and thus address counterfeiting in third countries, especially in China, South East Asia or South America.” This is in line with the views expressed by 59% of the respondents to the public consultation. In particular, 86% of the participating companies, organisations and professionals find it important that the Office helps authorities from non-EU countries to develop techniques, skills and tools for enforcing IPRs . Therefore, the tasks entrusted to the Office in relation with non-EU countries are relevant and should be maintained. Another area worth mentioning is the promotion of technical tools for professionals and benchmark techniques, including tracking and tracing systems which help to distinguish genuine products from counterfeit ones . Of all activities assigned to the Office by the Regulation, the promotion of the above mentioned technical tools was the one that received less positive replies as to its relevance . There seems to be two reasons for this result: ·Some individuals are concerned that such tools may invade their privacy . ·Right holders see track and trace systems as a sensitive issue, involving confidential commercial information. They also argue that such systems should not be standardised as there is no one size fits all solution, and some fear that the Office may end up promoting one specific solution to the detriment of other solutions. That said, most respondents to the public consultation (54%) consider this activity to be either important (31%) or very important (27%). The departments of the Commission consider that it is still useful for the businesses, in particular, SMEs to be made aware of the different technical solutions available, and the Office can share relevant information in that respect without favouring a particular track and trace solution. Indeed, track and trace solutions are business-to-business products that should be left free to compete in an open market without interference of public bodies. According to the feedback collected by the contractor, most stakeholders indicated that the scope of the Regulation is still appropriate and relevant and that there is no need to extend the scope of the Office’s tasks . That was also the dominant view expressed by respondents to the public consultation (39% of all respondents). Still, according to the contractor, some stakeholders indicated that the Office should have more powers, particularly in enforcement and sanctions . Likewise, some respondents suggested that the Office should facilitate the exchange of data between law enforcement authorities across the EU, at EU level and to certain non-EU countries. However, this is an area where the Office is already active, since one of the tasks of the Office under Article 2(1)(g) of the Regulation is to provide “mechanisms which help to improve the online exchange, between Member States’ authorities working in the field of intellectual property rights, of information relating to the enforcement of such rights, and fostering cooperation with and between those authorities.” While some of the replies received indicate a certain lack of awareness on the Office’s mandate, some others, provided by knowledgeable stakeholders, could indicate a wish for the Office to do more in certain areas covered by the Regulation. The same is true with most of other suggestions received through the public consultation (see Annex 2). In conclusion, the tasks and activities carried out by the Office under the Regulation are still valid and relevant. Both the contractor and the public consultation revealed a broad consensus on the tasks assigned to the Office under the Regulation. According to the contractor “the Observatory’s general and specific objectives are still considered to be relevant by the majority of stakeholders consulted” . The contractor found “barely any differences in the views of Observatory staff, observers, EC representatives and MEPs, national authorities and civil society organisations – i.e. all agreed on the relevance of the objectives” . The findings of the public consultation has also shown broad support for the tasks assigned to the Office. The respondents considered that all the tasks assigned to the Office were important with approval rates between 54% (research on technical tools to prevent and tackle infringements of IPR, including tracking and tracing systems which help to distinguish genuine products from counterfeit ones) and 77% (research on the economic and cultural value of IP for individuals, businesses and society). The approval rates were higher among professionals and organisations, from 73% (technical tools to prevent infringements of IPR) to 95% (training on IP enforcement and tools for cooperation between authorities). Effectiveness of the Regulation and its implementation In this section the evaluation assesses the progress made in achieving the objectives set out by the Regulation. Operational objective: sustainable infrastructure for the network The Office’s Observatory department The immediate operational objective of the EU legislator was ensuring “that the Observatory had the necessary infrastructure to deliver its activities effectively, as quickly as possible and with minimum costs for the EU budget” . The Office has met this objective. The Observatory team has now 18 times more staff than it had before the adoption of the Regulation and the Office has allocated on average an annual budget of €11 million to the activities linked to the Observatory. According to the contractor, the Office “seems to be well equipped in terms of expertise to perform the tasks attributed to it by the Regulation under evaluation” and the evidence collected “does not suggest that there are any shortcomings of expertise” . Most Observatory members (77%) that participated in the public consultation considered that “the EUIPO is well equipped to carry out its tasks and activities, in terms of independency, funding, staff, expertise, IT and meeting capacities” . Composition of the Observatory network The well-functioning of the Regulation requires more than adequate budget and staffing. Central to the Office’s missions is to ensure that its activities under the Regulation can benefit from the stakeholder’s expertise gathered by the Observatory. The Office has also met this objective. It has broadened the Observatory network by filling gaps in its earlier composition. The number of representatives more than doubled and it is now composed of 123 representatives. This expansion has enabled the Office to benefit from a broader range of expertise, while ensuring that meetings remain manageable and workable. Table 5 Staff and representatives Source: Commission and EUIPO Before transfer to the EUIPO 31/12/2019 Staff assigned to the Observatory 3 55 Observatory representatives (total) 66 123 Representatives from the public sector 27 28 Representatives from the private sector 38 68 Representatives from consumer organisations and civil society 1 8 Observers --- 14 Members or other representatives of the European Parliament --- 5

Private sector stakeholders include organisations representing the interests of IPR owners and industry sectors that rely heavily on IP (footwear, electric components manufacturers, composers and songwriters, journalists, publishers, movies and audiovisual software, toys, etc.). SMEs are represented through organisations such as SMEunited, Business Europe and Eurochambres. Despite the significant growth in participants, one third of the respondents to the public consultation considered that the Observatory network should include more stakeholders from the private sector, such as freelancer artists and legal practitioners, particularly litigators. The Observatory network also includes various international organisations and other institutional bodies, such as the World Customs Organisations, Europol, the OECD, OLAF, the European Patent Office, etc. The participation of civil society organisations has also increased since the adoption of the Regulation (from one to eight members), including organisations representing consumers’ interests, civil and human rights associations. However, examples of missing interest groups mentioned by respondents include (i) organisations and observers of human rights and net neutrality defenders, (ii) citizens in general, (iii) Pirate Parties International, (iv) Open Knowledge International, and (v) representatives of universities and research centres. It should be recalled that the main purpose of the Observatory network is not to promote discussions on the added value of the IP system as such, but rather to help the Office in carrying out its tasks of supporting the enforcement of IPR. While the composition of the Observatory should be diversified and open to change, its core must be formed by stakeholders concerned by or most experienced in the fight against infringements of IPR – as provided for by Article 4(2) of the Regulation. In addition, there is a need to keep the number of participants to a workable level. Overall, most respondents (58%) – and 67% of professionals and organisations - considered that no interest groups were underrepresented in the Observatory. The study did not find any flaws in the composition of the Observatory network. Working with stakeholders The good functioning of the Regulation requires the Office to ensure stakeholder engagement. Having a broad, representative and balanced network of stakeholders from the public and private sectors and civil society is not enough. It must result in a meaningful partnership between the Office and the network of stakeholders gathered under the Observatory. While it is for the Office’s governing bodies to ultimately decide what specific projects are to be carried out, the annual programmes of activities to be carried out under the Regulation (work programmes) are prepared in consultation with the departments of the Commission and all the stakeholders gathered by the Observatory. It is also the Office who decides how much resources it allocates to a specific study, campaign, tool or event, without consultation of the Observatory network. The funding of the different areas of activity and projects is a matter dealt by the EUIPO internally. Stakeholders have different concerns and views over priorities and specific actions. These differences are visible in their different contributions to the EUIPO’s work programmes. Still, there is broad consensus over most of the activities that the Office has been developing under the Regulation and there has been no major disagreements on the content of the different work programmes and strategic plans. Consistency with the EU’s priorities has also been ensured. The public consultation has shown that the Observatory members are virtually unanimous in finding that the process leading to adoption of the Observatory’s work programme is transparent. The Office also implements its work programmes in regular consultation with the Observatory’s representatives, mainly through the working groups meetings that take place twice a year. More recently, the Office has also created expert groups (see Section on current situation). It is too early to assess the effectiveness of these new work arrangements. While the creation of smaller and more targeted groups has clear advantages, the Office should maintain a strong level of engagement with all its representatives. Stakeholders should be given ample opportunities to participate actively in the Office’s work under the Regulation. Therefore, there must be sufficient exchanges of information between the expert groups and the working groups or the stakeholders as a whole. The departments of the Commission should also continue to be invited to the meetings of both the working groups and the expert groups to ensure that the Office’s activities are consistent with Commission priorities. Some stakeholders have indicated some instances where projects have been planned and announced without having been given the opportunity to provide input at early stage of the process. This is certainly not the rule, but this evaluation concludes that the Office must strengthen its efforts to systematically seek and obtain stakeholders feedback before and during the execution of the actions set out in its work programme. The Office should therefore consider adopting practices that promote effective consultation of the Members of the Observatory network. As an example, studies and reports could systematically describe the extent to which the Observatory’s representatives have been consulted. Conclusion on the operational objective of equipping the Observatory with a sustainable infrastructure In view of the above, it is concluded that the Office succeeded in delivering on the operational objective. It has put a stable and sustainable framework at the service of the objectives pursued by the Regulation, allocating sufficient human and financial resources to its new tasks. This evaluation concludes that the composition of the Observatory network is well balanced and is consistent with its mandate of helping the Office in carrying out the activities set out in the Regulation. Furthermore, the Office has succeeded in building good cooperation with the Observatory’s representatives. The public consultation has shown that there is a general positive perception on the way the Office informs, interacts with and listens to the stakeholders that participate in the Observatory’s work. , The Office should continue seeking an even stronger engagement from stakeholders and provide them with ample opportunities for contribution in all its projects, as this has not been always fully achieved. The Office’s implementation of the tasks assigned by the Regulation The overall assessment of the different activities carried out by EUIPO under the Regulation is very positive, in particular for research, training, raising awareness and developing tools. Research, publications and training As seen above, the Office has since its inception gathered, analysed, published and shared quite a substantial body of information and intelligence.

The Office has increased substantially the output of the Observatory in terms of publications. From the entry into force of the Regulation until 31 December 2019, the Office has published 84 studies, at a rate of a study every 4.7 weeks. One major achievement has been the development of transparent methodologies for the collection, analysis and reporting of independent, objective, comparable and reliable data on infringements of IPR, a task of utmost importance that has been carried out well according to 83% of the Observatory’s stakeholders. Building up on these results, the Office’s research has materialised in a number of major publications providing valuable insights on the loss of sales, government revenue and jobs caused by IP infringements. Furthermore, the Office’s studies on public awareness and use of IP by SMEs are a key source of information for designing new strategies and specific actions for awareness raising by Member States, private sector stakeholders and EU bodies. Its ground breaking report “Intellectual Property SME Scoreboard” on use of IP by SMEs is based on an EU-wide survey reaching out to around 9,000 SMEs. The SME scoreboard provides insights over the different reasons why the IP system may not be meeting its full potential in terms of helping SMEs to grow and prosper. The EUIPO has so far published two SME scoreboard reports (2016 and 2019), and plans to repeat the exercise every three years, in order to identify trends. Finally, the data that the EUIPO collects on the routes, methods and business models used by IP infringing organisations provide enforcement authorities with valuable information for the risk assessment and the strategic planning of operational actions by enforcement authorities across the EU. Such data also informs the Office’s training programmes, therefore contributing to improve the expertise of those involved in the enforcement of IPR. Some indicators provided by the EUIPO suggest that its Observatory dedicated webpage and its publications attract increased interest. Table 6 Reach out of Observatory publications (Source: EUIPO 2019 Annual Report) 2016 2017 2018 2019 Observatory website visitors (per month) 5 558 8 077 12 924 9 360 Downloads of relevant paper/publications from the Observatory website 35 384 152 968 113 976 126 010 Quotations of Observatory studies and reports by EU institutions 14 191 9 343 10 452 18 215 The Office’s extensive training programmes carried out in collaboration with the relevant EU bodies (such as CEPOL, Europol, OLAF or Eurojust) and various national and international authorities and organisations have closed the existing gaps in developing the required expertise. Today, training on IP enforcement is no longer limited to customs officials, but is extended to police officials, judges and prosecutors. This is an activity that neither the Commission departments nor the EU bodies mentioned above pursue before the entry into force of the Regulation. To date, the Office has trained around 4,100 people working in IP enforcement in more than 88 training events with participants coming from across the EU. The surveys carried out after each training event consistently show high levels of satisfaction among participants. Between 2015 and 2018, the average satisfaction rate was 97.4%. Furthermore, according to the contractor “the training programs were seen by interviewees as valuable opportunities for exchange of knowledge between judges as well as between public stakeholders such as customs representatives or judges and private stakeholders such as companies having experienced infringement on the other side” . The Office’s training programmes received positive responses from 72% of the Observatory’s stakeholders responding to the public consultation. Raising awareness The Office’s publications also contribute to the objective of raising awareness. First, the Office promotes the release of its publications. According to the contractor’s research, the Office’s studies published between 2012 and 2017, were mentioned or commented in nearly 2,000 published articles and generated a total value of €8.3 million in advertising value equivalency . Second, the knowledge generated by the Office’s research and publication activities, for example on the individuals’ behaviours towards counterfeiting and piracy, enables it to design and deliver effective awareness initiatives. In addition, the Office has invested €1.5 million in different awareness campaigns using a grant scheme. The campaigns are designed and implemented by third parties, usually on a national basis. The campaigns implemented in 2018 and 2019 reached 60 million Europeans, at a cost of approximately €1 per 59 individuals reached. The ‘Authenticity campaign’ , carried out by three beneficiaries of €50,000 worth of grants each in 2016, is one such example. The authenticity campaign was implemented in three capital cities (Paris, Rome and Madrid) and a couple of smaller ones, with the support of local authorities. It targeted the general public in local environments through an advertising campaign in the city (bus and metro stations during the Christmas period), social media activities and in some cases training of enforcers. Based on the reporting of the project at the end, the campaign reached 4,2 million people on Facebook and more than 35 million people saw the poster campaign in major train and metro stations (data aggregated for all three countries). In Rome alone more than 200 local enforcers were trained and were followed up by seizures of counterfeit goods. The success of this campaign and the potential of the project developed at the end of 2018 in the creation of a European Cooperation project (with national offices) in EUIPO to extend the piloted project at European level with a view to establish over the years a European network of “authenticity” cities. According to the Office, the campaigns organised by third parties in Member States (and co-funded by the Office in 2017) have reached 60 million Europeans in 10 EU countries, corresponding to 12% of the EU’s population. This includes 800 000 teachers reached by the campaign organised by the European Trade Union Committee for Education. In 2019, the Office conducted a Europe-wide media campaign coinciding with the publication of its 2019 Status Report on IPR infringement. The campaign covered all EU Member States and targeted print, online and audiovisual press for two weeks. Graphic 1 Reach out of 2019 Status Report media campaign (Source: EUIPO) The campaign was developed in close cooperation with Observatory stakeholders who provided support and shared it further. According to the Office, the campaign reached an estimated advertising value over €4.1 million for 1,438 clippings in total. The campaign also reached qualitative coverage as major media outlets in key countries reported on the study and its findings. The real impact that the Office’s campaigns have in influencing consumer behaviour and lowering buying or use of IP infringing products is difficult to measure. Still, some positive signs are emerging. For example, 52% of people now consider having a ‘rather good’ understanding of IP, an increase of 10 points compared to 2013 , and according to a Eurobarometer report from 2018, 90% of respondents agree that arrangements need to be in place to limit the spread of illegal content on the Internet. The evaluation concludes that the Office has delivered both in quantity and quality on its task of raising awareness. This conclusion seems to be shared by most stakeholders represented in the Observatory - 88% of them indicated that the Office carried out its task of raising awareness well.

The Office’s research and publishing activities are particularly useful for awareness raising among policy makers. The Office’s studies, surveys and reports have been used in a number of Commission proposals and initiatives, such as the 2015 Single market strategy, the 2016 copyright package, the 2016 Start-up initiative and the 2017 IP package as well as the IP market watch list . The Observatory’s public sector representatives also confirmed the usefulness and importance of the Office’s publications. According to the contractor “At the national level, public stakeholders were particularly enthusiastic about the sectorial studies and other ‘quantifying’ reports; their use is often linked to awareness-raising campaigns where numbers are required” . In addition “ten national authorities interviewed report that the data provided by the Observatory is regularly used in policy documents (although many of these seem to be internal documents) and/or in internal briefings and/or published on national websites. The data and studies therefore reinforce the capacity for IP enforcement in national policy making” . Tools The Office has also achieved good results on creating tools to support enforcement of IPRs. Such tools are available through the IP Enforcement Portal (‘IPEP’). While IPEP is relatively new (some of its components were launched in 2014, while others in 2016), it is clear that its usage is growing. By the end of 2019, there were 65 law enforcement authorities with access to IPEP. These authorities include all EU customs authorities, Europol, OLAF and police forces from Belgium, Bulgaria, Cyprus, Czechia, Germany, Estonia, Spain, France, Greece, Hungary, Ireland, Italy, Latvia, Malta, the Netherlands, Portugal and Romania. The tool assembles data, collected by the Commission’s department for Taxation and Customs Union, on border detentions from the EU’s borders. The EPIP also receives and makes available data on single market detentions of IP infringing goods (furnished by 25 Member States ). The tool contains over 950,000 records of detentions within the EU and at its borders. The estimated value of these detentions is over €30,500 million . EPIP is also used by owners of IPR through its exchange of information function (previously known as EDB). These owners feed data to the Portal. Between 2014 and 2019, the number of private sector stakeholders using the tool has grown from 117 to 810. Between 2016 and 2019, the overall number of applications for action sent by IPR owners to customs authorities through the Portal rose from 40 to 176. Most of these companies also use the report non-EU cases function (previously known as ACRIS). It is clear that the portal has a great potential. It may for example in the future be made available to Internet platforms such as online marketplaces so that they can verify the existence and ownership of for example, trade marks whenever there is a reason to believe that counterfeited goods are being offered for sale through their services. At the same time, the Office should avoid that the portal duplicates already existing tools. Assessment on effectiveness The entrustment of the Observatory and other related tasks to the Office has resulted in an increase in resources and in quantitative output which is reflected in the table below: Table 7 Observatory resources and output evolution Source: EUIPO and Commission own data Staffing and Observatory network 5/6/2012 31/12/2019 Staff assigned to the Observatory 3 55 Representatives to the Observatory 67 127 STUDIES Before the Regulation 09/2009 – 05/2012 29 Months After the Regulation 05/2012-12/2019 89 months Legal studies on civil law enforcement of IPR 4 - Economic studies on IP 8 Studies on awareness of IP 8 Studies on infringements of IPR 28 Studies on enforcement of IPR 34 Other studies 6 Total studies 4 84 AWARENESS Awareness campaigns funded 30 TRAINING Training events carried out 84 Number of participants 4,100 TOOLS & DATABASES 6 Enforcement tools (EDB, ACIST, ACRIS) 3 Legal use of IPR (Agorateka, Orphan Works database) 2 Training tools (Virtual Training Centre) 1 As indicated, the way in which the Office has been carrying out those tasks has generally been much appreciated by Member States representatives and private sector stakeholders to the Observatory. In this regard, the contractor concluded that the Office had improved the protection of IPR delivering on all the objectives in a manner that was independent while being open to all stakeholders. Likewise, 43% of respondents to the public consultation consider that the Office has achieved good or very good results in helping to improve the protection of IPR. The approval rate is higher among professionals and organisations (68%) and higher still within Members of the Observatory (88%). The overall result is therefore positive. However, some areas have emerged as requiring attention and possible improvement. These will be addressed below. i. Less is more? Some stakeholders consider that the Office may be delivering too much. Some representatives struggle to be fully dated on all the activities and projects carried out by the Office. The vast number of streams of work has also caused occasional delays in meeting deadlines. The growing range of projects and activities is one of the factors that some stakeholders consider as impairing the Office’s effectiveness. Some of these views may be related to the vested interests of the stakeholders in question. The International trademark association (INTA) for example considers that the focus of the Observatory work should be on delivering on the fight against infringements of designs and trademarks. That is understandable as INTA represents the interests of trade mark owners and of professionals in trade mark protection. Some other private stakeholders would like to see the Office dedicating more projects on piracy (infringements of copyright) . Associations representing the interests of holders of IPR (trade marks, copyright or other) tend to be less supportive of projects and activities that are not directly related to IP infringements, such as those that are closer to the concerns of consumer associations and other stakeholders from civil society. For example, one of these right holders organisations commented that the Observatory “is not there to justify IPR infringements, to blame all piracy on the (overstated) lack of legal offers, to promote open licensing.” Such a range of opinions result from the heterogeneous nature of the Observatory membership, which is also one of its strengths. As mentioned in the contractor’s study: “A critical success factor is hence the openness of the Observatory to all types of stakeholders and not only right holders” and “it’s widely perceived independence from industry” . The growing number of projects in which the Office is involved can lead to suboptimal implementation. At times, the Office takes on new projects without having delivered on or begun previously agreed actions. This was the case for the study on the role of social media in relation to IPR infringement, the study on search engines, the study on the availability of forward-looking blocking injunctions, as well as the mapping of market surveillance authorities. These initiatives were included in the work programmes of 2018 and 2019, but by the end of 2019 no substantial progress had been made. The Office should therefore manage expectations better and, where appropriate, allocate additional financial resources to its activities under the Regulation to keep up with its planning and avoid that certain projects are delayed for lack of budget. ii. Location The location of the Office´s headquarters (Alicante, Spain) is seen by some (10% of respondents and 33% of the Members of the Observatory) as problematic given that many private sector stakeholders have their seat in Brussels (or attend meetings in Brussels on a regular basis). These stakeholders consider it to be time consuming to attend the Observatory’s meetings in Alicante. The Office has counterbalanced this by organising some if its meetings in Brussels. In addition, the Office funds the travel and accommodation of the Members of the Observatory network. Participating in the work of the Observatory will always require time-consuming investment from the part of its members, justified by the relevance of its tasks and activities; and the meetings of the Observatory usually have a good attendance rate. In 2018, the representatives from 28 Member States and 42 representatives from private sector stakeholders, civil society and observers attended the Observatory plenary meeting (70 attendants in total, out of 114 invitations sent). In 2019, 27 Member States and 44 representatives from private sector stakeholders, civil society and observers attended the Observatory plenary meeting (71 attendants in total, out of 117 invitations sent). This evaluation concludes that the location of the Office does not significantly affect the participation of stakeholders in the Office’s activities under the Regulation.

iii. Collecting data from Member States The Regulation requires Member States to inform the Office of their overall policies and strategies on the enforcement of IPR, provide available statistical data on IPR infringements and inform the Office of significant case-law. Typically, a representative of a Member State to the Observatory comes from a specific IP related body in their country and often faces difficulties in obtaining data and support from other public bodies that may not have IP enforcement within their priorities. This difficulty has been particularly acute in projects that involve collection of case-law or of data related to the costs of IP enforcement. The Office has launched a reflection together with the Member States, which led to an agreed approach on how to minimise the difficulties in collecting data; namely the country reports detailing the estimated data needs, the sources and contact persons and guidelines on how to transmit it to the Office. However, data collection from Member States remains a challenge. iv. Accessibility of the Observatory publications Research on IP and IP infringements is one of the most valued activities of the Office under the Regulation. However, the way its publications are made available to the public on the Office’s website is suboptimal. The search area displays the Office’s publications is in descending chronologic order and the key words search tool is not sufficiently helpful. As a result, finding a particular study can be cumbersome. The contractor’s study points out that some of the Office’s publications lack well organised publishing information (clear indication of the date or year, publication number, how-to-quote guidance, etc.). The Office has in the meantime corrected some of these shortcomings, in particular on publishing information of its new studies and reports, but navigation between the different publications in the Office’s website could still be made easier. v. International cooperation The public consultation showed that not all stakeholders appreciate the manner in which the Office has been providing technical assistance and training programmes to IP offices and officials in non-EU countries. While there is a broad consensus on the importance of the task, this is the activity with the least favourable evaluation among Members of the Observatory. However, it should be noted that this area had the most respondents express no opinion (69% of all respondents, 63% if only professionals and organisations are considered, and 55% within the Members of the Observatory), which could be the result of lack of awareness on the activities carried by the Office in relation to non-EU countries. The level of positive feedback was substantially higher than the number of replies expressing a negative evaluation of the Office’s performance (21% versus 9% for all respondents, 30% versus 6% when only professionals and organisations are considered and 33% versus 11% within the Members of the Observatory). The contractor’s study had already mentioned that “Some stakeholders lacked awareness of the Observatory’s responsibilities towards international cooperation with third countries.” The study also reports on the need for the Office to be fully aligned with the EU’s IP strategy in non-EU countries, which is an integral part of the EU trade policy. The Office carries out international activities that both fall under the Regulation (with a focus on supporting EU activities on counterfeiting and piracy) and under the EU Trade Mark Regulation (related to the administration of trade marks and design systems). These activities are integrated in the Office’s annual work programme. However, for stakeholders the distinction between different projects carried out under either of these regulations may not be clear. The importance of cooperating with non-EU countries in the fight against counterfeiting and piracy cannot be overstated. Criminal organisations involved in IP infringements operate globally, not nationally. Counterfeits placed on the EU market are mainly manufactured in non-EU countries and imported into the EU. Border controls are therefore vital and could be increased but such measures alone will not eradicate counterfeit imports. Infringements of IPR taking place in other countries also harm European business and cooperation, trade diplomacy and multinational engagement are indispensable. Not all countries have the same capacity, or give the same priority, to the fight against counterfeit and piracy. It is therefore important that the Office establishes cooperation arrangements with IP offices from non-EU countries. The Office’s international activities consist of implementing EU funded projects for the Commission. The Office’s technical expertise and its network of contacts with relevant stakeholders in IP worldwide is a valuable asset. However, as the Regulation explicitly mentions, it is important for the Office to consult with Member States. In addition, the Office’s international activity should, like any other activity under the Regulation, benefit from constructive stakeholder input. The recent creation of an expert group dedicated solely to international activities should enable more engagement with Members of the Observatory network. Efficiency of the initiative and its implementation The efficiency criterion considers whether the Office’s results in carrying out its activities under the Regulation were achieved in a cost-effective manner. Stakeholders bear costs to the extent that they allocate time to participate in such meetings. However, the costs of implementing the Regulation are mainly covered by the Office budget, including the travel and accommodation costs of representatives and experts when they attend the various meeting of Observatory. The Office budget is solely funded by the fees paid by the users of the EU trade mark and designs systems. The Office’s total annual budget allocated to the activities under the Regulation is on average €9.25 million, including average staff costs of €3.75 million. The Office’s Observatory department started its activities in 2012 with an annual budget of €2.4 million and 34 staff members . To accommodate its expanding activities the Office’s Observatory department grew at a quick pace, quadrupling its budget and increasing the staff to 55 staff members. In 2019, the budget of the Observatory department was €11.73 million, corresponding to less than 5% of the Office’s overall spending (the Office’s total spending in 2019 was €237 million ). Graphic 2 Budget and number of staff allocated by the Office to the Observatory department (Source: EUIPO)

In 2017 and 2018, the Office’s spending on the activities under the regulation was split between the different work streams, as indicated below (staff included): Table 8 Observatory spending (Source: EUIPO annual reports) Subject Area Budget 2017 Exec % of total budget Budget 2018 % of total budget Economic and Statistics 1,553,905.30 € 12.7% 1,383,545 € 10.4% Enforcement 5,575,706.05 € 45.7% 3,643,234 € 27.4% IP Enforcement Portal included in Enforcement 0.0% 2,085,662 € 15.7% IP in the Digital World 1,201,656.28 € 9.8% 1,202,767 € 9.1% Legal and International 1,161,440.54 € 9.5% 555,061 € 4.2% Public Awareness 1,678,011.48 € 13.7% 3,725,501 € 28.0% Statutory Meetings 745,601.23 € 6.1% 643,807 € 4.8% Orphan Works Deployment 128,587.16 € 1.1% 35,510 € 0.3% Virtual Training Centre 158,482.73 € 1.3% 10,487 € 0.1% EU SMEs and IP 1,522.55 € 0.0% 2,520 € 0.0% GRAND TOTAL 12,204,913.32 € 13,288,093 € The areas with the highest Office spending are (1) enforcement and the Portal, (2) public awareness and (3) economic and statistics. Indeed, around 44% of the budget administered by the Office’s Observatory department is dedicated to enforcement activities. This includes the design, deployment and maintenance of IT tools and databases such as EDB, ACRIS, ACIST currently integrated into one single tool: the IP Enforcement Portal . Enforcement activities also include the training programmes for officials involved in enforcement. Public awareness activities are also a major area of spending, which has doubled between 2017 and 2018, corresponding to 28% of the Observatory department’s budget. The Office spends around 11% of the Observatory department budget on economic and statistics, which consist in research and publication, one of the activities most appreciated by Member States authorities, private sector stakeholders and the IP community in general. The costs of operating the Observatory can be benchmarked against a similar organisation, such as the European Monitoring Centre for Drugs and Drug Addiction (‘the Centre’). The Centre has been tasked with providing factual, objective, reliable and comparable information on drugs and drug addiction and their consequences. Its main tasks include collecting and analysing data, improving data-comparison methods, disseminating data and cooperating with peer institutions within the EU and internationally. Both the Office and the Centre look at illicit and or undesired practices that harm individuals and society. Their functions are in that respect of a similar nature. The Centre has been operating with an average of 105 full-time staff per year and an average annual budget of EUR 16 million . The Office’s Observatory department has 55 members of staff and manages an increasing average budget of €9.25 million (the 2019 budget was 11.73 million). The Observatory department has almost half of the staff of the Centre. However, it benefits from the support services that already exists in the Office (such as Human Resources departments, IT services, financial services, etc.). Taking these support services into account , it is assumed that the two organisations are working on proportionately comparable resources . As mentioned, representatives to the Observatory also bear costs, even if they may be considered minimal. Participation in the Observatory meetings is voluntary and the Office bears the travel and accommodation costs. Still, it represents a cost in terms of working time for the people involved. These representatives have to prepare their participation, collect data and feedback from their constituencies, travel to and from the meetings, and subsequently report back on the outcomes of such meetings, in addition to providing further input in between meetings whenever necessary. Being a representative to the Observatory is voluntary. Continued interest, participation in the Observatory’s work and good attendance at meetings lead to the conclusion that the cost/benefit ratio for the Observatory stakeholders is positive. The implementation of the Regulation has brought about visible benefits, such as the availability of objective, reliable and comparable data on the value and role of IP as well as on the volume and impact of IP infringements. The data enables a better understanding of the challenges posed by counterfeiting and piracy and feeds policy making both at EU and national levels. The IP enforcement tool is also a tangible benefit linking the different enforcement authorities and right holders across the EU. In addition to more and better data and tools, the Office has put in place, in cooperation with relevant national and EU bodies, training programmes. All the above outputs, including the Office’s roles in funding and supporting public awareness campaigns, are highly appreciated by stakeholders and national authorities, as shown both by the feedback collected by the contractor and in the public consultation. In addition, the Observatory enables a regular sharing of information, knowledge and best practice between all the major actors in IP enforcement. The value of the network effect should not be underestimated. The bringing together, on a regular basis, of a substantial number of authorities and stakeholders under a stable and durable collaborative framework, under agreed work programmes also facilitates every day cooperation between Member States’ authorities, as well as EU bodies and private sector stakeholders outside the remit of the Observatory’s activities. These benefits are difficult to quantify and therefore this evaluation does not make a direct comparison between the costs and benefits. However, some proxies provide indications on the proportionality of the costs vis-a-vis the outputs of the Office’s work under the Regulation. Some proxies related to efficiency of public agencies link the number of staff, staff budget and operational budget (that is, budget of the Observatory department excluding salaries). The table below show the evolution of the ratios from 2012 to 2019: Table 9 Evolution of EUIPO staff, staff budget and operational budget (Source: own calculations based on EUIPO/Observatory internal data and annual reports) Year/item 2012 2013 2014 2015 2016 2017 2018 2019 Operational expenditure per staff posts (thousand Euros) 27 52 121 292 171 178 156 111 Operational budget vs staff budget 60% 66% 97% 340% 209% 158% 157% 109% The table above shows that the Observatory department started by managing around €27,000 per member of staff per year. This ratio rose sharply to then slowly fall, due to increases in staff. In 2019, the ratio was approximately €111,000 per member of staff. Monitoring is needed to ensure that both ratios maintain their current good levels and do not fall beyond the 2014 numbers. The table also shows that the operational budget since 2015 exceeds the staff budget. This ratio has been influenced by a sharp frontloading of budgetary resources that was matched by much more slow increases in staff numbers. A rapid growth in the initial years has meant that the increases in budget was not accompanied an equally fast growth in staff. If these numbers are compared with the distribution of staff, support and operation budgets in other agencies, it can be observed that the ratio of operational budget versus staff budget of the Observatory department is in general higher than the ratios observed in Centre, and the EU Agency for Fundamental Rights (FRA) and lower than the European Agency for Safety and Health (EU-OSHA) and the European Asylum Support Office (EASO). Table 10 Staff, operational and non-operational budget of the Observatory and some EU agencies (Source: Evaluation of the European Monitoring Centre for Drugs and Drug Addiction (EMCDDA) 2018, SWD(2019) 174 final, and own calculations based on EUIPO Annual reports Budget EMCDDA FRA EUIPO EU-OSHA EASO Staff 60% 53% 44% 36% 21% Support/Administrative 10% 11% n.a. 8% 12% Operational 30% 36% 55% 52% 67% Overtime increases in budget and staff posts triggered increases of outputs. The graphic 3 below shows that training events, studies and Observatory members increase at a pace lower than the budget increase. Still, between 2015 and 2019 the number of studies has doubled. The number of stakeholders increased sharply during 2012, to become more stable onwards, as it was felt that the success of the work of the Office, and of the Observatory, was dependent on an upfront comprehensive and balanced composition of stakeholders’ representation to the Observatory. That said, there are several indicators that have grown at a higher rate than the budget. One such indicator is the number of meetings organised in the remit of the Observatory (dark brown line). This is also the case of several indicators relating to IT tools, namely: number of national police authorities who have access to the IP Enforcement Portal (light blue line), number of times that enforcement authorities have accessed the IP Enforcement Portal (light green line), number of companies using IP Enforcement Portal (violet line) and number of applications for action sent through IP Enforcement Portal (orange line). Overall, the Graph shows that increases in budget and staff are linked to the increase in outputs. Graphic 3

Evolution of the budget, staff and outputs over time (Source: own calculations based on data from EUIPO/Observatory internal data) From a stakeholder’s perspective, according to the contractor’s study, most interviewees stated that the costs borne by them are proportionate to the benefits generated by the Observatory’s activities . While participating in Observatory meetings and activities is time consuming, stakeholders stress that costs are worth the benefits. The high level of stakeholders’ engagement in the Observatory’s work also indicates that they find it cost effective. For instance, data collection takes time, but stakeholders would not carry out this task more efficiently at national level and, without the Office’s intervention national authorities would not aggregate data at EU level. According to the contractor’s study, “The Regulation bundles resources, capacity and knowledge and expertise into one single organisation. This leads to lower administrative costs and burdens. Such efficiency could not be achieved at national level.” The public consultation feedback on efficiency does not seem to be very conclusive, but it leans more towards the positive side. Half of the respondents to the public consultation did not express an opinion on the question of whether the costs supported by the Office are proportionate to the generated outputs and benefits. For some respondents (8%), the Office is not investing enough. The rest are divided between those who find the costs justified (21%), those who find that the same or better results could be achieved with a lower budget (11%) and those who find that the costs are not justified or proportionate, for some other reason (9%). Criticism of the Office’s spending as expressed in the public consultation seems to be more linked to the respondents’ particular opinions on IP or on what the Office’s priorities should be rather than to possible inefficiencies in the Office’s budgetary management. As an example of the first group, one respondent finds that “the costs could be saved by dissolving the EUIPO.” In the second group, different visions on priorities are linked with the particular interests in which some stakeholders are vested (for example, trade mark owners prefer more investment in trade mark matters) and which are not necessarily shared by stakeholders having different concerns. Within the group of professionals and organisations, the perception of whether the costs are justified in view of the results obtained is much more positive, with 39% finding that the costs are justified, and 10% finding that the Office is overspending. According to the contractor’s study, “The general conclusion is that the Regulation under evaluation was implemented in an efficient manner. Despite some difference of views by different stakeholders on some particularities, the activities and projects carried out by the EUIPO are in general viewed as positive contributions to the enforcement of IP rights, to raising awareness, to generate knowledge and expertise, and to strengthen cooperation between all relevant stakeholders, while keeping to a minimum the costs incurred by all involved in the work of the Observatory (such as time expenditure). There are no indications that the Observatory team is over resourced or incurring in disproportionate expenditure in the pursuit of the tasks that were attributed to it by the Regulation.” While there is nothing to suggest that the Office is using its resources inefficiently, it could improve considerably the information that it provides on its activities spending under the Regulation (e.g. having a short addendum to the budget and budget execution on all items for the Observatory expenditures and provide Observatory expenditure data on budgets dedicated to operational and staff costs). This evaluation concludes that the Office is well equipped to carry out its tasks under the Regulation. It has delivered in all tasks and its spending is justified and balanced vis-a-vis the results obtained. In the future, some aspects could be improved, in particular better data could be made available to assess more quantitatively the efficiency of the Observatory, also allowing for example to monitor the ratios of operational expenditure per staff posts and the ratio of operational budget vs staff budge, which should not fall beyond the 2014 numbers. Coherence of EU intervention The tasks attributed to the Office under the Regulation were designed to lower levels of IP infringement. More fact-based knowledge serves training and awareness, more integrated enforcement tools reinforces cooperation and efficiency, more and better cooperation in enforcement helps tackling supply of IP infringing products whereas awareness raising addresses demand. Reducing IP infringements within the EU requires reaching out to non-EU countries from which most counterfeits originate. Promoting and facilitating the use of IP and combating counterfeits and piracy in a coordinated manner across the EU is a key element to reinforcing a business environment that favours creativity and innovation. The Office’s tasks are therefore aligned with the EU priorities of creating jobs, growth and investment, reinforcing the single market and promoting a fair and rules based trading system. Most respondents interviewed by the contractor agreed that there is a broad coherence between the objectives of the Regulation and the Observatory’s work. The public consultation, carried out after the publication of the contractor’s study, confirmed this finding. Most respondents (56%) – 71% in the case of professionals and organisations – also agreed that there are no contradictions between the Office’s different tasks under the Regulation. Some of the respondents considered that it is incoherent to ask the Office to research on the value of IP and at the same time carry out tasks relating to strengthening IP enforcement, which assume that IP is beneficial, a view that they dispute. However, it should be noted that the EU is strongly committed to the protection of IP. Assigning to the Office the task of researching on the value of IP cannot be read as expressing hesitations about the benefits of IP to innovation, competitiveness and creation of jobs in the EU. Nevertheless, it remains relevant to investigate the extent to which the IP system contributes to the economic and social wellbeing of the EU and its citizens. The fundamental aim of IP protection is not to increase profits of businesses, but to seek societal gains that derive from innovation and improving living conditions. IP policies should be based on objective research using tested, transparent and verifiable methodologies. Knowing more about the impact of IP protection can help decision makers avoid the pitfalls of over regulating IP, which can lead to market foreclosure and the creation of barriers to market entry, thus distorting competition and betraying the fundamental raison d’être of IP. Better knowledge on the real contribution of IP and of the effects of IP infringement also helps raising awareness, which is key to the efforts in lowering demand for counterfeits and piracy. Having new tools to facilitate enforcement, and sharing knowledge on the business models and methods used by organisations profiting from counterfeiting and piracy, supports lowering the offer of counterfeit and pirated products. Therefore, the objectives of improving the understanding of the value of IP and of the scope and impact of infringements of IPR are coherent with the general objective improving IP enforcement and lowering IP infringements. Additionally, the close cooperation between the Office and the departments of the Commission ensures that the implementation of the Office’s tasks is coherent with and provides support to the Commission’s IP policy. The Commission departments provide a coordinated input to the preparation of the Office’s work programmes and officials from the different Commission departments participate regularly at the Observatory’s meetings, including the working groups and the recently created expert groups. This ensures in a structured manner that the Office’s activities are consistent with the Commission’s priorities. However, the Office does not always communicate on its activities by linking them to the overall context of the EU IP policy and Commission initiatives, which can lead to uncertainty among stakeholders on how the two layers of EU intervention coexist. Overall, inconsistencies are avoided and much of the Office’s work complements and supports the Commission’s IP activities. The Office has become a key partner of the departments of the Commission dealing with counterfeiting and piracy (DG GROW, DG TRADE, OLAF, DG TAXUD and DG CNECT). For example, the IP pre-diagnostic services for SMEs designed and made available by the Commission’s department for Internal Market, Industry, Entrepreneurship and SMEs (DG GROW) through the EU Programme for the competitiveness of enterprises and SMEs (COSME) . The Office helps the Commission in co-organising training courses for the experts responsible for carrying out IP diagnostics. The Office also actively participates in the work of the voluntary Memoranda of Understanding between IP right owners and online intermediaries facilitated by the Commission to curb the online offers of counterfeits and to limit the benefits of IPR-infringing websites. The Office also supports the Commission’s initiatives in copyright, collaborating with the Commission’s department for communications networks, content and technology (DG CNECT). The Office has set up a single publicly accessible online database of ‘orphan’ works, such as a piece of music or literature whose authors or other right holders are not known or cannot be located . The database records and provides information on orphan works contained in the collections of libraries, educational establishments, museums, archives, film or audio heritage institutions and public-service broadcasting organisations. The database allows these cultural heritage institutions to use orphan works under a copyright exception, in particular to create digital copies of the works and make them available to the public. Furthermore, the Office is carrying out preparatory work with a view to launching a portal on out of commerce works . The portal will have a publicity purpose, i.e. to inform right holders and the public at large about out-of-commerce works or other subject matter that may be, or are being, used by cultural heritage institutions. In addition, the Office promotes the legal online consumption of protected works (such as music and movies) through its portal Agorateka which helps consumers to find legal sources where such works can be found, accessed and watched or listened to. Through its published FAQ, the Office is making information on copyright easily accessible and easily understandable, therefore helping consumers, entrepreneurs a