Communication from the Commission to the Council, the European Parliament, the European Economic and Social Committee and the Committee of the Regions - Putting knowledge into practice: A broad-based innovation strategy for the EU
Date: 2006-09-13
Institutions: European Commission
Subjects: EU programme, economic and social cohesion, economic growth, innovation, sustainable development

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 13.9.2006 
COM(2006) 502 final 

COMMUNICATION FROM THE COMMISSION TO THE COUNCIL, THE 
EUROPEAN PARLIAMENT, THE EUROPEAN ECONOMIC AND SOCIAL 
COMMITTEE AND THE COMMITTEE OF THE REGIONS 

Putting knowledge into practice: A broad-based innovation strategy for the EU 

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COMMUNICATION FROM THE COMMISSION TO THE COUNCIL, THE 
EUROPEAN PARLIAMENT, THE EUROPEAN ECONOMIC AND SOCIAL 
COMMITTEE AND THE COMMITTEE OF THE REGIONS 

Putting knowledge into practice: A broad-based innovation strategy for the EU 

1. 

OUR FUTURE DEPENDS ON INNOVATION 

In a remarkably short period of time, economic globalisation has changed the world economic 
order,  bringing  new  opportunities  and  new  challenges.  In  this  new  economic  order,  Europe 
cannot  compete  unless  it  becomes  more  inventive,  reacts  better  to  consumer  needs  and 
preferences and innovates more.  

Europe’s  citizens  are  concerned  by  important  issues  ranging  from  climate  change  and  the 
depletion  of  non-renewable  resources  to  demographic  change  and  emerging  security  needs, 
which call for collective action to safeguard the European way of life that combines economic 
prosperity  with  solidarity.  These  legitimate  concerns  must  be  turned  into  an  opportunity  to 
enhance Europe’s global economic competitiveness. The quicker it can react, the higher the 
chance  of  success  and  the  greater  prospect  that  its  approach  will  serve  as  a  global  model. 
From  the  protection  of  the  environment  through  eco-innovation  to  the  improvement  of 
individual  well-being  through  more  intelligent  infrastructure  provision,  the  Commission  is 
convinced  that  innovation  in  a  broad  sense  is  one  of  the  main  answers  to  citizens’  material 
concerns about their future.  

The  European  Union  has  an  extraordinary  innovation  potential.  Europe  has  a  long-standing 
tradition of break-through inventions. It has a wealth of creative people and can build on its 
cultural diversity. It has laid the basis for one of the largest single markets in the world, where 
innovative  products  and  services  can  be  commercialized  on  a  large  scale.  It  also  has  a 
tradition of a strong and responsible public sector, which should be capitalized on.  

Many major measures for the modernisation of the EU economy have already been taken. The 
Lisbon  Strategy  for  Growth  and  Jobs1  launched  in  2005  sets  a  comprehensive  array  of 
policies  and  reforms  designed  to  make  Europe's  regulatory  and  economic  framework  more 
innovation  friendly.  This  includes  the  crucial  objective  of  increasing  research  and 
development  spending  to  3%  of  GDP.  The  agreement  on  the  new  Financial  Framework, 
including cohesion policy, the 7th Research and Development Framework Programme and the 
Competitiveness  and  Innovation  Framework  Programme,  provide  significant  financial 
envelopes targeted at innovation. The Commission's Communication “More Research and 
Innovation”2  of  October  2005  sets  out  a  programme  of  19  fields  of  action  for  both  the 
Community and the Member States, which are being implemented as planned.  

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2 

"Common  Actions  for  Growth  and  Employment:  The  Community  Lisbon  Programme"  -  COM(2005) 
330, 20.7.2005. 
“More  Research  and  Innovation  –  Investing  for  growth  and  employment:  A  Common  Approach”  - 
COM(2005) 488, 12.10.2005. 

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Member  States  are  taking  action  in  favour  of  innovation  in  the  framework  of  the  National 
Reform Programmes, based on the Integrated Guidelines of the renewed Lisbon Strategy for 
Growth and Jobs. The European Trend Chart on Innovation3 has given a clear picture of our 
innovation performance and of the national innovation systems of the EU Member States and 
of their strengths and weaknesses. It enables progress to be closely monitored. 

Despite  this  already  strong  policy  focus  on  innovation,  the  EU  deficiencies  have  not  been 
sufficiently  tackled  and  its  economy  has  not  yet  become  the  comprehensively  innovative 
economy that it needs to be. The report on “Creating an Innovative Europe”4 (the Aho Report) 
identified the main reasons explaining why this potential has so far not been fully exploited 
and called for urgent action “before it is too late.” It identified the need to make the business 
environment more innovation-friendly as a core concern.  

The  Commission  is  convinced  that  even  more  is  needed  -  Europe  has  to  become  a  truly 
knowledge-based  and  innovation-friendly  society  where  innovation  is  not  feared  by  the 
public but welcomed, is not hindered but encouraged, and where it is part of the core societal 
values  and  understood  to  work  for  the  benefit  of  all  its  citizens.  That  is  why  the  Spring 
European Council called on the European Commission to present “a broad based innovation 
strategy for Europe that translates investments in knowledge into products and services”.  

This framework Communication presents such a strategy, in particular by responding to the 
recommendations  contained  in  the  Aho  report.  It  presents  a  framework  to  take  innovation 
forward  bringing  together  different  policy  areas  which  have  a  bearing  on  innovation.  It  is 
intended to frame policy discussions on innovation at national and European levels. It outlines 
the  most  important  planned  or  on-going  initiatives,  identifies  new  areas  for  action,  and  in 
particular introduces a more focussed strategy to facilitate the creation and marketing of new 
innovative products and services in promising areas – the "lead markets". To implement this 
broad  agenda,  the  Communication  does  not  propose  to  create  new  structures,  but  instead  it 
builds on the existing legal and institutional framework of the renewed Lisbon Partnership for 
Growth and Jobs, which has already established a political platform for partnership between 
the Member States and the Commission. 

Today  Europe  does  not  need  new  commitments;  it  needs  political  leadership  and  decisive 
action.  Instead  of  preserving  established  structures,  that  have  shown  themselves  unable  to 
cope  with  the  challenges  of  the  21st  century,  Member  States  must  be  ready  to  invest  in 
anticipating and accompanying structural change. This requires in particular a reallocation of 
resources to education, ICT, research and to the creation of high value jobs and growth. The 
new  EU  Financial  Framework  for the  period 2007-2013  is a  first step in this direction. The 
same change of priorities needs to be seen at national levels. 

The EU can only become comprehensively innovative if all actors become involved and 
in particular if there is market demand for innovative products. This broad strategy needs to 
engage  all  parties  –  business,  public  sector  and  consumers.  This  is  because  the  innovation 
process involves not only the business sector, but also public authorities at national, regional 
and  local  level,  civil  society  organisations,  trade  unions  and  consumers.  Such  a  wide 
partnership  for  innovation  will  create  a  virtuous  circle,  where  supply  of  new  ideas  and 

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4 

Trend Chart – Innovation Policy in the EU – see http://trendchart.cordis.lu/ 
“Creating  an  Innovative  Europe”:  report  of  the  independent  expert  group  on  R&D  and  innovation 
appointed following the Hampton Court Summit and chaired by Mr Esko Aho. 

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demand  for  new  solutions  both  push  and  pull  innovation.  Innovation  depends  on  a  strong 
demand  from  consumers  and  citizens  for  new  and  innovative  products  and  services. 
Therefore, besides creating the optimal framework and possibilities to innovate, there must be 
an  innovation  friendly  market  and  demand  for  the  outputs.  This,  in  particular  requires 
consumer trust and confidence in these products and services not least in their (demonstrable) 
safety.  Consumer  confidence  in  unknown  products  and  services  depends  in  part  on  the 
knowledge  that  robust  systems  of  consumer  protection  exist.  Markets  where  consumer 
confidence is high are also easier to enter for new entrants with innovative products.  

All  forms  of  innovation  need  to  be  promoted,  for  innovation  comes  in  many  forms  other 
than technological innovation, including organisational innovation and innovation in services. 
In  this  context,  while  increased  competition  constitutes  the  most  efficient  instrument  to 
stimulate innovation, policy measures and innovation support mechanisms may also have an 
important role to play. 

The importance of an even more comprehensive strategy can be seen from the challenge of 
the EU 3% R&D objective. Significant steps have already been taken by Member States and 
the  Community  towards  the  public  funding  target  of  1%  of  the  GDP  by  2010.  The  private 
sector contribution depends not just on this, but also on ensuring favourable prospects for a 
return  on  R&D  investments  in  Europe.  This  in  turn  depends  on  demand  for  innovative 
products  and  services,  the  availability  of  people  with  the  necessary  skills  and  ambition  to 
deliver  these  products  and  services  to  the  market,  and  a  regulatory  framework  that  enables 
them to be speedily placed on the internal market.  

2. 

MAKING THE EU MORE INNOVATION-FRIENDLY 

One  reason  why  the  EU  innovation  potential  has  so  far  not  been  fully  exploited  lies  in  the 
persistent  deficiencies  in  the  framework  conditions  and  in  the  persistent  underestimation  of 
innovation as an important value in the society. This is an area where public authorities at all 
levels can and should act very quickly. Overcoming these obstacles would allow us to make a 
decisive step towards creating a true European innovation space. 

2.1. 

Education is a pre-condition 

First and foremost, without education as a core policy, innovation will remain unsupported. It 
must promote talent and creativity from an early stage. In its Communication of 10 November 
20055  the  Commission  has  already  identified  the  key  competences  necessary  for  living  and 
working in a modern innovation-oriented society. These include entrepreneurial skills in the 
wider sense, as well as literacy, scientific and mathematical competence, languages, learning-
to-learn skills and social and cultural competences. They also include digital literacy, which is 
a  sine  qua  non  for  a  wider  uptake  of  ICT  and  its  innovation  potential.  Through  the  Open 
Method  of  Coordination  the  Commission  will  help  to  facilitate  the  modernisation  and 
restructuring of education systems so that they provide these key competences. 

Lack of appropriate skills, in particular in the field of science, engineering and ICT has been 
identified as a major challenge. According to Eurostat data on Human Resources in Science 
and Engineering, the EU has recently achieved an increase in the absolute number of maths, 

5 

Proposal for a Recommendation of the European Parliament and the Council on Key Competences for 
Lifelong Learning, European Commission - COM(2005) 548. 

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science and technology graduates6, but the overall share of science and engineering graduates 
continues  to  decline, aggravating  an unfavourable  age structure in these disciplines in some 
countries  and  risking  undermining  the  future  capacity  of  Europe  to  innovate.  This  is  a 
problem  not  just  for  the  majority  of  new  Member  States,  but  also  for  older  Member  States 
such as Austria, Germany, Italy, the Netherlands and Portugal (despite some improvement in 
the absolute numbers of science and engineering graduates over the past years).  

The Member States’ education systems should ensure that there is sufficient availability of 
key  skills  to  support  innovation.  Education  must  move  with  the  times.  As  already  agreed 
within the Integrated Guidelines for Growth and Jobs, Member States are invited to set, as a 
matter  of  priority,  ambitious  targets  in  their  National  Reform  Programmes  that  address 
weaknesses in these areas. 

Mobility of researchers, both geographical and between sectors must be enhanced. From a 
point  of  view  of  acquiring  new  knowledge  and  skills  and  of  finding  new  applications,  both 
trans-national  mobility  and  structural  mobility  between  academia  and  industry  are  essential. 
In  this  light,  the  implementation  of  a  European  strategy  developed  by  both  the  Community 
and  the  Member  States  to  create  an  open,  single,  and  competitive  labour  market  for 
researchers,  with  attractive  career  prospects,  is  therefore  of  outmost  importance.  Both  must 
play their parts in its implementation, not least to ensure that researchers who leave a sector or 
country for a temporarily more attractive career are not lost forever.  

2.2. 

Using the potential of the Internal Market 

Barriers  persist  in  the  Internal  Market.  They  continue  to  hamper  mobility,  depriving 
businesses  of  the  necessary  scale  to  capitalize  on  investments  in  research  and  innovation 
thereby hampering EU innovation potential. These barriers affect not only goods and services, 
and consumers seeking access to them, but also the mobility of workers and the availability of 
venture  capital.  If  a  European  innovation  space  is  to  be  created,  these  barriers  need  to  be 
removed.  This  would  also  increase  the  level  of  competition  -  the  main  stimulus  for 
innovation. 

The Commission is currently carrying out a review of the Internal Market with a view to 
setting  concrete  priorities  for  future  policies.  The  review  will  contribute  to  making  the 
Internal Market more innovation friendly. 

Special attention needs to be paid to the service sector. This offers an important and under-
exploited opportunity for innovation7. Not only does the service sector account for more than 
two thirds of GDP and employment, but there are also many possible synergies with industrial 
innovation.  Since  much  service  innovation  is  primarily  linked  to  the  business  model  rather 
than  to  developing  new  technologies,  it  is  often  relatively  accessible  to  less  technologically 
developed  regions.  The  entry  into  force  of  the  Services  Directive  will  be  an  important  step 
towards creating a real Internal Market for services adding a strong stimulus to innovation. In 
order to fully exploit the services sector’s innovation potential, special attention must be given 
to  access  to  finance  and  to  innovation  management  by  SMEs.  Within  the  Europe  INNOVA 
initiative,  the  Commission  will  develop  a  more  pro-active  approach  to  the  creation  and 
support  of  young  innovative  SMEs  in  the  service  sector.  In  particular,  it  will  support  more 

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Commission Staff Working Document SEC(2006) 639, p. 19,   
http://ec.europa.eu/education/policies/2010/doc/progressreport06.pdf 
A Working Paper on “Innovation in services” will be presented in November 2006. 

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efficient links between universities, entrepreneurship and finance, resulting in the creation of 
a pan European incubation platform in this sector. 

It is also crucial to create the conditions that can bring returns to EU business worldwide in all 
markets  where  European  exports  and  investments  are  currently  underperforming,  such  as 
Asia. Open markets around the world are therefore important for encouraging innovation in 
the  EU.  In  addition,  the  global  promotion  of  EU  norms  and  standards  and  innovative 
initiatives can give a decisive first mover advantage to European companies in the spirit of the 
lead market initiative presented below. 

2.3. 

Enhancing  the  regulatory  environment  and  ensuring  an  effective  IPR 
framework 

Innovation  requires  a  regulatory  environment  that  is  predictable,  accommodates  and  even 
encourages  new  developments  in  goods  and  services,  protects  intellectual  property  and 
provides open, interoperable standards. Progress has already been made on Better Regulation8 
at  both  European  and  national  level.  Reducing  the  administrative  cost  of  regulation  of 
enterprises,  will  be  a  significant  contribution  to  innovative  activities.  At  the  same  time,  the 
regulatory  environment  should  also  reinforce  consumer  confidence  by  ensuring  that 
protection measures that exist are applied effectively to innovative products in the same way 
as to existing products. 

The assessment of the impact of regulation on innovation needs to be enhanced. Regulation 
should  be  predictable,  flexible,  simple  and  effective.  Regulations  that  focus  on  the  policy 
goal,  rather  than  on  the  technical  solution  through  which  it  is  achieved,  leave  space  for 
innovative solutions. The Commission will continue to encourage this type of legislation, as it 
has  done  through  its  “New  approach”  to  product  regulation.  Furthermore,  it  will  encourage 
the timely adoption of ambitious standards that focus on performance rather than technology.  

to 

the 

improve 

The  Commission  will  act 
institutional  framework  of  European 
standardisation.  In  particular,  it  will  seek  to  speed  up  the  adoption  of  open,  interoperable 
standards and to better integrate SMEs and consumers into the standards-setting process. In 
fast-moving technology fields, such as ICT, private company specifications can easily become 
de-facto  industry  standards.  If  this  happens,  it  is  important  that  they  should  not  become  a 
barrier to market access. Further, as demonstrated in the area of mobile communications, the 
rapid  setting  of  open,  interoperable  standards  is  key  to  global  success  for  European 
companies.  The  Commission  will  continue  to  work  with  the  European  Standards 
Organisations  and  societal  stakeholders  to  achieve  this  result.  It  will  ensure  that  European 
legislation facilitates the use of such standards.  

Protection of intellectual property is another sine qua non  for  innovation.  Without  adequate 
protection of inventions and creations, there is no motivation to invest in them. Furthermore, 
their  use  as  an  asset  by  their  authors  may  be  hampered.  Establishing  affordable  patent 
procedures  that  balance  cost  with  quality  and  legal  certainty,  accompanied  by  timely,  cost-
effective  and  predictable  dispute  resolution  must  be  a  priority,  especially  needed  by  SMEs. 
The Commission remains convinced that adoption of a “cost-effective” Community patent is 
the most important step. In the meantime, in order to lift a significant barrier to innovation, 

8 

Communication  from  the  Commission  to  the  European  Parliament,  the  Council,  the  Economic  and 
Social  Committee  and  the  Committee  of  the  Regions  “Implementing  the  Community  Lisbon 
programme: a strategy to simplify the regulatory environment“ - COM(2005) 535, 19.10.2005. 

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the  Member  States  and  Commission  should  together  make  the  existing  patent  system  more 
efficient  by  the  ratification  of  the  London  Protocol  and  through  progress  on  the  European 
Patent Litigation Agreement, while ensuring their compatibility with Community law.  

Following  the  conclusions  of  the  Council9,  and  the  public  consultation  carried  out  by  the 
Commission on the future patent strategy, the Commission will present a new patent strategy 
before  the  end  of  2006.  In  addition,  it  will  work  on  a  more  comprehensive  IPR  strategy  to 
foster  circulation  of  innovative  ideas.  Such  a  strategy  must  be  integrated  and  affordable.  A 
bigger  effort  is  needed  to  raise  awareness  of  the  practical  aspects  of  intellectual  property 
protection in the innovation community. SMEs and public research organisations in particular 
should be targeted by such efforts.  

The  suitability  of  existing  IPR  mechanisms  to  the  service  sector  needs  to  be  specifically 
addressed.  A  specific  challenge  is  to  ensure  the  suitability  of  existing  mechanisms  for 
copyright  clearance  for  new  digital  services.  The  Commission  is  conducting  an  overall 
examination  of  the  copyright  acquis  with  a  view  to  ensuring  that  both  the  legal  framework 
and its application are conducive to the development of new products, services and business 
models  and  user  driven  refinement  of  their  use,  which  may  be  offered  across  borders.  In 
particular, the Commission intends bringing forward an initiative on "copyright levies" before 
the end of the year.  

Finally,  better  enforcement  of  IPR  on  foreign  markets  is  crucial  to  protect  European 
companies and the Commission will focus its efforts on a number of priority countries. More 
resources  will  be  allocated  to  support  right-holders,  in  particular  SMEs,  and  to  provide 
assistance on specific IPR problems in third countries.  

2.4. 

Promoting cooperation between stakeholders 

Being  part  of  a  cluster  is  an  important  competitive  strength  for  business.  Clusters  help  to 
close the gap between business, research and resources, thereby bringing knowledge faster to 
the  market.  Successful  clusters  promote  intense  competition  along  with  co-operation.  They 
enhance productivity, attract investment, promote research, strengthen the industrial base, and 
develop specific products or services and become a focus for developing skills. World-class 
clusters  attract  brilliant  minds  that  sustain  innovation  –  Silicon  Valley  is  the  best-known 
example. 

That is why “cluster policy” has become an important element of Member States' innovation 
policies  as  reflected  in  the  National  Reform  Programmes,  and  also  why  cluster  policies  are 
supported  by  Community  instruments.  The  new  generation  of  European  regional  policy 
programmes for 2007-2013 promotes an approach based on regional innovative clusters, not 
just  in  developed  urban  centres  but  also  in  poorer  or  rural  regions.  It  is  at  the  level  of  the 
region that many businesses, especially SMEs, interact with one another and with centres of 
learning  and  technology.  This  makes  proximity  a  key  factor  in  the  innovation  process  and 
increases  the  effectiveness  of  innovation  policy  if  tailored  to  regional  and  local  needs.  The 
new  State  aid  Framework  for  Research,  Development  and  Innovation,  to  be  adopted  by  the 
Commission before the end of this year, should help Member States better target their existing 
support budgets to promote, inter alia, innovative clusters. 

9 

Council  Meeting  on  Competitiveness  (Internal  Market,  Industry  and  Research),  29-30  May  2006, 
Conclusions 9334/06 (provisional version). 

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At the same time, for Europe to tap the full potential of its clusters, they must also achieve a 
critical  mass  and  strategic  orientation  through  more  and  better  trans-national  European 
cooperation,  across  national  borders.  This  raises  the  prospect  of  generating  world-class 
European  clusters.  To  support  this  process,  the  Commission  will  in  particular  map  the 
strengths  of  national  and  cross-border  clusters  and  stimulate  practical  cooperation  between 
regional  authorities  and  relevant  economic  actors  or  associations,  supporting  co-operation 
between cluster initiatives. The first results of this initiative will be presented in autumn 2007 
at a Ministerial Conference, with a view to achieving a common cluster agenda for Europe. 

The  knowledge  economy  relies  on  the  transfer  of  knowledge  from  those  who  generate  it  to 
those  who  use  it  and  can  build  on  it.  The  transfer  of  knowledge  between  public  research 
organisations  and  third  parties  (including  industry  and  civil  society  organisations)  needs  to 
improve  and  the  Member  States  are  invited  to  take  this  into  account  in  their  innovation 
policies.  Doing  so  will  help  to  build  new  market  opportunities  on  research.  Public  research 
organisations, which account for about one third of the total R&D activity in Europe, have a 
particularly  important  role  to  play  in  this.  All  of  the  many  forms  of  knowledge  transfer  - 
contract  research,  collaborative  and  co-operative  research,  licensing,  publications  and 
exchanges of skilled  researchers  between the public and private sectors - need to  be  further 
developed and better managed. 

The Commission will present a Communication on improving knowledge transfer between 
the  public  research  base  and  industry  across  Europe.  This  will  provide  guidance  on  how 
public authorities can address the main barriers which currently exist and how ownership and 
exploitation of R&D results and associated intellectual property rights can be best combined 
with the fundamental missions of public research organisations.  

Furthermore,  the  Commission  will  streamline  its  business  support  and  information 
networks. This will encourage and facilitate the uptake of new ideas and their transformation 
into  marketable  products  and  services,  especially  by  SMEs.  In  particular  it  will  help  ensure 
that the Innovation Relay Centres and Euro Info Centres provide top class business services to 
SMEs. 

The  Communication  “Delivering  on  the  Modernisation  Agenda  for  Universities”10 
already  pointed  to  a  number  of  important  steps  that  could  enable  European  universities  to 
improve  their  performance,  including  by  contributing  more  and  more  efficiently  to  the 
innovation process. Key to this is granting universities sufficient autonomy  to  develop  their 
own strategies.  Structured and strategic partnerships between  business  and universities need 
to  be  strengthened.  This  requires  more  possibilities  of  exchange  of  staff,  teaching  and 
encouragement  of  entrepreneurship  in  university  and  the  establishment  of  science  parks 
around  universities,  with  adequate  finance  available  to  support  research  spin-offs.  This  will 
help bridge the cultural gap that so often separates university research from business needs. 
Development of links between universities and local civil society would also be conducive to 
a better uptake of innovation at local and regional levels. 

10 

Communication from the Commission to the Council and the European Parliament - Delivering on the 
Modernisation  Agenda  for  Universities:  Education,  Research  and  Innovation  -  COM(2006)  208, 
10.5.2006. 

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In  October  this  year,  the  Commission  intends  to  put  forward  a  proposal  to  establish  a 
European  Institute  of  Technology  (EIT)11.  It  will  be  an  integrated  partnership  of  science, 
business and education, embodying excellence in all its initiatives. It is intended to be a key 
driver and a new model for innovation in strategic interdisciplinary areas, where there is the 
potential to generate innovative solutions and commercial advantages with a major impact on 
Europe’s competitiveness. It will pool together the best European students and researchers to 
work  side  by  side  with  leading  edge  business  in  the  development  and  exploitation  of 
knowledge  and  research,  and  to  enhance  research  and  innovation  management  skills. 
Businesses  will  be  fully  integrated  in  the  EIT,  from  membership  of  its  Governing  Board  to 
involvement in all aspects of research and education, from the definition and implementation 
of training activities, to active participation in research. 

2.5. 

Financial boost to research and innovation 

Innovation  requires  excellent  research,  planned  and  carried  out  in  two-way  communication 
between  researchers  and  business.  The  European  research  activities  have  already  become 
more  focused  through  the  European  Technology  Platforms  which,  led  by  industry,  bring 
together stakeholders including the research community and the financial world. Although not 
an  instrument  of  the  Framework  Programme  for  Research  and  Technological  Development, 
the large majority of research agendas defined by the platforms have been taken into account 
in formulating the Commission’s proposals for the Seventh Framework Programme. Also, at 
the European Council in March 2006, all Member States have set national targets for research 
which, if met, would raise the level of R&D investment in the European Union from 1.9% of 
GDP to 2.6% by 2010. This is a step in the right direction, but the key challenge now lies in 
creating  an  environment  conducive  to  private  investment  in  research,  development  and 
innovation. 

The  Seventh  Framework  Programme  will  boost  the  funding  of  collaborative  research  in 
Europe in the period 2007-2013, to be delivered through a mix of existing and new schemes. 
The establishment of the European Research Council will put a premium on competition for 
excellence by channelling funds at EU level for the best frontier research.  

Joint  Technology  Initiatives,  a  new  funding  scheme  under  the  Seventh  Framework 
Programme,  will  offer  a  new  framework  for  realising  particularly  ambitious  research  and 
technology agendas that require high public and private investment at European level. They 
will  be  initiatives  whose  scope  and  scale  is  such  that  existing  funding  schemes  are  not 
adequate to achieve the desired objectives. Bringing together stakeholders around commonly-
agreed,  industry-driven  research  agendas,  Joint  Technology  Initiatives  will  accelerate  the 
generation  of  new  knowledge,  enhance  the  uptake  of  the  results  of  research  into  strategic 
technologies  and  foster  the  necessary  specialisation  in  high  technology  sectors  which 
determine  the  EU's  future  industrial  competitiveness.  Potential  Joint  Technology  Initiatives 
have initially been identified in six areas that offer significant potential for boosting Europe's 
innovative capacity. Further areas could be proposed in the future in the light of experience.  

Member  States  have  decided  that  the  new  cohesion  policy  programmes  for  the  period 
2007-2013 should seek to 'earmark' a large proportion of the total envelope of 308 billion € 
for investing in knowledge and innovation. All Member States and regions have been invited 

11 

The  European  Institute  of  Technology:  further  steps  towards  its  creation;  Communication  from  the 
Commission to the European Council - COM(2006) 276, 8.6.2006. 

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to set ambitious targets in this field. This is also in line with Community Strategic Guidelines 
for Cohesion Policy 2007-2013, which has called on the Member States and regions to make 
explicit  provisions  for  experimentation  and  investment  in  innovation,  based  on  national  and 
regional innovation strategies. This will enable Member States to build up strong research and 
innovation  systems  across  Europe,  including  systems  supporting  innovation  at  the  regional 
level. Innovative actions will also be co-financed by the European Agricultural Fund for Rural 
Development  to  develop  new  high  quality  and  value  added  products  and  to  promote  the 
sustainable use of natural resources. Better synergy needs to take place between national and 
Community efforts in support of innovation and all available Community instruments should 
be fully exploited to advance national innovation policy agendas. 

In  order  to  support  innovation,  the  Competitiveness  and  Innovation  Programme  (CIP) 
brings together action in support of innovation including in energy, eco-innovation and ICT in 
close  coordination  with  the  7th  Framework  Programme  on  Research  and  Development.  The 
CIP  in  particular  foresees  an  increase  of  60%  in  the  financial  instruments  in  support  of 
entrepreneurship  and  innovation.  The  recent  Communication  on  "Financing  SME  Growth" 
pointed to further actions to improve access to finance, which could lead to the tripling of EU 
early-stage risk/venture capital investment by 2013. 

In cooperation with the EIB, the Commission will launch a Risk Sharing Finance Facility 
(RSFF), which will support investment in high-risk research, technological development and 
demonstration  projects  through  loans  and  guarantees.  The  Community  will  contribute  up  to 
1 billion € from selected themes and activities of the 7th Framework Programme to RSFF with 
a matching allocation of up to 1 billion € from the EIB. By reinforcing the financing capacity 
of  EIB  in  the  area  of  research,  the  Community  will  mobilize  efforts  of  a  large  number  of 
European banks and financial institutions into research and innovation, thus increasing private 
investment and funding in this area.  

As  an  additional  step  to  improving  access  to  finance  for  the  development  of  businesses, 
including in services, the Commission and the European Investment Fund have launched an 
innovative initiative of using structural funds to provide access to finance by small businesses. 
This  so-called  JEREMIE  ("Joint  European  Resources  for  Micro-to-Medium  Enterprises") 
initiative will work within the framework of cohesion policy programmes to support Member 
States in developing well-designed financial instruments in favour of SMEs, where the EIF is 
ready  to  help  programme  managers  in  the  complex  task  of  developing  the  provision  of 
different  forms  of  risk  capital  according  to  regional  needs  and  priorities.  As  an  additional 
source of capital and expertise, Member States are invited to make full use of this initiative. 

The  Commission  has  recently  adopted  new  State  aid  Guidelines  for  risk  capital12.  A  new 
Framework  for  State  aid  to  research,  development  and  innovation  will  be  adopted  by  the 
Commission  before  the  end  of  the  year.  Together,  these  will  enable  the  Member  States  to 
better target State aid on market failures that prevent the provision of risk/venture capital and 
sufficient  funding  for  research  and  innovation  activities.  In  the  framework  for  research, 
development  and  innovation  the  Commission  intends  to  provide  for  enlarged  R&D  and 
innovation  categories  and  is  considering  the  inclusion  of  a  number  of  targeted  measures  in 
support  of  innovation,  such  as  aid  for  young  innovative  start-ups,  advisory  and  support 
services,  the  loan  of  qualified  personnel,  process  and  organisational  innovation,  and 

12 

Community Guidelines on state aid to support risk capital investments in SMEs of 19.7.2006, 
http://ec.europa.eu/comm/competition/state_aid/others/risk_capital_guidelines_en.pdf 

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innovation  clusters.  Member  States  should  re-orient  their  State  aid  budgets  towards  these 
measures in full respect of their commitment to "less and better targeted aid". 

Tax incentives are also a potentially important policy instrument that Member States can use 
to  stimulate  more  business  research,  innovation  and  private  investment  in  full  respect  of 
Community  law.  Many  Member  States  have  recently  introduced  new  incentives,  or 
strengthened  existing  ones.  Member  States  should  also  take  account  of  good  practices  to 
improve  the  effectiveness  of  generally  applicable  tax  incentives  in  favour  of  R&D  and 
optimise their use. The Commission will present a Communication later in 2006 with detailed 
guidance  on  these  issues  which  are  relevant  to  the  design  and  evaluation  of  generally 
applicable tax incentives for R&D. 

2.6. 

Setting the example: the role of governments 

The public sector itself must lead the way by adopting innovative approaches and exploiting 
new technologies and procedures in public administration. This will enable it to better address 
the  needs  of  citizens  and  increase  the  quality  of  public  service,  including  by  improving 
productivity. 

Information and communication technologies (ICT) are largely under-exploited in the EU 
as a whole, but in the public sector in particular. This is crucial for the development of public 
services:  wider  uptake  and  exploitation  of  ICT  in  public  services  (eg.  in  the  health  sector) 
would not just improve the productivity of the public sector; it could open up large markets 
for innovative ICT products and services.  

Improved public procurement practices can help foster market uptake of innovative products 
and services, while raising the quality of public services in markets where the public sector is 
a  significant  purchaser.  The  Contracting  Authorities  can  do  this  by  making  sure  that  they 
describe  their  needs  in  a  broad  and  performance  based  way,  which  allows  the  bidders  to 
propose better and a wider variety of solutions to the problem to be solved. Public purchasers 
need to become “intelligent  customers”,  who plan what to buy, how to buy it and who will 
buy  it.  As  suggested  by  the  Aho  report,  they  should  also  take  into  account  costs  incurred 
during the whole life of a product or service and not simply focus on the costs at the time of 
purchase.  Public  purchasers  could  also  join  forces  to  exchange  expertise  and  ideas  and  to 
reach a critical size of the order. This would stimulate demand for innovation, while allowing 
public authorities to acquire higher quality products and services. 

The  so-called  pre-commercial  procurement  is  a  yet  untapped  opportunity  for  public 
authorities  in  Europe.  In  the  US  for  instance, it plays  an important role  in the  economy not 
only for innovation related to defence, space and security but also in other public sectors such 
as transport, health, energy and ICT. Where no commercial solutions exist on the market, pre-
commercial  procurement  can  help  public  authorities  to  get  technologically  innovative 
solutions developed according to their needs. In pre-commercial procurement public procurers 
do not prescribe a specific R&D solution to be developed, but solicit alternative solutions that 
could address a problem of public interest. 

Long-term  plans  that  are  communicated  to  the  market  and  technical  dialogue  between 
purchasers  and  the  market  can  help  promote  innovative  solutions.  The  procurement 

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Directives13  adopted  in  2004  offer  scope  for  innovation-oriented  tendering.  Furthermore, 
these Directives also include provisions expected to have a positive impact on facilitating the 
access  and  participation  of  SMEs  in  public  procurement  markets.  Public  entities  should  use 
these opportunities. Member States are also encouraged to take concrete measures to stimulate 
innovation  and  research  through  improved  public  procurement  practices  in  their  Lisbon 
National Reform Programmes, as proposed in the Integrated Guidelines for Growth and Jobs.  

A Handbook on the possibilities the public procurement directives offer for commercial and 
pre-commercial innovation-oriented tendering is being prepared by the Commission services 
and  is  to  be  published  later  this  year.  This  is  an  important  step  in  the  awareness  raising 
process of the possibilities for Contracting Authorities to foster innovation. 

3. 

FACILITATING THE EMERGENCE OF INNOVATION-DRIVEN LEAD-MARKETS  

More  efficient  and  competitive  framework  conditions  are  a  pre-requisite  for  a  successful 
uptake  of  innovation  in  the  EU  but  they  will  not  be  enough  to  make  up  the  EU's  persistent 
innovation  deficit  vis-à-vis  its  major  competitors.  As  the  Aho  Report  has  rightly  remarked, 
Europe  must  seek  to  develop  innovation-friendly  markets  in  a  more  targeted  way  creating 
conditions to facilitate the translation of technological and non-technological innovation into 
commercial products. 

It  is  therefore  proposed  to  launch  a  new  lead-market  initiative  aiming  at  facilitating  the 
creation and marketing of new innovative products and services in promising areas. The idea 
is  to  identify  areas  where  the  removal  of  barriers  would  essentially  contribute  to  the 
competitive  process  and  lead  to  the  emergence  of  new  markets.  This  mainly  includes 
coordinated  action  that  combines  supply  measures,  such  as  research  support,  that  will  be 
provided  under  the  7th  Framework  Programme,  with  actions  aimed  at  understanding  and 
stimulating competitive market demand for innovative products and services. Policy makers 
can for example examine the regulatory environment, the setting of standards, make better use 
of  the  opportunities  provided  by  procurement  rules  and  improve  the  overall  market 
environment  to  promote  a  more  innovation  friendly  culture.  Such  an  initiative  will  help  to 
create  dynamic  virtuous  circles  of  growing  demand  and  innovation  by  facilitating  early 
movers, without “picking winners” or pushing specific technologies.  

In concrete terms, a systematic and prospective approach should be used to look at all policy 
instruments  available  and  using  them  in  a  combined  way,  in  order  to  ensure  the  timely 
emergence  of  favourable,  competitive  market  conditions  for  the  deployment  of  new 
technologies.  This  would  require  a  concerted  approach  between  Member  States  and  the 
Community, also taking due account of similar initiatives in Member States.  

The  identification  of  priority  areas  should  be  market-driven,  in  full  respect  of  the  need  to 
preserve free and fair competition. Without excluding any areas from this initiative, there is a 
clear  public  interest  in  helping  the  emergence  of  solutions  that  would  provide  answers  to 
citizens concerns. These would, in particular, be areas where public authorities play a critical 
role  to  eliminate  existing  barriers  to  market  take-up  of  new  products.  However,  this  should 
not be at the expense of supporting innovation in more traditional sectors. 

13 

Directives 2004/18/EC and 2004/17/EC. 

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The  Commission  is  convinced  that,  by  showing  that  innovation  can  help  to  address  these 
concerns, such an approach would be an essential contribution to the creation of an innovation 
friendly society by increasing the trust of citizens in its merits.  

In  practical  terms,  the  Commission  can  draw  on  the  Technology  Platforms  and  the  Europe 
INNOVA Innovation Panels14, which are well placed to identify obstacles and opportunities 
in  relation  to  specific  technological  areas  and  sectors.  In  particular,  the  long-term  strategic 
research agendas of the Technology Platforms constitute a good basis on which the need for 
further action can be assessed.  

Eco-innovation is an area offering promising prospects for the emergence of an innovation-
friendly  lead-market.  The  pull  of  eco-innovation  can  be  enhanced  by  environmental  policy, 
notably  through  a  well-designed  regulation  and  the  development  of  market-oriented 
instruments.  For  example,  a  mechanism  could  be  put  in  place  whereby  the  current  “best 
performance” in the market for a given set of products could become the reference standards 
within a certain time-frame to encourage other enterprises to adapt to it. Eco-innovation can 
also  be  promoted  by  fostering  cooperation  between  research  and  enterprises  in  promising 
areas, such as construction, water-management, bio-industries, carbon capture and storage or 
recycling.  

As  part  of  eco-innovation,  setting  targets  for  improving  energy  efficiency  can  serve  us  as  a 
model for other aspects of energy: the forthcoming action plan on this subject will contribute 
concretely  to  this  objective.  This  should  be  seen  in  the  broader  context  of  the  recent  Green 
Paper15  on  a  European  strategy  for  a  sustainable,  competitive  and  secure  energy  and  the 
forthcoming European Strategic Energy review.  

Example of a potential innovation-friendly lead-market: intelligent, near-zero energy 
building 

The  emergence  of  a  lead-market  for  "Intelligent,  near-zero  energy  buildings"  would  secure 
new business opportunities (e.g. smart services, building units, components and materials, and 
new energy supply resources) and substantially contribute to alleviating Europe's reliance on 
fossil energies and reducing the emission of greenhouse gas and other pollutants. 

The concept of an “intelligent, near-zero energy, building” offers the prospect of an entirely 
new,  technology  intensive,  European  market  with  obvious  world-wide  export  potential.  The 
European  Construction  Technology  Platform  has  already  brought  together,  under  industry 
leadership,  a  wide  range  of  stakeholders  (e.g.  clients/users  organisations,  energy  supply 
local-regional  authorities,  materials  producers,  equipment  manufacturers, 
companies, 
architects, engineers and key technologists) to develop a Strategic Research Agenda. It is also 
looking 
innovative 
technologies and services, such as initiatives to promote energy efficiency in the public sector, 
improved public procurement structures and changes to the treatment of Intellectual Property 
Rights16.  

into  demand-side  measures  which  could  stimulate  demand  for 

14 
15 
16 

See Europe INNOVA innovation panels at http://www.europe-innova.org/index.jsp 
Green Paper on energy efficiency - COM(2005) 265, 22.6.2005. 
Construction sector does not currently rely strongly on formal means of protecting intellectual property 
and patenting. 

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A European policy agenda is needed to remove remaining obstacles and ensure diffusion and 
use of methods and performance assessment criteria, and to integrate in a consistent manner 
current regulation and initiatives, e.g. EU directives on construction and energy performance, 
EU  action  plans,  national  regulations,  the  green  book  on  energy  and  Kyoto  emissions 
commitments. 

Other examples of such areas include internal security and defence, which have become a 
matter  of  global  concern.  Innovative  approaches  in  areas  such  as  public  transport,  the 
organization  of  public  space  and  the  protection  of  borders  can  be  envisaged.  Space,  offers 
great  scope  for  high  technology  innovation  over  time  (in  particular  public  investors  in  the 
application  of  Galileo17  and  GMES  (Global  Monitoring  for  Environment  and  Security),  the 
Commission's flagship space programmes. These need to share their knowledge of the system 
and its scope for business with potential downstream users in the space and non-space sectors, 
to raise their awareness of potential space-based solutions). Transport, where the demand for 
energy efficiency provides great opportunities. Marine technologies and products allowing 
for  new  uses  of  the  sea  such  as  deep  sea  drilling,  blue  biotech  exploitation,  offshore 
mariculture  and  renewable  energies,  ocean  space  monitoring  and  surveillance  technologies 
offer promising scope. Health, which has a huge growth potential for innovative products and 
services (including in particular e-Health, and the provision of customized solutions to allow 
elderly people to continue to live independently, pharmaceuticals and medical devices where 
innovation can bring direct benefits to patients and improve competitiveness), or well-being 
and  culture  (for  instance  creative  content  services,  which  gain  a  new  dimension  with  the 
rollout of broadband networks, allowing citizens and businesses to access all kind of creative 
contents  such  as  audiovisual,  games,  cultural  information  at  home  and  in  mobility)  are 
examples of markets where the public sector has a role to play.  

The  Commission  will  conduct  a  detailed  analysis  based  on  information  from  a  variety  of 
sources,  including  a  public  consultation,  to  identify  possible  areas  where  a  combination  of 
supply  and  demand  measures  may  help  the  emergence  of  innovation-friendly  markets.  An 
informal  consultation  of  the  European  Technology  Platforms  and  the  Europe  INNOVA 
Innovation Panels has already been launched with this in mind. Based on the outcome of both 
consultations or possibly other useful inputs (such as from the regional innovation networks 
under  the  forthcoming  Regions  for  Economic  Change  initiative)  and  of  an  analysis  of  the 
measures needed to help emergence of such lead markets and of their impact, the Commission 
will propose a comprehensive strategy. In doing so, it will also point to the expected positive 
impact on growth and jobs. As a first step, this concept will be tested in 2007 by applying it in 
a pilot phase to a limited number of areas. 

The Commission intends to implement this innovation-friendly lead-market  initiative  within 
the  existing  legal  and  institutional  framework.  The  decisive  step  that  will  make  a  real 
difference is the full political commitment from all relevant actors to help identify and remove 
potential barriers to the emergence of innovation-friendly markets. The Commission will steer 
this process and foster cooperation towards a common agenda.  

17 

With  a  view  to  fulfilling  the  requirements  of  the  widest  range  of  users,  the  idea  of  a  competition  for 
young  inventors  on  future  applications  for  the  Galileo  signal  at  EU  level  should  be  investigated,  in 
coordination with already existing competitions.  

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4. 

A BETTER EUROPEAN GOVERNANCE FOR INNOVATION 

To improve the EU’s innovation performance will require long-term commitment to a broad 
policy framework. No single action or actor can deliver this result or the higher growth rate it 
will make possible. Only the combined efforts of all public and private stakeholders, pulling 
together  where  necessary,  in  competition  where  appropriate,  will  lead  to  the  uptake  of 
innovation in society in the way that is needed.  

Political  leadership  is  particularly  necessary  to  manage  the  structural  change  that  is 
inevitably  linked  with  a  knowledge-based  and  innovation-friendly  society  that  this 
communication seeks to promote. Businesses must also play their part and demonstrate their 
sense  of  corporate  social  responsibility  in  facilitating  the  innovation  uptake.  An  increased 
investment into research and innovation is the best means to enhance their competitiveness. 
At the same time, as part of a socially responsible behaviour, businesses should be aware, that 
rapid  technological  change  can  raise  citizens'  concerns.  Helping  citizens  to  address  these 
concerns would promote their confidence in innovation. Innovation needs to be organised in a 
way that supports not only the acceptance of change but also provides opportunities in human 
resource management, leading to higher productivity. 

At  political  level,  innovation  must  continue  to  be  recognised  and  consistently  supported  by 
the Member States as a key priority within the existing Partnership for Growth and Jobs. 
The 2005 and 2006 Spring European Council has endorsed this approach but more needs to 
be  done  to  keep  innovation  visible  and  high  on  the  European  agenda.  The  Commission 
welcomes  the  Presidency’s  intention  to  discuss  innovation  at  the  informal  meeting  of  the 
Heads of State and Government in Lahti on 20 October 2006. As a result of the Lahti Summit, 
the  Commission  hopes  to  see  declarations  in  support  for  innovation  translated  into  concrete 
action by Member States. 

To  implement  the  policy  orientations  put  forward  by  this  Communication,  an  improved 
governance  structure  for  innovation  is  necessary.  This  should  address  innovation  at  all 
levels. The priority must be to establish strong innovation systems in all Member States that 
build  upon  all  innovation  drivers  described  in  this  communication,  including  education, 
research,  knowledge  transfer,  entrepreneurship  and  finance.  To  this  end,  it  is  suggested  that 
Member  States  use  the  National  Coordinating  mechanisms  established  under  the  Lisbon 
process to monitor the effective implementation of their innovation strategies.  

The  governance  structure  of  the  renewed  Lisbon  Strategy  provides  a  forum  for  policy 
discussions and the exchange at the EU level of best practices on innovation in the context of 
the treaty-based multilateral surveillance. The thematic discussions on innovation in various 
Council  formations  during  the  autumn  of  2006  provide  an  opportunity  to  inform  the 
Commission's 2007 Annual Progress Report and further Council discussions in spring 2007. 
In particular, the Commission will, when assessing the progress reports on the implementation 
of the National Reform Programmes – due by 15 October – assess carefully Member States' 
reforms  and  policies  addressing  the  innovation  system  and  report  on  this  in  the  Annual 
Progress Report. In this context, the Competitiveness Council is invited to regularly assess the 
impact of national innovation policies on competitiveness.  

The  governance  cycle  of  the  renewed  Lisbon  Strategy  envisages  the  adoption  of  Integrated 
Guidelines to guide the process over a three-year period. The next revision of the Integrated 
Guidelines in 2008 for a new three-year cycle will be an opportunity to reflect the experiences 
gained with the National Reform Programmes in the 2005-2008 governance cycle as well as 

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the  new  policy  orientations  put  forward  in  this  communication.  Impact  assessments  of 
Community legislation already explicitly require the effect of regulation on innovation to be 
taken  into  account:  these  provisions  will  be  evaluated  with  a  view  to  strengthening  them  in 
the context of the general review of the Commission's Impact Assessment Guidelines. 

The  main  competence  to  foster  innovation  often  lies  at  regional  level.  Regions  should 
therefore  be  involved  in  the  preparation  and  implementation  of  the  National  Reform 
Programmes,  including  by  developing  their  own  regional  innovation  strategies.  Additional 
efforts need to be undertaken to facilitate policy learning and the diffusion of good practice 
across borders. In this respect, the Pro INNO Europe will offer a platform that brings together 
regional  and  national  policymakers  with  a  view  to  facilitating  trans-national  cooperation  in 
areas  of  common  interest.  Industrial  clusters  are  an  outstanding  example  of  this.  As  a 
complementary initiative, the Commission will bring forward proposals to the Member States 
for  a  Regions  for  Economic  Change  initiative  under  the  new  cohesion  policy  programmes. 
This  initiative  will  bring  regions  together  in  networks  to  develop  best  practice  in  key  areas 
such as research and innovation and to encourage the transfer of new ideas into projects to be 
supported under the programmes. 

Finally,  private  stakeholders  are  a  vital  element  of  an  efficient  innovation  system  and 
therefore need to be fully involved in political priority setting. Member States are invited to 
foster, where appropriate, public-private partnerships to better engage the private sector into 
education, research and finance. 

5. 

A ROADMAP FOR A MORE INNOVATIVE EUROPE  

The  shortcomings  of  the  EU’s  innovation  system  can  be  summarised  as  deficiencies  in 
innovative  resources  and  capabilities,  in  the  incentives  for  innovation  and  in  the  interaction 
between innovation actors. 

In  recent  years,  efforts  to  address  these  deficiencies  have  been  undertaken  at  national  and 
Community  level.  The  3%  Action  Plan18  and  the  Commission's  Communication  “More 
Research and Innovation” of October 2005 have been important milestones in this respect.  

The present Communication puts these efforts in a broader context. It seeks to stimulate both 
the  supply  and  the  demand  side  of  innovation.  In  doing  so,  it  is  responding  to  the 
recommendations  of  the  Aho  Report.  It  lays  down  the  foundation  for  the  broad-based 
innovation  strategy  requested  by  the  Spring  Council.  As  such  its  objectives  can  only  be 
achieved by a broad based implementation at the level of the Community, its Member States 
and their regions. At the same time, not only are the public authorities required to act, but also 
the business sector and the civil society.  

The  following  10  actions  are  of  particularly  high  political  priority  as  part  of  the  Lisbon 
strategy for growth and jobs:  

Action 1 : Member States are invited to significantly increase the share of public expenditure 
devoted  to  education  and  to  identify  and  to  tackle  obstacles  in  their  education  systems  to 
promoting  an  innovation  friendly  society.  In  particular,  they  should  implement  the 

18 

Communication  from  the  Commission  “Investing  in  research:  an  action  plan  for  Europe”, 
COM(2003) 226 final/2, 4.6.2003. 

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recommendations included in the Communication “Delivering on the Modernisation Agenda 
for Universities”19 for better education and innovation skills. 

Action  2  :  A  European  Institute  of  Technology  should  be  established  to  help  improve 
Europe's  innovation  capacity  and  performance.  The  Commission  intends  to  put  forward  a 
proposal in October 2006 and the EIT should be operational by 2009.  

Action 3 : The Community and Member States should continue to develop and implement a 
strategy to create an open, single, and competitive European labour market for researchers, 
with attractive career prospects, including possible incentives for mobility. 

Action 4 : In order to address the poor up-take of research results in Europe, the Commission 
will adopt a Communication in 2006 - including voluntary guidelines and actions of Member 
States and concerned stakeholders - to promote knowledge transfer between universities and 
other public research organisations and industry. 

Action 5 : The EU’s cohesion policy for the period 2007-2013 will be mobilized in support 
of regional innovation. All Member States should seek to earmark an ambitious proportion of 
the 308 billion € available for investing in knowledge and innovation.  

Action 6 : A new framework for State aid to research, development and innovation will be 
adopted by the Commission before the end of 2006, to help Member States better target State 
aid on market failures preventing research and innovation activities. Member States should re-
orient  their  State  aid  budgets  to  target  these  objectives,  in  full  respect  of  their  overall 
commitment  to  "less  and  better  targeted  aid".  The  Commission  will  also  present  a 
communication later in 2006 with detailed guidance for the design and evaluation of generally 
applicable tax incentives for R&D. 

Action  7  :  Drawing  on  the  recent  public  consultation,  the  Commission  will  present  a  new 
patent strategy before the end of 2006 and prepare a more comprehensive IPR strategy in 
2007, facilitating inter alia the circulation of innovative ideas.  

Action 8 : Building on its review of the copyright acquis, the Commission will continue its 
work to ensure that the legal framework and its application are conducive to the development 
of new digital products, services and business models. In particular, it will bring forward an 
initiative on "copyright levies" before the end of 2006. 

Action  9  :  The  Commission  will  test  in  2007  a  strategy  to  facilitate  the  emergence  of 
innovation friendly lead-markets. In this context, it will conduct, after a public consultation 
including in particular the Technology Platforms and the Europe INNOVA innovation panels, 
a detailed analysis of potential barriers to the take-up of new technologies in a limited number 
of  areas.  In  parallel,  using  this  experience,  the  Commission  will  prepare  a  comprehensive 
lead-markets strategy. 

Action 10 : The Commission will publish and distribute a Handbook on how pre-commercial 
and  commercial  procurement  can  stimulate  innovation  by  end  2006  to  support  Member 
States in availing themselves of the opportunities offered by the new procurement Directives. 

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COM(2006) 208, 10.5.2006. 

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The  framework  for  the  implementation  of  these  actions  is  the  renewed  Lisbon  Strategy  for 
Growth  and  Jobs.  This  requires  a  commitment  from  all  sides  and  in  particular  from  the 
Member States to deliver on the structural reforms to foster innovation. The Commission will 
monitor  the  implementation  of  the  road-map  as  part  of  the  Lisbon  process.  Particular 
attention  will  be  given  to  these  areas  in  the  forthcoming  Annual  Progress  Report  due  in 
December 2006 and in the assessment of the National Reform Programmes.  

EN 

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