COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS Europe 2020 Flagship Initiative  Innovation Union   SEC(2010) 1161
Date: 2010-10-06
Institutions: European Commission
Subjects: EU research policy, European social policy, development policy, economic policy, education policy, innovation, research and development, research policy, small and medium-sized enterprises, sociology of education

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EUROPEAN COMMISSION 

Brussels, 6.10.2010 
COM(2010) 546 final 

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

Europe 2020 Flagship Initiative  
Innovation Union  

SEC(2010) 1161 

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Executive Summary 

At  a  time  of  public  budget  constraints,  major  demographic  changes  and  increasing  global 
competition, Europe's competitiveness, our capacity to create millions of new jobs to replace 
those  lost  in  the  crisis  and,  overall,  our  future  standard  of  living  depends  on  our  ability  to 
drive innovation in products, services, business and social processes and models. This is why 
innovation  has  been  placed  at  the  heart  of  the  Europe  2020  strategy.  Innovation  is  also  our 
best means of successfully tackling major societal challenges, such as climate change, energy 
and resource scarcity, health and ageing, which are becoming more urgent by the day.  

Europe  has  no  shortage  of  potential.  We  have  world  leading  researchers,  entrepreneurs  and 
companies  and  unique  strengths  in  our  values,  traditions,  creativity  and  diversity.  We  have 
made great strides in creating the largest home market in the world. European enterprises and 
civil society  are actively  engaged in emerging and developing economies around the world. 
Many world-changing innovations can be traced back to Europe. But we can – and must do – 
much  better.  In  a  rapidly  changing  global  economy,  we  must  build  on  our  strengths  and 
decisively tackle our weaknesses:  

–  Under-investment  in  our  knowledge  foundation.  Other  countries,  like  the  US  and  Japan, 

are out-investing us, and China is rapidly catching up. 

–  Unsatisfactory  framework  conditions,  ranging  from  poor  access  to  finance,  high  costs  of 
IPR  to  slow  standardisation  and  ineffective  use  of  public  procurement.  This  is  a  serious 
handicap when companies can choose to invest and conduct research in many other parts 
of the world.  

–  Too  much  fragmentation  and  costly  duplication.  We  must  spend  our  resources  more 

efficiently and achieve critical mass.  

Perhaps  the  biggest  challenge  for  the  EU  and  its  Member  States  is  to  adopt  a  much  more 
strategic approach to innovation. An approach whereby innovation is the overarching policy 
objective, where we take a medium- to longer-term perspective, where all policy instruments, 
measures  and  funding  are  designed 
innovation,  where  EU  and 
national/regional policies are closely aligned and mutually reinforcing, and last but not least, 
where  the  highest  political  level  sets  a  strategic  agenda,  regularly  monitors  progress  and 
tackles delays. 

to  contribute 

to 

Innovation  Union  sets  out  such  a  bold,  integrated  and  strategic  approach,  exploiting  and 
leveraging  our  strengths  in  new  and  productive  ways  –  and  thereby  maintain  the  economic 
foundation  that  supports  our  quality  of  life  and  our  social  model  as  our  population  ages. 
Business-as-usual equals gradually losing our competitive advantages, and accepting Europe's 
steady decline.  

Concretely, to achieve Innovation Union, the following is needed: 

1. 

In  times  of  fiscal  constraints,  the  EU  and  Member  States  need  to  continue  to 
invest in education, R&D, innovation and ICTs. Such investments should where 
possible not only be protected from budget cuts, but should be stepped up.  

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2. 

3. 

4. 

5. 

6. 

7. 

8. 

9. 

This  should  go  hand  in  hand  with  reforms  to  get  more  value  for  money  and 
tackle  fragmentation.  EU  and  national  research  &  innovation  systems  need  to 
be better linked up with each other and their performance improved.  

Our education systems at all levels need to be modernised. Excellence must even 
more  become  the  guiding  principle.  We  need  more  world-class  universities, 
raise skill levels and attract top talent from abroad.  

Researchers and innovators must be able to work and cooperate across the EU 
as  easily  as  within  national  borders.  The  European  Research  Area  must  be 
completed within four years – putting in place the frameworks for a truly free 
movement of knowledge.  

Access  to  EU  programmes  must  be  simplified  and  their  leverage  effect  on 
private  sector  investment  enhanced,  with  the  support  of  the  European 
Investment  Bank.  The  role  of  the  European  Research  Council  should  be 
reinforced.  The  framework  programme's  contribution  to  nurturing  fast-
growing  SMEs  must  be  boosted.  The  European  Regional  Development  Fund 
should  be  fully  exploited  to  develop  research  and  innovation  capacities  across 
Europe, based on smart regional specialisation strategies. 

We need to get more innovation out of our research. Cooperation between the 
worlds  of  science  and  the  world  of  business  must  be  enhanced,  obstacles 
removed and incentives put in place.  

Remaining  barriers  for  entrepreneurs  to  bring  "ideas  to  market"  must  be 
removed: better access to finance, particularly for SMEs, affordable Intellectual 
Property  Rights,  smarter  and  more  ambitious  regulation  and  targets,  faster 
setting of interoperable standards and strategic use of our massive procurement 
budgets. As an immediate step, agreement should be reached on the EU patent 
before the end of the year.  

European  Innovation  Partnerships  should  be  launched  to  accelerate  research, 
development  and  market  deployment  of  innovations  to  tackle  major  societal 
challenges,  pool  expertise  and  resources  and  boost  the  competitiveness  of  EU 
industry, starting with the area of healthy ageing.  

Our  strengths  in  design  and  creativity  must  be  better  exploited.  We  must 
champion social innovation. We must develop a better understanding of public 
sector  innovation,  identify  and  give  visibility  to  successful  initiatives,  and 
benchmark progress. 

10. 

We  need  to  work  better  with  our  international  partners.  That  means  opening 
access to our R&D programmes, while ensuring comparable conditions abroad. 
That  also  means  adopting  a  common  EU  front  where  needed  to  protect  our 
interests. 

This,  in  essence,  is  what  Innovation  Union  is  all  about.  The  benefits  will  be  significant: 
according to recent estimates, achieving our target of spending 3% of EU GDP on R&D by 
2020  could  create  3.7  million  jobs  and  increase  annual  GDP  by  close  to  €800  billion  by 

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20251. Realising it will require the full and sustained support of the European Council and the 
European Parliament, Member State governments, businesses, public authorities, researchers 
and the public.  

With Innovation Union, we have a vision, an agenda, a clear distribution of tasks and robust 
monitoring  procedures.  The  European  Commission  will  do  what  is  necessary  to  make  the 
Innovation Union a reality.  

1 

P. Zagamé (2010) The Cost of a non-innovative Europe. 

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TABLE OF CONTENTS 

COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, 
THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE 
COMMITTEE OF THE REGIONS Europe 2020 Flagship Initiative Innovation Union.......... 1 

1. 

2. 

2.1. 

2.2. 

2.3. 

2.4. 

3. 

3.1. 

3.2. 

3.3. 

4. 

4.1. 

4.2. 

5. 

6. 

7. 

7.1. 

7.2. 

7.3. 

Introduction .................................................................................................................. 6 

Strengthening the knowledge base and reducing fragmentation.................................. 8 

Promoting excellence in education and skills development ........................................ 8 

Delivering the European Research Area .................................................................... 10 

Focusing EU funding instruments on Innovation Union priorities............................ 11 

Promoting the European Institute of Innovation and Technology (EIT) as a model of 
innovation governance in Europe............................................................................... 12 

Getting good ideas to market ..................................................................................... 13 

Enhancing access to finance for innovative companies............................................. 13 

Creating a single innovation market .......................................................................... 15 

Promoting openness and capitalising on Europe's creative potential......................... 18 

Maximising social and territorial cohesion ................................................................ 20 

Spreading the benefits of innovation across the Union.............................................. 20 

Increasing social benefits ........................................................................................... 21 

Pooling forces to achieve breakthroughs: European Innovation Partnerships........... 22 

Leveraging our policies externally............................................................................. 27 

Making it happen........................................................................................................ 28 

Reforming research and innovation systems.............................................................. 28 

Measuring Progress.................................................................................................... 29 

A commitment by all to turn Innovation Union into reality ...................................... 30 

ANNEX I......Self assessment tool: Features of well performing national and regional research 
and innovation systems ............................................................................................................ 32 

ANNEX II Performance Scoreboard for Research and Innovation ......................................... 36 

ANNEX III European Innovation Partnerships Aims and scope of a pilot European Innovation 
Partnership in the field of active and healthy ageing ............................................................... 40 

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1. 

INTRODUCTION  

As  public  deficits  are  reined  in  to  repair  public  finances  and  as  our  labour  force  begins  to 
shrink, what will be the basis for Europe's future competitiveness? How will we create new 
growth and jobs? How will we get Europe's economy back on track?  

How  will  we  tackle  growing  societal  challenges  like  climate  change,  energy  supply,  the 
scarcity of resources  and  the impact of  demographic changes? How  will  we improve  health 
and security and sustainably provide water and high-quality, affordable food?  

The only answer is innovation, which is at the core of the Europe 2020 Strategy2 agreed by 
Member States at the June 2010 European Council, underpinning the smart, sustainable and 
inclusive  growth  the  Strategy  is  aiming  for.  The  "Innovation  Union"  is  one  of  the  seven 
flagships announced in the Europe 2020 Strategy. It aims to improve conditions and access to 
finance  for  research  and  innovation,  to  ensure  that  innovative  ideas  can  be  turned  into 
products and services that create growth and jobs.  

The  Innovation  Union  has  been  developed  alongside  the  flagship  initiative  on  a  Industrial 
Policy for the Globalisation Era, which aims to ensure a strong, competitive, and diversified 
manufacturing value chain, with particular emphasis on Small and Medium Sized Enterprises. 
It complements other flagship initiatives, such as the Digital Agenda, Youth on the Move and 
the  Agenda  for  New  Skills  and  Jobs.  In  conjunction  with  the  Innovation  Union,  these  will 
improve  conditions  for  innovation,  including  by  accelerating  the  roll-out  of  high  speed 
internet and its applications, by securing a strong industrial base, and by promoting excellent 
education systems, modern labour markets, and the right skills mix for Europe's future labour 
force.  Other  major  policies  such  as  the  re-launch  of  the  single  market  through  the  Single 
Market  Act,  an  effective  competition  policy  and  better  access  to  third  country  markets 
through a new trade strategy, will also complement and strengthen the Innovation Union. 

This  Communication  addresses  the  challenges  and  opportunities  facing  Europe  in  key  areas 
where urgent and sustained efforts are required. It sets out clearly the key European, national 
and regional initiatives needed to create the Innovation Union3.  

Europe  starts  from  a  position  of  strength.  Today,  a  number  of  Member  States  are  world 
leaders  in  manufacturing,  creativity,  design,  aerospace,  telecommunications,  energy  and 
environmental technologies. We have regions amongst the most innovative in the world. Our 
economies  are  supported  by  some  of  the  world's  most  dynamic  public  services  and  strong 
traditions in social innovation.  

Yet  we  can  and  must  do  much  better.  We  are  under-investing  in  our  knowledge  base, 
spending every year 0.8% of GDP less than the US and 1.5% less than Japan in R&D - with 
major gaps in business R&D, venture capital investments4 - and our education system needs 
reform. Private sector R&D is increasingly outsourced to emerging economies and thousands 

2 
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COM (2010) 2020 
The  initiatives  proposed  in  Innovation  Union  are  supported  by  the  analyses  provided  in  the 
accompanying staff working document, SEC (2010) 1160 
Business R&D in the EU is 66% lower than the US and 122% lower than Japan, as a share of GDP; 
venture capital investments are 64% lower than the US; and the share of population completing tertiary 
education is 69% lower than the US and 76% lower than Japan (See Annex II). 

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of  our  best  researchers  and  innovators  have  moved  to  countries  where  conditions  are  more 
favourable. According to recent estimates, achieving our target of spending 3% of EU GDP 
on  R&D  by  2020  could  create  3.7  million  jobs  and  increase  annual  GDP  by  close  to  €800 
billion by 20255. Too few of our innovative SMEs grow into large companies. Although the 
EU  market  is  the  largest  in  the  world,  it  remains  fragmented  and  insufficiently  innovation-
friendly.  Although  our  services  sector  accounts  for  70%  of  the  economy,  our  knowledge-
intensive services are still under-developed.  

Countries like China and South Korea are catching up fast and moving from being imitators to 
leaders  in  innovation  (see  EU-China  comparisons  in  Annex  II).  Unlike  the  EU,  they  are 
pursuing a strategic approach to creating an innovation-friendly environment.  

Their development creates huge market opportunities and new cooperation potential, but also 
considerable pressure on our companies. Meanwhile, the United States and Japan continue to 
lead the EU in innovation performance. The European Union needs to confront its challenges 
head on and to exploit its huge scientific and innovation potential. The EU must:  

•  Tackle  unfavourable  framework  conditions:  private  investment  in  research  and 
innovation  is  being  held  back  and  ideas  prevented  from  reaching  the  market  by  poor 
availability  of  finance,  costly  patenting,  market  fragmentation,  outdated  regulations  and 
procedures,  slow  standard-setting  and  the  failure  to  use  public  procurement  strategically. 
Moreover, barriers in the single market make it more difficult for different players to work 
together  across  border,  using  and  sharing  knowledge  from  all  sources,  which  is 
increasingly how successful innovations are developed. 

•  Avoid fragmentation of effort: national and regional research and innovation systems are 
still working along separate tracks with only a marginal European dimension. This leads to 
costly duplication and overlap which is unacceptable at a time of tight finances. By better 
pooling our efforts and focusing on excellence, and by creating a true European Research 
Area,  the  EU  can  enhance  the  quality  of  research  and  Europe's  potential  for  major 
breakthroughs  and  increase  the  effectiveness  of  the  investments  needed  to  get  ideas  to 
market. 

In a global environment, Europe must also develop its own distinctive approach to innovation 
which builds on its strengths and capitalises on its values by: 

•  Focusing  on  innovations  that  address  the  major  societal  challenges  identified  in 
Europe 2020, strengthening our leadership in key technologies, reaping the potential these 
markets  offer  for  innovative  businesses,  and  enhancing  EU  competitiveness.  Innovation 
must become a key element in EU policies and the EU must use the strong potential of the 
public sector in areas such as energy and water, health, public transport and education, to 
bring new solutions to the market.  

•  Pursuing a broad concept of innovation, both research-driven innovation and innovation 
in  business  models,  design,  branding  and  services  that  add  value  for  users  and  where 
Europe  has  unique  talents.  The  creativity  and diversity  of  our  people  and  the  strength  of 
European  creative  industries,  offer  huge  potential  for  new  growth  and  jobs  through 
innovation, especially for SMEs. 

5 

P.  Zagamé,  (2010)  The  cost  of  a  non-innovative  Europe,  http://ec.europa.eu/research/social-
sciences/policy-briefs-research-achievements_en.html 

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•  Involving all actors and all regions in the innovation cycle: not only major companies 
but also SMEs in all sectors, including the public sector, the social economy and citizens 
themselves ('social innovation'); not only a few high-tech areas, but all regions in Europe 
and every Member State, each focusing on its own strengths ("smart specialisation") with 
Europe, Member States and regions acting in partnership. 

In addition, given that undistorted competition and well functioning competitive markets are 
key  for  innovation,  a  strict  enforcement  of  competition  rules  that  ensure  market  access  and 
opportunities for new entrants is a necessary condition.  

Alongside the European Parliament, the European Council will monitor Europe's performance 
on the thematic areas of the Europe 2020 strategy. The first such assessment will be devoted 
to research and innovation in December 2010. To achieve the Innovation Union there needs to 
be a sea change. In the post-crisis world, Europe must move away from "business as usual" 
and  make  innovation  its  overarching  policy  objective.  What  is  needed  to  transform  the  EU 
economy  into  a  genuine  Innovation  Union  is  political  leadership,  bold  decisions  and 
determined implementation.  

The European Union should commit to creating a true "Innovation Union" by 2020 by: 

– 

– 

– 

Taking  collective  responsibility  for  a  strategic,  inclusive  and  business-oriented 
research  and  innovation  policy,  to  tackle  major  societal  challenges,  raise 
competitiveness  and  generate  new  jobs.  The  Commission  will  reflect  this 
strategic  approach  to  innovation  in  all  its  policies  and  invites  the  other  EU 
institutions to do likewise. 

Prioritising and protecting investments in our knowledge base, reducing costly 
fragmentation and making Europe a more rewarding place for innovation and 
for bringing ideas to market. A deadline of 2014 should be set for delivering the 
European Research Area.  

Agreeing  to  launch  European  innovation  partnerships,  the  first  on  active  and 
healthy  ageing,  to  pool  resources  and  expertise  to  find  solutions  to  societal 
challenges and to build competitive advantage in key markets.  

2. 

STRENGTHENING THE KNOWLEDGE BASE AND REDUCING FRAGMENTATION 

2.1. 

Promoting excellence in education and skills development 

Massive programmes of education, training and promotion of research and innovation careers 
have  been  set  up  in  many  countries  across  the  world.  The  EU  must  ensure  that  it  has  a 
sufficient  supply  of  highly  qualified  workers,  who  should  be  offered  attractive  careers  and 
easy mobility across sectors and countries; otherwise innovative investments and talent will 
move elsewhere6. 

The starting point for the Innovation Union is to create an excellent, modern education system 
in all Member States. Although Europe has a good basic education system compared to many 

6 

Policies  and  measures  to  promote  access  to  quality  education,  well-functioning  labour  markets  and 
skills  development  will  be  addressed  in  the  Europe  2020  flagships  "Youth  on  the  move"  and  "New 
skills for new jobs", respectively. 

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parts  of  the  world,  significant  weaknesses  remain  with  science  teaching  in  some  Member 
States. There are still too few girls taking science to an advanced level. Moreover, innovation 
is now needed in almost all walks of life: schools must ensure that all young people are ready 
to meet this challenge.  

Higher education reform is equally urgent. Most European universities do not attract enough 
top  global  talent,  with  relatively  few  in  leading  positions  in  existing  international  rankings. 
European universities should be freed from over-regulation and micro-management in return 
for full institutional accountability. Universities also need more diversity in their missions and 
outlook, with smarter specialisation across different fields.  

The number of researchers in Europe as a share of the population is well below that of the US, 
Japan and other countries. The EU will need at least one million new research jobs if it is to 
reach  the  R&D  target  of  3%.  The  number  of  researchers  required  is  significantly  higher,  as 
many  researchers  will  retire  over  the  next  decade.  The  EU  and  its  Member  States  should 
strengthen  their  capacity  to  attract  and  train  young  people  to  become  researchers  and  offer 
internationally competitive research careers to keep them in Europe and attract the best from 
abroad.  In  this  respect,  the  Marie  Curie  fellowships  under  the  Research  Framework 
Programme are playing an important role to strengthen the skills development, mobility and 
careers  of  researchers  across  borders.7  More  broadly,  more  needs  to  be  done  to  address 
innovation  skills  shortages  and  to  implement  European  e-skills  agenda8.  This  is  crucial  to 
accelerate  the  development  and  the  adoption  of  innovative  business  models  by  European 
enterprises, especially SMEs.  

Businesses  should  also  be  more  involved  in  curricula  development  and  doctoral  training  so 
that  skills  better  match  industry  needs  building  for  instance  on  the  University  Business 
Forum9.  There  are  good  examples  of  inter-disciplinary  approaches  in  universities  bringing 
together skills ranging from research to financial and business skills and from creativity and 
design to intercultural skills10.  

Innovation Union commitments 

1. 

2. 

7 
8 
9 
10 
11 

By the end of 2011, Member States should have strategies in place to train enough 
researchers  to  meet  their  national  R&D  targets  and  to  promote  attractive 
employment  conditions  in  public  research  institutions.  Gender  and  dual  career 
considerations should be fully taken into account in these strategies. 

In 2011 the Commission will, on the basis of the current preparatory work11, support 
an  independent  multi-dimensional  international  ranking  system  to  benchmark 
university performance. This will allow the best performing European universities 
to be identified. In 2011 further steps will be proposed in a Communication on the 
reform and modernisation of higher education. 
The  Commission  will  also  support  business-academia  collaborations  through  the 
creation of "Knowledge Alliances" between education and business to develop new 

http://ec.europa.eu/research/mariecurieactions/ 
Ref. "e-Skills for the 21st Century: Fostering Competitiveness, Growth and Jobs", COM(2007) 496 
Cf. http://ec.europa.eu/education/higher-education/doc1261_en.htm 
The new Aalto University in Finland is an example. 
Feasibility  study  for  a  multidimensional  global  ranking  of  universities,  http://www.u-multirank.eu; 
Assessing 
http://ec.europa.eu/research/science-
society/document_library/pdf_06/assessing-europe-university-based-research_en.pdf 

University-Based 

Research, 

Europe's 

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curricula  addressing  innovation  skills  gaps  (see  also  commitment  3  on  e-skills). 
inter-disciplinarity, 
to  modernise 
They  will  help  universities 
entrepreneurship and stronger business partnerships.  

towards 

3. 

In 2011, the Commission will propose an integrated framework for the development 
and  promotion  of  e-skills  for  innovation  and  competitiveness,  based  on 
partnerships  with  stakeholders.  This  will  be  based  on  supply  and  demand,  pan-
European guidelines for new curricula, quality labels for industry-based training and 
awareness-raising activities. 

2.2. 

Delivering the European Research Area 

Given  the  need  for  value  for  money,  it  is  more  vital  than  ever  to  avoid  costly  overlaps  and 
unnecessary  duplication  in  national  research.  It  is  essential  to  create  a  genuinely  unified 
European  Research  Area,  in  which  all  actors,  both  public  and  private,  can  operate  freely, 
forge alliances and gather critical mass in order to compete and cooperate on a global scale. 
Groups of national representatives and the European Commission have been working on five 
main  areas:  human  resources,  research  programmes,  research  infrastructures,  knowledge 
sharing  (see  section  3.3)  and  international  S&T  cooperation  (see  section  6).  But  Europe’s 
researchers,  research  institutions  and  funding  agencies  still  face  many  legal  and  practical 
obstacles that prevent them from operating freely, particularly across borders. The completion 
of  the  European  Research  Area  is  a  legal  requirement.  The  Council  and  Parliament  have 
called  for  it.  Progress  needs  to  be  accelerated  and  steered through  a  common  framework  of 
principles and objectives. The Union should set a deadline of end 2014 for achieving a well-
functioning European Research Area. 

The  whole  system  of  support  to  R&D  has  become  much  too  complex  in  Europe.  Potential 
beneficiaries  face  a  multitude  of  national  and  regional  programmes  and  intergovernmental 
initiatives as well as EU funding procedures. The rules and time-tables of the myriad existing 
instruments  are  not  aligned.  This  creates  a  huge  administrative  burden  and  can  discourage 
participation,  particularly  by  SMEs,  and  cross-border  cooperation.  Recent  work,  involving 
stakeholders  and  funding  agencies,  to  simplify  procedures  and  conditions  and  make  them 
coherent with each other must be given high priority. 

Ground-breaking  research  and  innovation  increasingly  require  world-class  infrastructures. 
They  attract  global  talent  into  innovative  clusters  and  are  an  essential  breeding  ground  for 
ICTs and key enabling technologies such as micro and nanoelectronics, biotechnologies, new 
materials and advanced manufacturing. Given their increasing complexity, scale and costs, the 
resources to build and operate them must be pooled across Europe and in some cases globally. 
Major  progress  has  been  made  through  the  European  Strategy  Forum  on  Research 
Infrastructures  (ESFRI),  which  has  agreed  priorities  and  catalysed  investments  in  major 
infrastructures.  In  addition  much  progress  has  been  made  in  the  deployment  of  ICT 
infrastructures  for  research.  In  the  context  of  scarce  public  resources,  these  investments 
should  be  given  political  priority  and  new  funding  mechanisms  developed.  Moreover, 
research  infrastructures  should  continue  their  opening  to,  and  partnership  with,  industrial 
researchers to help address societal challenges and to support EU competitiveness. 

Innovation Union commitments  

4. 

In 2012, the Commission will propose a European Research Area framework and 
supporting  measures  to  remove  obstacles  to  mobility  and  cross-border  co-

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operation,  aiming  for  them  to  be  in  force  by  end  2014.  They  will notably  seek  to 
ensure through a common approach: 

- quality of doctoral training, attractive employment conditions and gender balance in 
research careers; 

-  mobility  of  researchers  across  countries  and  sectors,  including  through  open 
recruitment in public research institutions and comparable research career structures 
and by facilitating the creation of European supplementary pension funds; 

- cross-border operation of research performing organisations, funding agencies and 
foundations, including by ensuring simplicity and mutual coherence of funding rules 
and  procedures,  building  on  the  work  of  stakeholders,  funding  agencies  and  their 
representative organisations; 

- dissemination, transfer and use of research results, including through open access to 
publications and data from publicly funded research; 

- opening of Member State operated research infrastructures to the full European user 
community; and 

- consistency of EU and national strategies and actions for international cooperation 
in science and technology. 

5. 

the  construction  of  60%  of 

By  2015,  Member  States  together  with  the  Commission  should  have  completed  or 
launched 
the  priority  European  research 
infrastructures  currently  identified  by  the  European  Strategy  Forum  for  Research 
Infrastructures (ESFRI)12. The potential for innovation of these (and ICT and other) 
infrastructures  should  be  increased.  The  Member  States  are  invited  to  review  their 
Operational  Programmes  to  facilitate  the  use  of  cohesion  policy  money  for  this 
purpose. 

2.3. 

Focusing EU funding instruments on Innovation Union priorities 

The  EU  research  and  innovation  programmes  have  served  the  EU  well  by  focusing  on 
excellence at European level. The success of the European Research Council shows that this 
is  the  way  forward.  The  priority  setting  process  for  the  cooperation  part  of  the  Framework 
Programme, involving many stakeholders across Europe, provides a unique added value and a 
basis for priorities defined in many Member State programmes. Major progress has also been 
made in developing partnerships to jointly implement  research  funding  with  Member  States 
and with industry13. 

Building on these developments, EU research and innovation funding instruments need to be 
streamlined and to focus on the objectives of Innovation Union. Support to the whole chain of 
research  and  innovation  must  be  strengthened  and  made  more  coherent,  from  blue  sky 
research  to  market  uptake.  Funding  opportunities  should  meet  the  needs  of  different 
participants,  in  particular  SMEs  with  the  potential  to  turn  the  results  into  new  products  and 
services. 

12 
13 

http://ec.europa.eu/research/infrastructures/index_en.cfm?pg=esfri-roadmap 
Partnerships based on EU Treaty articles 185 and 187 (Joint Technology Initiatives). 

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Moreover,  the  integration  of  the  research  and  innovation  dimensions  should  be  reflected  in 
EU  funding  programmes,  including  the  Framework  Programme,  the  Competitiveness  and 
Innovation  Framework  Programme  and  the  Cohesion  Funds.  They  also  need  to  be  better 
coordinated in design and implementation so as to maximise impact, user-friendliness and EU 
added value.  

There  is  still  much  scope  for  simplification. Researchers  and  innovators  should  spend  more 
time in the lab or doing business and less on paperwork. Quick progress is possible as regards 
the Framework Programme14 if rapid decisions on the Commission proposals for revising the 
Financial Regulations are taken. 

While technologies such as air travel and telecommunications transformed economies in the 
20th century, growth is also now being driven increasingly by other key enabling technologies, 
such  as  eco,  nano,  bio,  and  info.  These  technologies  may  affect  all  areas  of  our  lives  and 
regulatory frameworks must be based on scientific evidence with transparent information and 
involvement  of  citizens.  In  this  way  Europe  can  ensure  public  trust  in  scientific  and 
technological  breakthroughs  and  provide  a  favourable  environment  for  investment.  This 
should  be  underpinned  by  a  reinforced  forward-looking  capacity  (including  foresight, 
forecasting,  technology  assessment  and  modelling).  While  such  activities  are  ongoing  at 
different levels, they need to be pulled together and used effectively in the policy making.  

6. 

7. 

8. 

Future  EU  research  and  innovation  programmes  will  focus  on  Europe  2020 
objectives  and  particularly  the  Innovation  Union.  In  2011,  looking  ahead  to  the 
next  financial  perspectives,  the  Commission  will  set  out  ways  for  future 
programmes  to  focus  more  on  societal  challenges,  streamline  funding 
instruments  and  radically  simplify  access  through  a  better  balance  between  a 
control-based  and  a  trust-based  system.  The  role  of  the  ERC  in  promoting 
excellence  should  be  strengthened  and  industry  driven  priorities  reinforced 
(including industry driven partnerships in areas such as key enabling technologies) in 
the research Framework Programme.  

The Commission will design future EU research and innovation programmes to 
ensure  simple  access  and  stronger  involvement  of  SMEs,  in  particular  those  with  a 
high  growth  potential.  Further  use  should  be  made  of  partnerships  with  Member 
State  agencies,  building  in  particular  on  the  experience  of  the  Eureka  Eurostars 
initiative. 

The  Commission  will  strengthen  the  science  base  for  policy  making  through  its 
Joint  Research  Centre.  The  Commission  will  also  create  a  "European  Forum  on 
Forward  Looking  Activities"  bringing  together  existing  studies  and  data  and 
involving public and private stakeholders to improve the evidence base of policies. 

2.4. 

Promoting  the  European  Institute  of  Innovation  and  Technology  (EIT)  as  a 
model of innovation governance in Europe 

The  creation  of  the  European  Institute  of  Innovation  and  Technology  (EIT)  has  provided  a 
powerful  new  impetus  to  integrate  the  three  sides  of  the  "knowledge  triangle"  (education, 
research  and  innovation)  for  the  first  time  at  EU  level  by  promoting  new  models  of 

14 

Commission  Communication  "Simplifying 
Programmes", COM(2010) 187 

the 

implementation  of 

the 

research  Framework 

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governance  and  financing.  It  is  a  pioneer  and  a  role  model  for  stimulating  innovation  in 
Europe.  Covering  the  entire  innovation  chain,  its  Knowledge  and  Innovation  Communities 
(KICs) aim to bring the world's best creative and innovative partners from research, business 
and  academia  to  work  together  on  major  societal  challenges.  The  EIT  will  thus  foster 
innovation-driven  research  as  well  as  business creation  and  development,  including  through 
entrepreneurial  education,  which  will  be  recognised  in  multi-disciplinary  "EIT-branded" 
degrees that partner universities within the KICs will award. New flexible financing of high-
risk entrepreneurial activities and leveraging philanthropic funds in support of innovation will 
be developed by the EIT Foundation. 

Innovation Union commitment 

9. 

By mid-2011, the EIT should set out a Strategic Innovation Agenda to expand its 
activities as a showcase for Innovation in Europe. This should map out its long term 
development within the Innovation Union, including the creation of new KICs, close 
links  with  the  private  sector  and  a  stronger  role  in  entrepreneurship.  It  should  also 
build on the EIT Foundation being set up in 2010 and on the introduction in 2011 of 
the "EIT degree" as an internationally recognised label of excellence. 

3. 

GETTING GOOD IDEAS TO MARKET 

Europe's entrepreneurs currently face multiple obstacles and adverse framework conditions in 
getting ideas to market. At European level, this chain of obstacles needs to be systematically 
removed and a single market for innovation created.  

3.1. 

Enhancing access to finance for innovative companies 

Europe must invest in the development of good ideas. This is primarily the role of the private 
sector. Yet Europe invests about €1 5 billion a year less in venture capital than in the US and a 
€100 billion more in business R&D investment is  needed every year to reach the 3% of GDP 
target.15 Banks are reluctant to lend to knowledge-based companies that lack collateral. The 
financial crisis has made a bleak picture worse.  

There are a number of major market gaps. During the technology transfer and start-up phase, 
new  companies  face  a  "valley  of  death"  where  public  research  grants  stop  and  it  is  not 
possible to attract private finance. Public support aiming to leverage private seed and start-up 
funds to fill this gap is currently too fragmented and intermittent or its management lacks the 
necessary expertise. 

Innovative  companies  with  the  potential  to  expand  into  international  markets  have  limited 
access to growth finance from venture capital. Most venture capital funds in Europe are too 
small to support the continued growth of innovative companies and do not have the critical 
mass  to  specialise  and  operate  trans-nationally.  Europe  needs  to  improve  its  venture  capital 
market by creating incentives to invest and by improving regulation. 

15 

Latest available data from 2008, including Venture Capital at early stage and expansion. 

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Many established innovative companies – both large and small – face a shortage of higher risk 
loans.  Banks  lack  the  ability  to  value  knowledge  assets,  such  as  intellectual  property,  and 
therefore are often unwilling to invest in knowledge-based companies. Loans are also needed 
to help fund major infrastructure projects. 

Closing these gaps, and making Europe an attractive place to invest in innovation, requires the 
intelligent use of public private partnerships as well as changes to the regulatory framework. 
All  of  the  remaining  barriers  to  venture  capital  funds  operating  cross-border  need  to  be 
removed.  Listing  of  stock  of  innovative  companies  must  be  simplified  to  ease  access  to 
capital16.  State  aid  Risk  Capital  guidelines  allow  Member  States  to  cover  gaps  in  finance 
available  on  the  market.  The  size  of  the  funding  gap  is  being  reassessed  to  ensure  that  it  is 
adequate for current conditions..  

At  EU  level,  the  current  Risk  Sharing  Finance  Facility  under  FP7  (RSFF)  and  the  financial 
instruments  of  the  Competitiveness  and  Innovation  Framework  Programme  (CIP)17  have 
leveraged investments worth well over twenty times the contribution from the EU Budget18, 
and  have  been  unable  to  keep  up  with  demand.  The  expertise  and  market  standing  of  the 
European Investment Bank (EIB) Group in managing these financial instruments has been a 
major  factor  in  their  success.  The  Commission  proposals  for  changes  in  the  Financial 
Regulations will make future schemes of this type much simpler to implement.  

As  flagged  in  the  Europe  2020  strategy,  there  may  be  opportunities  to  bring  in  further 
innovative  incentive  mechanisms  linked  to  the  carbon  market,  namely  for  fast-movers.  The 
Commission will further explore this idea. 

Innovation Union commitments  

10 

16 
17 

18 

By  2014:  on  the  basis  of  Commission  proposals,  the  EU  should  put  in  place 
financial instruments to attract a major increase in private finance and close the 
market  gaps  in  investing  in  research  and  innovation.  Contributions  from  the  EU 
budget should create a major leverage effect and expand on the success of FP7 and 
CIP. The Commission will work with the European Investment Bank Group, national 
financial  intermediaries  and  private  investors  to  develop  proposals  addressing  the 
following  critical  gaps:  (i)  investment  in  knowledge  transfer  and  start  ups;  (ii) 
venture capital for fast growing firms expanding on EU and global markets; (iii) risk-
sharing finance for investments in R&D and innovation projects; and (iv) loans for 
innovative  fast  growing  SMEs  and  midcaps.  The  proposals  will  ensure  a  high 
leverage effect, efficient management and simple access for businesses 

See the forthcoming Commission Communication on a “Single Market Act”  
The RSFF is an credit risk sharing scheme jointly set up by the EC and the EIB to improve access to 
debt financing for private companies or public institutions promoting activities with a higher financial 
risk profile in the fields of research, technological development, demonstration and innovation. The CIP 
financial instruments cover, loan guarantees and venture capital, and are managed by the EIF. 
To  date,  contributions  for  the  RSFF  of  €430  mil lion  from  the  EU  budget  and  €800  million  from  the 
EIB,  as  risk-sharing  partners,  have  supported  over  €  18  billion  investments  (15  times  the  combined 
contribution to the RSFF and 42 times the EU budget contribution). The €400 million contribution to 
the CIP financial instruments up to the end of 2009 has leveraged investments of €9 billion (22 times 
the budget contribution), benefiting some 68000 SMEs. 

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11. 

12. 

13. 

By  2012,  the  Commission  will  ensure  that  Venture  Capital  funds  established  in 
any  Member  State  can  function  and  invest  freely  in  the  EU  (if  necessary  by 
adopting  a  new  legislative  regime).  It  will  endeavour  to  eliminate  any  tax 
treatment unfavourable to cross-border activities.  

The Commission will strengthen cross-border matching of innovative firms with 
suitable  investors.  It  will  appoint  a  leading  figure  to  lead  the  process.  In 
addition, in the context of the SME Finance Forum, the Commission will focus 
inter  alia  on  the  particular  financing  problems  faced  by  small,  innovative 
companies.  

In 2011 the Commission will conduct a mid-term review of the State aid research 
and development and innovation framework clarifying which forms of innovation 
can be properly supported, including for key enabling technologies and innovations 
addressing  major  societal  challenges,  and  their  best  use  by  Member  States.  The 
Commission  will  assess  the  effectiveness  of  the  temporary  State  aid  measures 
introduced  in  2008,  including  the  increased  "safe  harbour"  for  venture  capital 
investments, and on this basis make the necessary proposals.  

3.2. 

Creating a single innovation market 

The  sheer  size  of  the  single  market,  supported  by  empowered  consumers,  should  attract 
innovative investments and businesses, spur competition for the best innovations, and enable 
entrepreneurs  to  commercialise  successful  innovations  and  grow  their  businesses  rapidly. 
However, the reality is too often one of fragmented national markets with costly procedures. 
A  Single  Market  Act  is  being  brought  forward  to  address  the  remaining  obstacles  to  the 
functioning of the internal market. 

A critical issue for innovation investments in Europe is the cost and complexity of patenting. 
Obtaining a patent protection for all 27 EU Member States is currently at least 15 times more 
expensive  than  patent  protection  in  the  US19,  largely  due  to  translation  and  legal  fees.  The 
absence of a cheap and simple EU patent is a tax on innovation. The EU Patent has become a 
symbol for Europe’s failure on innovation. It would save innovative businesses an estimated 
€250  million  and  must  be  adopted  without  delay, 
to  show  that  the  EU  is  serious  about 
becoming an Innovation Union. 

The potential of the single market should also be activated through policies that stimulate the 
demand for innovation, starting with an effective competition policy. Whereas most previous 
EU  policy  initiatives  have  focused  on  supply-side  measures  which  tried  to  push  innovation, 
demand-side  measures  give  markets  a  greater  role  in  "pulling"  EU  innovation  by  providing 
market opportunities. Initial steps have been taken under the EU Lead Market Initiative but a 
bolder approach associating the supply and demand sides is needed. 

Smart and ambitious regulation can be a key driver for innovation, particularly when dynamic 
and  market-  based  approaches  are  used.  This  is  particularly  important  for  eco-innovation. 
Stricter  environmental  targets  and  standards,  for  example  on  CO2  emissions  from  vehicles, 
which establish challenging objectives and provide long-term predictability, provide a major 
boost  for  eco-innovation.  Harmonised  rules  for  product  approvals  are  often  essential.  For 

19 

Economic cost-benefit analysis of the Community patent", by Prof. Bruno van Pottelsberghe (2009). 

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example, without rules ensuring type-approval, the introduction of green vehicles on Europe’s 
roads will not work. 

Standards play an important role for innovation. By codifying information on the state of the 
art  of  a  particular  technology,  they  enable  dissemination  of  knowledge,  interoperability 
between  new  products  and  services  and  provide  a  platform  for  further  innovation.  For 
example,  the  opening  of  the  telecommunications  market  combined  with  the  GSM  standard 
laid  the  foundation  for  Europe's  success  in  mobile  phones.  However,  standards  play  this 
useful  role  only  if  they  keep  pace  with  the  development  of  new  technologies.  The  rapid 
shortening of innovation cycles and the convergence of technologies across the boundaries of 
the  three  European  standardisation  organisations  are  a  particular  challenge.  If  not  able  to 
adapt, the European standardisation system risks becoming irrelevant with companies turning 
instead to other instruments (as could be seen in the ICT sector) or worse could start to work 
as a brake on innovation. A dynamic standardisation system is also a pre-condition for the EU 
to maintain and further reinforce its impact on the setting of standards at global level, where 
other countries are increasingly seeking to set the rules.  

Big customers play a crucial role in stimulating and funding high technology companies. The 
US spends at least 49 billion dollars/year20 on pre-commercial procurement (i.e. procurement 
of  R  &  D),  some  of  it  via  its  Small  Business  Innovation  Research  (SBIR)  programme.  21  It 
spends even more on procurements of innovation beyond R& D (new technologies, products 
and services). 

Public  procurement  accounts  for  some  17%  of  the  EU's  GDP.  It  represents  an  important 
market, particularly in areas such as health, transport and energy. So, Europe has an enormous 
and  overlooked  opportunity  to  spur  innovation  using  procurement..  Moreover,  public 
procurement  of  innovative  products  and  services  is  vital  for  improving  the  quality  and 
efficiency of public services at a time of budget constraints. Yet little public procurement in 
Europe is aimed at innovation, despite the opportunities under the EU procurement directives. 
This is due to a range of factors, such as: incentives that favour low-risk solutions; a lack of 
knowledge  and  capabilities  regarding  successful  procurement  of  new  technologies  and 
innovations; and a disconnection between public procurement and policy objectives. This can 
be better addressed through guidance and sharing of best practice, notably in the area of green 
public  procurement.  Moreover,  because  public  procurement  markets  remain  fragmented 
across  Europe,  procurements  often  fail  to  achieve  the  critical  scale  needed  to  trigger 
innovative investments. 

Several  Member  States  are  pioneering  ways  to  support  innovation  using  pre-commercial 
procurement and approaches that adapt the successful US SBIR scheme to the EU context.22 
The results have been encouraging, in particular for SMEs (although the procurements are not 
restricted  to  SMEs).  If  such  an  approach  could  be  applied  more  widely  and  combined  with 
joint procurement between different contracting entities, huge markets could be created that 
would boost innovation and new innovative businesses. 

20 
21 

22 

2004 figure 
The US obliges its federal agencies by law to devote 2.5 % of their external R & D budgets to funding 
innovative projects by SMEs 
Such  as  the  UK  SBRI  and  Dutch  SBIR  schemes  that  offer  contracts  to  develop  solutions  to  specific 
challenges identified in public services. These schemes follow the approach set out in the Commission 
Communication on Pre-Commercial Procurement. The US reserves part of its federal budget to support 
innovation through its SBIR programme with considerable success.  

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Innovation Union commitments  

14. 

15 

16. 

17. 

The  European  Parliament  and  Council  should  take  the  necessary  steps  to  adopt  the 
proposals  on  the  EU  patent,  its  linguistic  regime  and  the  unified  system  of  dispute 
settlement. The objective is that the first EU patents are delivered in 2014. 

Starting  in  2011:  EU  and  Member  States  should  undertake  a  screening  of  the 
regulatory framework in key areas, starting with those linked to eco-innovation 
and to the European Innovation Partnerships (see next section). This will identify 
the  rules  that  need  to  be  improved  or  updated  and/or  new  rules  that  need  to  be 
implemented  in  order  to  provide  sufficient  and  continuous  incentives  to  drive 
innovation.  The  Commission  will  provide  guidance  on  how  best  to  organise  this 
screening exercise. 

In  early  2011,  as  a  first  step,  the  Commission  will  present  a  Communication 
accompanied by a legislative proposal on standardisation, which will inter alia cover 
the  ICT  sector,  in  order  to  speed  up  and  modernise  standard-setting  to  enable 
interoperability  and  foster  innovation  in  fast-moving  global  markets.  This  will 
be combined with a multi-annual programme to anticipate new standardisation needs 
and  integration  of  standards  into  R&D  projects  in  the  research  Framework 
Programme. The Communication will also examine options for ensuring in a longer 
term  perspective  that  the  standardisation  system  is  able  to  adapt  to  the  quickly 
evolving  environment  and  to  contribute  to  Europe’s  strategic  internal  and  external 
objectives  (relating,  among  others,  to  innovation  and  technological  development), 
including through the launch of an independent review. 

From  2011,  Member  States  and  regions  should  set  aside  dedicated  budgets  for 
pre-commercial procurements and public procurements of innovative products 
and services (including those defined by the Innovation Partnerships, see Section 5). 
This should create procurement markets across the EU starting from at least €10 
billion  a  year  for  innovations  that  improve  the  efficiency  and  quality  of  public 
services,  while  addressing  the  major  societal  challenges.  The  aim  should  be  to 
achieve  innovative  procurement  markets  equivalent  to  those  in  the  US.  The 
Commission  will  provide  guidance  and  set  up  a  (financial)  support  mechanism  to 
help contracting authorities to implement these procurements in a non-discriminatory 
and  open  manner,  to  pool  demand,  to  draw  up  common  specifications,  and  to 
promote SME access.  

the  Commission  will  offer  guidance  on 

implementing  joint 
In  addition, 
procurements  between  contracting  entities  under  the  current  public  procurement 
directives and use the ongoing general evaluation of the current directives to examine 
the  opportunity  to  introduce  additional  rules  to  make  cross  border  joint  p 
procurements easier.  

18. 

By early 2011 the Commission will present an eco-innovation action plan building 
on  the  Innovation  Union  and  focusing  on  the  specific  bottlenecks,  challenges  and 
opportunities for achieving environmental objectives through innovation. 

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3.3. 

Promoting openness and capitalising on Europe's creative potential 

Companies  innovate  in  various  ways.  While  some  conduct  R&D  and  develop  new 
technologies, many base their innovations on existing technologies or develop new business 
models or services driven by users and suppliers, or within clusters or networks. Policies must 
therefore  be  designed  to  support  all  forms  of  innovation,  not  only  technological  innovation. 
Specific  approaches may also be needed for innovative services with  high  growth  potential, 
particularly in the cultural and creative industries.23 

Design is of particular importance and is recognised as a key discipline and activity to bring 
ideas  to  the  market,  transforming  them  into  user-friendly  and  appealing  products.  Although 
some  European  countries  are  world  leaders  in  design,  others  lack  a  robust  design 
infrastructure and design capability in companies and engineering schools. This systemic gap 
has largely gone unnoticed but must now be tackled. 

As  the  problems  grow  more  complex,  and  the  costs  of  innovation  increase,  firms  are 
increasingly being driven to collaborate. While they still carry out in-house development, this 
is often complemented with activities to identify, recognise and transfer ideas from external 
sources,  such  as  universities  or  start  ups.  They  sometimes  co-innovate  with  users  and 
consumers in order to better satisfy their needs or create new routes to market. This trend is 
being  fuelled  by  social  networking  and  cloud,  mobile  and  collaborative  computing  and  is 
spreading  across  manufacturing  and  service  sectors.  It  also  has  major  implications  for 
research,  science,  education  and  government  itself.  These  trends  to  open  and  collaborative 
innovation  have  major  policy  implications.  While  it  is  important  to  find  the  right  balance 
between  facilitating  the  diffusion  of  knowledge  and  providing  sufficient  incentives  for 
innovation,  the  Commission  believes  that  these  trends  will  bring  long-term  economic  and 
social benefits and should be supported.  

It is therefore more important than ever to deliver the so-called "fifth freedom", which is not 
only  the  free  movement  of  researchers  but  also  the  free  movement  of  innovative  ideas. 
Genuinely  open  innovation  requires  brokerage,  intermediaries  and  networks  in  which  all 
players can participate on an equal basis. Internationally competitive clusters play a vital role 
in  bringing  together  –  physically  and  virtually  -  large  companies  and  SMEs,  universities, 
research centres and communities of scientists and practitioners to exchange knowledge and 
ideas. Knowledge transfer between business and academia should be strengthened, and made 
to  happen 
trans-national 
technology transfer, brokerage and other innovation and business-related support services and 
helps SMEs to operate internationally. This should be reinforced and further improved.  

trans-nationally.  The  Enterprise  Europe  Network  provides 

The  results  of  publicly-funded  research  should  be  made  more  accessible  and  available. 
Research information systems should be improved, linked up, and made more inter-operable, 
including  with  the  Enterprise  Europe  technology  transfer  database  BBS.  Public  Sector 
Information  should  be  more  available  for  research  and  innovation  (as  proposed  under  the 
Digital Agenda, where the Commission plans to adopt an ambitious revision of the Re-use of 
Public Sector Information Directive in 2012). 

A key issue is how to increase the flows of, and therefore benefits from, Intellectual Property 
Rights  (IPRs,  including  patents,  design  and  copyrights).  While  the  EU  Patent  should 

23 

See  Commission  Green  Paper  on  "Unlocking  the  potential  of  cultural  and  creative  industries", 
COM(2010) 183 final 

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dramatically  reduce  the  cost  of  patenting  in  Europe,  particularly  for  SMEs,  the  economic 
benefits will flow from the exploitation of IPRs in innovative products and services. This is 
critical  in  sectors  such  as  semi-conductors  and  telecoms  where  companies  need  to  bundle 
together many existing technologies and therefore require access rights to a range of IPRs.  

The markets for trading IPRs need to become less opaque and fragmented so that IPR buyers 
and sellers can find each other efficiently, financial investments are made in IPR assets, and 
transactions take place on fair terms. Although a number of initiatives are emerging both at 
Member State level and internationally24, they should be developed on a European scale for 
maximum  efficiency  and  to  take  advantage  of  economies  of  scale  and  scope.  These 
knowledge markets should be open to new entrants and unlock the potential of IPRs that lie 
dormant  in  universities,  research  institutes  and  companies.  This  could  generate  major  new 
revenue flows, which could be re-invested in research, thus creating a virtuous cycle. 

Beyond the IP support that is currently provided through the IPR-Helpdesk and co-operation 
with  national  patent  offices,  SMEs  need  stronger  assistance  for  efficient  use  of  intellectual 
and industrial property protection to have a level playing field with larger companies. 

For knowledge markets to work effectively, the relationship between intellectual property and 
competition  policy  requires  in-depth  consideration.  This  has  a  number  of  facets.  First,  the 
scope  of  intellectual  property  protection  and  the  high  quality  of  patents  granted  in  Europe 
should  be  maintained  to  ensure  that  legal  rights  are  clearly  defined.  Second,  although 
collaborative IPR arrangements  (cross-licensing, patent pools, etc) generally have a positive 
impact, they also need to be examined to ensure they are not used anti-competitively. Third, 
standard  setting  processes  require  clear  IPR  rules  to  avoid  situations  where  a  company  can 
gain unfair market power by incorporating proprietary IPRs in a standard.  

Innovation Union commitments  

19. 

20. 

21. 

In 2011, the Commission will set up a European Design Leadership Board which 
will  be  invited  to  make  proposals  within  a  year  to  enhance  the  role  of  design  in 
innovation  policy,  for  example  through  EU  and/or  national  programmes,  and  a 
"European Design Excellence" label. As part of the follow up to the Green Paper on 
cultural and creative industries, the Commission will establish a European Creative 
Industries  Alliance  to  develop  new  forms  of  support  for  these  industries  and 
promote the wider use of creativity by other sectors. 

The  Commission  will  promote  open  access  to  the  results  of  publicly  funded 
research. It will aim to make open access to publications the general principle for 
projects funded by the EU research Framework Programmes. The Commission 
will also support the development of smart research information services that are 
fully searchable and allow results from research projects to be easily accessed.  

The  Commission  will  facilitate  effective  collaborative  research  and  knowledge 
transfer within the research Framework Programmes and beyond. It will work with 
stakeholders to develop a set of model consortium agreements with options ranging 
from traditional approaches to protect IP through to more open ones. Mechanisms are 

24 

Such as the intellectual property market place of the Danish Patent Office and the joint initiative of the 
French Caisse des Dépots and US Bank Ocean Tomo 

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22. 

23. 

also  needed  to  further  strengthen  knowledge  transfer  offices  in  public  research 
organisations, in particular through trans-national collaboration. 

By  the  end  of  2011,  working  closely  with  Member  States  and  stakeholders,  the 
Commission  will  make  proposals  to  develop  a  European  knowledge  market  for 
patents  and  licensing.  This  should  build  on  Member  State  experience  in  trading 
platforms  that  match  supply  and  demand,  market  places  to  enable  financial 
investments  in  intangible  assets,  and  other  ideas  for  breathing  new  life  into 
neglected intellectual property, such as patent pools and innovation brokering. 

The  Commission  will  examine  the  role  of  Competition  Policy  in  safeguarding 
against  the  use  of  intellectual  property  rights  for  anti-competitive  purposes.  It 
will analyse the implications of collaborative IPR agreements as part of its review of 
the  application  of  its  anti-trust  rules  to  horizontal  agreements  between  competing 
companies. 

4. 

MAXIMISING SOCIAL AND TERRITORIAL COHESION 

4.1. 

Spreading the benefits of innovation across the Union 

The  Innovation  Union  must  involve  all  regions.  The  financial  crisis  is  having  a 
disproportionate impact on some less performing regions and hence risks undermining recent 
convergence.25  Europe  must  avoid  an  "innovation  divide"  between  the  strongest  innovating 
regions and the others.  

The  Structural  Funds  have  a  critical  role  and  already  provide  substantial  investments  in 
research and innovation. Some €86 bn has been  programmed for the current financing period 
(2007-13).  Much  of  these  funds  are  still  unspent  and  should  be  used  more  effectively  for 
innovation  and  achieving  the  Europe  2020  objectives.  Currently,  too  much  funding  is 
allocated  to  overlapping  projects  or  to  priorities  where  a  region  lacks  relative  strengths. 
Regions  need  to  redirect  funding  based  on  a  smart  specialisation  approach  and  focus  on 
relative strengths where they can become excellent.  

There  are  a  number  of  other  ways  that  Structural  Funds  can  be  used  more  effectively. 
Relatively little is spent in pooling resources and expertise through trans-national projects26, 
for  example  to  support  research  infrastructures  or  the  emergence  of  world-class  clusters. 
Greater use can be made of financial instruments to leverage private finance for research and 
innovation. Public procurements co-financed by the Structural Funds should also be used to 
increase demand for innovative products and services. The European Social Funds could be 
deployed more effectively to train and retrain people with the skills needed for the Innovation 
Union.  European  level  programmes  to  support  trans-regional  cooperation  (e.g.  FP7  Regions 
of Knowledge, CIP funded cluster initiatives and Enterprise Europe Network, and operations 
co-financed under the European Territorial Cooperation programmes) should be consolidated 
to better assist regions and increase impacts on regional development. Moreover, there should 
be incentives in future programmes for co-operation between leading innovation regions and 
those in catching-up Member States. 

25 
26 

Conclusions of 2009 European Innovation Scoreboard  
Using the possibility under Article 37 (6b) of Regulation EC No. 1083/2006. 

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Innovation Union commitments  

24. 

25. 

Starting  in  2010:  Member  States  should  considerably  improve  their  use  of  existing 
Structural Funds for research & innovation projects, helping people to acquire 
the  necessary  skills,  improving  the  performance  of  national  systems  and 
implementing  smart  specialisation  strategies  and  trans-national  projects.  This 
should  also  apply  to  the  pre-accession  funding  for  EU  candidate  countries.  The 
Commission  stands  ready  to  assist  and  will  use  its  regional  research  and  cluster 
initiatives  to  support  this  change  and  establish  a  "smart  specialisation  platform"  by 
2012,  including  further  support  for  the  emergence  of  world  class  clusters.  Further 
details are in an accompanying Communication.  

Member  States  should  initiate  the  preparation  of  post  2013  Structural  Fund 
programmes  with  an  increased  focus  on  innovation  and  smart  specialisation. 
Future  regulations  governing  the  operation  of  the  European  Regional  Development 
Fund  should  further  commit  substantial  financial  resources  to  support  innovation 
initiatives within the regions of the European Union. 

4.2. 

Increasing social benefits 

Social innovation is an important new field which should be nurtured. It is about tapping into 
the ingenuity of charities, associations and social entrepreneurs to find new ways of meeting 
social needs which are not adequately met by the market or the public sector. It can also be 
about  tapping  into  this  same  ingenuity  to  bring  about  the  behavioural  changes  which  are 
needed  to  tackle  the  major  societal  challenges,  such  as  climate  change.  As  well  as  meeting 
social needs and tackling societal challenges, social innovations empower people and create 
new social relationships and models of collaboration. They are thus innovative in themselves 
and good for society's capacity to innovate. 

Examples  of  social  innovation  in  Europe  range  from  coronary  heart  disease  prevention 
schemes  which  target  the  whole  community  rather  than  just  'at  risk'  individuals,  social 
networks  of  helpful  neighbours  for  old  people  living  on  their  own,  urban  Eco-maps  which 
provide  local  communities  with  information  on  their  progress  towards  meeting  emissions 
reduction targets or ethical  banks which provide financial products which seek to maximise 
social and environmental returns on investment. 

However, while there is no shortage of good ideas, social innovations are not yet producing 
the impact that they should. There must be more support for experimentation. Approaches that 
have clear advantages over current practice then need to be scaled up and disseminated. To 
achieve  this,  competent  intermediaries,  effective  incentives  and  networks  speeding  up  and 
facilitating  mutual  learning  are  needed.  Across  Europe,  infrastructures  of  this  kind  already 
exist  for  business  innovation,  yet  there  are  currently  no  equivalents  for  social  innovation. 
Better evaluation methods are needed to identify what works and what does not, and why, as 
well as what could and should be scaled up.  

To  meet  the  evolving  needs  and  expectations  of  public  service  users  against  a  backdrop  of 
fiscal  austerity,  the  public  sector  needs  to  innovate  more  than  ever.  More  and  more 
governments are embracing more citizen-centred approaches to service delivery. Many have 
launched e-government strategies aimed at moving existing services online, and beyond that 
to  develop  new  internet-enabled  services.  At  EU  level  it  is  important  to  develop  a  better 
understanding  of  public  sector  innovation,  to  give  visibility  to  successful  initiatives,  and 

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benchmark  progress.  Much  will  depend  on  creating  a  critical  mass  of  public  sector  leaders 
who have the skills to manage innovation. This can be achieved through more sophisticated 
training, as well as opportunities to exchange good practice. 

The shift to an innovative economy has major implications for the world of work. Employers 
need workers who actively and constantly seek out new and better ways of doing things. This 
requires  not  only  higher  skills  levels,  but  a  new,  trust-based  relationship  between  employer 
and employee. This kind of approach is needed at all occupational levels, and must extend to 
sectors not usually thought of as "knowledge sectors." A prime example is the caring sector, 
where a skilled, motivated and adaptable workforce is needed to provide a high standard of 
care to the increasing numbers of older Europeans. 

26. 

The  Commission  will  launch  a  European  Social  Innovation  pilot  which  will 
provide  expertise  and  a  networked  'virtual  hub'  for  social  entrepreneurs  and  the 
public and third sectors. 

- 

- 

27. 

28. 

It will promote social innovation through the European Social Fund (ESF) building 
on the significant investments in social innovation which the ESF has made over the 
last ten years, all along the innovation cycle. This will be complemented by support 
to innovative social experiments to be developed in the framework of the European 
Platform against Poverty. 

Social  innovation should  become a  mainstream focus in  the next generation of 
European Social Fund programmes. Member States are encouraged to already step 
up efforts to promote social innovation through the ESF 

Starting  in  2011,  the  Commission  will  support  a  substantial  research  programme 
on public sector and social innovation, looking at issues such as measurement and 
evaluation,  financing  and  other  barriers  to  scaling  up  and  development.  As  an 
immediate step, it will pilot a European Public Sector Innovation Scoreboard as a 
basis  for  further  work  to  benchmark  public  sector  innovation.  It  will  explore  with 
Member States whether it is appropriate to bring together new learning experiences 
and networks for public sector leaders at European level. 

The Commission will consult the social partners to examine how the knowledge 
economy can be spread to all occupational levels and all sectors. It will ask the 
social partners for proposals on how to develop a sectoral labour market strategy for 
the caring sector.  

5. 

POOLING  FORCES  TO  ACHIEVE  BREAKTHROUGHS:  EUROPEAN  INNOVATION 
PARTNERSHIPS 

Europe is faced with a number of major societal challenges such as an ageing population, the 
effects of climate change, and reduced availability of resources. Breakthroughs must be found 
in  new  treatments  for  life-threatening  diseases,  new  solutions  to  improve  the  lives  of  elder 
people,  ways  to  radically  cut  CO2  emissions  and  other  sources  of  pollution  in  particular  in 
cities,  alternative  sources  of  energy  and  substitutes  for  increasingly  scarce  raw  materials, 
reducing  and  recycling  waste  and  ending  landfill,  improvements  in  the  quality  of  our  water 
supply,  smart  transport  with  less  congestion,  healthy  or  high-quality  food  stuffs  using 
sustainable production methods and technologies for fast and secure information handling and 
sharing, communication and interfacing.  

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Successfully  developing  these  breakthroughs  will  also  boost  our  competitiveness,  enable 
European  companies  to  lead  in  the  development  of  new  technologies,  to  grow  and  assume 
global  leadership  in  new  growth  markets,  improve  the  quality  and  efficiency  of  public 
services and so contribute to creating large numbers of new quality jobs.  

Given the scale and urgency of the societal challenges and the scarcity of resources, Europe 
cannot afford any longer the current fragmentation of effort and slow pace of change. Efforts 
and expertise on research and innovation must be pooled and critical mass achieved. At the 
same  time,  we  must  from  the  outset  put  in  place  the  conditions  which  allow  breakthroughs 
quickly  to  find  their  way  to  the  market,  thereby  bringing  rapid  benefits  to  citizens  and 
competitiveness gains.  

i) The new approach of European Innovation Partnerships 

For these reasons, the Commission in its Europe 2020 Strategy announced that it will launch, 
as part of the Innovation Union flagship initiative, European Innovation Partnerships. These 
Partnerships will test a new approach to EU research and innovation.  

First, they will be challenge-driven, focusing on societal benefits and a rapid modernisation 
of  the  associated  sectors  and  markets.  This  means  that  they  will  go  beyond  the  technology 
focus of existing instruments, such as Joint Technology Initiatives (JTIs). 

Second,  they  will  act  across  the  whole  research  and  innovation  chain.  The  Partnerships 
will bring together all relevant actors at EU, national and regional levels in order to: (i) step 
up research and development efforts; (ii) coordinate investments in demonstration and pilots; 
(iii)  anticipate  and  fast-track  any  necessary  regulation  and  standards;  and  (iv)  mobilise 
‘demand’  in  particular  through  better  coordinated  public  procurement  to  ensure  that  any 
breakthroughs  are  quickly  brought  to  market.  Rather  than  taking  the  above  steps 
independently, as is currently the case, the aim of the innovation partnerships will be to design 
and implement them in parallel to cut lead times. 

Third,  they  will  streamline,  simplify  and  better  coordinate  existing  instruments  and 
initiatives  and  complement  them  with  new  actions  where  necessary.  This  should  make  it 
easier for partners to co-operate and achieve better and faster results compared to what exists 
already.  Therefore,  they  will  build  upon  relevant  existing  tools  and  actions  and,  where  this 
makes sense (e.g. for joint programming, lead markets, joint pre-commercial and commercial 
procurement  schemes,  regulatory  screening),  integrate  them  into  a  single  coherent  policy 
framework. Flexibility is important; there will not be a 'one-size-fits-all' framework. 

ii) Conditions for success 

Partnerships  should  be  launched  only  in  areas  –  and  consist  only  of  activities  –  in  which 
government intervention is clearly justified and where combining EU, national and regional 
efforts  in  R&D  and  demand-side  measures  will  achieve  the  target  quicker  and  more 
efficiently.  

The choice of the 'right' partnerships will largely determine their success. In order for them to 
deliver  on  their  promise,  the  following  conditions,  which  are  all  interlinked,  need  to  be 
fulfilled: 

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(1) 

(2) 

(3) 

(4) 

(5) 

Focus  on  a  specific  societal  challenge  that  is  shared  across  the  EU,  with  clear, 
ambitious  and  measurable  goals  which  will  bring  important  benefits  for  citizens  and 
the society as a whole before 2020, and where there is a large new market potential for 
EU businesses. 

Strong  political  and  stakeholder  commitment:  partnerships  will  need  to  mobilise  all 
key stakeholders behind a well-defined goal to be achieved by 2020, underpinned by a 
strong and sustained commitment over a longer period of time. They will also provide 
platforms for open innovation and citizen engagement, including through the awarding 
of  prizes  for  research.  The  Commission  itself  intends  to  play  a  driving  role  for 
development of the partnership.  

Clear EU-added value: Action at EU level should result in efficiency gains and large 
scale  impact  through  critical  mass  (e.g.  simplification  and  streamlining,  pooling  and 
more efficient use of scarce public resources, i.e. by aligning research or procurement 
programmes across Member States; better quality solutions, interoperability and more 
rapid deployment). 

Strong  focus  on  results,  outcomes  and  impacts:  partnerships  must  be  result-oriented 
and should therefore not be all-encompassing in scope. Societal challenges should be 
broken down into smaller “work packages” on which different groups of stakeholders 
with  converging  interests  should  define  their  own  implementation  plans,  setting  out 
what  needs  to  be  done,  by  whom  and  by  when.  Clear  targets,  milestones  and 
deliverables should be defined in advance.  

Adequate financial support: whilst one of the key aims of innovation partnerships is to 
ensure  that  scarce  financial  resources  are  used  to  the  best  effect,  avoiding  costly 
duplication, there can be no doubt that additional financial support will be required to 
match  the  size  of  the  challenge.  All  stakeholders  will  be  expected  to  contribute;  the 
Commission will seek to leverage the EU budget to raise further the overall level of 
funding. It will make available funding for the launch  of the first partnerships  under 
the current financial perspectives and evaluate the financial needs of the partnerships 
when preparing its proposals for the next financial perspectives.  

iii) Governance and working methods 

The  best  ideas  can  fail  because  of  poor  execution  or  weak  monitoring.  Putting  in  place 
effective,  simple  and  sufficiently  flexible  structures  to  steer  and  monitor  progress,  arbitrate 
between  diverging  interests,  and  remedy  any  delays,  will  be  critical  to  the  success  of  the 
partnerships.  

Governance arrangements should balance the need for high level commitment and functional 
coordination,  with  strong  decentralised  operational  responsibilities  to  ensure  effective 
ownership  by  practitioners  and  other  key  stakeholders.  Membership  needs  to  reflect  the 
integrated approach so that stakeholders dealing with different elements of the supply-demand 
continuum  are  adequately  represented.  To  reflect  the  importance  of  these  different 
constituencies, each partnership should be led by a representative Steering Board, composed 
of a limited number of high level representatives of Member States (Ministers), members of 
Parliament, industry leaders, researchers and other key stakeholders, who will need to bring a 
major commitment to realise the aims of the partnership. The Board should be supported by 
operational  groups,  composed  of  private  and  public  sector  experts,  practitioners  and  users, 

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who  will  define  and  implement  the  contents  of  the  "work  packages".  The  Board  will  be 
chaired  by  the  lead  Commissioner(s)  and  supported  by  a  secretariat  which  the  Commission 
will provide. Its  first task will be to draw up a  multi-annual  strategic  work plan, containing 
concrete  targets,  allocating  responsibilities  and  defining  milestones  to  monitor  progress.  At 
EU  level,  the  Commission  will  work  closely  with  Council  and  Parliament,  to  secure  strong 
political support both for the aims and direction of each partnership as well as to speed up the 
delivery of the necessary regulatory framework.  

iv) Identification of the European Innovation Partnerships 

With a view to achieve the EU 2020 objective of a smart, sustainable and inclusive growth, 
the  Commission  intends  to  launch  innovation  partnerships  in  key  areas  addressing  major 
societal challenges, such as energy security, transport, climate change and resource efficiency, 
health and ageing, environmentally-friendly production methods and land management.  

Examples of possible partnerships include areas such as: 

•  Tackling the major climate change & energy challenge coming from cities (which consume 
around  80%  of  the  overall  EU  energy  and  are  responsible  for  about  the  same  share  of 
greenhouse gases) by creating a representative platform of key stakeholders and boost the 
use of existing and future ICT to accelerate the deployment of smart grids, new systems for 
using energy from renewable source, smarter & cleaner urban mobility, increased energy 
efficiency of buildings; 

•  Ensuring higher quality and efficiency of our supply use of water; 

•  Ensuring a secure supply chain and achieve efficient and sustainable management and use 

of non-energy raw materials along the entire value chain; 

•  Reducing  emissions  of  greenhouse  gases  by  higher  emission  efficiency  of  transport  also 
beyond  the  urban  dimension,  notably  through  inter-operable  and  intelligent  traffic 
management  systems  across  all  transport  modes,  leading  to  progress  in  logistics  and 
behavioural changes.  

•  Promote  EU's  competitiveness  in  the  digital  society  through  faster  access  to  information 
and new ways of trustworthy communication, interfacing and knowledge sharing enabled 
notably by the internet of the future.  

•  Improving the  supply  of foodstuffs produced in a  resource-efficient,  productive and low-

emission way through improved agricultural and food-processing methods. 

•  Improving  the  quality  of  life  of  an  ageing  population  e.g.  by  new  innovative  solutions, 
clinical  tests,  diagnostics  and  treatments  for  age-related  diseases,  deployment  of  new 
innovative  ICT-based  solutions  and  the  development  and  introduction  of  novel  products, 
appliances and services specifically suitable for the elderly.  

Preparatory  work  has  been  undertaken  on  launching  specific  partnerships  in  active  and 
healthy  ageing,  water  efficiency,  non-energy  raw  materials,  smart  mobility,  agricultural 
productivity  and  sustainability,  and  on  smart,  liveable  cities,  the  latter  combining  energy-
efficiency, clean transport and fast internet (see Annex III).  

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However, Innovation Partnerships are a novel concept, which the Commission first wishes to 
test  through  a  pilot  partnership  before  launching  a  further  set  of  partnerships.  Such  a  pilot 
should help validate the added value of the concept, gauge the interest and commitment of all 
key  stakeholders,  provide  insights  into  how  best  to  develop  work  packages  and  assure 
effective governance.  

Reflecting  its  societal  importance,  state  of  preparedness  and  representativeness  of  the 
partnership concept, the Commission proposes to launch a pilot project on active and healthy 
ageing. Its aims should be, by 2020, to enable citizens to live longer independently in good 
health  by  increasing  the  average  number  of  healthy  life  years  by  2,  and,  in  achieving  this 
target, to improve the sustainability and efficiency of our social and healthcare systems, and 
to  create  an  EU  and  global  market  for  innovative  products  and  services  with  new 
opportunities  for  EU  business.  More  details  about  the  proposed  Pilot  Project  on  active  and 
healthy ageing can be found in Annex III. 

2011 will be a "test phase" for the Partnership approach. By the end of 2010, the Commission 
will develop a robust set of selection criteria and a rigorous and transparent selection process 
for  future  partnerships.  These  criteria  and  this  selection  process  will  be  operational  from 
January 2011. Based on this process, and the application of these criteria, and a confirmation 
of  the  readiness  of  the  potential  partnerships  in  areas  such  as  energy,  "smart  cities",  a 
sustainable  supply  of  raw  materials,  water  efficiency,  smart  mobility  and  agricultural 
productivity  and  sustainability,  the  Commission  will  present  the  proposals  for  partnerships 
which have met the criteria to the other institutions, during 2011, from February onwards, as 
part  of  the  roll-out  of  the  Europe  2020  Strategy,  in  line  with  the  goal  of  developing  a  low 
carbon, energy efficient economy with a strong industrial basis. 

The  Commission  will  present  in  June  2011  a  Communication  formalising  the  proposals  for 
partnerships  and  setting  out  in  detail  the  governance,  financing  and  implementation 
arrangements. At the end of the" test phase", i.e. before the end of 2011, the Commission will 
review  and  evaluate  the  effectiveness  of  the  Partnership  approach,  and  set  out  whether  and 
how  it  intends  to  take  it  forward,  in  particular  regarding  support  through  the  next  Research 
Framework Programme.  

Innovation Union commitments: 

29. 

The  Council,  Parliament,  Member  States,  industry  and  other  stakeholders  are 
invited  to  support  the  innovation  partnership  concept  and  to  indicate  the 
specific  commitments  they  will  undertake  to  make  the  concept  work.  The 
Commission invites all key stakeholders to commit themselves to pooling efforts 
and resources to achieve the partnership's intended objectives.  

The Commission would welcome views and ideas on the areas being considered 
for  future  partnerships  and  other  possible  candidates  that  meet  the  success 
criteria.  

As a first concrete step, the Commission will start preparations to launch a pilot 
partnership on active and healthy ageing by the beginning of 2011. Taking into 
account the views of Parliament and Council and input from other stakeholders, 
it will present proposals for further partnerships during 2011. 

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6. 

LEVERAGING OUR POLICIES EXTERNALLY  

Competition  for  knowledge  and  markets  is  becoming  ever  more  global.  Private  sector 
decisions  on  where  to  invest  in  R&D  and  innovation  are  taken  on  a  global  scale.  Europe  is 
losing ground in this global competition. The Innovation Union actions described above are 
designed to reverse this trend and make Europe more attractive to companies and investors. 

Europe's  success  depends  on  its  ability  to  reverse  several  decades  of  a  relative  'brain-drain' 
and  to  attract  leading  talent.  European  universities  and  research  institutes  award  many 
thousands of degrees in science and engineering to foreign nationals every year. These people 
should be given the option of remaining in Europe, by exploiting the possibilities under the 
Scientific Visa Package27 and the Blue Card scheme. Beyond the necessary legal entitlements, 
they  must  be  convinced  that  Europe's  universities  and  research  centres  and  the  innovation 
clusters around them are places of global excellence, and that living and working conditions 
are attractive. 

For  Europe  to  be  successful  in  this  global  push  for  excellence,  it  must  further  deepen  its 
international  scientific  and  technological  cooperation.  The  EU's  research  programmes  are 
already  among  the  most  open  in  the  world.  Europe's  markets  are  also  the  most  open  in  the 
world, giving investors access to an integrated and competitive internal market of 500 million 
customers based on clear, predictable and fair rules. 

This  openness  should  be  reciprocated  through  our  science  and  technology  cooperation  with 
third countries. International  cooperation must go hand-in-hand  with an  integrated  approach 
to bringing the results of common R&D or innovation projects to the market. This means, in 
particular, offering equivalent protection of IPRs, open access to interoperable standards, non-
discriminatory public procurements, and removing other non-physical barriers to trade, in line 
with international requirements. 

Europe  must  act  as  one  to  achieve  such  a  global  level-playing  field  for  research  and 
innovation. Currently, our Member States, regions or even local authorities appear to compete 
with  each  other  on  scientific  cooperation  agreements,  activities  and  offices  in  other 
economies.  This  leads  to  dispersion  and  fragmentation  of  efforts.  It  also  serves  to  weaken 
Europe's leverage in negotiating market access with our major partners worldwide on a level-
playing field. The recent progress made with the European framework for international S&T 
cooperation  and  the  Strategic  Forum  for  International  Cooperation  must  therefore  be 
accelerated. 

Finally, many if not all of the societal challenges on which Europe's research and innovation 
efforts must focus are also global. Overcoming many of these challenges calls for the sharing 
of  efforts  worldwide.28  In  particular,  many  major  research  infrastructures  require  massive 
investments that can only be raised through global cooperation.  

Innovation Union commitments  

30. 

By 2012, the European Union and its Member States should put into place integrated 
policies to ensure that leading academics, researchers and innovators reside and 

27 

28 

Council Directive O.J. L289/15 of 3/11/2005 (2005/71/EC, including the EC Recommendation on short 
–term visas for researchers) 
In this context, the role of EU development policy is important. 

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31. 

work  in  Europe  and  to  attract  a  sufficient  number  of  highly  skilled  third 
country nationals to stay in Europe. 

The European Union and its Member States should treat scientific cooperation 
with  third  countries  as  an  issue  of  common  concern  and  develop  common 
approaches.  This  should  contribute  to  global  approaches  and  solutions  to 
societal  challenges  and  to  the  establishment  of  a  level-playing  field  (removing 
barriers  to  market  access,  facilitating  standardisation,  IPR  protection,  access  to 
procurement etc.). In 2012 together with the ERA Framework, the Commission will 
propose  common  EU  /  Member  States  priorities  in  S&T  as  a  basis  for  coordinated 
positions  or  joint  initiatives  vis-à-vis  third  countries,  building  on  the  work  of  the 
Strategic Forum for International Cooperation. In the meantime, the EU and Member 
States  should  act  in  a  concerted  manner  when  engaging  in  S&T  agreements  and 
activities  with  third  countries.  The  potential  scope  for  "umbrella"  agreements 
between the EU and Member States with third countries will be explored. 

32. 

The  European  Union  should  step  up  its  cooperation  on  the  roll-out  of  the  global 
research infrastructures. By 2012, agreement should be reached with international 
partners  on  the  development  of  research  infrastructures,  including  ICT 
infrastructures,  which  owing  to  cost,  complexity  and/or  interoperability 
requirements can only be developed on a global scale. 

7. 

MAKING IT HAPPEN  

Transforming  the  EU  into  a  genuine  Innovation  Union  requires  sustained  effort,  close  co-
operation  and  effective  implementation  at  all  levels  (EU,  national,  regional)  over  a 
considerable number of years. The roles and responsibilities of each actor in the Innovation 
Union  must  therefore  be  clearly  defined  and  strong  monitoring  mechanisms  put  in  place  to 
avoid slippage.  

7.1. 

Reforming research and innovation systems 

While action at EU level is important, the quality of national research and innovation systems 
–  and  their  interaction  between  themselves  and  with  the  EU  level  –  remains  crucial  for 
promoting  business  and  citizens'  capacity  and  willingness  to  invest.  Significant  reforms  to 
national and regional policies are required.  

In  order  to  help  the  Member  States  design  these  reforms  in  a  context  of  tight  budgetary 
constraints, the Commission has brought together the available evidence and identified a set 
of  policy  features  which  are  typically  found  in  systems  that  perform  strongly.  They  are 
presented in Annex I. Many of these features are already reflected in the policy commitments 
proposed  in  this  Communication.  Member  States  are  invited  to  use  the  policy  features 
identified  to  carry  out  a  comprehensive  "self-assessment"  of  their  research  and  innovation 
systems  and  subsequently  define  the  key  reforms  in  their  Europe  2020  National  Reform 
Programmes, which are due by April 2011. These policy features may also be relevant for the 
candidate and potential candidate countries. 

The  Commission  will  use  the  policy  features  identified  as  the  basis  for  supporting  further 
exchanges  of  best  practice  among  Member  States  and  for  improving  policy  reporting  tools 
(e.g. Trendchart and ERA-WATCH). It also stands ready to support country specific reviews 

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28 

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involving  international  expertise.  In  particular,  the  Commission  will  seek  a  new  strategic 
relationship with the OECD. 

The  Commission  considers  that  the  (Competitiveness)  Council  could  play  a  new  role  in 
monitoring  Member  States  progress  on  their  innovation  reforms  as  part  of  the  overall 
economic co-ordination under the Europe 2020 Strategy ('European semester').  

33.  Member  States  are  invited  to  carry  out  self  assessments  based  on  the  policy 
features identified in Annex 1 and identify key challenges and critical reforms as part of 
their  National  Reform  Programmes.  The  Commission  will  support  this  process  through 
exchanges of best practice, peer reviews and developing the evidence base. It will also apply 
them  to  its  own  research  and  innovation  initiatives.  Progress  will  be  monitored  in  the 
framework of the integrated economic coordination ('European semester'). 

7.2.  Measuring Progress 

Progress towards the Innovation Union should be measured at European Council level by two 
headline indicators: the R&D investment target and a new Innovation indicator, as requested 
by the European Council.29 

To assist the Commission to respond to the European Council's request, a High-Level panel of 
leading business innovators and economists was set up to identify possible indicators which 
would  best  reflect  R&D  and  innovation  intensity  avoiding  duplication  with  the  3%  R&D 
investment target focusing on outputs and impacts and ensuring international comparability.  

The Panel concluded30 that there is an urgent need to improve data availability and the breadth 
and  quality  of  indicators  to  measure  and  monitor  innovation  performance,  ranging  from 
technological  innovation  to  other  forms  of  innovation  (e.g.  public  sector  innovation).  It 
explored  two  options:  a  list  of  three  immediately  available  indicators  (based  on  patent 
applications,  the  contribution  of  medium-high-tech  and  high-tech  products  to  the  trade 
balance, and employment in knowledge-intensive activities) and a single indicator (reflecting 
the  successful  development  and  dynamism  of  innovative  entrepreneurial  activities).  While 
business demographics data are, in principle, available, the development of such indicator to 
measure  the  share  of  fast-growing,  innovative  companies  in  the  economy  would  require 
further work, which could take two years. 

Having  studied  the  Panel's  conclusions,  the  Commission  has  decided  to  propose  the  single 
indicator,  defined  as  fast  growing,  innovative  firms,  which  best  responds  to  the  European 
Council's request, even though its development will require around two years. This indicator 
provides a good measure of the dynamism of the economy; captures an important part of our 
economy where growth and jobs will need to come from; it is output-orientated and reflects 
the impact of the framework conditions on innovation, which policy-makers both at EU and 
national level can influence. It also focuses on a critical gap which the EU needs to close if it 
is to catch up with innovation leaders worldwide.  

The Commission is also convinced that, because innovation is a multi-faceted phenomenon, a 
full  monitoring  of  progress  requires  a  broader  set  of  indicators.  Building  on  the  European 
Innovation  Scoreboard,  it  has  therefore  developed  a  Research  and  Innovation  Union 

29 
30 

Conclusions of the European Council of 25/26 March 2010 (EUCO 7/10) 
http://ec.europa.eu/commission_2010-2014/geoghegan-quinn/hlp/index_en.htm 

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29 

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scoreboard  to  provide  comparative  benchmarking  of  EU  and  Member  State  performance 
against a broad set of indicators, including those identified by the High-Level Panel. The list 
of  indicators  is  set  out  in  Annex  II.  While  it  makes  use  of  best  available  statistical  sources, 
further work is needed to develop indicators on aspects such as non-technological innovation, 
design, service innovation, and performance at regional level. 

34. 
The Commission proposes to launch the necessary work for the development of a 
new  indicator  measuring  the  share  of  fast-growing  innovative  companies  in  the 
economy. This will require the full cooperation of Member States and international partners. 
Subject to these commitments, the Commission will submit the necessary proposals and take 
urgent action to develop this indicator within the next two years, working with the OECD, as 
appropriate, so that it can become, over time, a new headline indicator allowing as part of the 
EU 2020 strategy to benchmark the EU's performance against its main trading partners. 

Starting immediately, the Commission will monitor overall progress on innovation 

- 
performance using the Research and Innovation Union scoreboard (see Annex II). 

7.3. 

A commitment by all to turn Innovation Union into reality 

The  collective  effort  of  the  EU  Institutions  and  other  stakeholders  will  be  the  key  to  the 
success of the Innovation Union. 

The  European  Council  should  provide  a  steer  and  a  political  impetus  as  part  of  the  Europe 
2020 Strategy.  

The  Council  should  play  a  leading  role  in  adopting  the  necessary  measures  to  improve  the 
EU's framework conditions. Following the launch of the European Innovation Partnerships, it 
should  ensure  that  the  conditions  are  in  place  to  allow  them  to  come  to  fruition.  The 
Commission  suggests  that  the  Council  should  meet  once  every  semester  as  an  "Innovation 
Council", bringing together the relevant ministers– to take stock of progress and identify areas 
where fresh impetus may be required. 

The  European  Parliament  is  invited  to  give  priority  to  Innovation  Union  proposals  and 
initiatives, including the identification and success of the European Innovation Partnerships. 
The Commission would welcome the Parliament holding once a year a major policy debate on 
progress  with  representatives  of  national  parliaments  and  stakeholders,  to  identify  key 
messages and to keep the Innovation Union high on the political agenda. 

The  European  Commission  will  develop  the  initiatives  set  out  in  Innovation  Union.  It  will 
assist  Member  States  with  the  reform  of  their  systems  and  take  initiatives  to  promote  the 
exchange  of  good  practice  at  all  levels.  The  Commission  will  expand  the  remit  of  the 
European  Research  Area  Board  (ERAB)  and  include  prominent  leaders  from  business, 
finance  and  young  researchers  and  innovators,  to  evaluate  the  Innovation  Union  on  a 
continuous  basis,  reflect  on  new  trends,  and  provide  recommendations  on  priorities  and 
actions.  The  Commission  will  systematically  monitor  progress  and  report  once  a  year  on 
progress achieved. Where appropriate, it will make use of its prerogatives under the Treaty to 
propose  country-specific  recommendations  in  this  field  to  assist  Member  States  with  their 
reform process. 

The Member States (and their regions) should ensure that the necessary governance structures 
are put in place where these do not yet exist. They should conduct thorough self assessments, 

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30 

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and look for  ways to reform their systems to promote excellence,  foster closer co-operation 
and pursue smart specialisation from an EU perspective. They should review their operational 
programmes  co-financed  by  the  Structural  Funds,  in  line  with  priorities  fixed  under  Europe 
2020,  and  seek  to  allocate  additional  resources  to  research  and  innovation.  The  National 
Reform Programmes, which are due by April 2011, should identify what specific steps they 
will  take,  by  when  and  if  expenditure  is  involved  how  this  will  be  accounted  for.  The  new 
European Research Area Committee (ERAC) should take responsibility for fostering progress 
by Member States in implementing the Innovation Union, ensuring the necessary participation 
from industry ministries and coordination with the Enterprise Policy Group.  

Stakeholders – business, local authorities, social partners, foundations, NGOs – are invited to 
support  the  Innovation  Union.  The  European  Economic  and  Social  Committee  and  the 
Committee  of  the  Regions  are  invited  to  work  with  the  organisations  and  bodies  they 
represent to mobilise support, encourage initiatives and help disseminate best practices. 

The  Commission  will  facilitate  debate  and  exchanges  of  ideas  and  best  practice  through 
online exchanges and social networking focusing on the Innovation Union. 

To  further  encourage  this  process  of  change  and  to  promote  an  innovation  mind-set,  the 
Commission  will  convene  an  annual  Innovation  Convention  to  discuss  the  state  of  the 
Innovation Union, in conjunction with the proposed European Parliament debate. This should 
involve  Ministers,  Members  of  the  European  Parliament,  business  leaders,  deans  of 
universities and research centres, bankers and venture capitalists, top researchers, innovators 
and, last but not least, citizens of Europe.  

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ANNEX I  Self assessment tool: 
Features of well performing national and regional research and innovation 
systems 

1. 

Promoting research and innovation is considered as a key policy instrument to 
enhance  competitiveness  and  job  creation,  address  major  societal  challenges 
and improve quality of life and is communicated as such to the public 

– 

Public  action  in  all  relevant  policy  areas  including  education  and  skills,  the 
functioning of product and service markets, financial markets, labour markets, 
entrepreneurship 
industrial  policy, 
cohesion/spatial  planning,  infrastructure/ICT  as  well  as  taxation  and  at  all 
levels,  is  designed  and  implemented  in  a  strategic,  coherent  and  integrated 
framework  geared 
the 
knowledge base and fundamental research. 

innovation  and  strengthening 

towards  fostering 

the  business 

environment, 

and 

–  Where  policies  and  funding  are  focused  on  specific  priorities,  these  are 
increasingly  oriented  towards  addressing  major  societal  challenges,  such  as 
resource  efficiency,  climate  change,  and  health  and  ageing,  and  towards 
deriving competitive advantage from finding new solutions to tackle them. 

2. 

Design and implementation of research and innovation policies is steered at the 
highest  political  level  and  based  on  a  multi-annual  strategy.  Policies  and 
instruments  are  targeted  at  exploiting  current  or  emerging  national/regional 
strengths within an EU context ("smart specialisation") 

– 

– 

An effective and stable centre-of-government structure, typically steered by the 
top political level, defines broad policy orientations on a multi-annual basis and 
ensures  sustained  and  properly  coordinated  implementation.  This  structure  is 
backed  up  by  networks  involving  all  relevant  stakeholders,  such  as  industry, 
regional and local authorities, parliaments and citizens, thereby stimulating an 
innovation culture and building mutual trust between science and society. 

A multi-annual strategy defines a limited number of priorities, preceded by an 
international  analysis  of  strengths  and  weaknesses  at  national  and  regional 
level  and  of  emerging  opportunities  ('smart  specialisation')  and  market 
developments,  and  provides  a  predictable  policy  and  budgetary  framework. 
The strategy duly reflects EU priorities, avoiding unnecessary duplication and 
fragmentation  of  efforts,  and  actively  seeks  to  exploit  opportunities  for  joint 
programming, cross-border co-operation and exploiting the leverage effects of 
EU  instruments.  Bilateral  co-operation  with  non-EU  countries  is  based  on  a 
clear strategy and, where possible, is co-ordinated with the other EU Member 
States. 

– 

An effective monitoring and review system is in place, which makes full use of 
output indicators, international benchmarking and ex-post evaluation tools. 

3. 

Innovation  policy  is  pursued  in  a  broad  sense  going  beyond  technological 
research and its applications 

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32 

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– 

– 

innovation  - 

A  broad  concept  of 
in  services, 
improvements  of  processes  and  organisational  change,  business  models, 
marketing, branding and design - is actively promoted, inter alia through more 
interdisciplinary  work  involving  groups  of  users  or  consumers  as  important 
constituencies of open innovation. 

innovation 

including 

Supply  and  demand-side  policies  are  developed  in  a  consistent  manner, 
building on and increasing the absorptive capacity of the Single Market. 

4. 

There is adequate and predictable public investment in research and innovation 
focused in particular on stimulating private investment 

– 

– 

It  is  recognised  that  public  funding  assumes  an  important  role  in  providing  a 
high  quality  knowledge  infrastructure  and  as  an  incentive  for  maintaining 
excellence  in  education  and  research  including  access  to  world-class  research 
infrastructures,  building  regional  S&T  capacity  and  supporting  innovation 
activity  especially  during  periods  of  economic  recessions.  As  a  consequence, 
public  investments  in  education,  research  and  innovation  are  prioritised  and 
budgeted  in  the  framework  of  multi-annual  plans  to  ensure  predictability  and 
long term impact, and drawing on the Structural Funds where appropriate. 

Public  funding  aims  at  leveraging  greater  private  sector  investments. 
Innovative financing solutions (e.g. public-private partnerships) and the use of 
tax  incentives  are  explored  and  adopted.  Reforms  are  implemented  to  reflect 
changing conditions and ensure optimal returns on investments. 

5. 

Excellence is a key criterion for research and education policy 

– 

– 

– 

Research  funding  is  increasingly  allocated  on  a  competitive  basis  and  the 
balance between institutional and project-based funding of research has a clear 
rationale.  Institutes  are  evaluated  on  the  basis  of  internationally  recognised 
criteria  and  projects  are  selected  on  the  basis  of  the  quality  of  proposals  and 
expected  results,  subject  to  external  peer  review.  Funding  to  researchers  is 
portable across borders and institutes. Results of publicly funded research are 
protected and published in a way that encourages their exploitation. 

Higher  education  and  research  institutes  enjoy  the  necessary  autonomy  to 
organise  their  activities  in  the  areas  of  education,  research,  and  innovation, 
apply open recruitment methods and to draw on alternative sources of funding 
such as philanthropy. 

The  legal,  financial  and  social  frameworks  for  research  careers,  including 
doctoral studies, offer sufficiently attractive conditions to both men and women 
in  comparison  to  international  standards,  especially  those  in  the  US.  This 
includes favourable conditions for reconciling private and professional life and 
for  professional  development  and  training.  There  are  incentives  in  place  to 
attract leading international talent. 

6. 

Education and training systems provide the right mix of skills 

– 

Policies  and  incentives  are  in  place  to  ensure  a  sufficient  supply  of 
(post)graduates  in  science,  technology,  engineering  and  mathematics  and  an 

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33 

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appropriate  mix  of  skills  among  the  population  (including  through  strong 
vocational and education and training systems) in the medium-to-longer term. 

– 

Education and training curricula focus on equipping people with the capacity to 
learn and to develop transversal competences such as critical thinking, problem 
solving,  creativity,  teamwork,  and  intercultural  and  communication  skills. 
Special  attention  is  paid  to  address  innovation  skills  gaps.  Entrepreneurship 
education and training is widely available or included in curricula. Partnerships 
between formal education and other sectors are actively promoted to that end. 

7. 

Partnerships  between  higher  education 
businesses, at regional, national and international level, are actively promoted 

institutes,  research  centres  and 

–  Where possible, research efforts are accompanied by instruments to support the 
commercialisation  of  innovative  ideas.  Policies  and  instruments  such  as 
innovation/knowledge  clusters,  knowledge  transfer  platforms,  and  voucher 
systems, are in place to encourage co-operation and knowledge sharing and at 
creating a more favourable business environment for SMEs. 

– 

– 

Researchers and innovators are able to move easily between public and private 
institutes. There are clear rules on the ownership of intellectual property rights 
and  sharing  and  support  systems  are  in  place  to  facilitate  knowledge  transfer 
and  the  creation  of  university  spin-offs  and  to  attract  (venture)  capital  and 
business angels. 

There  are  no  obstacles  to  setting  up  and  operating  transnational  partnerships 
and collaborations. 

8. 

Framework conditions promote business investment in R&D, entrepreneurship 
and innovation 

– 

– 

– 

– 

Policies to promote innovation, entrepreneurship and enhance the quality of the 
business environment are closely interconnected. 

Favourable  conditions  are  in  place  to  foster  a  growing  and  robust  venture 
capital market, especially for early stage investments. 

Consistent with the Small Business Act for Europe31, the rules for starting up 
and running a business are simple and designed from an SME perspective. The 
legal  framework  is  transparent  and  up-to-date.  Rules  are  properly  enforced. 
Markets  are  dynamic  and  competitive.  Willingness  to  take  risks  is  promoted. 
Insolvency  regulations  support  the  financial  reorganisation  of  enterprises. 
There is no discrimination against entrepreneurs who may have failed the first 
time around. 

An  efficient,  affordable  and  effective  system  for  the  protection  of  intellectual 
property  is  in  place,  which  fosters  innovation  and  preserves  investment 
incentives. The market for innovative products and services is kept constantly 
up to date by means of an efficient standard-setting system. 

31 

"Think small first". A "Small Business Act" for Europe. COM (2008)374 

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9. 

Public support to research and innovation in businesses is simple, easy to access, 
and high quality 

– 

– 

– 

– 

There is a limited number of well targeted, clearly differentiated, and easy to 
access support schemes consistent with support available at EU level and that 
address  well  identified  market  failures  in  the  provision  of  private  funding  for 
innovation. 

Funding support is tailored to the needs of companies, particularly SMEs. The 
emphasis is placed on outputs rather than on inputs and controls. Bureaucracy 
is kept to a minimum, selection criteria are straightforward and time to contract 
and  to  payment  are  as  short  as  possible.  Funding  schemes  are  regularly 
evaluated and benchmarked against comparable schemes in other countries. 

National  funding  is  allocated  through  international  evaluation  procedures  and 
encourages  trans-national  cooperation.  Rules,  procedures  and  time-tables  are 
aligned in order to facilitate participation in EU programmes and co-operation 
with other Member States. 

Specific support is often available to young innovative companies to help them 
commercialise ideas rapidly and promote internationalisation. 

10. 

The public sector itself is a driver of innovation 

– 

– 

The  public  sector  provides  incentives  to  stimulate  innovation  within  its 
organisations and in the delivery of public services. 

Active  use  is  made  of  public  procurement  of  innovative  solutions  in  order  to 
improve  public  services,  including  through  dedicated  budgets.  Tenders  are 
based  on  output-based  performance  specifications  and  contracts  are  awarded 
on  the  basis  of  qualitative  criteria  which  favour  innovative  solutions  such  as 
life-cycle  analysis,  rather  than  lowest  price  only.  Opportunities  for  joint 
procurement are exploited. 

–  Where possible, government-owned data is made freely available as a resource 

for innovation. 

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ANNEX II 

Performance Scoreboard for Research and Innovation 

The below list of  indicators will  provide the basis for an annual performance scoreboard as 
part of the monitoring of the Innovation Union. The data, using the latest available statistics, 
will  be  presented  for  each  Member  State,  for  the  European  Union,  and  for  main  non-EU 
countries. Efforts will be made to make data available at regional (i.e. sub national) level for 
EU  Member  States.  The  Scoreboard  will  be  maintained  until  2020  and  will  be  subject  to 
review  periodically  depending  on  the  availability  of  new  data  sources  and/  or  new  policy 
orientations.  The  Commission  will  look  for  an  additional  performance  indicator  reflecting 
gender for inclusion in the Scoreboard. 

Indicator 

Data source  

ENABLERS 

Human resources 

1.1.1 New doctorate graduates (ISCED 6) per 1000 population aged 25-34* 

Eurostat  

1.1.2 Percentage population aged 30-34 having completed tertiary education *  

Eurostat  

1.1.3  Percentage  youth  aged  20-24  having  attained  at  least  upper  secondary  level 
education* 

 Eurostat  

Open, excellent and attractive research systems 

1.2.1 International scientific co-publications per million population 

Thomson/Scopus  

1.2.2 Scientific publications among the top 10% most cited publications worldwide 
as % of total scientific publications of the country 

Thomson/Scopus  

1.2.3 Non-EU doctorate students32 per million population 

Eurostat/OECD  

Finance and support  

1.3.1 Public R&D expenditures as % of GDP 

 Eurostat  

1.3.2 Venture capital (early stage, expansion and replacement) as % of GDP  

 EVCA/Eurostat  

FIRM ACTIVITIES 

Firm investments 

2.1.1 Business R&D expenditures as % of GDP  

2.1.2 Non-R&D innovation expenditures as % of turnover 

Linkages & entrepreneurship 

2.2.1 SMEs innovating in-house as % of SMEs 

Eurostat  

Eurostat  

Eurostat  

32 

Non-domestic doctoral students for non-European countries. 

EN 

36 

   EN 

 
 
 
 
 
 
 
 
                                                 
2.2.2 Innovative SMEs collaborating with others as % of SMEs 

Eurostat  

2.2.3 Public-private co-publications per million population 

Thomson/Scopus  

Intellectual Assets 

2.3.1 PCT patents applications per billion GDP (in PPS€) 

 Eurostat  

2.3.2  PCT  patent  applications  in  societal  challenges  per  billion  GDP  (in  PPS€) 
(climate change mitigation; health) 

OECD  

2.3.3 Community trademarks per billion GDP (in PPS€) 

2.3.4 Community designs per billion GDP (in PPS€) 

OHIM/Eurostat  

OHIM/Eurostat  

OUTPUTS 

Innovators 

3.1.1SMEs  (more  than  10  employees)  introducing  product  or  process  innovations 
as % of SMEs 

Eurostat  

3.1.2  SMEs  (more  than  10  employees)  introducing  marketing  or  organisational 
innovations as % of SMEs 

Eurostat  

3.1.3  High-growth  enterprises  (with  more  than  10  employees)  as  %  of  all 
enterprises33 

Eurostat  

Economic effects 

3.2.1 Employment in Knowledge-Intensive Activities (manufacturing and services) 
as % of total employment 

Eurostat  

3.2.2 Medium and High-tech manufacturing exports as % total product exports  

UN/Eurostat  

3.2.3 Knowledge-Intensive Services exports as % total service exports  

UN/Eurostat  

3.2.4 Sales of new to market and new to firm innovations as % of turnover 

Eurostat  

3.2.5 Licence and patent revenues from abroad as % of GDP 

Eurostat  

*Breakdowns by sex to be provided for these indicators. 

33 

Subject to verification of data availability by 2011 

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37 

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EU US comparison 

Performance gap with US

Innovation growth US

EU

INNOVA TION GA P

- 4 3

New do cto rate degrees

Tertiary educatio n

Internatio nal co -publicatio ns

M o st cited publicatio ns

P ublic R&D expenditures

Venture capital

B usiness R&D expenditures

6

3

-69

-46

-32

-64

-66

INNOVA TION GA P

New do cto rate degrees

Tertiary educatio n

Internatio nal co -publicatio ns

M o st cited publicatio ns

P ublic R&D expenditures

Venture capital

B usiness R&D expenditures

P ublic-private co -publicatio ns

-128

P ublic-private co -publicatio ns

P CT patents

So cietal challenges

Trademarks

KIA  emplo yment

M ed/hi-tech pro duct expo rts

KIS expo rts

License and patent revenues

-222

-8

-19

-20

-25

33

16

P CT patents

So cietal challenges

Trademarks

KIA  emplo yment

M ed/hi-tech pro duct expo rts

KIS expo rts

License and patent revenues

-300

-200

-100

0

100

-5%

0%

5%

10%

EU Japan comparison 

Performance gap with Japan

Innovation growth Japan

EU

INNOVA TION GA P

- 4 1

New do cto rate degrees

Tertiary educatio n

-76

Internatio nal co -publicatio ns

M o st cited publicatio ns

P ublic R&D expenditures

-2

Venture capital

B usiness R&D expenditures

P ublic-private co -publicatio ns

P CT patents

So cietal challenges

Trademarks

KIA  emplo yment

-122

-77

-108

-122

M ed/hi-tech pro duct expo rts

-57

KIS expo rts

License and patent revenues

-168

38

29

28

13

19

31

INNOVA TION GA P

New do cto rate degrees

Tertiary educatio n

Internatio nal co -publicatio ns

M o st cited publicatio ns

P ublic R&D expenditures

Venture capital

B usiness R&D expenditures

P ublic-private co -publicatio ns

P CT patents

So cietal challenges

Trademarks

KIA  emplo yment

M ed/hi-tech pro duct expo rts

KIS expo rts

License and patent revenues

-300

-200

-100

0

100

-10% -5% 0% 5% 10% 15% 20%

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EU China comparisons 

Performance gap with China

Innovation growth China

EU

INNOVA TION GA P

New do cto rate degrees

Tertiary educatio n

Internatio nal co -publicatio ns

M o st cited publicatio ns

P ublic R&D expenditures

Venture capital

B usiness R&D expenditures

P ublic-private co -publicatio ns

P CT patents

So cietal challenges

Trademarks

-210

KIA  emplo yment

M ed/hi-tech pro duct expo rts

-18

KIS expo rts

License and patent revenues

3 2

72

89

40

39

INNOVA TION GA P

New do cto rate degrees

Tertiary educatio n

Internatio nal co -publicatio ns

M o st cited publicatio ns

P ublic R&D expenditures

Venture capital

7

B usiness R&D expenditures

97

73

80

P ublic-private co -publicatio ns

P CT patents

So cietal challenges

Trademarks

KIA  emplo yment

21

93

M ed/hi-tech pro duct expo rts

KIS expo rts

License and patent revenues

-300

-200

-100

0

100

-10%

0%

10%

20%

30%

Note: comparisons based on latest available data: 2008 for all indicators except: international 
co-publications (2009); most cited publications (2007); public private co-publications (2007); 
PCT  patents  (2007);  KIA  employment  (2007).  For  Japan:  data  not  available  for  venture 
capital and most recent data on KIA employment is 2005. For China: data not available for 
new doctorate degrees, venture capital, cost of patents, KIA employment. 

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ANNEX III 
European Innovation Partnerships  
Aims and scope of a pilot European Innovation Partnership in the field of active and 
healthy ageing 

1. The objective of the partnership 

As the baby-boom generation retires, the population of over 60 is increasing twice as fast as 
before 2007, i.e. by some two million people a year. By 2050, the number of people over 50 
will  rise  by  35%  and  that  over  85  will  triple.  If  the  current  level  of  diseases  in  these  age 
groups  would  remain,  many  millions  more  Europeans  would  suffer  from  disorders  such  as 
neuro-degenerative  diseases  (Alzheimer/Parkinson)  and  others  such  as  cancer  and 
cardiovascular  diseases  which  are  prevalent  at  an  older  age.  This  calls  for  stepping  up  the 
discovery and deployment of screening, detection and (non-invasive) diagnosis, of medicines 
and  treatments  to  prevent  and  address  these  diseases.  In  addition,  innovative  solutions, 
including ICT and other technologies have the potential to provide high-quality, personalised 
medicine and health/social care while increasing the efficiency of our care systems. 

The  combination  of  a  smaller  working  age  population  and  a  higher  share  of  retired  people 
with health problems will place considerable strain on welfare systems starting in the next few 
years.  At  the  same  time,  addressing  specific  needs  of  elder  people  opens  up  new  market 
opportunities  for  those  who  manage  to  come  up  with  smart  and  innovative  solutions  to  the 
challenges an ageing population will be facing such as social isolation, increased incidence of 
falls and reduced mobility. Finding breakthroughs and allowing older people to live healthier 
and  independently  for  longer  would  not  only  bring  significant  societal,  but  also  important 
economic benefits. 

The aims of the innovation partnership are, by 2020, to enable our citizens to live longer 
independently in good health by increasing the average number of healthy life years by 
2,  and,  in  achieving  this  target,  to  improve  the  sustainability  and  efficiency  of  our  social 
and healthcare systems, and to create an EU and global market for innovative products 
and services with new opportunities for EU business. 

2. Delivery and deployment of instruments 

The active and healthy ageing partnership will have:  

A strong research component, where possible, resulting in new medicines for the elderly, new 
treatments  or  diagnostic  tools,  new  institutional  or  organisational  approaches  and  new 
solutions  allowing  for  a  better  life  quality  for  the  elderly.  The  research  can  be  done  either 
through  launching  new  research  programmes/projects  (notably  using  pre-commercial 
procurement) or through coordination of existing research programmes (as is already the case 
for Alzheimer's or ageing as part of the EU joint programming initiative).  
Demonstration, pilots and large scale trials involving the elderly, patients, carers, health care 
facilities, community and home care facilities, ICT infrastructure, etc. to test out solutions of 
sufficiently  large  scale  in  a  coordinated  way  across  countries  and  different  contexts.  Such 
demonstrations  will  need 
localities,  while  ensuring 
comparability  and  interoperability.  This  can  be  supported  by  EU  and  national  instruments 
such  as  structural  funds,  European  Investment  Bank  and  national  or  European  innovation 
funds. 

take  place  across  different 

to 

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Accelerating the creation of the necessary framework conditions and demand, which will need 
to include improving rules for clinical trials and testing, fast-tracking assessment procedures 
of  new  medicines  by  the  European  Medicines  Agency,  patenting  and  patent  protection, 
regulatory  requirements  such  as  measures 
to  protect  medical  and  personal  data, 
reimbursement through national health insurance schemes and co-ordinated procurements by 
the  public  sector  (networks  of  public  authorities),  ensuring  interoperability  and  setting 
standards  and  reference  specifications  for  new equipment  and  services  for  telemedicine  and 
independent  living,  setting  up  a  fund  for  care  innovation  and  for  “orphan  diseases”,  and 
tackling possible market access obstacles in third countries.  

Areas  should  also  be  identified  (both  in  R&D  and  related  issues  such  as  standardisation)  in 
which cooperating with third countries would be necessary or desirable. 

This  would  translate  into  a  limited  number  of  work  packages  proposing  actions  that  aim  to 
achieve the strategic objectives:  

–  Finding  and  deploying  innovative  solutions,  clinical  tests,  medicines  and  treatments,  to 
combat and address age-related chronic diseases (such as Alzheimer's, Parkinson's as well 
as cancer, diabetes, cardiovascular diseases and other chronic diseases), whilst at the same 
time  providing  public  support  for  research  on  less-frequent,  rare  or  orphan  age-related 
diseases (that do not attract sufficient attention from private research funding);  

–  Developing  new  innovative  policies  and  business  models  for  more  integrated  health  and 
social  care  systems  for  the  elderly,  improving  home-based  and  self-care;  as  well  as 
tailoring and deploying on a large scale new innovative (including ICT-based) solutions for 
long-term care of the elderly such as chronic disease management. This work package will 
also include fostering public procurement and HTA EU cooperation would also contribute 
to  this  objective.  Promoting  the  development  and  introduction  of  innovative  solutions, 
including  ICT-  based  and  other  technologies,  for  products,  devices  and  services 
specifically suitable for the elderly, to help them lead more active and independent lives, 
such  as  alarm  and  safety  systems,  daily  living  support,  fall  prevention,  social  interaction 
services and home robotics, and specific access to the internet. 

3. Actors and governance 

To  be  successful,  the  Commission  through  the  Innovation  Partnership  intends  to  bring 
together and forge an active and sustained commitment of all Europe's major players in this 
field.  This  includes  not  only  EU  and  Member  States'  authorities  and  regulators,  standard-
setters  and  procurement  professionals  but  also  representatives  from  public  health  and  social 
care authorities, from the medical profession and from health and ageing research institutes. 
Private  sector  involvement  will  include  the  pharmaceuticals  and  biotechnology  industries, 
medical and assistive equipment manufacturers, ICT industry, the health and social insurance 
sector  and  the  providers  of  (venture)  capital.  Representatives  from  elderly  user  groups  and 
care organisations will also have to play an important role in the partnership. 

Responsibility for the successful implementation of the active and healthy ageing partnership 
will rest with the Commissioners for Health and for the Digital Agenda in the overall context 
of the Innovation Union flagship governance. The Commission will invite stakeholders from 
the  groups  set  out  above  to  participate  in  the  partnership.  A  steering  board  will  be  set  up, 
including  high-level  representatives  from  Member  States,  industry  and  elderly  care 
professionals, to ensure effective and timely implementation. The steering board will oversee 

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the  work  of  three  task  forces,  composed  of  experts,  practitioners  and  users,  who  will  each 
focus on the development and implementation of the work packages.  

The partnership should produce efficiency gains for all participants. The Commission, for its 
part,  will  streamline  and  simplify  existing  initiatives  in  this  area.  For  example,  relevant 
technology platforms, joint programming, lead market  initiatives and other relevant projects 
financed by the EU framework programmes will be integrated into the partnership. 

The first task of the steering board will be – with the assistance of the task forces - to draw up, 
within six months, a strategic work programme defining a research agenda, and priorities for 
demonstrations and large scale deployment, identifying ways to pool expertise, assessing the 
level  of  funding  required  and  its  sources  and  specifying  the  deployment  of  instruments  and 
policies to fast-track research and innovation results and get products and services to market 
without  unnecessary  delays.  This  should  include  an  in-depth  analysis  of  research  needs  and 
work already undertaken to avoid duplication and ensure that the partnership can build on the 
most recently available knowledge and expertise. Milestones and monitoring instruments for 
implementation shall be defined. A specific working group will support the steering board in 
developing monitoring indicators and data collection. 

Further potential Innovation Partnerships so far examined by the Commission 

Smart Cities 

By  2020,  and  taking  2010  as  a  baseline,  the  aim  is  to  support  a  number  of  pioneering 
European  cities  (with  a  total  population  of  at  least  20  million)  in  reducing  their  carbon 
emissions by more than 20%, increasing the share of renewable energy in the energy used for 
electricity supply, heating and cooling by 20%, and increasing end-use energy efficiency by 
20%.  The  Partnership  will  demonstrate  the  feasibility  of  rapid  progress  towards  the  EU's 
energy  and  climate  objectives  at  local  level  while  showing  citizens  that  their  quality  of  life 
and  local  economies  can  be  improved  through  investments  in  energy  efficiency,  renewable 
energy sources and energy system management solutions, including smart metering and use of 
ICT innovations as well as more efficient urban transport.  

Water-Efficient Europe 

The  aim  of  the  Partnership  is  to  promote  actions  that  can  speed-up  innovation  in  the  water 
sector  and  remove  barriers  to  innovation.  The  actions  are  intended  to  achieve  the  EU  water 
policy  objectives  while  reducing  the  EU  water  footprint,  improving  water  security  and 
promoting the worldwide leadership of the European water industry. 

Sustainable supply of non-energy raw materials for a Modern Society 

The aim is to ensure a secure supply and achieve efficient and sustainable management and 
use  of  non-energy  materials  along  the  entire  value  chain  in  Europe.  This  is  all  the  more 
necessary to provide an answer to the various societal challenges at stake. Demonstrating ten 
innovative  pilot  plants  for  raw  materials  extraction,  processing  and  recycling,  and  finding 
substitutes  for  at  least  three  key  applications  of  critical  raw  materials  underpin  this 
Partnership. 

Smart mobility for Europe's citizens and businesses 

The aim of the Partnership is to equip Europe with seamless door-to-door travel and effective 
logistics by promoting the broad and coordinated development and deployment of Intelligent 
Transport  Systems  (ITS).  The  Innovation  Partnership  will  build  on  available  results  from 

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research  and  development  and  take  them  further  to  innovation  and  concrete  operational 
deployment, combined with further research, policy and legislative measures.  

Agricultural productivity and sustainability 

World  food  demand  will  increase  massively  over  the  next  two  decades.  The  aim  of  this 
Partnership is to promote a resource-efficient, productive and low-emission agricultural sector 
–  which  works  in  harmony  with  the  essential  natural  resources  on  which  farming  depends, 
such as soil and water. The objective is to deliver a safe and steady supply of food, feed and 
biomaterials – both existing products and new ones. There is a need to improve processes to 
preserve  our  environment,  adapt  to  climate  change  and  mitigate  it.  The  Partnerships  would 
build a bridge between cutting-edge research and technology and the farmers, businesses and 
advisory services which need them. 

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