COMMISSION STAFF WORKING PAPER IMPACT ASSESSMENT  COMMISSION STAFF WORKING PAPER IMPACT ASSESSMENT
Date: 2011-05-24
Institutions: European Commission
Subjects: European Union Intellectual Property Office, audiovisual industry, copyright, industrial counterfeiting, industrial property, piracy

EUROPEAN COMMISSION 

Brussels, 24.5.2011 
SEC(2011) 612 final 

COMMISSION STAFF WORKING PAPER 

IMPACT ASSESSMENT 

Accompanying document to the 

Proposal for a 
REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

on entrusting the Office for Harmonisation in the Internal Market (Trade Marks and 
Designs) with certain tasks related to the protection of intellectual property rights, 
including the assembling of public and private sector representatives as a  
European Observatory on Counterfeiting and Piracy 

{COM(2011) 288 final} 
{SEC(2011) 613 final} 

 
 
 
 
  
 
Disclaimer 

This impact assessment commits only the Commission's services involved in its preparation. 
The document has been prepared as a basis for comment and does not prejudge the final form 
of any decision to be taken by the Commission. 

TABLE OF CONTENTS 

1. 

2. 

2.1. 

2.2. 

3. 

Introduction .................................................................................................................. 4 

Procedural issues and consultation of interested parties .............................................. 5 

Procedural issues.......................................................................................................... 5 

Consultation of interested parties................................................................................. 5 

Problem definition........................................................................................................ 7 

3.1. 

Reasons for ineffective enforcement of intellectual property rights in the EU............ 7 

3.1.1.  Lack of reliable, objective data .................................................................................... 7 

3.1.2.  Divergences in the enforcement legislation of Member States and the application by 

the courts ...................................................................................................................... 8 

3.1.3. 

Insufficient coordination and exchange between responsible authorities in the 
Member States on best practices .................................................................................. 8 

3.1.4. 

Insufficient exchange on successful private sector strategies ...................................... 9 

3.1.5. 

Insufficient knowledge of persons involved in enforcement ....................................... 9 

3.1.6. 

Insufficient use of technologies to prevent counterfeiting........................................... 9 

3.1.7. 

Insufficient awareness of consumers on the impact of IPR infringements.................. 9 

3.1.8.  Demand for counterfeit products and pirated content................................................ 10 

3.1.9.  Lack of expertise in third countries............................................................................ 11 

3.2. 

The role of the European Observatory on Counterfeiting and Piracy........................ 11 

3.2.1.  The Observatory's mandate........................................................................................ 11 

3.2.2.  The Observatory's problems to cope with its current and future tasks ...................... 12 

3.3. 

Likely consequences if no measures are taken (baseline scenario) ........................... 14 

3.3.1.  The situation of the Observatory in the mid-term...................................................... 14 

3.3.2.  Assistance to be provided by the Office for Harmonisation in the Internal Market 

(OHIM) ...................................................................................................................... 14 

3.3.3. 

Impacts of the current situation.................................................................................. 15 

3.3.4.  Likely development of the situation over the next few years .................................... 18 

4. 

Subsidiarity ................................................................................................................ 21 

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5. 

6. 

6.1. 

6.2. 

6.3. 

6.4. 

6.5. 

6.6. 

6.7. 

6.8. 

7. 

8. 

Objectives................................................................................................................... 21 

Policy options and analysis of their impacts .............................................................. 24 

Introduction ................................................................................................................ 24 

Option 1 sub-option 1a: Increase of DG MARKT's human and  
budgetary resources.................................................................................................... 24 

Option 1 sub-option 1b: Outsourcing on a commercial basis to an 
 external contractor..................................................................................................... 26 

Option 2 sub-option 2a: The tasks are carried out through an industry led initiative 
financed by private sector stakeholders ..................................................................... 27 

Option 2 sub-option 2b: The tasks are carried out through an industry led initiative 
financed through a Commission grant/program......................................................... 29 

Option 2 sub-option 2c: The tasks are carried out in the framework of a public-
private partnership...................................................................................................... 30 

Option 3 sub-option 3a: The tasks of the Observatory are entrusted to a new 
EU agency .................................................................................................................. 30 

Option 3 sub-option 3b: The tasks of the Observatory are entrusted to an existing 
agency ........................................................................................................................ 32 

Comparing the options ............................................................................................... 34 

Monitoring and Evaluation ........................................................................................ 36 

ANNEX I: MEMBERS OF THE EUROPEAN OBSERVATORY ON COUNTERFEITING 
AND PIRACY.......................................................................................................................... 38 

ANNEX II: IPR INFRINGEMENTS IN THE EU AND EU POLICY ON 
IPR PROTECTION.................................................................................................................. 44 

ANNEX III: STAFFING NEEDS AND COSTS UNDER OPTIONS 1A (COMMISSION) 
AND 3A (NEWLY CREATED AGENCY) ............................................................................ 50 

ANNEX IV: IT COSTS ........................................................................................................... 59 

ANNEX V: COSTS OF OPTIONS 1B AND 2 ....................................................................... 62 

ANNEX VI: SYNERGIES AND COSTS UNDER OPTION 3B (OHIM) ............................. 66 

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1. 

INTRODUCTION 

The  economic  well-being  of  the  EU  relies  on  sustained  creativity  and  innovation;  therefore 
measures for their effective protection are indispensible in ensuring its future prosperity. The 
Europe  2020  Strategy1  has  therefore  identified  "Smart  Growth"  as  one  of  the  Commission's 
three policy priorities for the future. In this respect, intellectual property rights (IPR) are vital 
business assets that help to ensure that innovators and creators get a fair return for their work 
and investments. 

Unfortunately,  legitimate  businesses  are  not  the  only  ones  to  realise  the  importance  of  IPR 
and  the  organised  infringement  of  rights  has  become  a  global  phenomenon.  Counterfeiting 
and piracy2 are causing worldwide concern. Infringers of IPR not only deprive EU creators of 
their appropriate rewards but also harm competitiveness, destroy jobs in the Member States, 
deny  much  needed  revenue  to  public  finances  and,  in  some  cases,  threaten  the  health  and 
safety of EU citizens. 

Strong legislation has been put in place across the EU to protect and enforce IP rights. This 
legislation  has  been  complemented  by  various  practical  measures,  adopted  by  both  public 
authorities and private sector bodies, at national and international levels in order to improve 
existing  knowledge  about  counterfeiting  and  piracy  and  to  enhance  the  cooperation  of  all 
actors  involved  in  fighting  this  phenomenon.  In  the  same  way  the  Commission  has  taken  a 
lead  by  launching  a  European  Observatory  on  Counterfeiting  and  Piracy,  at  a  high-level 
conference  in  April  2009  involving  Members  of  the  European  Parliament,  Member  States' 
representatives  and  representatives  from  industry  and  from  the  consumers'  side.  The 
Observatory's  main  objectives  include  data  collection  and  the  analysis  of  the  overall  scope, 
scale  and  impact  of  IPR  infringements  in  the  EU,  improving  cooperation  between  those 
engaged  in  protecting  and  enforcing  IPR,  ensuring  the  dissemination  of  best  practices  in 
enforcement and developing greater consumer awareness. 

Since the launch of the Observatory, the political discussion has further evolved. As a result, 
additional  fields  of  activity  for  the  Observatory  have  been  identified.  As  a  result,  there  has 
been  increasing  concern  that  the  Observatory  needs  to  continue  to  deliver  on  its  aims. 
Consequently,  this  has  caused  a  need  to  re-examine  the  Observatory's  structure.  In  this 
respect, the Commission is concluding a Memorandum of Understanding with the Office for 
Harmonisation in the Internal market (OHIM the EU trademarks and designs office) to enable 
the Office to support the delivery of some of the Observatory's tasks related to trademarks and 
designs. However, at this point in time, this is a relatively short term initiative. 

This  Impact  Assessment  therefore  aims  at  presenting  solutions  for  a  more  sustainable 
infrastructure for the Observatory, which should allow it to fulfil a broadened range of tasks, 
in a more effective way. 

1 

2 

Communication  from  the  Commission:  'Europe  2020:  A  strategy  for  smart,  sustainable  and  inclusive 
growth' of 3 March 2010, COM(2010) 2020. 
In this Impact Assessment, the term "counterfeiting and piracy" should be understood as covering the 
infringement  of  all  intellectual  property  rights  as  referred  to  in  the  Statement  by  the  Commission 
concerning Article 2 of Directive 2004/48/EC, OJ L 94, p. 37. 

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2. 

PROCEDURAL ISSUES AND CONSULTATION OF INTERESTED PARTIES 

2.1. 

Procedural issues 

The  preparation  of  this  Impact  Assessment  was  monitored  by  an  Inter-Services  Steering 
Group,  composed  of  Directorates  General  MARKT,  SANCO,  ENTR,  TRADE,  HOME, 
INFSO, TAXUD, SG, LS, BUDG, HR, EMPL, AGRI and the JRC. The Steering Group met 
on three occasions. Its last meeting was convened on 14 December 2010. 

A  draft  of  this  Impact  Assessment  Report  was  submitted  to  the  Impact  Assessment  Board 
(IAB)  on  12  January  2011.  The  Board  met  on  9  February  2011.  In  its  opinion  dated 
11 February 2011, the Board found that the report provided the necessary evidence base for 
action in the area, but suggested further improvements in the analysis on a number of issues. 

Thus,  the  IAB  made  recommendations  to  strengthen  the  analysis  of  impacts  and  specific 
issues  affecting  the  Observatory,  to  clarify  the  various  problem  drivers  and  to  update  the 
definition of the baseline scenario to take account of the Memorandum of Understanding that 
the  Commission  intends  to  sign  with  the  Office  for  Harmonisation  in  the  Internal  Market 
(OHIM) on short term support in view of the Observatory's activities. 

Following  the  comments  from  the  IAB,  in  particular  the  problem  definition  (section  3)  was 
modified  by  moving  general  explanations  on  the  EU's  policy  on  intellectual  property  rights 
and the scope and impact of infringements of such rights to a new Annex II and by extending 
the  explanations  on  the  Observatory's  role  and  the  problems  it  is  currently  facing. 
Furthermore,  the  baseline  scenario  in  section  3.3  was  adapted  as  well  as  the  objectives  in 
section 5 and the evaluation of the different options in section 6. 

The  initiative  that  this  Impact  Assessment  relates  to  has  been  introduced  into  the 
Commission's agenda planning as 2011/MARKT/009. 

2.2. 

Consultation of interested parties 

Since  its  inception,  issues  surrounding  the  structure  and  financing  of  the  Observatory  have 
been  discussed  regularly,  both  at  the  four  Observatory  meetings3  held  so  far  and  in  regular 
specialist  sub  group  meetings  which  have  brought  together,  since  September  2009, 
representatives from a number of private sector Observatory members4. 

Within  the  Observatory,  the  private  sector  is  represented  by  European  and  national 
organisations  covering  all  geographical  areas  and  sectors  affected  by  and  involved  in 
combating counterfeiting and piracy. The sectors include pharmaceuticals, luxury goods, food 
products,  toys,  creative  media,  software,  sports,  fast  moving  consumer  goods  etc.  European 
associations of consumers (BEUC) and SMEs (UEAPME) also take part in the Observatory. 
The  public  sector  is  represented  by  officials  from  a  wide  range  of  ministries,  agencies, 
departments  and  other  authorities  from  the  27 EU  Member  States,  including  those  from 
Ministries  of  Justice,  Economy  and  Culture,  national  intellectual  property  (IP)  offices  and 
enforcement agencies. In addition, international organisations such as the World Intellectual 
Property  Organisation  (WIPO),  the  OECD,  INTERPOL,  the  United  Nations  Interregional 

3 

4  

These  meetings  took place  on  4 September  2009,  14  December  2009,  16  February  2010  and 10  June 
2010. 
See Annex I for the complete list of associations and public bodies represented in the Observatory. 

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Crime  and  Justice  Research  Institute  (UNICRI)  and  EUROPOL  have  been  invited  as 
observers, to the Observatory meetings involving public authorities. 

The  conclusion,  from  discussions  within  the  Observatory,  has  been  that  a  more  sustainable 
infrastructure  is  necessary  to  allow  the  Observatory  to  work  successfully.  Some  Member 
States, however, felt that this should not lead to the creation of new structures. 

Members  of  the  European  Parliament  are  regularly  informed  about  the  work  and 
developments  of  the  Observatory  and  on  two  separate  occasions,  in  2010,  the  European 
Parliament  Forum  on  counterfeiting,  contraband  and  organised  crime  openly  discussed  the 
future  of  the  Observatory  and  focused,  in  particular,  on  a  possible  transfer  of  the 
Observatory's  tasks  to  the  Office  for  Harmonisation  in  the  Internal  Market  (the  trade  marks 
and designs registration office of the European Union, OHIM) at Alicante, Spain. 

Outside of the Observatory meetings, a wider range of stakeholders have been made aware 
of  the  issues  facing  the  Observatory  in  terms  of  its  potential  for  delivering  on  current  and 
possible future aims. For example, DG Internal Market and Services (DG MARKT) has been 
invited  to  discuss  the  issue  at  meetings  of  the  AIM  (Association  des  Industries  de  Marque, 
representing  some  1800  companies in  21 countries) Anti-Counterfeiting Committee, and the 
Committee members were invited to provide their views. 

In addition, within the context of the Commission's Stakeholders' Dialogue on illegal up- and 
downloading5,  issues  regarding  the  structure  of  the  Observatory,  including  the  possible 
transfer  of  its  tasks  to  the  OHIM,  have  been  discussed  on  two  separate  occasions  with 
representatives  of  copyright  holders,  the  telecommunications  sector  and  Internet  service 
providers. 

At  the  political  level,  the  Council,  as  a  reaction  to  the  two  Commission  Communications 
concerning  the  Observatory6,  adopted  two  Resolutions7  welcoming  the  creation  of  the 
Observatory  and  asking  the  Commission  to  elaborate  further  on  its  role  and  tasks,  whilst 
supporting  this  through  existing  structures.  Furthermore,  the  European  Parliament  on 
22 September 2010 adopted a report on the Commission's 2009 Communication asking for an 
enhanced involvement of the OHIM in enforcement related matters8. 

The idea of entrusting some enforcement-related activities to the OHIM has been the subject 
of  additional  consultations  with  users  of  the  European  trade  mark  system,  within  the 
framework of a comprehensive evaluation of the trade mark system in Europe9. The contract 
for this study was commissioned in 2009 to the Max Planck Institute for Intellectual Property, 
Competition  and  Tax  Law.  As  part  of  the  study,  the  Commission  asked  the  Institute  to 
evaluate  the  potential,  appropriateness  and  added  value  of  assigning  additional  tasks  to  the 

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9 

On the Stakeholders' Dialogue see section 4.2 of Commission Communication of 11 September 2009: 
'Enhancing the enforcement of intellectual property rights in the internal market', COM(2009) 467 final. 
Commission  Communication  of  16  July  2008:  'An  industrial  property  rights  strategy  for  Europe', 
COM(2008) 465 final, and COM(2009) 467 final. 
Council  Resolutions  of  25  September  2008,  OJ  C253,  4.10.2008,  p.1,  and  Council  Resolution  of  1 
March 2010 on the enforcement of intellectual property rights in the internal market (2010/C 56/01), OJ 
C56, 6.3.2010, p. 1. 
Resolution  of  22  September  2010  on  the  enforcement  of  intellectual  property  rights  in  the  internal 
market (2009/2178(INI)), A7-0175/2010. 
For details refer to the text of the study available at 
http://ec.europa.eu/internal_market/indprop/tm/index_en.htm. 

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OHIM,  particularly  in  the  field  of  enforcement  (anti-counterfeiting).  In  the  context  of  the 
study,  the  views  of  users  were  sought  on  the  possible  involvement  of  the  OHIM  in 
enforcement related activities. In total, eighteen business, IP and trade mark associations with 
national, European and/or international membership contributed to this process. The question 
was  finally  discussed  at  a  specific  workshop  at  the  Pan-European  IP  summit  2010  held  in 
Brussels  on  2  and  3 December  201010  where  the  idea  received  broad  support.  Equally,  the 
proposal was viewed positively by the OHIM governing bodies, the Administrative Board and 
the Budget Committee11, in their meetings in November 2010. 

In view of this specific, targeted and continuous consultation process, it was considered that 
there was no need to organise a supplementary, standard consultation exercise. 

3. 

PROBLEM DEFINITION 

Despite comprehensive IPR policies, at national, EU and international levels, infringements of 
intellectual  property  rights  occur  on  a  massive  scale  and  cause  considerable  damage  to  the 
European economy by hampering growth, destroying jobs and, in some cases, putting at risk 
the  health  and  safety  of  consumers12.  Details  on  the  EU  policies  to  protect  intellectual 
property  rights  and  on  the  current  situation  concerning  IPR  infringements  can  be  found  in 
Annex II. 

3.1. 

Reasons for ineffective enforcement of intellectual property rights in the EU 

The reasons for the problems in effectively enforcing IPR, in the EU, are, to a large extent, 
related  to  a  lack  of  knowledge,  both  in  relation  to  the  precise  scope  and  impact  of  IPR 
infringements  and  about  the  effective  policies  and  methods  to  prevent  and  fight  such 
infringements. Other major issues relate to the legal framework to combat IPR infringements 
and  the  considerable  demand  for  counterfeit  products  and  for  downloads  of  illegal  content 
play a role. 

3.1.1.  Lack of reliable, objective data 

Existing  studies  suffer  because  there  has  been  no  agreed  methodology  for  collecting  and 
analysing data on counterfeiting and piracy. Furthermore, the studies have been 'snapshots' of 
limited  phases  of  time,  which  have  been  commissioned  by  different  industries  and  have 
employed  different  approaches.  Moreover,  due  to  the  secretive  nature  of  counterfeiting, 
obtaining comprehensive data for all product sectors has been virtually impossible. Added to 
this, some sectors of industry have been hesitant to disclose information on the scope of the 
problem in certain areas, as they fear damaging both consumer confidence and the reputation 
of  their  brands.  Finally,  as  far  as  online  copyright  infringements  are  concerned,  a  rapidly 
changing  technical  environment  makes  the  collection  and  analysis  of  data  a  considerable 
challenge. 

Without  regular,  reliable  and  robust  data  on  the  scale,  scope  and  impact  of  the  problem 
created by IPR infringements, it is not possible to measure trends and threats. This means that 
those  involved  in  enforcement  are  not  able  to  establish  precise  priorities  and  programmes, 

10  
11  
12  

http://www.premiercercle.com/sites/ip2010/overview.php. 
Both bodies are composed of representatives of Member States and of the Commission. 
For details see point 3.3.3. below. 

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targets  for  enforcement  or  to  design  more  focused  consumer  campaigns.  Therefore,  a 
mechanism to collect and analyse data, based on an agreed methodology, is an essential step 
in overcoming these problems.  

3.1.2.  Divergences in the enforcement legislation of Member States and the application by 

the courts 

The  recently  published  Commission  report13  on  the  application  of  the  so-called  IPR 
Enforcement  Directive14  reveals  differences  as  to  how  the  Directive  was  transposed  in  the 
Member  States  and  in  the  practical  application  of  its  provisions,  e.g.  concerning  the  use  of 
provisional and precautionary measures such as injunctions, procedures to gather and preserve 
evidence  (including  the  relationship  between  the  right  of  information  and  protection  of 
privacy), corrective measures and calculation of damages. 

To what extent these divergences and possible other legislative shortcomings are responsible 
for the current situation, will need to be evaluated in the context of forthcoming discussions 
on  a  possible  review  of  the  IPR  Enforcement  Directive,  a  potential  new  proposal  for  a 
Directive  on  criminal  sanctions,  the  planned  review  of  the  Customs  Regulation  and  in 
regulatory dialogues with third countries. 

This question therefore lies outside the scope of this Impact Assessment. 

3.1.3. 

Insufficient  coordination  and  exchange  between  responsible  authorities  in  the 
Member States on best practices 

Despite  the  fact  that  there  has  been  clear  progress  in  how  Member  States  are  tackling 
counterfeiting and piracy at national levels, the cross border nature of the problem means that 
more  effective  collaboration  between  national  administrations  is  needed  to  get  the  problem 
under  control.  Administrative  cohesion  requires  a  clearer  understanding  of  national 
authorities'  strategies  and  structures,  and  improved  transparency  in  relation  to  the  methods 
used for exchanging information. Currently, there are shortcomings in these areas that prevent 
a consistently high level of IPR enforcement, throughout the Internal Market. 

In  the  Member  States,  there  have  been  many  different  and  innovative  developments. 
However, Member States are not always able to benefit from the expertise of others as there is 
no functioning mechanism to exchange information between them on a regular basis. 

Finally, cooperation on a daily basis between Member States’ authorities is often ineffective. 
A  recently  published,  external,  study  commissioned  by  DG  MARKT15  shows  that  several 
electronic  systems  exist  to  exchange  information  on  counterfeit  goods  within  a  number  of 
Member States. However, not all of the authorities involved in the fight against counterfeiting 
and piracy, in those Member States, necessarily have access to that information. Furthermore, 
there  are  no  mechanisms  in  place  that  allow  real-time  exchanges  across-borders,  to  alert 
authorities  in  other  Member  States  about  specific  products,  trends  and  potential  threats. 
Currently,  a  central  EU  customs  database,  entitled  COPIS,  is  being  developed  to  store  all 
companies'  applications  for  customs  action,  as  stipulated  in  the  Customs  Regulation. 

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COM(2010)779, available at http://ec.europa.eu/internal_market/iprenforcement/directives_en.htm. 
Directive  2004/48/EC  of  the  European  Parliament  and  of  the  Council  of  29  April  2004  on  the 
enforcement of intellectual property rights, OJ L157, 30.4.2004, p. 16. 
http://ec.europa.eu/internal_market/iprenforcement/docs/study_information_en.pdf. 

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However,  the  scope  of  COPIS  is  mainly  limited  to  exchanges  between  customs  authorities 
and the application system is specifically tailored to their needs. 

3.1.4. 

Insufficient exchange on successful private sector strategies 

Similarly,  an  external  study  carried  out  on  behalf  of  DG  Enterprise  and  Industry  in  200716 
confirms that there is currently not enough exchange on successful private sector strategies. 
Such  an  exchange  would  be  beneficial  for  businesses  of  all  dimensions,  in  order  to  create 
synergies  and  allow  them  to  focus  on  strategies  that  have  proven  to  be  effective.  This  is 
particularly  important  for  SMEs,  who  require  access  to  information  and  specific  support  in 
protecting their IP rights. 

3.1.5. 

Insufficient knowledge of persons involved in enforcement 

Counterfeiting  and  piracy  is  a  fast  moving  environment.  Those  engaged  in  enforcement 
(prosecutors, customs, police etc) therefore need to be fully aware, not only of the most recent 
trends  in  the  market,  but  also  of  developments  concerning  methods  of  investigation.  In 
particular,  they  need  to  appreciate  the  possibilities  and  limitations  attached  to  cross-border 
cooperation and how best to coordinate action most effectively. 

Although there are training measures, in Member States and at the EU level, these measures 
lack  general  coordination  and  often,  only  cover  one  target  group.  For  example,  the  OHIM 
organises series of seminars for judges sitting in trademark and design courts in the Member 
States. These seminars are likely to involve over 300 judges in 2010-2011, and will help to 
ensure that the judges share a common understanding of enforcement decisions. However, at 
present, the seminars do not address the needs of prosecutors, enforcers or customs. 

3.1.6. 

Insufficient use of technologies to prevent counterfeiting 

Numerous  innovative  techniques  and  systems  have  been  developed  by  industry  sectors  to 
prevent  copying  and  to  track  and  trace  fake  products  within  supply  chains  and  sales  points. 
However, there is a continuing lack of interaction between business sectors. Therefore there is 
insufficient  mutual  support  and  many  businesses  cannot  take  advantage  of  new  technical 
developments  to  protect  themselves.  For  this  reason,  continual  research  is  needed  to  make 
knowledge  available  on  new  technical  tools  that  can  be  used  to  prevent  or  'track  and  trace' 
counterfeited products. 

3.1.7. 

Insufficient awareness of consumers on the impact of IPR infringements 

A 2009 Eurobarometer study carried out by DG MARKT17 revealed that only between 55% 
(LT and DK) and 84% (FR) of consumers are aware that there are EU rules on counterfeiting 
and piracy. This was a much lower awareness percentage than in other policy areas. 

Furthermore,  the  study  revealed  that  that  one  out  of  five  EU  citizens  had,  on  at  least  one 
occasion,  unintentionally  bought  a  counterfeit  product.  This  fact  substantiates  the  lack  of 

16  

17  

Technopolis (2007), 'Effects of counterfeiting on EU SMEs and a review of various public and private 
IPR enforcement initiatives and resources', available at 
http://ec.europa.eu/enterprise/enterprise_policy/industry/doc/Counterfeiting_Main%20Report_Final.pdf
. 
Full  report  available  at:  http://ec.europa.eu/public_opinion/.  For  further  details  on  the  study  see  also 
Annex II. 

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awareness and the scale of the problem. In this context it should be noted that, according to 
the Eurobarometer survey, the percentage of citizens from the EU-12, who unknowingly buy 
counterfeit  products  is  much  greater  than  those  in  the  EU-15.  For  example,  approximately 
every second Romanian has later discovered that he or she has bought a counterfeit product. 
Most of these products were fashion wear and accessories (38 percent), music (13 percent), 
and consumer electronics, films and perfume (each between 9 and 11 percent). In contrast, in 
Denmark, less than 10 percent of the population have been deceived into buying fakes. 

These figures show that consumers need to be more aware and have a better understanding of 
the risks, to allow them to make more informed decisions when buying products and services. 

3.1.8.  Demand for counterfeit products and pirated content 

Not  all  consumers  buy  counterfeits  inadvertently.  Surveys  regularly  show  that  there  is  a 
considerable  share  of  European  consumers  that  knowingly  acquire  products  that  infringe 
intellectual property rights. This is also true for up- and downloading of illegal digital content. 

Where  consumers  knowingly  acquire  counterfeits  considerable  differences  can  be  observed, 
depending  on  the  product  sector.  The  2009  Eurobarometer  survey  showed  that  the  vast 
majority  of  the  population  in  the  EU  (63  to  73  percent,  see  Figure  2  below)  think  that  no 
matter the reason, it is neither acceptable nor justified to intentionally buy counterfeit goods. 
On the other hand, this still leaves one out of four people who believe it is acceptable to buy 
counterfeit  luxury  products.  Moreover,  every  third  person  feels  that  it  is  justified  to  buy 
counterfeit products when it is considered that the price of the original is just too high.  

Figure 2:  Justifications to Buy Counterfeit Products 

It's ok to buy counterfeit products, … 

… when price for
original too high

7

26

36

… when original 
not available

… when quality 
doesn't matter

5

5

22

20

40

41

27

29

30

… when it 
concerns luxury

3

18

42

31

3

4

3

4

Agree very much

Agree

Disagree

Disagree very much 

Citizens in the EUR-12 appear to be more willing to buy counterfeit goods, with more than 
half of the citizens in Latvia, Estonia or Cyprus finding it acceptable, if the price is considered 
too  high.  On  the  contrary,  citizens  in  the  UK,  Ireland  and  Denmark  overwhelmingly 
disagreed, with up to 75 percent of citizens considering it to be unacceptable. Looking at the 
socio-demographic  characteristics,  it  is  clear  that  young  citizens  and  manual  workers  were 
much  more  likely  to  feel  it  acceptable  to  buy  counterfeit  products.  However,  it  should  be 
noted  that  among  those  that  considered  it  justifiable  to  buy  counterfeit  products,  26  percent 
assume that these products have the same quality as the original. 

Concerning  online  copyright  infringements,  the  Eurobarometer  survey  shows  that  the  most 
widespread justification for downloading of illegal content is that doing it for 'personal use' is 

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acceptable  or  at  least  'not  as  bad  as'  downloading  in  order  to  re-sell  and  make  profit.  This 
mitigating stance is reinforced by the view that CDs, DVDs and cinemas are all considered to 
be  very  expensive  and  that  many  citizens,  even  if  they  could  not  download  the  material, 
would not pay the legitimate prices. 

Where  consumers  knowingly  buy  counterfeit  products  or  up-  and  download  illegal  content, 
awareness  measures  have  a  limited  impact18  (possibly  with  the  exception  of  measures 
focusing  on  the  lower  quality  of  counterfeit  products,  including  those  that  potentially 
endanger health and safety). Also the question of consumer demand for counterfeit products 
and  illegal  downloads  will  therefore  largely  have  to  be  addressed  in  another  context,  in 
particular  in  the  impact  assessments  to  be  drawn  up  to  examine  a  review  of  the  IPR 
Enforcement Directive and the appropriateness of adopting a new proposal for a Directive on 
criminal sanctions. 

3.1.9.  Lack of expertise in third countries 

Developing  and  emerging  countries  are  particularly  vulnerable  to  counterfeiting  and  piracy 
and  are  used  by  complex  criminal  networks  as  manufacturing  and  distribution  bases.  These 
countries face significant challenges and sometimes do not have the structures and experience 
to combat IPR infringements. 

Organisations such as WIPO, Interpol and WCO already provide certain training measures for 
enforcement authorities in these countries. However, while WIPO offers technical assistance 
to enable some developing countries to tailor their IP systems to their needs, these efforts do 
not always match EU needs. In particular, they have to take account of the interests of other 
WIPO  members  that  are  significant  target  regions,  such  as  the  US  and  Canada.  For  these 
countries,  the  sources  of  counterfeits  are  often  different  from  those  assailing  the  European 
market.  In  addition,  WIPO  resources  are  constrained  and  therefore  they  face  significant 
challenges in ensuring that their technical assistance has a sustainable impact. 

At the EU level, a recently published study, commissioned by the Commission's Directorate 
General  for  Trade19,  notes  that  the  different  actions  under  the  Commission's  Enforcement 
Strategy  lack  coordination  between  Commission  services  and  with  other  institutions  and 
agencies that carry out activities in this field, such as the European Patent Office (EPO) and 
the OHIM. 

3.2. 

The role of the European Observatory on Counterfeiting and Piracy 

The creation of the European Observatory on Counterfeiting and Piracy aimed at addressing 
the problems that have been set out under points 3.1.1, 3.1.3. to 3.1.7. and 3.1.9. 

3.2.1.  The Observatory's mandate 

The  Observatory  is  a  non  decision  making  network  of  representatives  of  public  authorities 
involved  in  the  enforcement  of  intellectual  property  rights  and  private  stakeholders. 
Membership  of  the  network  implies  no  specific  rights  or  privileges  other  than  to  attend 

18  

19  

This  view  is  supported  both  by  the  2009  Eurobarometer  and  by  the  ADE  study  'Evaluation  of  the 
in  Third  Countries',  November  2010, 
Intellectual  Property  Rights  Enforcement  Strategy 
http://trade.ec.europa.eu/doclib/cfm/doclib_section.cfm?sec=180&langId=en. 
ADE, see FN 17. 

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meetings and to support and contribute to the needs of the network. Furthermore, a number of 
international  organisations  (e.g.  WIPO,  OECD)  are  participating  in  the  Observatory's 
meetings as observers. Meeting agendas are proposed by the Observatory's secretariat which 
is provided by the Commission services (DG MARKT). 

At the time of its establishment, the Observatory was assigned four main tasks. In April 2009, 
the Council had defined the two primary aims of delivering independent data and assessments 
on the scope and scale of counterfeiting and piracy in the internal market and raising public 
awareness20.  The  Commission  Communication  of  September  2009  added 
further 
responsibilities associated with exchanging and promoting best practices in relation to public 
authorities and spreading of best private sector strategies21. 

Despite the comparatively short time since the Observatory's establishment and even before it 
became fully operational, the Council and the European Parliament called for new tasks to be 
added  to  the  Observatory's  mission.  Thus,  the  latest  Council  Resolution  related  to  the 
Observatory  invited  it  to  assess  the  needs  for  the  implementation  of  European  Union  level 
training programmes, for those involved in combating counterfeiting and piracy22. The recent 
European Parliament Resolution additionally called for the Observatory to compile scientific 
research on counterfeiting and IPR regulation23. 

Finally,  the  more  recently  published  study  commissioned  by  DG  TRADE  recommends  that 
the Observatory should become a single point of contact, within the Commission, for external 
parties, and an international point for the creation and dissemination of best practice24. 

For this reason, the Commission intends to assign these three new tasks to the Observatory, in 
the context of its forthcoming IPR strategy, which is planned for spring 2011. 

3.2.2.  The Observatory's problems to cope with its current and future tasks 

Experience acquired during its first year of existence has shown that even if its current range 
of  tasks  are  not  expanded,  the  Observatory's  organisational  structure  does  not  allow  it  to 
become fully operational. 

As  indicated  earlier,  the  Observatory  was  established  within  the  structures  of  DG  MARKT. 
Within DG MARKT, currently all of the tasks related to the Observatory are carried out by a 
team of two administrators and one assistant, the latter having been seconded to DG MARKT 
from the OHIM for a limited period of time. This setting was appropriate for the launch phase 
of  the  Observatory,  where  its  institutional  framework  was  established  through  consultations 
and meetings. However, it is not suited to the operational activities (such as data collection, 
training,  research  etc.)  that  the  Observatory  should  now  start  to  roll  out.  Moreover,  the 
Observatory does not have access to a suitable support infrastructure in terms of IT (for the 
creation,  running  and  updating  of  extensive  data  bases  on  case  law,  trainings,  public 
awareness  campaigns,  scientific  research  on  technologies,  dedicated  search  engines  and 
information  dissemination,  including  specific  alert  systems),  meeting  rooms  etc.,  or  to  a 
designated  source  of  funding  that  would  allow  the  outsourcing  of  these  tasks.  Instead,  the 

20 
21 
22 
23 
24  

Council Resolution of 25 September 2008. 
COM(2009)467. 
Council Resolution of 1 March 2010. 
European Parliament Resolution of 22 September 2010, 2009/2178(INI). 
ADE, see FN 17. 

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Observatory  is  obliged  to  make  use  of  Commission  resources,  which  are  not  specifically 
designed  to  meet  its  growing  responsibilities  and  needs.  Furthermore,  with  only  two 
administrators,  forming  the  secretariat  to  the  Observatory,  it  is  not  possible  to  provide  the 
expertise  needed  to  deliver  all  of  the  specialist  tasks  with  which  the  Observatory  has  been 
entrusted.  

Instead,  the  current  resources  only  allow  the  Observatory  to  deliver  on  its  minimum 
objectives  and  the  Commission  is  consequently  constrained  to  strictly  prioritising  the 
Observatory's  activities.  At  present,  the  Observatory's  work  is  essentially  limited  to  the 
following: 

–  two  Observatory  meetings  of  the  private  sector  representatives,  the  representatives  from 
the Member States or both groups; due to the lack of dedicated budgetary resources for the 
Observatory the costs of these meetings, in the past, could only be financed with help from 
Council Presidencies and private stakeholders, granted on an ad hoc basis25; 

–  around ten meetings of working groups per year (e.g. on legal matters, public awareness, 

statistics etc); 

–  the organisation of one annual conference as an awareness raising activity; 

–  an external study that is aimed at developing a general methodology to collect and analyse 

the data. The results of this study are expected for the end of 2011. 

For  this  reason,  the  Observatory  currently  has  serious  difficulties  in  delivering  its  original 
tasks  in  terms  of  data  collection,  spreading  best  practices  and  improving  cooperation  and 
raising public awareness: 

–  Concerning  data  collection  and  analysis,  the  Observatory  should  in  future  apply  a 
methodology (developed in the external study) on a regular basis and produce general and 
sector-specific  reports.  However,  ensuring  the  Observatory's  capacity  to  produce  reliable 
information  and  data  for  all  27 Member  States  necessitates  the  setting  up  of  a  data 
gathering  mechanism,  as  well  as  an  appropriate  IT  structure  to  run  relevant  analytical 
systems  and  databases,  on  a  day  to  day  basis.  A  system  such  as  this  requires  relevant 
expertise  in  statistics  and  IT  development.  Furthermore,  it  would  require  significant 
investment,  in  terms  of  establishment,  maintenance  and  running  costs.  Such  skills  and 
means for investment are currently unavailable within the Observatory. 

–  In order to promote and spread best practices between public authorities and best practice 
private  sector  strategies,  the  Observatory  would  need  suitable  archiving  systems  and  the 
capacity  to  arrange  specific  events  to  consult  on  developments,  with  appropriate 
representatives  from  Member  States  and  the  private  sector.  Again,  at  present,  the 
Commission is unable to provide resources to enable the necessary analyses to be carried 
out,  relevant  records  to  be  stored,  accessible  and  searchable  systems  to  be  set  up  or 
organised events to take place. 

Also  improving  day-to-day  cooperation  through  an  electronic  network  for  'rapid' 
information  sharing  on  IPR  infringements  is  not  feasible  at  this  stage.  The  establishment 
and administration of such a system is very demanding in terms of financial, technical and 

25  

For details on this support from third parties see point 5 of Annex III. 

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human  resources  and  thus,  in  the  current  circumstances,  it  would  be  difficult  for  the 
Observatory to deliver on this aim. 

–  The  current  resources  of  the  Observatory  are  also  not  sufficient  to  take  more 
comprehensive  action  to  raise  consumer  awareness.  Moreover,  the  introduction  of 
extensive  consumer  awareness  programmes,  based  on  successful  campaigns  already 
carried  out  in  the  EU,  requires  sustainable  funding  and  the  employment  of  specialists  in 
this area. 

3.3. 

Likely consequences if no measures are taken (baseline scenario) 

3.3.1.  The situation of the Observatory in the mid-term 

With  the  new  tasks  that  have  been  identified  for  the  Observatory,  its  situation  is  bound  to 
deteriorate. 

–  Technical training programs and professional awareness events require experts, specialist 
materials,  resources,  appropriate  training  facilities  and  adequate  administrative  staff,  to 
examine  training  needs,  ensure  coordination  with  already  existing  measures  and  design 
new  programs.  Gaining  access  to  such  resources  will  be  impossible  without  sufficient 
financial means.  

–  The same applies as far as research on new technical tools that can be used to prevent or 

'track and trace' counterfeited products.  

–  Furthermore, technical enforcement training and assistance at an international level cannot 
be  provided  in  the  current  situation.  Presently  the  Observatory  has  no  means  to  provide 
such capacity building programmes in third countries. 

3.3.2.  Assistance  to  be  provided  by  the  Office  for  Harmonisation  in  the  Internal  Market 

(OHIM) 

Given the need to increase the Observatory's activities in the short term, the Commission has 
decided to conclude a Memorandum of Understanding (MoU) with the OHIM. Through the 
MoU, the OHIM commits to providing technical support to the Observatory, through certain 
related activities that the OHIM already carries out as "accessory activities" to the registration 
of trademarks and designs. However, the MoU will be limited to trademarks and designs, in 
accordance  with  the  OHIM's  constrained  framework  and  therefore,  the  OHIM  will,  in 
particular, be unable to work on issues specific to other IP rights, such as copyright or patents. 

Under the MoU, the OHIM will assist the Commission in the following: 

–  on  data  collection:  the  follow-up  to  the  external  study  aimed  at  developing  a  general 

methodology to collect and analyse the data; 

–  on  public  awareness-raising:  a  plan  to  define  a  strategy  concerning  infringements  of 

trademarks and designs, and the organisation of a public awareness event in 2011; 

–  on training: the establishment on an online inventory of available training courses and the 
provision of trainings for enforcement authorities, as well as an e-learning tool, with regard 
to infringements of trademarks and designs; 

EN 

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–  the organisation of three meetings of the Observatory in 2011. 

Despite these improvements, the Observatory will still, without any improvements concerning 
its  infrastructure  and  funding,  continue  to  be  unable  to  carry  out  a  considerable  number  of 
tasks. These include: 

–  Data collection, public awareness measures and training related to patents and copyright; 

–  Identification and exchange of best public and private practices, and improving day-to-day 

cooperation; 

–  Research on technical tools to prevent counterfeiting and piracy; 

–  International cooperation and assistance. 

Furthermore, while the MoU initiative will be very beneficial in the short term, it also has a 
clear  link  with  a  possibility  of  having  the  Observatory  moved  entirely  to  the  OHIM. 
Assistance  in  organising  a  public  awareness  event  and  a  number  of  Observatory  meetings, 
through the MoU, is currently limited to the year 2011, and as such, the issue will need to be 
readdressed  at  the  end  of  2011,  in  the  light  of  any  future  developments.  If  as  a  result  a 
decision were to be taken to tackle the current problems of the Observatory through another 
measure  (i.e.  other  than  entrusting  OHIM  with  the  tasks  of  the  Observatory  in  a  more 
enduring way, it could then be anticipated that the OHIM would not be prepared to commit to 
a  more  long  standing  relationship  beyond  2011.  In  the  same  way,  it  cannot  be  expected,  in 
such a scenario, that the assistance being made available by the OHIM under the MoU to DG 
MARKT could be extended into 2012. 

The Observatory also cannot rely, in the longer run, on the ad hoc financial support received 
from  Council  Presidencies  and  private  stakeholders  in  the  past.  Therefore,  taking  no  action 
could  even  mean  that  the  current  meeting  activities  of  the  Observatory  would  have  to  be 
reduced in the future, due to a further reduced operational budget and further reduced human 
resources to manage its activities. 

3.3.3. 

Impacts of the current situation 

IPR infringements significantly reduce investments in innovation and destroy jobs. The 
more  the  businesses  fear  that  their  IP  rights  are  not  being  efficiently  protected  the  less 
incentive  they  have  to  invest  in  research  and  innovation.  Their  resources  are  diverted  to 
protecting existing brands, products and services, and therefore fewer resources are available 
to  develop  innovative  new  products  and  services,  ultimately  resulting  in  lower  economic 
growth and lost jobs. According to a recent report by the Union des Fabricants in France26, 
27 percent of companies spend more that EUR 1 million per year protecting their rights. In the 
same  report,  57  percent  of  companies  recognised  the  direct  impact  of  counterfeiting  on 
employment,  while  54  percent  stated  that  counterfeiting  is  a  barrier  to  innovation.  This 
conclusion is supported by a study done by the Centre for Economics and Business Research 
(CEBR),  which  stresses  that  a  concomitant  reduction  in  investment  could  have  a  negative 

26 

Union des Fabricants April 2010 report, available at 
http://www.unifab.com/downloads/RAPPORTUNIFABavril2010.pdf. 

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effect  on  GDP  across  the  EU,  to  within  the  region  of  EUR  8  billion  per  year27.  A  study  by 
Frontier Economics, in 2009, indicated that 2.5 million jobs were destroyed in G20 countries 
alone by counterfeiting and piracy28. While these are largely industry figures, for the reasons 
explained above, they provide an indicator on the size of the problem. 

Concerning  piracy  (or  online  copyright  infringements),  the  economic  impact  is  less  clear  at 
this  stage,  due  to  the  very  recent  nature  of  this  phenomenon.  The  most  recent  study  in  this 
area  carried  out,  in  2010,  by  Paris-based  TERA  Consultants  and  commissioned  by  the 
International  Chamber  of  Commerce’s  Business  Action  to  Stop  Counterfeiting  and  Piracy 
(BASCAP) initiative, indicates that EUR 10 billion and more than 185,000 jobs were lost due 
to  piracy  in  the  music,  movie,  TV,  and  software  industries  in  the  EU  in  200829.  However, 
other studies30 deny any negative economic effect of piracy and point to potentially positive 
implications for consumer welfare. 

Counterfeiting  threatens  the  health  and  safety  of  European  consumers.  Apart  from  the 
general  problem  of  consumers  buying  counterfeit  products  in  good  faith  and  suffering 
monetary loss, there is also the growing concern about the perceptible increase in volumes of 
substandard  and  hazardous  fake  products,  which  pose  significant  health  and  safety  risks  for 
citizens.  In  its  2009  'Report  on  EU  Customs  enforcement  of  intellectual  property  rights'31, 
DG TAXUD  notes  that  while,  in  the  past,  luxury  goods  were  most  frequently  hit  by  IPR 
infringements,  more  and  more  potentially  dangerous  items,  used  by  European  consumers  in 
their  daily  lives,  are  being  detained  by  customs.  These  include  medicines,  cosmetics, 
foodstuffs,  beverages,  shampoos,  toothpastes,  toys,  household  appliances,  automotive 
components,  electrical  components,  chemicals  and  toiletries32.  In  total,  approximately 
17 million  items,  or  18  percent  of  the  total  number  of  detentions  made  by  EU  custom's 
authorities in 2009, had the potential to place consumers at risk33. 

The rise of potentially dangerous counterfeit consumer products was illustrated in May 2010, 
when  a  two-year  Europol  investigation  resulted  in  the  seizure  of  800  tons  of  counterfeit 
electrical  products,  including  fake  electricity  generators,  power  drills  and  chainsaws,  which 
did not comply with any European safety standards34. UNICRI also confirms that dangerous 
counterfeits have infiltrated the automotive markets and that the incidence of counterfeit spare 
parts  in  the  automotive  sector  could  represent  a  loss  to  the  industry  of  USD 12  billion  per 

27 

28 

29 
30  

31 

32 

33 
34 

CEBR (2000), The Impact of Counterfeiting on Four main sectors in the European Union, Centre for 
Economic and Business Research, London. 
Frontier Economics (a report commissioned by BASCAP), 'The impact of counterfeiting on 
Governments and Consumers', May 2009, available at: 
http://www.iccwbo.org/uploadedFiles/BASCAP/Pages/Impact%20of%20Counterfeiting%20on%20Gov
ernments%20and%20Consumers%20-%0Final%20doc.pdf. 
http://www.iccwbo.org/bascap/id35360/index.html. 
Van  Eyck,  Poort  and  Rutten,  Legal,  Economic  and  Cultural  aspects  of  File  Sharing,  in: 
Communications & Strategies, 77, 1st quarter 2010, p.35. 
Available at: 
http://ec.europa.eu/taxation_customs/customs/customs_controls/counterfeit_piracy/statistics/index_en.h
tm). 
Compare  with  Forzley,  M.  (2003)  Counterfeit  goods  and  the  public's  health  and  safety,  International 
Intellectual Property Institute. 
DG TAXUD, see FN 29. 
http://www.europol.europa.eu/index.asp?page=news&news=pr100521.htm. 

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year35. In addition, UNICRI reports that according to the Toy Industries of Europe (TIE), one 
toy out of ten, in Europe, could be a counterfeit36. 

According to the 2009 Frontier Economics study, the economic cost of deaths resulting from 
counterfeiting amounts to EUR 14.5 billion and the additional cost to health services, incurred 
in treating injuries caused by dangerous fake products approximately adds another EUR 100 
million37.  Moreover,  the  Centre  for  Medicine  in  the  Public  Interest,  a  US-based  medical 
research group, predicted that worldwide sales of counterfeit medicines would reach USD 75 
billion in 2010, which is a 90 percent surge from 200538. 

IPR infringements create serious problems for European SMEs. The 2007 study carried 
out  on  behalf  of  the  DG  Enterprise  and  Industry  confirmed  that  SMEs  were  found  to  have 
been affected by lost sales, as a direct result of counterfeiting and piracy39. The report noted 
that, in 2006, 20 percent of SMEs in the EU estimated that around 5 percent of job losses in 
their companies had been specifically due to counterfeiting and piracy and that the problem 
also reduced their ability to retain key staff. The staff of these SMEs was concerned about the 
future  prospects  of  the  businesses,  due  to  the  continued  rise  of  counterfeit  and  pirated 
products.  Moreover,  the  report  confirmed  that  many  SMEs  lack  sufficient  knowledge, 
resources  and  finances  to  pursue  infringers.  In  2008,  the  Commission  carried  out  a  Best 
Practice project aimed at helping SMEs to better enforce their intellectual property rights, by 
improving  available  support.  As  part  of  the  project,  SME  support  and  IPR  enforcement 
experts  from  Member  States  analysed  SMEs’  perceived  needs  and  available  enforcement 
options40.  As  a  result,  the  Best  Practice  Group  encouraged  the  co-ordination  of  IPR 
enforcement  activities  at  national  and  EU  levels,  thus  supporting  the  creation  of  an  EU 
Observatory  on  counterfeiting  and  piracy  to  actively  help  SMEs  fight  the  dangerous 
phenomenon of counterfeiting and piracy. 

IPR infringements result in losses of tax revenues due to a reduction in declared sales. 
Value  added  tax  (VAT)  authorities  in  the  UK  alone  estimate  losses  equivalent  to  GBP  1.5 
billion due to the circulation of counterfeit goods41. This deficit in tax revenue may result in 
tightening  government  expenditure  in  crucial  areas,  such  as  social  policies42.  The  Frontier 
Economics' study estimated that, in 2009, EUR 62 billion in tax revenue and higher welfare 
spending was lost in G20 countries due to counterfeiting and piracy43. 

35 

36 
37 
38 

39 

40 

41 

42 

43 

UNICRI, 'Counterfeiting: a global spread, a global threat', 2008, 
http://counterfeiting.unicri.it/report2008.php. 
http://www.unicri.it/news/0712-4_Counterfeiting_PressKit.php  
Frontier Economics, see FN 27. 
http://www.cmpi.org/in-the-news/in-the-news/fake-medicines-illegal-immoral-and-liable-to-increase-
drug-resistance/. 
Technopolis (2007), http://ec.europa.eu/enterprise/enterprise_policy/industry/doc/ 
Counterfeiting_Main%20Report_Final.pdf. 
http://ec.europa.eu/enterprise/newsroom/cf/document.cfm?action=display&doc_id=4053 
&userservice_id=1&request.id=0. 
Union des Fabricants, 2003. available at: 
http://counterfeiting.unicri.it/docs/Union%20des%20Fabricants.Counterfeiting%20and%20Organised%
20Crime%20Report.2nd%20edition2004.pdf. 
IACC, 2005, available at: 
http://counterfeiting.unicri.it/docs/International%20AntiCounterfeiting%20Coalition.White%20Paper.p
df. 
Frontier Economics, see FN 27. 

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Counterfeiting and piracy is attractive to organised crime. At present, profit margins from 
counterfeiting  and  piracy  are  extremely  high  and,  in  comparison  to  other  forms  of  illegal 
activities,  the  penalties  are  low.  As  a  result,  they  have  become  an  attractive  investment  for 
organised crime44. UNICRI confirms that organised crime manages a significant proportion of 
counterfeit  trafficking.  The  global  trade  in  counterfeiting  and  piracy  involves  complex 
manufacturing  chains  and  connections  between  legitimate  and  other  illegitimate  business 
partners, some of whom operate in other illicit trades such as illegal immigration and human 
trafficking45.  A  2009  report  from  Rand  (Center  for  Global  Risk  and  Security)46,  which 
compiled  responses  from  120  law  enforcement  representatives  from  over  20  countries, 
confirms  the  existence  of  "compelling  evidence  of  a  broad  and  continuing  connection 
between  film  piracy  and  organised  crime.  Piracy  is  high  in  payoff  —  with  profit  margins 
greater than those of illegal narcotics — and low in risk, often taking place under the radar of 
law  enforcement."  In  particular,  the  Rand  report  also  identified  movie  piracy  as  a  funding 
method of the IRA, D Company India/Pakistan (both are major organised crime and terrorist 
organizations).  Additionally,  Interpol  provides  examples  of  how  counterfeiting  and  piracy 
financially  supports  groups  such  as  Chechen  separatists,  Hezbollah  and  Al-Qaeda47.  The 
Frontier  Economics'  study  offers  the  added  information  that  during  2008,  G20 countries 
suffered  EUR 20  billion  in  increased  costs  of  crime  due  to  counterfeiting  and  piracy.  One 
example where the involvement of organised criminal networks became evident was in a joint 
operation of law enforcement agencies concluded in May 201048. With the support of Europol 
and  Eurojust,  agencies  from  seven  European  Union  Member  States  took  action  against  a 
network  of  criminals  who  were  behind  a  substantial  system  of  trafficking  counterfeit 
commodities. Europol identified  a criminal  network  centred in  the vicinity of Naples which 
stretched  to  Australia,  Iceland  and  Finland.  The  subsequent  seizure  of  materials  and  assets 
exceeded a value of EUR 11 million. 

3.3.4.  Likely development of the situation over the next few years 

Past  experience  and  information  currently  available  suggests  that,  with  the  economy 
recovering  from  the  crisis,  an  increase  in  counterfeiting  and  piracy  can  be  expected. 
Therefore, its dangerous and damaging impacts will become even more prevalent and serious 
in future years. 

As previously explained, without a solid base of data, it is difficult to provide figures on what 
this will mean in terms of the scope and scale of counterfeiting and piracy a few years from 
now. However, if the trend in the customs area continues at the same rate as that witnessed 
during the five years immediately prior to the crisis (i.e. a yearly increase of between 13 and 

44 

45 
46  

47 

48 

http://europa.eu/rapid/pressReleasesAction.do?reference=MEMO/10/272&type=HTML; OECD (1998), 
'The Economic Impact of Counterfeiting', p. 37; Europol, 'OCTA 2009 - EU Organised Crime Threat 
Assessment', 
http://www.europol.europa.eu/publications/European_Organised_Crime_Threat_Assessment_(OCTA)/
OCTA2009.pdf. 
http://www.unicri.it/news/0712-4_Counterfeiting_PressKit.php. 
Rand, 'Film Piracy, Organised Crime, and Terrorism', March 2009, 
www.rand.org/pubs/monographs/2009/RAND_MG742.pdf. 
Interpol 
financing', 
http://www.interpol.int/public/ICPO/speeches/SG20030716.asp; see also European Commission (2006), 
'A serious problem for everyone', 
http://ec.europea.eu/taxation_customs/customs/customs_controls/countefeit_piracy/compating/index_en
.htm. 
See http://www.europol.europa.eu/index.asp?page=news&news=pr100521.htm 

intellectual  property  crime  and 

links  between 

terrorist 

(2003), 

'The 

EN 

18 

   EN 

 
                                                 
40 percent), this would mean that in 2014, we could expect the number of registered cases to 
have at least doubled, thus approaching around 100,000 per year. 

Concerning training and awareness raising measures as well as research and data collection, 
and  considering  the  position  of  the  Member  States  in  times  of  austerity  in  public  budgets, 
there are no indications that any additional action to strengthen enforcement can be expected. 
The  same  is  true  for  the  exchange  of  best  practices  and  private  sector  strategies  and  the 
improvement  of  day-to-day  cross-border  cooperation,  which  are  difficult  to  organise  at  a 
national level. On the private sector side, important activities can be expected particularly in 
the area of research on "tracking and tracing" methods. However, there is likely to be some 
reluctance  on  the  part  of  companies  to  share  their  results,  which  may  be  considered  to  be 
valuable assets that could provide a competitive advantage. 

With reference  to international  activities, taking into account the  number  of institutions  and 
agencies involved the existing coordination problems at EU level are likely to remain. 

EN 

19 

   EN 

 
Problem tree 

The European Observatory on Counterfeiting and Piracy is unable to 
deliver on its aims

Lack of hu man
resources

Lack of 
fin ancin g

Lack of infrastructu re in 
terms of IT, meetin g 
facilities etc.

Lack of 
expertise

Broadened
range of 
tasks

Lack of 
independent
robust figures 
and statistics

Lack of 
promotion 
and spread
of best 
practices 
among
public 
authorities

Lack of 
speading of 
successful
private
sector
strategies

Lack of 
professional
European 
public 
awareness
campaigns

Lack of 
technical
training and 
development
programs

Lack of 
research and 
information 
on technical
tools and 
resources

Lack of 
international 
cooperation
and 
technical
assistance

Lack of a 
comprehensive
EU-wide
system for the 
exchange of 
information 

SOCIET Y

CON SU M ER S

COM PANIES

-Lost jobs

-Lower ta x rece ipts

-Increased crim e 

-Safet y ris ks

-Les s investm ents d ue to m or e risks

-Lowe r va lue/q ual ity pro ducts

-Low er f ocus o n in no vat io n

-Unw illing purchas es

-Safety ris ks

-Low er va lu e/q uality pro ducts p roduce d/so ld

Sign ifican t h arm to the European econ omy, h ealth an d security of European citizen s

EN 

20 

EN 

 
  
 
 
4. 

SUBSIDIARITY 

Many of the activities that have been assigned to the European Observatory on Counterfeiting 
and Piracy are of a cross-border nature, involving all  27  Member States, and therefore they 
cannot  be  effectively  delivered  by  individual  Member  States.  As  far  as  there  is  a  need  to 
improve  bilateral  cooperation  between  two  Member  States,  in  individual  cases  procedures 
could  theoretically  be  improved  at  this  level.  However,  given  that  the  tools  and  methods 
needed in such a context would be similar for all Member States, it seems more efficient to 
develop them at EU level. This will ensure that solutions that are developed do not build on 
individual  Member  States'  specificities,  but  provide  benefits  for  all  Member  States. 
Furthermore,  as  far  as  relations  with  third  countries  are  concerned,  coordination  within  the 
Commission services and with other EU and international agencies must take place at the EU 
level. 

Therefore, an EU initiative seems to be the most effective and appropriate way forward. Such 
an initiative could potentially be based on Articles 114 and 118(1) TFEU (ordinary legislative 
procedure). A legislative proposal could be tabled in spring 2011. 

5. 

OBJECTIVES 

General  objective:  To  enhance  effective  enforcement  of  IPR,  in  order  to  avoid  significant 
harm being caused by counterfeiting and piracy to the European economy and to the health 
and safety of European citizens. 

Specific objective: To enhance knowledge, among public authorities and private stakeholders 
about  the  scope,  impact  and  trends  related  to  counterfeiting  and  piracy  and  about  effective 
techniques to fight the problem, and to improve day-to-day cooperation; to inform consumers 
of  the  economic  impact  and  dangers  related  to  counterfeiting  and  piracy  and  to  help  avoid 
them  from  being  misled  into  buying  fake  products;  to  improve  the  coordination  of  actions 
directed towards third countries. 

Operational objectives: Ensure that the Observatory has the necessary infrastructure to deliver 
its  activities  effectively,  as  quickly  as  possible  and  with  minimum  costs  for  the  EU  budget. 
Such an infrastructure implies: 

–  sufficient human resources,  

–  the necessary IT capacities, 

–  sustainable funding,  

–  the expertise required to carry out its tasks, and 

–   the  necessary  independence  from  vested  interests,  avoiding  any  undue  influence  from 

stakeholders, particularly as far as data collection and analysis would be concerned. 

EN 

21 

   EN 

 
These objectives are in line with existing EU policies and strategies, such as Europe 202049. 
They also fit with the Commission's main priorities and proposals concerning its IPR strategy 
for Europe50. 

49 
50 

COM(2010)2020. 
COM(2008)465; see also Commission Communication of 27 October 2010: 'Towards a Single market 
Act – for a highly competitive social market economy', COM(2010)608 final. 

EN 

22 

   EN 

 
                                                 
O b je c tiv e s  h ie ra rc h y

E n ha n ce p ro p e r en fo rc em e n t o f IP R  in  E u rop e  to a vo id
ha rm c au s ed to  the  E u ro pe an  ec on o m y an d  to  the  
h e alth a n d sa fe ty o f E u rop e n c itize ns

b y co u nterfeitin g an d  p ira cy

G E N E R A L    
O B JE C T IV E

Ind e p e nd e n t, 
EU  w id e
co lle ction  
a nd  a n al ys is
o f o b je ctive  
a nd  re liab le
d ata  

Exch a n g e o f 
b e st 
p ra ctice s 
b e tw e e n
p u blic  
a u th o ritie s
a n d b e tw ee n
p ri va te
sta ke ho ld e rs

Pu b lic a n d 
p rofe ssio n a l
a w a re n e ss
ca m p aig n s

T ra inin g  
p ro gra m s for 
p ro fessio n a ls

R e se a rch o n  
to o ls to fig h t
co u n terfe itin g
a n d  p ria cy

C oo p e ra tio n
w ith a n d  
ca p a city
b u ild in g  in 
th ird
co u n tries

Po ssib ility to  
exc ha n g e 
info rm a tion  
be tw e e n
en fo rcem e n t
au th o ritie s

S P E C IF IC     

O B JE C T IV E

E n sure that the E u rop ean  O b servatory o n C ou nterfeiting an d P iracy h as 
necessary in frastru cture to d eliver its activities effe ctively th ro ug h :

O P E R A TIO N A L  
O B JE C TIV E S

Su fficie n t
h um a n
res ou rce s

Su sta in a ble
fu n din g

N e ce ssa ry
IT  an d  
m e etin g  
ca p a cities

E xpe rtise  
re q uire d to 
ca rry o u t its
ta sks

N ece ss ary
in d e p en d e n ce
fro m ve ste d
in te res ts

EN 

23 

EN 

 
  
 
6. 

POLICY OPTIONS AND ANALYSIS OF THEIR IMPACTS 

6.1. 

Introduction 

The  following  three  main  options  are  explored  with  a  view  to  the  achievement  of  the 
objectives identified in section 5: 

Option 1: The tasks are delivered within the Observatory which continues to be administered 
by DG MARKT, with uplift in available resources: 

–  Sub-option 1a – DG MARKT's human and budgetary resources are increased. 

–  Sub-option  1b  –  The  management  of  the  Observatory  is  outsourced  on  a 

commercial basis to an external contractor. 

Option  2:  The  tasks  are  delivered  by  an  external  body,  on  the  basis  of  an  industry  led 
initiative: 

–  Sub-option 2a – Industry led initiative, financed by private sector stakeholders. 

–  Sub-option 2b – Industry led initiative, financed by a Commission grant/program. 

–  Sub-option 2c – Public-private partnership (PPP). 

Option 3: The Observatory is entrusted to an EU agency: 

–  Sub-option 3a – The Observatory is entrusted to a newly created EU agency. 

–  Sub-option 3b – The Observatory is entrusted to an existing EU agency. 

Whichever  option  is  chosen,  the  Commission  will  retain  the  political  control  of  EU  IPR 
enforcement policies which are to be considered core tasks of the Commission. 

6.2. 

Option  1  sub-option  1a:  Increase  of  DG  MARKT's  human  and  budgetary 
resources 

6.2.1.  Description 

The  overall  tasks  would  be  delivered  by  the  Commission.  DG  MARKT  would  continue  to 
manage  the  Observatory  with  its  additional  resources.  However,  under  this  option  where  a 
final  decision  would  be  taken  to  keep  the  Observatory  inside  the  Commission,  the  OHIM 
could not be expected to continue its assistance. 

6.2.2.  Analysis 

If  staffed  sufficiently,  the  Commission  services  could  deliver  the  Observatory's  tasks  in  a 
satisfactory  way,  whilst  ensuring  the  necessary  independence  from  vested  interests.  In 
particular, due to its position as an institution and its comprehensive rules on data protection, 
the  Commission  services  would  be  in  a  comparatively  strong  position  to  obtain  access  to 
necessary data. In organisational terms, there would be no changes compared to the baseline 
scenario, so the Observatory's governance structure would remain unaffected. 

EN 

24 

   EN 

 
In  terms  of  human  resources,  under  this  option,  DG  MARKT  would  retain  two  AD  staff  to 
continue  to  carry  out  policy  related  tasks,  including  those  aligned  to  IP  rights  other  than 
trademarks and designs. In addition, the DG MARKT personnel would provide briefings and 
coordinate policies linked to the work of the Observatory. 

Annex III shows that in this scenario seven staff would have to be employed during the first 
two years, in addition to the current three staff members. The majority of these additional staff 
(four  persons)  would  to  be  employed  as  officials  or  temporary  staff,  dealing  with  essential, 
substantive  work  strategies  and  initiatives  related  to  raising  public  awareness,  training,  the 
development of technical tools and databases and systems to improve information exchange 
The  other  three  members  of  staff,  as  well  as  the  replacement  for  the  assistant  currently  on 
secondment  from  the  OHIM  and  dealing  with  the  Observatory  could  be  contract  agents, 
providing  support  in  terms  of  IT  and  the  organisation  of  meetings.  At  cruising  speed 
(24 additional persons plus the replacement for the assistant), staff should probably consist of 
fifteen  officials/temporary  agents  and  ten  contract  agents.  The  posts  for  the  temporary  staff 
and/or officials would have to be made available from the Commission's establishment plan, 
which however will not increase over the next three years, in line with the Commission's own 
commitment  not  to  request  any  new  posts  for  the  period  between  2009  and  201351.  In  this 
situation,  an  increase  in  staff  numbers  of  the  magnitude  mentioned  above  seems  hardly 
realistic. 

Furthermore,  even  in  a  situation  where  the  staff  would  be  made  available,  the  largely 
technical work to be carried out in the context of the Observatory would constantly need to 
compete with other primary tasks of the Commission, in particular policy making. Therefore, 
a permanent threat would exist that staff assigned to support its activities could be reallocated, 
even on a temporary basis, to other urgent tasks in the policy field. This would jeopardise the 
continuity of the Observatory's work. 

Finally, although the Commission's IT services would be technically able to run systems, such 
as  those  required  by  the  Observatory,  there  would  be  a  serious  risk  that  the  creation  and 
management of these systems would not be assigned the necessary priority, but ranked after 
other primary tasks, scheduled to ensure the running of the Commission's daily activities. A 
similar risk would also exist with a view to certain tasks related to public awareness strategies 
and campaigns. 

If  these  obstacles  are  overcome,  this  option  could  be  put  in  place  within  a  relatively  short 
period of time as technically it would only require making the budgetary arrangements within 
the  Commission's  budget  and  recruiting  the  necessary  staff.  In  order  to  manage  the 
recruitment procedures and the integration of the staff, it would however seem appropriate to 
expand  the  Observatory's  tasks  in  two  stages,  based  on  an  order  of  priority  (for  details  see 
Annex III). 

To summarise, while this option would theoretically be suited to meet the objectives, in the 
current situation, it does not seem a realistic option to solve the Observatory's problems. 

The total costs of this option are detailed in Annexes III and IV. Depending on the design of 
the rapid information exchange system to be chosen, these would be the following: 

51  

Commission Report of 24 April 2007: 'Planning & optimising Commission human resources to serve 
EU Priorities', SEC(2007)530. 

EN 

25 

   EN 

 
                                                 
Table 1: Costs of option 1a (compared to baseline scenario) 

Years 

Staff 
required 

Costs52 

Admin 
Costs 

Meeting/ 
missions 
costs 

Costs IT systems 

Total yearly costs 

Basic 

Sophisticated 

Basic IT 

Sophisticated
IT 

n53 – 
n+1 

8 

0.77 

incl. 

0.5 

1.9 

2.9 

3.17 

4.17 

n+2 + 

25 

2.57 

incl. 

0.59 

2.23 

3.01 

5.398 

6.17 

6.3. 

Option  1  sub-option  1b:  Outsourcing  on  a  commercial  basis  to  an  external 
contractor 

6.3.1.  Description 

Under  this  sub-option,  DG  MARKT  would  not  run  the  Observatory's  operational  activities 
itself,  but  only  act  as  the  supervising  contract  manager,  employing  one  or  several  external 
contractors to help deliver the Observatory's tasks. 

6.3.2.  Analysis 

The  governance  structure  of  the  Observatory  would  remain  unaffected  as  the  Commission 
would continue to be in charge.  

Also  most  of  the  Observatory's  activities  set  out  above  could  be  successfully  carried  out 
through an external contractor and therefore most of the objectives set out in section 5 could 
be met. An exception applies however in relation to the task of data collection and analysis. In 
this  respect,  the  problems  encountered  in  the  context  of  previous  studies  on  the  scope  and 
impact  of  counterfeiting  and  piracy  makes  it  appear  unlikely  that  private  stakeholders  and 
public authorities would be willing to share data, which is often perceived as sensitive, with 
external  private  sector  contractors,  even  if  the  Commission  would  remain  ultimately 
responsible. Therefore, although it would be technically possible to outsource this activity, it 
seems questionable as to whether the objective pursued would be attainable. 

The  time  required  to  put  this  option  in  place  would  be  about  one  year  more  than  under 
option 1a,  as,  apart  from  making  the  budgetary  arrangements,  the  tender  procedures  would 
also  have  to  be  carried  out  before  the  Observatory's  activities  could  be  launched.  However, 
this delay would be compensated for by the fact that all of the Observatory's activities could 
be launched in parallel. 

The impact for the EU budget implied under this option would probably be slightly higher in 
the  first  two  years  than  under  option 1a,  and  could  be  slightly  lower  in  the  years  to  follow. 
Given  the  complexity  of  the  tasks,  it  seems  unrealistic  that  a  single  company  or  a  single 
consortium would be capable of carrying out all of the different strands of work. The pillars of 

52  
53  

All costs in EUR million. 
Year n: Year in which the measure would become effective. 

EN 

26 

   EN 

 
 
                                                 
actions  would  be  focused  on  very  divergent  issues,  such  as  public  awareness,  enforcement, 
legal matters, technical assistance, IT, specialised research, training etc. Also, most of these 
actions are designed to run over extended periods of time. An ideal contractor would therefore 
need  to  be  a  specialist  in  all  of  these  aspects  and  at  the  same  time  be  able  to  provide  the 
guarantee that all of these actions could be secured over a considerable time span. Based on 
current knowledge, finding a suitable contractor, with the necessary capabilities, facilities and 
capacity,  seems  unlikely.  Instead,  it  is  estimated  that  to  deliver  the  Observatory's  pillars  of 
work, between seven and ten different contractors, with specialised competencies, would be 
required (for details see Annex V). 

The management of these contracts (including the preparation of calls for tender, evaluation 
processes, contract negotiations, monitoring of contract performance and ensuring coherence 
between the different projects) would cause additional costs. 

In contrast to option 1a, all staff currently working on the Observatory's activities would also 
need to be maintained. In particular, the AST official to organise meetings etc would continue 
to be needed as this 'horizontal task' would not be included within the contracts. 

An estimation of potential contracts and indicative costs is outlined in Annex V. Compared to 
the baseline scenario, they can be summarised as follows: 

Table 2: Costs of option 1b (compared to baseline scenario) 

Years  Contract 

costs 
(other 
than IT) 

Admi
n 
Costs 

Cost for 
meetings 
+missions 

COM 
staff 
contract 
managem
ent 

Cost 

Costs IT systems 

Total yearly costs 

Basic 

Sophistic
ated 

Basic 
IT 

Sophisticated
IT 

n – 
n+1 

2.11 

incl. 

0.56 

4-6 

0.26-0.4 

1.9 

2.9 

n+2 + 

2.11 

incl. 

0.66 

4-6 

0.26-0.4 

2.23 

3.01 

4.83-
4.97 

5.26-
5.4 

5.83-5.97 

6.04-6.18 

6.4. 

Option  2  sub-option  2a:  The  tasks  are  carried  out  through  an  industry  led 
initiative financed by private sector stakeholders 

6.4.1.  Description 

Under  this  option,  the  Commission  would  no  longer  be  in  charge  of  ensuring  that  the  tasks 
currently  assigned  to  the  Observatory  are  delivered.  Instead,  the  tasks  would  be  performed 
through an industry led initiative, with the private stakeholders ensuring the financing. 

6.4.2.  Analysis 

Under this option, the governance structure of the Observatory would change in the sense that 
the Commission would neither have any influence anymore  on how  the Observatory is run, 
nor on its meeting agendas. It would be up to the private sector to determine what structure 
the Observatory should have in future. 

EN 

27 

   EN 

 
 
To  deliver  the  Observatory's  tasks  and  therefore  most  of  the  results  should  be  technically 
feasible. 

However, as far as data collection and analysis are concerned, it should be recalled that there 
have been many studies carried out by industry bodies on the phenomenon of counterfeiting 
and  piracy.  All  have  been  contested  due  to  their  perceived  partiality.  Therefore  there  are 
serious doubts about whether such an initiative would guarantee the necessary independence 
and  objectivity  to  produce  reliable  analyses.  Furthermore,  in  this  context,  it  seems  doubtful 
that it would be possible to mobilise public and private stakeholders, to make them cooperate 
and provide the necessary information. The same difficulties are also likely to arise in respect 
of the objectives aimed at ensuring exchanges of best practices and fostering cooperation with 
third countries. 

With a view to other activities, the necessary independence from vested interests would have 
to  be  guaranteed  through  specific  measures.  In  particular,  where  the  level  of  financial 
contributions  from  stakeholders  differed,  there  would  be  a  risk  that  certain  sectors,  through 
higher contributions, might seek and gain a disproportionate influence on the way the work is 
prioritised and carried out. As a result, certain aspects of work might be neglected if they were 
of  no  immediate  interest.  In  order  to  avoid  such  influence  of  vested  interests  and  to  ensure 
continuous funding, under this option, contributions would need to be determined by way of 
regulation. 

Concerning the sustainability of the infrastructure in terms of human resources, funding and 
IT, the assessment of this option is negative. Despite the considerable problems presented by 
counterfeiting and piracy in the past, industry has never been able to work together in order to 
set  up  such  an  initiative.  Consequently,  there  is  no  reason  to  assume  that  the  Commission's 
request to launch such an initiative would change this situation. 

The calculation of the costs of carrying out the different activities of the Observatory can be 
based on that made for option 1b, as it can be assumed that any such industry initiative would 
largely  resort  to  outsourcing,  with  all  the  implications  this  brings  in  terms  of  infrastructure, 
overheads  etc,  instead  of  directly  employing  the  necessary  staff.  Furthermore,  a  private 
initiative  of  this  sort  would  necessitate  the  management  of  contracts  with  their  related 
overheads.  Therefore  total  staff  costs  could  be  estimated  to  be  at  least  as  high  as  the 
Commission's or even higher, as the size of the Commission leads to considerable economies 
of scale in this respect. 

Finally,  the  entire  costs  for  the  organisation  of  meetings  etc  would  have  to  be  added.  This 
total additional costs would rise to EUR 621,000 in years n and n+1, and 691,000 as of year 
n+2 (for details see Annex V). The total cost of this option can therefore be summarised as 
follows: 

EN 

28 

   EN 

 
Table 3: Costs of option 2a 

Contra
ct costs 
(other 
than 
IT) 

Admin 
Costs 

Cost for 
meetings 
+missions 

Staff for 
contract 
managem
ent 

Cost 

Costs IT systems 

Total yearly costs 

Basic 

Sophistic
ated 

Basic 
IT 

Sophisticated
IT 

2.11 

incl. 

0.628 

4-6 

0.26-0.4 

1.9 

2.9 

Year
s 

n – 
n+1 

n+2 + 

2.11 

incl. 

0.69 

4-6 

0.26-0.4 

2.23 

3.01 

4.89-
5.03 

5.29-
5.43 

5.89-6.03 

6.07-6.21 

Under this option, there would be no costs for the EU budget. Instead, certain savings would 
be made as the current work of the Observatory would not have to be financed any more from 
the EU budget: these savings would amount to EUR 38,773 for reimbursements of Member 
States' experts and the organisation of the Observatory's meetings54. 

6.5. 

Option  2  sub-option  2b:  The  tasks  are  carried  out  through  an  industry  led 
initiative financed through a Commission grant/program 

6.5.1.  Description 

Under this option, the Commission would offer a grant, e.g. through an EU program, for an 
initiative to be run by the private sector. As under option 2a, the private sector stakeholders 
would be responsible for delivering the objectives set out in section 5. 

6.5.2.  Analysis 

The  impact  on  the  Observatory's  governance  structure  would  be  largely  the  same  as  under 
option 2a. Also the disadvantages concerning the potential to deliver the Observatory's tasks 
under this option are largely the same as those in the previous option. 

The financing through a Commission grant would, however, make this option a more realistic 
prospect. It would also remove the need to regulate the level of contributions as there would 
be no possibility for certain industry sectors to influence the Observatory's work through their 
financial contributions.  

The  need  to  set  up  an  entirely  new  initiative  to  apply  for  the  necessary  financing,  to  go 
through  the  award  procedures  for  the  grant  and  then  to  outsource  the  individual  activities 
means that this option would require considerable time before the Observatory would become 
operational. Five years appears to be the minimum timescale required in this context, which 
means a substantial delay compared to the previous options. 

The  financing  through  a  Commission  grant  would,  furthermore,  mean  that  the  EU  budget 
would be charged with costs that would, at least, correspond, to those under option 2a. Taking 
into account the savings of EUR 38,773 set out under option 2a, this means that the minimum 

54  

For details see Annexes III and IV. 

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29 

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overall cost, compared to the baseline scenario, would lie between EUR 4.85 per year at the 
lower end or EUR 5.99 million at the upper end in years n and n+1, depending on the design 
of the IT systems to be developed, and between EUR 5.25 million and EUR 6.17 million from 
year n+2. 

6.6. 

Option 2 sub-option 2c: The tasks are carried out in the framework of a public-
private partnership 

6.6.1.  Description 

Under this option, the Commission and the private sector would cooperate under the terms of 
a  contract,  which  would  determine  the  contributions  and  the  modalities  of  the  work  to  be 
carried out by an entity outside the Commission services. 

6.6.2.  Analysis 

This option would avoid a number of the disadvantages outlined in the previous options. The 
contract  would  determine  the  level  of  influence  of  each  of  the  partners,  including  the 
Observatory's  governance  structure  and  the  Commission's  role  in  that  context,  and  ensure 
continuous funding, at least for the duration of the contract. The continuous involvement of 
the Commission would facilitate an assurance that public authorities and private stakeholder 
both contribute to the work in an appropriate way. 

However, the close involvement of the private sector would probably continue to make data 
collection  and  objective  analysis  an  issue.  The  feasibility  of  this  option  can  also  be 
questioned,  as  although  the  private  sector,  in  this  scenario  would  have  to  contribute  only  a 
part  of  the  costs,  it  seems  doubtful  that  industry  would  be  ready  to  commit  to  such  an 
initiative. 

In terms of timing, this option is likely to be similar to option 2b. The costs for the EU budget 
would depend on the modalities of the contract. Here, an equal share for the Commission on 
the one side and the private sector on the other would seem most appropriate. This means that 
the  yearly  costs  for  each  side  can  be  estimated  to  be  half  of  those  for  sub-option  2a,  i.e. 
between  EUR 2.45  and  3.02  million  in  years  n  and  n+1,  and  between  EUR 2.65  and  3.11 
million from year n+2. 

Again, on the EU budget savings could be made of EUR 38,773, bringing the total yearly cost 
for  the  EU  budget  of  this  sub-option  to  between  EUR 2.41  and  2.98  million  in  years  n  and 
n+1, and between EUR 2.61 and 3.07 million from year n+2. 

6.7. 

Option  3  sub-option  3a:  The  tasks  of  the  Observatory  are  entrusted  to  a  new 
EU agency 

6.7.1.  Description 

A  new,  specialised  EU  agency  would  be  set  up  to  carry  out  the  tasks  of  the  European 
Observatory  for  Counterfeiting  and  Piracy.  This  option  implies  the  adoption  of  a  European 
Parliament and Council Regulation, establishing a new agency. 

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30 

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6.7.2.  Analysis 

EU agencies are fairly independent bodies with their own legal standing, and their own budget 
and  establishment  plan.  The  Commission  only  exercises  remote  control  functions  via  the 
'parent DG' ('DG de tutelle'), without influencing the agency's day-to-day management which 
normally  is  the  responsibility  of  the  agency's  director.  The  agency  director  therefore,  under 
this  option,  would  also  be  responsible  to  determine  the  governance  and  functioning  of  the 
Observatory,  to  the  extent  that  this  is  not  dealt  with  in  the  agency's  basic  regulation.  The 
Commission  would  retain  political  control  and  responsibility  for  enforcement  related  policy 
initiatives. 

Agencies are set up by an act of secondary legislation in order to accomplish a very specific 
technical, scientific or managerial task. Accordingly, the option of creating a new EU agency 
has the potential to allow the delivery of all the objectives described in section 5. 

The  range  of  tasks  to  be  carried  out  by  a  new  agency  and  the  number  of  staff  required  are 
identified in Annex III.  

However,  the  probable  size  of  the  Observatory  is  unlikely  to  justify  the  creation  of  a  new 
agency. As identified in the external evaluation of EU decentralised agencies, carried out on 
the  Commission's  behalf  in  200955,  a  certain  minimum  size  ("critical  mass")  in  terms  of 
human  resources  is  required  for  an  agency  to  undertake  its  tasks  efficiently.  The  evaluator 
concluded  that  this  critical  size  lies  somewhere  between  50  and  100  staff  members.  The 
"critical mass challenge" was also highlighted in a recent study by the European Parliament56 
which  revealed  that  agencies  with  less  than  100 people  have  a  much  higher  proportion  of 
administrative staff, which suggests that they face certain efficiency constraints. As indicated 
in Annex III, the tasks of the Observatory would only justify operational staff of 25 people, 
which would clearly lie below this indicative threshold. 

The figures contained in Annex III illustrate the problem. With operational staff of 25 people 
at  cruising  speed  (of  which  about  sixteen  could  be  contract  agents  as  this  staff  type  can  be 
employed  in  agencies  on  a  permanent  basis57),  the  agency  would  require  at  least  five 
additional staff members to deal with administrative tasks (human resources, finance, IT etc). 
The  staffing  costs  would  therefore,  in  total,  amount  to  EUR  1  million  during  the  first  two 
years. In addition, the setting up of the agency would also require additional resources from 
inside DG MARKT which would incur additional costs of EUR 127,000 /year during the first 
two years (for details see Annex III), and also under this option the current two AD officials 
in DG MARKT would continue to take care of policy related tasks. From the following year 
there would be a reduction of costs, due to the completion of IT development and the setting 
up of the agency. 

55  

56  

57  

http://ec.europa.eu/dgs/secretariat_general/evaluation/documents_en.htm.  In  2008,  the  Commission 
committed itself to not propose any new regulatory agencies, while the horizontal evaluation of existing 
EU agencies was ongoing, see COM (2008)135. 
European  Parliament,  2009,  Opportunity  and  feasibility  of  establishing  common  support  services  for 
EU agencies, Table 3, http://www.europarl.europa.eu/studies. 
See  Article  3a  of  the  Conditions  of  Employment  for  other  agents  of  the  European  Communities 
(Regulation  No  31  (EEC),  11  (EAEC)  laying  down  the  Staff  Regulations  of  Officials  and  the 
Conditions of Employment of Other Servants of the European Economic Community and the European 
Atomic Energy Community, OJ 45, 14.6.1962, p. 1385). 

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31 

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The total costs of this option are detailed in Annexes III and IV. They can be summarised as 
follows: 

Table 4: Costs of option 3a (compared to baseline scenario) 

Years 

Agency 
staff 
required 

Cost incl. 
facilities 

Meeting/ 
mission costs  

Costs IT systems 

Total yearly costs 

Basic 

Sophisticated  Basic IT 

Sophisticated 
IT 

n-n+1 

n+2 + 

15 

30 

1.93 

2.68 

0.5 

0.59 

1.9 

2.23 

2.9 

3.01 

4.33 

5.5 

5.33 

6.28 

Agencies are financed either from the European Union's budget or via fees paid by their users. 
The  Observatory  does  not  provide  any  payment  related  services  or  products  to  businesses; 
therefore,  its  activities  will  not  generate  any  fees.  In  these  circumstances,  the  costs  of  the 
agency would need to be entirely covered by a subsidy from the EU budget. 

Furthermore,  the  establishment  of  a  new  agency  is  complex  and  time  consuming.  Recent 
examples,  such  as  the  setting  up  of  the  Agency  for  the  Cooperation  of  Energy  Regulators 
(ACER)  in  Ljubljana,  have  shown  that,  apart  from  the  time  needed  for  the  adoption  of  the 
agency's  basic  regulation  (which  can  be  estimated  at  between  18  to  24  months),  it  can  still 
take several years for the agency to be fully up and running. Therefore, this option would not 
ensure appropriate support for the Observatory's activities in the short and medium-term. 

6.8. 

Option  3  sub-option  3b:  The  tasks  of  the  Observatory  are  entrusted  to  an 
existing agency 

6.8.1.  Description 

Under  this  option,  the  Observatory  would  be  run  by  an  existing  agency,  which  currently 
carries  out  other  tasks.  This  would  allow  the  Observatory  to  profit  from  existing 
administrative structures (such as human resources and finance). 

6.8.2.  Analysis 

For  the  reasons  mentioned  in  option  3a,  an  EU  agency  would  be  well  suited  to  deliver  the 
objectives  described  in  section  5.  Compared  to  option  3a,  this  option  might  also  provide  a 
more cost-efficient solution. 

There  are  currently  around  thirty  regulatory  agencies  dealing  with  different  subject  matters 
and various scopes of activities. Several of them carry out activities comparable to those of 
the  Observatory,  i.e.  data  collection,  developing  methodologies,  sharing  best  practices  or 
raising public awareness. The European Institute for Gender Equality (EIGE) in Vilnius is one 
such  example,  as  is  the  European  Monitoring  Centre  for  Drugs  and  Drug  Addiction 
(EMCDDA) in Lisbon. However, in the context of being housed in one of these agencies the 
Observatory  would  be  unable  to  benefit  from  any  pre-existing  knowledge  of  the  often 
complex and wide ranging subject matter it is dealing with. 

EN 

32 

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It  therefore  seems  more  rational  to  consider  the  Office  for  Harmonisation  in  the  Internal 
Market (OHIM) which is the EU agency responsible for registering Community trade marks 
and  designs,  valid  in  all  27  EU  Member  States.  Given  the  clear  relationship  between  the 
protection of IP rights and their enforcement, the expertise already available within the OHIM 
appears  particularly  pertinent  to  taking  over  the  Observatory's  tasks.  The  OHIM  also  has 
natural working relations with national IP offices, many of which are responsible for leading 
on national enforcement strategies and coordination structures. Consequently, networks exist 
that could be further developed by the OHIM to ensure that the work of the Observatory is 
carried  out.  Moreover,  the  OHIM  also  has  an  established  basis  for  expertise  in  the  area  of 
enforcement  of  trademarks  and  designs,  through  its  seminar  series  for  judges.  In  addition, 
enforcement is incorporated into other training activities and the Office has already promoted 
IP  awareness  through  tools  such  as  the  'Hands  off  My  Design'  e-learning  website. 
Furthermore,  the  OHIM  has  created  a  legal  database  of  infringement  cases,  drawn  from 
information  throughout  the  EU.  It  will  also  develop  other  enforcement  related  projects, 
through  the  OHIM  Cooperation  Fund.  One  such  project  will  create  a  multi-modular  tool  to 
assist  investigations  by  allowing  customs  and  other  enforcement  authorities  to  consult 
information  on  registered  trade  marks  and  designs,  as  well  as  contact  information  for  right 
holders and other information to allow easier detection of counterfeit goods. 

The  expertise  available  within  the  OHIM  concerning  the  enforcement  of  trade  marks  and 
designs  provides  a  good  basis  for  expanding  this  work.  Additional  expertise  would  in 
particular  need  to  be  acquired  in  relation  to  copyright  issues  and  patents.  This  could  be 
achieved  through  the  recruitment  of  specialist  staff  and,  possibly,  the  training  of  existing, 
redeployed  staff.  This  basis  would  create  important  synergies  between  the  tasks  of  the 
Observatory and those currently carried out by the OHIM. As a result, such synergies could 
significantly limit the number of additional staff needed to be employed to carry out the tasks 
of the Observatory (for details see Annex VI). Instead of the 25 staff mentioned in Annex III, 
only 19 staff would be required to be employed as of the third year, as economies equivalent 
to that of six man-years could be made through synergies within existing functions. The total 
costs of this option, which are detailed in Annexes V and VI, can be summarised as follows: 

Table 5: Costs of option 3b (compared to baseline scenario) 

Years 

Staff 
required 

Cost 

Admin 
costs  

Meeting/ 
mission 
costs 

Costs IT systems 

Total yearly costs 

Basic 

Sophisticat
ed 

Basic 
IT 

Sophisticated 
IT 

n – n+1 

n+2 + 

10 

19 

1.02 

incl. 

2.06 

incl. 

0.38 

0.45 

1.9 

2.23 

2.9 

3.3 

3.01 

4.74 

4.3 

5.52 

Apart  from  the  comparatively  lower  costs,  this  option  would  also  have  the  advantage  of 
allowing  the  Observatory  to  become  operational  more  quickly  than  a  newly  established 
agency. While a European Parliament and Council Regulation extending the OHIM's mandate 
would need to be adopted, there would, for example, be no need to adopt new rules on human 
resources and budget before the agency could start with the recruitment of staff. Thanks to the 
already  existing  working  relations  between  DG  MARKT  and  the  OHIM,  which  will  be 
intensified  through  the  implementation  of  the  Memorandum  of  Understanding,  also  the 

EN 

33 

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handover  of  tasks  could  be  done  through  a  smooth  and  staged  transition  that  would  ensure 
that the Observatory's tasks continue to be carried out without any disruption. 

The possibility of involving the OHIM in enforcement related activities, and more generally, 
in  broadening  the  scope  of  its  competences  has  already  been  discussed  and  supported,  in 
particular, by Member States and the European Parliament. In its conclusions of 25 May 2010 
on  the  future  revision  of  the  Trade  Mark  system  in  the  EU,  the  Council  invited  the 
Commission  to  include  in  its  modifications  to  the  Community  Trade  Mark  Regulation  and 
Trade  Mark  Directive  "the  establishment  of  a  clear  legal  basis  for  the  involvement  of  the 
OHIM  in  enforcement-related  activities,  including  the  fight  against  counterfeiting,  in 
particular through fostering its cooperation with the National Offices, in accordance with their 
national  competences,  and  the  European  Observatory  on  Counterfeiting  and  Piracy"58.  The 
European Parliament addressed this issue in its Resolution of 22 September 2010 in which it 
called on the Member States and the Commission to extend cooperation between the OHIM 
and  national  intellectual  property  offices,  to  cover  the  fight  against  IPR  infringements. 
Moreover, the Parliament's Forum on counterfeiting, contraband and organised crime viewed 
the  idea  to  entrust  the  OHIM  with  the  management  of  the  Observatory  as  the  most  suitable 
solution to enhance the Observatory’s effectiveness.  

Furthermore, the issue of introducing additional tasks to the OHIM, particularly in relation to 
enforcement  (e.g.  anti-counterfeiting  activities),  was  analysed  within  the  framework  of  an 
external  study,  commissioned  by  the  Commission,  on  the  overall  functioning  of  the  trade 
mark system in Europe59. The Max-Planck-Institute that carried out the study concluded that a 
role for the OHIM in this area should be foreseen. The survey of user organisations showed 
that  while  in  general  they  do  not  perceive  a  particular  need  for  the  OHIM  to  expand  its 
activities they would see merit in assistance related to enforcement of IP rights.  

In legal terms, entrusting the management of the Observatory to the OHIM would require a 
change to the agency's current legal basis or the adoption of a new Regulation on new tasks 
for the OHIM in relation to enforcement activities. Such a Regulation could possibly be based 
on Articles 114 and 118(1) TFEU. In practice, the management of the Observatory could be 
entrusted  to  a  new  section  which  would  be  established  in  the  OHIM  and  function  as  an 
integral part of the Office. 

The financing of the activities  could be taken from the budgetary resources that the OHIM 
generates  through  its  current  activities.  This  would  mean  that  the  EU  budget  would  not  be 
required to cover these costs. At the same time, in comparison to the baseline scenario, under 
this  option  savings  in  the  EU  budget  would  arise  to  the  extent  of  EUR  38,773 
(reimbursements  of  Member  States'  experts  and  organisation  of  the  Observatory's  meetings, 
for details see Annex VI) per year. 

7. 

COMPARING THE OPTIONS 

As  set  out  in  section  6,  option  1a  (an  increase  in  DG  MARKT's  resources)  is  not  realistic 
under  the  given  circumstances  and  therefore  not  a  suitable  option.  Option  2a  (private, 
industry-financed initiative) is not likely to be feasible, due to the unwillingness of the private 

58  

59  

Council Conclusions of 25 May 2010 on the future revision of the Trade Mark system in the European 
Union, Official Journal C 140, 29.5.2010, p. 22. 
The full text of the study is available at http://ec.europa.eu/internal_market/indprop/tm/index_en.htm. 

EN 

34 

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sector  to  launch  such  an  initiative,  and  also  does  not  thus  offer  a  suitable  solution  to  the 
problem. The risk of undue influence by vested interests would pose a problem with a view to 
the overall objectives of the initiative. Furthermore, the sensitivity of some of the information 
to be handled would create an additional problem as far as data collection is concerned. 

These  two  options  are  therefore  not  contained  in  the  Table  6,  below,  which  provides  a 
summary of the analysed suitable options: 

Table 6: Comparison of options 

Assessment 

Effectiveness (achievement of objectives) 

Efficiency 

Overall 
assessment 

Time 
needed  

Overall costs 

Implication  for 
EU budget 

Sustainable 
funding 

Stable 
structure 

Human 
resources 

IT  
capacity 

0 

0 

0 

0 

Options 

Option 0 
(base-line 
scenario) 

Option 1b 

+ 

+ 

+ 

+ 

Indepen-
dence 
from 
vested 
interests 

0 

0 

0 

- 

Option 2b 

+ 

- 

+ 

+ 

- 

-- 

Option 2c 

+ 

+ 

+ 

+ 

0 

-- 

Option 3a 

++ 

++ 

++ 

+ 

++ 

-- 

0 

0 

between 
EUR 4.83 
and 6.18 
million / 
year 

between 
EUR 4.89 
and 6.21 
million / 
year 

between 
EUR 4.89 
and 6.21 
million / 
year 

between 
EUR 4.37 
and 6.32 
million / 
year 

between 
EUR 4.83 
and 6.18 
million / 
year 

between 
EUR 4.85 
and 6.17 
million / 
year 

between 
EUR 2.41 
and 3.07 
million / 
year 

between 
EUR 4.33 
and 6.28 
million / 
year 

0 

+ 

- 

+ 

+ 

Option 3b 
(as 
regards 
OHIM) 

++ 

++ 

++ 

++ 

++ 

- 

between 
EUR 3.3 and 
5.52 million 
/ year 

- EUR 0.04 
million / 
year 

++ 

Magnitude of effectiveness and efficiency: ++ strongly positive, + positive, 0 neutral, - negative, -- strongly negative, N/A 
not applicable. 

Options  1b  (outsourcing)  and  2b  (a  private,  Commission-financed  initiative),  offer  suitable 
solutions for most of the tasks that need to be performed. Only the process of data collection 
and  analysis  would  need  to  be  carried  out  through  different  means,  in  order  to  reach  the 

EN 

35 

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objective  defined  in  section  5.  However,  both  options  have  high  overall  costs  and  a  high 
impact on the EU budget, which is strongly negative. Options 2c (public private partnership) 
and 3a (newly created EU agency) also offer solutions that would reach all the objectives set 
out in section 5 a least to a certain extent. However, again, both have an adverse impact on the 
budget  and  in  the  case  of  option  3a  this  is  particularly  negative.  Both  options  would  also 
result in a significant delay in getting all activities up and running. 

By  contrast,  option  3b  would  provide  all  of  the  advantages  of  option  3a  but  also  allow  the 
objectives to be achieved relatively soon. Furthermore, it would lead to a very cost-efficient 
solution (with overall costs ranging from EUR 3.3 to 5.52 million) and would allow the costs 
to be covered from budgetary means outside the EU budget (which would benefit of certain 
savings). Option 3b is therefore the preferred option. 

8. 

MONITORING AND EVALUATION 

Should  a  decision  be  taken  to  entrust  the  tasks  of  the  Observatory  to  the  Office  for 
Harmonisation in the Internal Market (OHIM), then the full effect of the resulting conditions 
will  need  to  be  monitored,  measured  and  evaluated,  to  ensure  the  decision  has  achieved  its 
intended  objectives.  To  this  end,  five  years  after  the  entry  into  force  of  the  Regulation 
entrusting  the  OHIM  with  the  management  of  the  Observatory,  the  Commission  should 
establish an evaluation report and transmit it the European Parliament and to the Council.  

This report would be composed of: 

(1) 

(2) 

(3) 

An  assessment  of  the  results  that  will  be  published  by  the  Observatory  in  quarterly 
highlight reports and in its annual report, based on comprehensive, objective data. 

Any audit reports carried out by the OHIM on the work of the Observatory; 

A survey of public and private stakeholders on their perceptions of the Office's work, 
in  terms  of  comprehensiveness,  reliability,  accuracy,  usefulness,  objectivity  and 
independence of its results. 

The criteria that would be used in order to assess the effect and impact of the measure will 
be, in particular: 

•  Progress made in the development of the Observatory's activities; 

•  The success of the Observatory's strategy; 

•  The efficient use of resources; 

•  The impact and implications for public and private stakeholders. 

The following would act as the main monitoring indices: 

•  Timeliness  of  the  collation  and  publication  of  reports,  of  research  on  best  practices,  the 
development and delivery of tool kits on awareness raising, and the development, delivery 
and maintenance of databases. 

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36 

   EN 

 
•  Quality of reports and research (accuracy and usefulness), quality and impact of strategies 
that  will  be  developed  in  the  fields  of  public  awareness,  research  and  training,  including 
the  number  of  campaigns  carried  out  successfully  and  the  number  of  persons  trained, 
accessibility  of  databases  and  the  extent  to  which  these  databases  have  been  used  in 
practice. 

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ANNEX I: MEMBERS OF THE EUROPEAN OBSERVATORY ON 
COUNTERFEITING AND PIRACY 

1. 

MEMBER STATES 

Table 7: Member States' representatives to the Observatory 

Member 
State 

Ministry/Office 

Austria 

Federal Ministry of Finance 

Belgium 

Federal Public Service of Economy 

Bulgaria 

Bulgarian Patent Office 

Cyprus 

Permanent Representation of the Republic of Cyprus to the EU 

Czech 
Republic 

Generalni reditelstvi cel (the General Directorate of Customs) 

Denmark 

Danish Patent and Trademark Office 

Finland 

Kotka Customs 

France 

CNAC (Comité National anti-contrefacon) 
INPI (Institut National de la Propriété Industrielle) 

Germany 

Federal Ministry of Justice 

Greece 

Hellenic Industrial Property Organization 

Hungary 

Hungarian Patent Office 

Ireland 

Customs Division, Office of the Revenue Commissioners 

Italy 

Anti-Counterfeiting Unit - Italian Patents and Trademarks Office -Ministry of Economic 
Development 

Latvia 

Patent Office 

Lithuania 

Ministry of Culture of the Republic of Lithuania 

Luxembourg  Ministry of the Economy and Foreign Trade 

Malta 

Ministry of Finance, Economy & Investment, Customs Division 

Netherlands  Ministry of Economic Affairs 

Poland 

Portugal 

Ministerstwo  Kultury  i  Dziedzictwa  Narodowego  (Ministry  of  Culture  and  National 
Heritage), Departament Prawny (Legal Department) 

Directive  Council  of  the  Portuguese  Institute  of  Industrial  Property  (Instituto  Nacional  da 
Propriedade Industrial - INPI) 

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38 

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Member 
State 

Ministry/Office 

Romania 

Public Ministry, Prosecutor’s Office attached to the High Court of Casation and Justice 

Slovakia 

Slovak Industrial Property Office 

Slovenia 

Slovenian Intellectual Property Office 

Spain 

Oficina Española de Patentes y Marcas 

Sweden 

Ministry of Foreign Affairs 

United 
Kingdom 

Copyright and Enforcement Directorate, Intellectual Property Office 

2. 

PRIVATE STAKEHOLDERS 

Table 8: Private sector representatives to the Observatory 

Organisation 
(acronym) 

Full name 

Description 

ABAC BAAN  Association Belge Anti-

Contrefacon 

ABAC-BAAN  is  a  Belgian  non-profit  organisation  that  helps 
companies to fight counterfeiting, does not focus on a single segment 
of the market.  

Association of 
Commercial Television 
in Europe 

Association  of  Commercial  Television  in  Europe  (ACT)  is  a  trade 
association representing the interests of the commercial broadcasting 
sector in Europe. The ACT has thirty member companies active in 34 
European countries, operating several hundred free-to-air and pay-tv 
channels and distributing several hundred channels and new services. 

ACT 

AIM 

Alliance 
Against IP 
Theft 

Association des 
Industries de Marque 
(European Brands 
Association) 

ANDEMA 

Asociacion Nacional 
para la Defensa de la 
Marca 

AIM  is  the  European  Brands  Association.  It  represents  the  branded 
goods industries in Europe on issues which affect the ability of brand 
manufacturers  to  design,  distribute  and  market  their  brands.  AIM’s 
membership  groups  1800  companies  of  all  sizes  through  corporate 
members and national associations in 22 countries. These companies 
are mostly active in every day consumer goods. They employ some 
two million workers and account for over 350 billion Euro in annual 
sales in Europe alone. 

The Alliance Against Intellectual Property (IP) Theft is a UK-based 
coalition  of  20  associations  and  enforcement  organisations  with  an 
interest in ensuring intellectual property rights receive the protection 
they  need  and  deserve.  With  a  combined  turnover  of  over  £250 
billion,  our  members  include  representatives  of  the  audiovisual, 
music,  video  games  and  business  software,  and  sports  industries, 
branded  manufactured  goods,  publishers,  authors,  retailers  and 
designers. 

ANDEMA  is  a  Spanish  association  of  trademark  owners  from  all 
sectors. 

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Organisation 
(acronym) 

APM 

Full name 

Description 

Aktionskreis gegen 
Produkt- und 
Markenpiraterie e.V. 
REACT Germany 

The  German  Anti-Counterfeiting  Association  (APM)  is  a  cross-
industrial alliance in the protection of intellectual property anda joint 
initiative  by  the  German  Association  of  Chambers  of  Industry  and 
Commerce  (DIHK),  the  Federation  of  German  Industry  (BDI),  and 
the German Brands Association. It currently has 74 members. 

ARCC 

The Romanian Anti-
counterfeiting 
Association 

The  Romanian  Anti  counterfeiting  Association  (ARCC)  was 
established  for  the  primary  purpose  of  monitoring  the  cases  of 
counterfeiting  by  their  identification  by  any  means  necessary  and 
drawing up strategies and programs to bring them to pubic attention.  

BASCAP 

Business Action to Stop 
Counterfeiting & Piracy 

BEUC 

BSA 

The European 
Consumers’ 
Organisation 

Business Software 
Alliance 

Business  Action  to  Stop  Counterfeiting  and  Piracy  –  BASCAP  –  is 
an initiative launched by the International Chamber of Commerce to 
connect  and  mobilize  businesses  across  industries,  sectors  and 
national borders in the fight against counterfeiting and piracy and to 
pool resources and expertise. 

Has  a  membership  of  43  national  consumer  organisations  from  31 
European  countries  (EU,  EEA  and  applicant  countries).  BEUC  acts 
as the umbrella group in Brussels for these organisations. 

Business  Software  Alliance  (BSA)  is  a  non  profit  trade  association 
created  to  advance  the  goals  of  the  software  industry  and  its 
hardware partners. Headquartered in Washington, DC, BSA is active 
in more than 80 countries, with dedicated staff in 11 offices around 
the  globe.  Members  include  HP,  Adobe,  Apple,  Cisco,  Dell,  IBM, 
Microsoft, Siemens, Symantec etc. 

BUSINESSEU
ROPE 

Confederation of 
European Business 

Through its 40 member federations, BUSINESSEUROPE represents 
20 million companies from 34 countries.  

CECCM 

Confederation of 
European Community 
Cigarette Manufacturers 

CECCM  is  a  non  commercial  association  which  was  formed  to 
represent  the  common  views  of  major  European–based  cigarette 
manufacturers and several National Manufacturers Associations. 

COLIPA 

The European 
Cosmetics Association 

Colipa has been the voice of Europe’s EUR 58.1 billion cosmetic, 
toiletry and perfumery industry since 1962. As the industry’s 
European trade association Colipa’s membership consists of: 
- 16 major international companies  
- 25 active national associations  
- 4 supporting association members  
- 2 correspondent members  
Colipa represents the interests of more than 2000 companies ranging 
from major international cosmetics manufacturers to small family-
run businesses operating in niche markets. Together, these employ 
more than 500,000 people within the European Union. 

DIHK 

Deutscher Industrie- 
und Handelskammertag 
e. V. (Association of 
German Industry and 
commerce) 

The  DIHK  is  the  central  organisation  for  80  Chambers  of  Industry 
and  Commerce  in  Germany.  All  German  companies  registered  in 
Germany,  with  the  exception  of  handicraft  businesses,  the  free 
professions and farms, are required by law to join a chamber. 

EN 

40 

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Organisation 
(acronym) 

Full name 

Description 

ECPA  

European Crop 
Protection Association  

EDIMA 

European Digital Media 
Association 

EECA - ESIA 

European 
Semiconductor Industry 
Association 

EFPIA 

 European Federation of 
Pharmaceutical 
Industries and 
Associations 

ECPA  represents  the  crop  protection  industry's  European  regional 
network.  Their  members  include  all  major  companies  and  national 
associations across Europe – currently there are 59 members listed on 
their website. 

EDiMA  is  an  alliance  of  new  media  companies  whose  members 
provide  new  media  platforms  offering  European  consumers  a  wide 
range  of  online  services,  including  e-content,  media,  E-commerce, 
communications and information/search services. EDiMA represents 
some  of  the  largest  new  media  companies  and  Internet  platforms 
operating at the European level and interested in the development of 
the European online market. Current members: Amazon, Apple, B!, 
e-bay,  Orange,  Google,  Microsoft,  Music  choice,  Napster,  Nocial, 
Real, Tiscali and Yahoo.  

EECA-ESIA represents the European-based semiconductor industry. 
The semiconductor industry provides the enabling technologies at the 
forefront of the development of the information society. This sector 
supports around 115,000 jobs directly and up to 500,000 induced 
jobs in Europe, in a market valued at over € 21bn (bn) in 2009. 

Currently they have 18 company members, 8 national member 
associations and 3 research institutes. 

(EFPIA) 

represents 

Industries  and 
 The  European  Federation  of  Pharmaceutical 
Associations 
industry 
operating  in  Europe.  Through  its  direct  membership  of  32  national 
associations and 40 leading pharmaceutical companies, EFPIA is the 
voice on the EU scene of 2,200 companies committed to researching, 
developing and bringing to patients new medicines that will improve 
health and the quality of life around the world. 

the  pharmaceutical 

Euratex 

Eurimag 

European Apparel and 
Textile Confederation 

EURATEX  is  the  association  of  the  European  textile  and  clothing 
industry. 

The IT Imaging and 
Printing Industry in 
Europe 

EURIMAG  is  an  organisation  representing  the  IT  imaging  and 
printing  industry  in  Europe.  Its  membership  is  comprised  of  the 
leading  manufacturers  of  printers,  scanners,  and  multifunctional 
devices  including  Brother,  Canon,  Dell,  Epson,  Hewlett-Packard, 
Kodak,  Konica  Minolta,  Lexmark  and  OKI.  In  Europe  these 
companies account for direct employment of about 100.000 people. 

Eurochambres  The Association of 

Represents European Chambers of Commerce and Industry. 

European Chambers of 
Commerce and Industry 

FEP - FEE 

Federation of European 
Publishers 

FEP is an umbrella association of book publishers associations in the 
European  Union.  FEP  represents  26  national  associations  of  book 
publishers  of  the  European  Union  and  of  the  European  Economic 
Area. 

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41 

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Organisation 
(acronym) 

Full name 

Description 

FESI 

GACG 

IFPI 

Federation of the 
European Sporting 
Goods Industry 

FESI  is  the  European  representative  of  the  sporting  goods  industry 
vis-à-vis  the  European  Institutions  as  well  as  other  European 
authorities  and  bodies.  FESI  represents some  1,800  companies  with 
an annual turnover of more than 60 billion Euro. 

Global Anti-
Counterfeiting Group 
(GACG Network) 

GACG is an informal network of national and regional IP protection 
and enforcement organisations. There are currently 23 Members 
covering 36 Countries (incl. Andema, ABAC/BAAN, MARQUES, 
Indicam, SACG, Unifab). 

International Federation 
of the Phonographic 
Industry 

IFPI represents the recording industry worldwide, with a membership 
comprising some 1400 record companies in 66 countries and 
affiliated industry associations in 45 countries. 

INDICAM 

Instituto di Centromarca 
per la lotta alla 
contraffazione 

INDICAM represents nearly 180 companies, industry associations, 
law and IP firms, security consultants and other organisations daily 
engaged against counterfeiting activities that hit branded products. 
Members mainly Italian and International brand manufacturers 
operating in the Italian market. 

INTA 

ISFE 

International Trademark 
Association 

INTA is a membership association of more than 5,900 trademark 
owners and professionals, from more than 190 countries, dedicated to 
the support and advancement of trademarks and related intellectual 
property. 

Interactive Software 
Federation of Europe 

ISFE represents the interests of the interactive software sector vis-à-
vis  the  EU  and  international  institutions.  Initially  founded  by  the 
national  interactive  software  trade  associations  in  the  UK,  France, 
Germany and the Netherlands, ISFE was enlarged in January 2002 to 
include  any  company  representing  the  industry  within  the  27 
Member States plus Norway, Iceland, Switzerland and Liechtenstein. 
Thirteen  major  publishers  of  interactive  software  and thirteen 
interactive  software  trade  associations  throughout  Europe  have 
joined ISFE. 

IVF 

International Video 
Federation 

The IVF represents video associations in 16 European countries and 
in the United States of America. 

ORGALIME 

European Engineering 
Industries Association 

SACG 

Swedish Anti-
Counterfeiting Group 

Orgalime is the European federation representing the interests at the 
level  of  the  EU  institutions  of  the  European  mechanical,  electrical, 
electronic  and  metal  articles  industries  as  a  whole.  Orgalime’s 
member  federations  directly  or  indirectly  represent  some  130,000 
companies  of  an  industry  which  employs  11.1  million  people.  The 
companies  which  are  overwhelmingly  small  and  medium-sized 
enterprises cover a broad industry cross-section in terms of product, 
market segment and geographical spread. 

The  Swedish  Anti-Counterfeiting  Group  (SACG)  is  the  non-sector 
specific association in Sweden fighting counterfeiting. The members 
mainly consist of representatives of the Swedish industry, importers 
and  distributors,  as  well  as  of  Swedish  attorneys  specialized  in 
intellectual property rights. 

EN 

42 

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Full name 

Description 

Organisation 
(acronym) 

SNB-REACT 

European Anti-
Counterfeiting Network 

SROC 

Sports Rights Owners 
Coalition 

TIE 

Toy Industries of 
Europe 

UEAPME 

The European 
Association of Craft, 
Small and Medium-
sized Enterprises 

SNB-REACT is a non profit coalition with the objective to actively 
fight counterfeit trade. SNB-REACT members come from all sectors; 
sports,  footwear,  football,  fashion,  merchandising,  fragrances, 
household,  automotive  industry,  mobile  phone  industry,  toys  and 
various. 

SROC  is  an  informal  group  of  representatives  of  international  and 
national sports bodies with a particular focus on rights issues. SROC 
operates  as  a  forum  through  which  sports  bodies  can  share 
information and experiences. 

TIE  is  a  non-profit  trade  association  for  the  European  toy  industry. 
At present membership includes 9 direct member companies and all 
major  national  toy  associations,  representing  approximately  80%  of 
European toy sales. 

UEAPME is the employers’ organisation representing the interests of 
European crafts, trades and SMEs at EU level. As the European SME 
umbrella  organisation,  UEAPME 
incorporates  82  member 
organisations from 34 countries consisting of national cross-sectorial 
SME  federations,  European  branch  federations  and  other  associate 
members, which support the SME family. UEAPME represents more 
than 12 million enterprises, which employ around 55 million people 
across Europe. 

UNIFAB 

Union des Fabricants 

Unifab  is  a  French  association  whose  members  are  companies  and 
trade organizations of all sizes and sectors. 

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43 

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ANNEX II: IPR INFRINGEMENTS IN THE EU AND EU POLICY  
ON IPR PROTECTION 

1. 

THE EU POLICY ON IPR PROTECTION 

Studies  typically  suggest  that  R&D  spending  is  associated  with  an  increase  in  productivity, 
with  estimated  gross  rates  of  return  (including  both  net  return  to  capital  and  depreciation) 
ranging  from  10  to  20  percent60.  Conditions  which  are  conducive  to  investment  include  a 
surety that investments in new creations and R&D are properly protected and can generate an 
appropriate return for investors and the creative industries. For the EU where, due to our high 
social standards and labour costs, most areas cannot compete on the basis of price, this is a 
crucial aspect. A 2007 survey involving over 400 EU-based executives61 revealed the view of 
these executives that, as Europe’s industrial base has declined, the continent has come to rely 
upon its knowledge based workers. Ideas were therefore considered, by these executives, to 
be  the  EU's  most  valuable  resource.  In  this  respect,  53%  of  them  said  that  the  use  of 
intellectual property rights will be very important or critical to their business models in two 
years, compared to 35% who considered this to be the case at the time of the survey. 

The  Commission  therefore  has  been  committed  to  creating  a  high-standard  intellectual 
property (IP) culture62. In the EU acquis, this policy is reflected in the Charter of Fundamental 
Rights  of  the  European  Union,  which  states,  in  its  Article  17(2),  that  intellectual  property 
shall be protected. At the level of secondary law, harmonisation measures have been adopted 
in  relation  to  certain  aspects  of  copyright  (such  as  the  resale  right  of  authors63,  the  term  of 
protection64,  exemptions  from  copyright  in  the  digital  environment65,  and  trademarks66). 
Furthermore, the EU has created specific EU intellectual property titles that provide a unitary 
level  of  protection  throughout  the  EU,  namely  the  Community  trademark67  and  the 
Community design68, which are both administered by the OHIM. EU legislation also provides 
for  unitary  protection  throughout  the  EU  for  geographical  indications  (GI)  of  agricultural 
products and foodstuffs69, wines70, spirit drinks71 and aromatised wines72. 

60  

61  

62 
63  

64  

65  

66  

67  
68  
69  

70  

71  

OECD policy brief: Creating value from intellectual assets, February 2007, 
http://www.oecd.org/dataoecd/8/45/38194512.pdf. 
'The  value  of  knowledge:  European  firms  and  the  intellectual  property  challenge',  Economist 
Intelligence Unit white paper 2007 published by the Economist. 
See in particular COM(2008)465 final. 
Directive  2001/84/EC  on  the  resale  right  for  the  benefit  of  the  author  of  an  original  work  of  art, 
OJ L 272, 13.10.2001, p. 32. 
Directive  2006/116/EC  on  the  term  of  protection  of  copyright  and  certain  related  rights  (codified 
version), OJ L 372, 27.12.2006, p. 12. 
Directive  2001/29/EC  on  the  harmonisation  of  certain  aspects  of  copyright  and  related  rights  in  the 
information society, OJ L 167, 22.6.2001, p. 10. 
First  Council  Directive  89/104/EEC  to  approximate  the  laws  of  the  Member  States  relating  to  trade 
marks, OJ L 40, 11.2.1989, p. 1. 
Council Regulation (EC) No 40/94 on the Community trade mark, OJ L 11, 14.1.1994, p. 1. 
Council Regulation (EC) No 6/2002 on Community designs, OJ L 3, 5.1.2002, p. 1. 
Council Regulation (EC) No 510/2006 on the protection of geographical indications and designations of 
origin for agricultural products and foodstuffs, OJ L 93, 31.3.2006, p. 12. 
Council Regulation (EC) No 1234/2007 establishing a common organisation of agricultural markets and 
on  specific  provisions  for  certain  agricultural  products  (Single  CMO  Regulation),  OJ  L  299, 
16.11.2007, p. 45. 
Regulation (EC) No 110/2008 on the definition, description, presentation, labelling and the protection 
of geographical indications of spirit drinks, OJ L 39, 13.2.2008, p. 16. 

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44 

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Although the main focus of this policy is to safeguard the interests of right holders, it is not 
limited to this aspect as it clearly serves other interests in the market. For example, IP rights 
increase competition by facilitating the entry of newcomers to a market, in particular SMEs, 
which  can  attract  venture  capital  or  license  production  to  incumbents.  Furthermore, 
particularly in the aftermath of the financial crisis, the possibility of using IP rights as security 
facilitates SMEs' access to bank loans73.  

IPRs also form the basis for cultural creation, high quality journalism and a democratic press. 
Thus, copyright is fundamental to intellectual and cultural creation. It is also crucial for the 
maintenance  of  media  plurality.  The  culture  and  media  sectors  can  only  be  sustained  when 
accompanied by adequate protection and income for those who devote their life to the creative 
impulse or those who invest heavily in creative industries. 

IP  protection  also  serves  the  interests  of  consumers  by  ensuring  that  buyers  of  goods  and 
services  can  rely  on  acquiring  products  that  meet  their  expectations  in  terms  of  quality, 
security standards and, in the case of luxury goods, brand and origin reputation. This aspect is 
of significant importance. In 2009, DG MARKT conducted a Eurobarometer survey74, which 
included a large scale quantitative telephone survey, delivering representative results for the 
EU  population.  The  survey,  which  discussed  internal  market  issues  in  depth,  incorporated 
Focus Groups made up of citizens and business representatives, from all Member States. The 
results showed that one out of five EU citizens had on at least one occasion unintentionally 
bought a counterfeit product. 

2. 

ENFORCEMENT OF INTELLECTUAL PROPERTY RIGHTS 

In  the  EU,  the  enforcement  of  all  IP  rights  (including  trademarks,  copyrights  and  related 
rights, patents and geographical indications) is considered, in the first place, to be the task of 
the right holders. In this respect, the IPR Enforcement Directive provides right holders with 
civil law tools to enforce their rights before the courts. 

These  particular  enforcement  measures  are  complemented  by  a  wider  range  of  measures  at 
national,  EU  and  international  levels,  which  are  aimed  at  preventing  and  combating 
infringements of intellectual property rights on a larger scale. 

2.1. 

Private sector 

Private  business'  efforts  to  combat  IPR  infringements  focus  on  a  number  of  specific  areas. 
Firstly,  industry  sectors  collect  information  about  counterfeiting  and  piracy  incidents.  This 
information is used to develop public awareness about illicit products and to design relevant 
counter-measures.  Secondly,  legitimate  producers  undertake  various  preventative  steps  to 
ensure  their  products  are  difficult  to  copy  and  counterfeit.  These  measures  often  involve 
sophisticated authentication techniques and 'track and trace' technologies. Thirdly, industries 
act  as  prompts  for  enforcement  and  offer  regular  support  to  public  authorities  involved  in 

72  

73  

74  

Council  Regulation  (EEC)  No  1601/91  laying  down  general  rules  on  the  definition,  description  and 
presentation  of  aromatized  wines,  aromatized  wine-  based  drinks  and  aromatized  wine-product 
cocktails, OJ L 149, 14.6.1991, p. 1. 
OECD, Intellectual Assets and Value Creation: Synthesis Report, 2008, 
http://www.oecd.org/dataoecd/36/35/40637101.pdf. 
Full report available at: http://ec.europa.eu/public_opinion/. 

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investigations,  through  information  and  intelligence  about  products,  consignments  and 
potential infringements. Moreover,  industry stakeholders  regularly assist in  offering training 
and  awareness  raising  programmes  for  police,  prosecutors,  customs  officials  and  other 
enforcement personnel. Finally, industry takes pursues violators of intellectual property rights 
through the courts75. 

2.2. 

Public sector 

2.2.1.  EU Member States 

At  national  levels,  over  the  years,  Member  States  have  put  in  place  a  wide  variety  of 
structured frameworks for combating counterfeiting and piracy. These enforcement structures, 
that  in  many  Member  States,  are  developed  and  led  by  national  IP  offices,  have  resulted  in 
significant  success  stories76.  However,  the  frameworks  have  often  been  developed  in 
accordance  with  national  requirements  and  needs.  As  such,  different  national  structures  are 
often unsuitable  for use in other  Member  States.  Consequently, there is no particular model 
that is applied all over the EU. 

2.2.2.  European Union 

Over  the  past  decade,  several  steps  have  been  taken,  both  legislative  and  non-legislative,  to 
improve the enforcement of intellectual property rights within the EU. 

In the legislative area, the IPR Enforcement Directive, referred to above, has harmonised the 
laws  of  Member  States  in  respect  of  civil  measures  for  the  enforcement  of  all  IP  rights. 
Furthermore,  the  Commission  is  currently  assessing  whether  it  is  necessary  to  complement 
this Directive through criminal law measures. Depending on the result of this assessment, the 
Commission could present a new legislative proposal, which would replace the 2006 proposal 
for a Directive on criminal sanctions77. Moreover, in the food and beverage sectors, the EU's 
official  feed  and  food  control  system78  includes  geographical  indications  within  the 
architecture for the enforcement of food law. 

To  comprehensively  fight  infringements  of  intellectual  property  rights  and  safeguard  EU 
competitiveness, internal market based schemes are complemented by those that focus on the 
EU's  external  borders  and  on  third  countries.  The  EU  Customs  Action  Plan  to  combat  IPR 
infringements for the years 2009-201279 sets priorities for the Commission and the Member 
States to take action to strengthen customs enforcement at the EU border. In this context, the 
Commission is preparing a proposal for a new Regulation, to replace Regulation 1383/200380, 
with  the  objective  of  strengthening  enforcement  whilst  streamlining  procedures.  Moreover, 
the  EU-China  Action  Plan  on  customs  cooperation  on  IPR  enforcement  should  provide  the 
basis for reducing the scale of IPR infringements in bilateral trade between the EU and China. 

75 
76 

77 

78  
79 
80 

OECD (2008), 'The economic impact of counterfeiting and piracy', OECD Publications: Paris. 
See e.g. http://www.presstv.ir/detail.aspx?id=118579&sectionid=3510212 and 
http://www.cityoflondon.police.uk/CityPolice/Media/News/counterfeitringsmashed.htm. 
Amended proposal for a Directive of the European Parliament and of the Council on criminal measures 
aimed at ensuring the enforcement of intellectual property rights (COM(2006) 168 final). 
Council Regulation (EC) No 882/2004. 
Council Resolution of 16 March 2009, OJ C71, 25.3.2009, p.1. 
Council  Regulation  (EC)  No  1383/2003  of  22  July  2003  concerning  customs  action  against  goods 
suspected of infringing certain intellectual property rights and the measures to be taken against goods 
found to have infringed such rights, OJ L 196, 2.8.2003, p. 7. 

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Finally,  the  Commission  has  put  in  place  a  range  of  Free  Trade  Agreements  (FTAs), 
negotiated with third countries, on provisions of protection for IP rights and has developed a 
long-term  strategy  for  the  enforcement  of  IPR  in  third  countries81,  which  is  due  to  be 
reviewed in 2011. 

These  regulatory  measures  are  complemented  by  non-legislative  measures.  Various 
initiatives  to  exchange  best  practices  are  carried  out  by  the  European  Commission. 
DG Enterprise and Industry and DG TAXUD regularly organise programmes linked to anti-
counterfeiting  work  for  customs  and  market  surveillance  authorities.  Furthermore,  the 
Commission  has  launched  initiatives  to  improve  businesses'  knowledge  about  the  tools 
available to successfully pursue infringers of their IP rights and to prevent infringements, both 
in  Europe  and  abroad.  One  example  is  the  China  IPR  SME  Helpdesk,  which  provides  EU 
SMEs,  active  in  China,  with  the  business  tools  they  need  to  develop  their  IP  rights  and 
manage related risks.  

In  respect  of  actual  enforcement  activities,  Europol  has  taken  a  lead  by  launching,  in 
January 2008,  an  analysis  work  file  (AWF),  to  focus  on  product  piracy  and  IPR 
infringements82.  This  AWF  is  the  means  by  which  Europol  provides  support,  through 
intelligence  analysis,  to  investigations  carried  out  by  the  competent  authorities  of  the  EU 
Member States. 

However,  the  primary,  inclusive  initiative  at  the  EU  level  is  the  European  Observatory  on 
Counterfeiting  and  Piracy.  The  functions  and  main  pillars  of  the  Observatory's  work  were 
described by the Commission its September 2009 Communication83. One of the Observatory's 
main  objectives  is  to  better  map  out  the  phenomenon  of  counterfeiting  and  piracy  by 
collecting,  analysing  and  reporting  data  related  to  IPR  infringements,  and  to  use  this 
information  to  foster  more  effective  responses.  Other  objectives  involve  spreading  best 
practices  for  enforcement  and  developing  awareness  raising  activities,  in  order  to  inform 
consumers of the negative economic and societal impact of counterfeiting and piracy and the 
potential dangers related to counterfeit products. 

2.2.3. 

International enforcement related initiatives 

Over  recent  years,  there  has  also  been  an  increase  in  the  number  of  internationally  led 
initiatives, both at policy and operational levels, aimed at reducing counterfeiting and piracy. 

Examples  in  terms  of  policy  initiatives  include  the  establishment  of  a  comprehensive 
multilateral, legal framework for international co-operation in specific areas, and regional and 
bilateral agreements within the World Trade Organisation (WTO), through the adoption of the 
agreement on Trade-Related aspects of intellectual property rights (TRIPS). TRIPS provides 
common international rules on the minimum levels of protection that the government of each 
participating  country  must  guarantee,  in  respect  of  the  intellectual  property  of  fellow  WTO 

81 

82 

83 

'Communication  from  the  Commission  concerning  the  strategy  for  the  enforcement  of  intellectual 
property rights in third countries – An information note from Mr Lamy', COM(2004)749 of 8.11.2004, 
OJ C 129, 26.5.2005, p.3. 
See Europol 'Annual Report 2008', available at 
http://www.europol.europa.eu/publications/Annual_Reports/Annual%20Report%202008.pdf, p. 22. 
COM(2009)467. 

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members84.  Other  major  international  initiatives  include  the  -  recently  concluded  - 
negotiations on the Anti-Counterfeiting Trade Agreement (ACTA)85. 

In  addition,  various  international  organisations,  such  as  the  WIPO  Advisory  Committee  on 
Enforcement  and  the  World  26,704  in  2005  to  43,572  in  2009  Organisation  (WCO)  have 
taken action to assist countries to strengthen their systems and infrastructures, to enable more 
effective  enforcement  of  intellectual  property  rights.  Moreover,  the  Global  Congress  on 
Combating  Counterfeiting  and  Piracy  regularly  brings  together  high  level  representatives 
from  governments  and  from  the  private  sector,  to  pool  their  experiences  and  enhance 
international  coordination  and  cooperation.  The  Congress  is  convened  by  leaders  from 
INTERPOL,  WCO,  WIPO,  the  International  Chamber  of  Commerce  initiative  BASCAP 
(ICC/BASCAP),  the  International  Trademark  Association  (INTA)  and  the  International 
Security Managers Association (ISMA). 

In  terms  of  actual  enforcement  activities,  since  2003,  Interpol's  Intellectual  Property  Crime 
Programme  and  Action  Group  (IPCAG)86  has  developed  a  strong  partnership  with 
government  authorities,  enforcers  and  major  business  sectors  affected  by  counterfeiting  and 
piracy.  In  particular,  a  regular  work  program  is  carried  out  alongside  the  World  Health 
Organisation's  International  Medical  Products  Anti-Counterfeiting  Task  Force  (IMPACT)87. 
This  has  resulted  in  major  operations,  with  seizures  of  counterfeit  items  worth  millions  of 
euro, including illicit medical products. 

3. 

THE SITUATION CONCERNING IPR INFRINGEMENTS IN EUROPE TODAY 

Despite  these  measures,  the  number  of  intellectual  property  rights  infringements  has 
continued to increase over recent years. In the latest OECD study, published in 2009, it was 
estimated  that  counterfeit  and  pirated  goods  in  international  trade  have  grown  steadily  over 
the last decade, from just over USD 100 billion in 2000, to up to USD 250 billion in 200788. 
The  OECD  estimates  this  amount  as  being  larger  than  the  national  GDPs  of  about 
150 economies. While these figures are widely used to portray the overall dimensions of the 
problem, they are not fully comprehensive. The OECD reports that the collection of data was 
extremely  difficult  and  often  the  figures  were  incomparable  due  to  the  different 
methodologies used for collection, analysis and reporting. 

In  addition,  the  figures  published  by  EU  customs  authorities  reflect  a  clear  increase  in 
customs activity in recent years. Thus the number of registered cases has risen from 26,704 in 
2005 to 43,572 in 2009; a rise of 60 percent in five years. 

84 

85  

86 

87 

88 

WTO, 'Intellectual property: protection and enforcement', 
http://www.wto.org/english/thewto_e/whatis_e/tif_e/agrm7_e.htm. 
See http://ec.europa.eu/trade/creating-opportunities/trade-topics/intellectual-property/anti-
counterfeiting/. 
Interpol, 'Intellectual Property Rights Programme', 
http://www.interpol.int/Public/FinancialCrime/IntellectualProperty/Default.asp , and Interpol (2007), 
'Intellectual Property Crimes: Trademark counterfeiting & Copyright Piracy', 
http://www.interpol.int/Public/FinancialCrime/IntellectualProperty/Publications/IIPCAGBrochure.pdf. 
See http://www.who.int/medicines/services/counterfeit/en/index.html; 
http://www.interpol.int/Public/ICPO/speeches/2009/SGCounterfeitingMexico20091208.asp. 
OECD,  Magnitude  of  counterfeiting  and  piracy  of  tangible  products  –  November  2009  update, 
http://www.oecd.org/document/23/0,3343,en_2649_34173_44088983_1_1_1_1,00.html. 

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Figure 1: 

Cases registered by EU customs 

Source: EU Customs report 2009 

In the above figure, the slight decrease in cases from 2008 to 2009 is likely to be linked to the 
economic  crisis  than  to  a  general  change  in  trend.  However,  once  again,  these  figures  only 
provide an indication of the scope and scale of the problem, as they are limited to the situation 
at the external borders of the EU and depend on the activities and detection rates of national 
customs authorities. 

In  the  online  world,  copyright  infringements  have  increased  at  an  exponential  rate  over  the 
last few years. According to a French survey, 38 percent of the French Internet users admitted 
to  having  downloaded  music  from  "torrent  sites"  in  2009,  while  only  about  28  percent 
downloaded from such sites the year before89. Furthermore, another 2010 study revealed that 
44  percent  of  the  Dutch  Internet  population  over  the  age  of  15  admitted  file  sharing  in  the 
previous  12  months  (this  equates  to  around  4.7  million  people).  40  percent  of  these 
downloaded music90. 

89  
90  

Rapport au Ministre de la Culture et de la Communication, 2010. 
Van  Eyck,  Poort  and  Rutten,  Legal,  Economic  and  Cultural  aspects  of  File  Sharing,  in: 
Communications & Strategies, 77, 1st quarter 2010, p.35. 

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ANNEX III: STAFFING NEEDS AND COSTS UNDER  
OPTIONS 1A (COMMISSION) AND 3A (NEWLY CREATED AGENCY) 

This Annex sets out the staffing needs of the European Observatory under options 1a and 3a. 

In the estimates, account is taken of the fact that contract agents (CA), in the Commission, can 
only be recruited for a maximum of three years91, whereas they can be recruited on potentially 
unlimited duration contracts in an agency. For option 1a, this means that most of the required 
staff would need to be officials and temporary agents (TA). The long-term stability required 
for the build up of expertise could not be guaranteed if a larger share of the staff needed to be 
recruited on such contracts. Only in the area of IT services, due to the nature of these services 
contract agents could be used under all options. 

1. 

ESTIMATE  OF  STAFFING  NEEDS  OF  THE  OBSERVATORY  UNDER  OPTION  1A/  
YEAR N

 AND N+1 (PRIORITY ACTIONS) 

92

Where the secretariat of the Observatory would continue to be provided by the Commission 
services, these would have to be reinforced by 7 staff members during the first two years in 
order to deliver the most urgent tasks. The current two administrators (AD) would continue to 
deal with more policy oriented work (briefings etc) and to coordinate the work technical work 
set  out  hereunder.  The  assistant  (AST)  would  continue  to  take  care  in  particular  of  the 
organisation  of  meetings.  Given  that  the  assistant  currently  made  available  by  the  OHIM 
would not be at the disposal of the Commission any more, an additional post would have to be 
made available for these tasks. 

Table 9: Staffing needs under option 1a in years n and n+1 

Observatory's  main 
functions 

Human 
resources 
required 

AD/Category IV 

Preparation of policy, 
briefings etc 

Coordination of the 
Observatory's activities  

1 person 

1 Senior Administrator 

2 persons 

1 Junior Administrator 

AST/ 
Categories 
II and III 

- 

1 Assistant 

Strategies and 
initiatives for raising 
public awareness 

1 person 

1 Senior Public Relations specialist to assess the overall needs in 
terms of public awareness, public relations and media 
management (including the Observatory website and portal); to 
guide and advise on events and campaigns and to develop 
Europe-wide campaigns. 

- 

91 

92  

See  Article  3b  of  the  Conditions  of  Employment  for  other  agents  of  the  European  Communities 
(Regulation  No  31  (EEC),  11  (EAEC)  laying  down  the  Staff  Regulations  of  Officials  and  the 
Conditions of Employment of Other Servants of the European Economic Community and the European 
Atomic Energy Community, OJ 45, 14.6.1962, p. 1385). 
Year  n  is  the  year  where  the  measure  providing  the  Observatory  with  a  more  sustainable  structure 
becomes effective. 

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Observatory's  main 
functions 

Training and 
professional 
development 

Human 
resources 
required 

2 persons 

AD/Category IV 

1 Senior Training Specialist to carry out research and assessments 
of training programmes existing at national, European (EJN, 
ETN, Europol etc) and international level (WIPO, OECD etc) and 
aimed at those engaged in enforcement related activities and to 
develop such training programs on European level. 

Technical tools and 
systems for prevention 
and investigation 
purposes 

1 person  

1 Senior Technical Researcher to research, catalogue, promote 
and spread technical tools and systems used to prevent and 
investigate counterfeiting and piracy, for example tracking and 
tracing. 

Case Law database 

1 person  

1 Junior Lawyer to collect and assess case law within and outside 
the EU; to assist in the development and maintenance of a data 
base of relevant case law; to provide legal advice on the service 
on all enforcement related matters. 

Systems to improve 
information exchange  

2 persons  

1 Junior IT Systems Analyst to ensure the global project 
management, and  

AST/ 
Categories 
II and III 

1 Assistant 

- 

- 

- 

1 Junior IT Analyst to coordinate the development of a cross 
border system to allow authorities to rapidly exchange 
information on counterfeiting and piracy issues, including rapid 
notification and alert facilities on seizures of potentially 
dangerous items and other significant enforcement related 
developments, and the implement of such a system at a European 
level. 

10 
persons 

8 Administrators 

2 
Assistants 

ESTIMATE  OF  STAFFING  NEEDS  OF  THE  OBSERVATORY  UNDER  OPTION  3A/  
YEAR N

 AND N+1 (PRIORITY ACTIONS) 

93

Total: 

2. 

Under option 3a, the staffing needs would be similar to those set out under option 1a. In the 
year  of  the  entry  into  force  of  the  legal  instrument  providing  the  Observatory  with  its  new 
structure  and  the  year  to  follow,  the  agency  would  be  gradually  and  increasingly  set  up,  by 
concentrating on a number of priority activities, at each stage, using a limited number of staff. 

However, given the separation from the Commission services, a Head of Service would also 
be  required  (supported  by  an  assistant),  as  well  as  a  junior  policy  officer  to  coordinate  the 
setting up of the agency and the Observatory's activities with the Commission. 

On the Commission's side, an assistant would no longer be needed to organise meetings, but 
the two administrators would remain to deal with the coordination with the agency and more 
policy-oriented  tasks.  Furthermore,  due  to  the  preparatory  work  needed  to  set  up  a  new 

93  

Year  n  is  the  year  where  the  measure  providing  the  Observatory  with  a  more  sustainable  structure 
becomes effective. 

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51 

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agency, another two AD man years (i.e. one administrator per year) would be required in the 
Commission services.  

This  option,  in  the  first  two  years,  would  therefore  lead  to  two  plus  one  administrators 
working on tasks related to the Observatory inside the Commission, plus eight administrators 
and two assistants working in the agency on the tasks of the Observatory, i.e. in total eleven 
staff more than under the baseline scenario. To these staff, administrative staff in the agency 
will have to be added (see section 4.1 below) 

3. 

ESTIMATE OF STAFFING NEEDS OF THE OBSERVATORY UNDER OPTIONS 1 A AND 3A/ 
YEARS N+2 TO N+5 

In the year following the entry into force of the legal instrument, the Observatory should grow 
into its final setting which, by this stage, would allow it to run all activities envisaged. In view 
of the size of the project, it would seem appropriate that under both options a Head of Service 
should be appointed, as well as an administrator coordinating the Observatory's work. 

Table 10: Staffing needs under options 1a and 3b as of year n+2 

Observatory's  main 
functions 

Human 
resources 
required 

AD/Category IV 

AST/ Cat. II 
and III 

Management  

1 person 

1 Head of Service to manage the overall project. 

- 

Support 

3 persons 

1 Junior Policy Adviser to administer and implement day 
to day work programme. 

Data collection, 
measurement and 
analysis 

3 persons 

1 Senior Economist/ 
Statistician to build and implement an international 
methodology to collect and assess data and to analyse 
global trends. 

2 Junior Statisticians/Economists to analyse key business 
sectors, geographical areas and impacts on health, 
security, environment etc. 

2 Secretaries 
of the 
Service 

- 

Developing public 
awareness strategies 
and public 
relations/press, 
webpage 

Training and 
Development – 
delivering technical 
training, awareness 
events and programmes 

3 persons 

1 Senior Public Relations Specialist to design and develop 
European awareness campaign. 

1 Assistant 

1 Junior Administrator to analyse national and 
international public awareness campaigns to help to 
implement European campaigns; to develop press 
services, website, newsletter, write articles. 

3 persons 

1 Senior Training Specialist to carry out research and 
assessment of training programs on enforcement, and to 
design and develop training programs of the Observatory. 

1 Junior IT Specialist to create searchable, online 
directory and index of the training events and 
programmes. 

1 Assistant to 
provide 
support 
organising 
training 
programs 

in 

   EN 

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52 

 
 
Human 
resources 
required 

2 persons  

Observatory's main 
functions 

Developing greater 
technical assistance at 
an international level in 
cooperation with IP 
offices  

Researching and 
making information 
available on technical 
tools and systems for 
prevention and 
investigation purposes  

Legal Section 

2 persons 

AD/Category IV 

AST/ 
Categories 
II and III 

1 Senior Administrator to work in conjunction with 
international organisations like WIPO, WTO etc. and 
Community agencies like Eurojust, Europol, to develop 
synergies between national IP offices and enforcement 
working groups.  

1 Junior Administrator to assess, plan and provide 
technical assistance on enforcement matters in line with 
international needs. 

2 persons 

1 Senior Technical Researcher to assess and catalogue 
technical tools and systems, for example tracking and 
tracing.  

1 Junior Administrator to create and facilitate and expert 
group to identify needs, design strategies to improve 
technologies and techniques, organise events and develop 
publications to promote benchmark techniques, practices 
and standards in the area of technical tools and systems. 

1 Senior Lawyer and 1 Junior Lawyer to collect and assess 
case law within and outside the EU, to assist in the 
maintenance of the data base of relevant case law, to 
provide legal advice to the service on all enforcement 
related matters. 

- 

- 

- 

Information exchange 
system 

2 persons 

1 Junior IT Systems Analyst to ensure the global project 
management for a cross border system to allow authorities 
to rapidly exchange information on enforcement issues. 

1 Assistant 

Researching promoting 
and spreading best 
practice amongst public 
authorities 

2 persons 

1 Senior Administrator to research, promote and spread 
best practices. 

Researching and 
spreading successful 
private sector strategies 

2 persons 

1 Senior Administrator to research, promote and spread 
best practices. 

Total  

25 persons 

19 Administrators 

1 Assistant to 
provide 
support  

1 Assistant to 
provide 
support  

6 Assistants 

As in the first two years, two administrators would take care of the policy-related tasks inside 
the Commission, in addition to the 25 staff working on the Observatory's tasks. In the case of 
option 1a this would bring the overall Commission staff to a total of 27; under option 3a, there 
would be 25 agency staff plus two Commission administrators. In both scenarios, there would 
therefore  be  25  more  staff  than  under  the  baseline  scenario  working  on  tasks  directly 
related to the Observatory. In addition, under option 3a, staff to deal with administrative tasks 
in the agency would be required (see section 4.1 below). 

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4. 

ESTIMATE OF STAFFING COSTS 

The staffing costs have to be measured against the baseline scenario. As set out in the Impact 
Assessment, under the baseline scenario only two administrators would in future take care of 
the  Observatory's  tasks,  given  that  the  assistant  has  been  put  at  the  Commission's  disposal 
only  on  a  temporary  basis  by  the  OHIM  and  that  it  could  not  be  expected  that  such 
secondment  would  be  extended  where  a  decision  was  taken  to  establish  a  sustainable 
infrastructure  for  the  Observatory  outside  the  OHIM.  The  tables  below  therefore  only 
calculate the costs that would be incurred in addition to those of the baseline scenario under 
the two different scenarios. 

4.1. 

Staffing costs in years n and n+1 

With a view to option 1a, the costs of the staff can be calculated on the basis of the average 
budgetary  costs  applicable  to  the  Commission.  These  costs  include  the  costs  for  overheads. 
Under these options, the additional staffing costs (compared to the baseline scenario), during 
the first two years would therefore amount to EUR (4 x 127,000 + 4 x 66,000=) 772,000.  

Table 11: Types of staff under option 1a in years n and n+1 

Functions (Option 1a) 

Commission  

Official/TA 

CA FG IV 

CA FG III 

CA FG II 

General coordination 

Public awareness 

Training  

Technical tools  

Case Law database 

Info exchange  

Total 

- 

1 

1 

1 

1 

- 

4 

- 

- 

- 

- 

- 

2 

2 

- 

1 

- 

- 

- 

1 

1 

- 

- 

- 

- 

- 

1 

Under  the  scenario,  where  a  new  agency  would  be  created  (option  3a),  administrative  staff 
would  have  to  be  recruited  in  addition  to  the  operational  staff.  The  figures  contained  in 
table 12  below  are  based  on  the  example  of  the  gender  equality  agency  in  Vilnius  (EIGE) 
which has a size comparable to that of such a new agency.  

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54 

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Table 12: Types of staff under option 3a in years n and n+1 (compared to baseline scenario) 

Functions (Option 3a) 

Commission  

EU Agency 

Official/T
A 

CA  FG 
IV 

CA  FG 
III 

CA FG 
II 

Official/T
A 

CA  FG 
IV 

CA  FG 
III 

CA  FG 
II 

Setting up the service 

1 

Coordination 
policy tasks (COM) 

and 

Public awareness 

Training  

Technical tools  

Case Law database 

Info exchange  

Head Administration 

Human Resources 

Finance 

Total 

- 

- 

- 

- 

- 

- 

- 

- 

1 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

1 

- 

1 

1 

1 

- 

- 

1 

- 

- 

5 

- 

1 

- 

- 

- 

1 

2 

- 

1 

1 

6 

- 

- 

1 

1 

- 

- 

- 

- 

- 

- 

2 

- 

1 

- 

- 

- 

- 

- 

1 

- 

- 

2 

The  Director  of  an  agency  is  recruited  at  AD14  level94.  Assuming  that  the  other 
officials/temporary agents would be recruited at AD8 level for senior staff and AD 5 level for 
junior staff, and contract agents at the entry grades (13, 8 and 4) the total staffing costs for this 
option in the first two years would amount to EUR ( 1x 136,000 + 4x74,000 + 6x36,000 + 
2x29,000 + 2x23,000 + 30% for allowances etc =) 1 million /year. Compared to the baseline 
scenario, furthermore the cost for one additional Commission official would have to be added 
for the setting up of the service, bringing the total staffing cost under this option during the 
first two years to EUR (1 million + 127,000 =) 1.13 million. 

Furthermore, to this sum, overheads need to be added. Yearly costs for the building and the 
office equipment can be estimated at about EUR (450,000 + 350,000=) 800,000. 

This means that the total cost of option 3a until the end of n+1, compared to the baseline 
scenario, can be estimated at about EUR 1.93 million /year. 

4.2. 

Staffing costs in years n+2 to n+5 

As set out in table 13 below, as of year n+2, the staffing costs under option 1a would rise to 
about EUR (15 x 127,000 + 10 x 66,000=) 2.57 million more than in the baseline scenario. 

94  

SEC (2009) 27/2. 

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55 

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Under option 3a, the costs of the agency staff can be estimated at about EUR (1x136,000 + 
9x74,000  +  12x36,000  +5x29,000  +  3x23,000  +  30%  =)  1.882  million.  To  this  sum,  the 
EUR 800,000  for  the  building  would  need  to  be  added,  leading  to  a  total  staffing  cost 
(including overheads) of EUR 2.68 million. 

Table 13: Types of staff under options 1a and 3a as of year n+2 

Functions 

Commission (Option 1a) 

EU Agency (Option 3a) 

Official/T
A 

CA  FG 
IV 

CA  FG 
III 

CA FG 
II 

Official/T
A 

CA  FG 
IV 

CA  FG 
III 

CA  FG 
II 

Management 

Policy support  

Data collection 

Public awareness 

Training  

Technical assistance 

Technical tools  

Legal section 

Information exchange  

Best practices (public) 

Successful strategies 
(private) 

Head of Administration 

Human Resources 

Finance 

Public Procurement 

1 

1 

3 

1 

1 

2 

2 

2 

- 

1 

1 

- 

- 

- 

- 

Total 

15 

- 

- 

- 

1 

1 

- 

- 

- 

1 

- 

- 

- 

- 

- 

- 

3 

- 

- 

- 

1 

1 

- 

- 

- 

1 

1 

1 

- 

- 

- 

- 

5 

- 

2 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

1 

- 

1 

1 

1 

1 

1 

1 

- 

1 

1 

1 

- 

- 

- 

- 

1 

2 

1 

1 

1 

1 

1 

1 

- 

- 

- 

1 

1 

1 

2 

10 

12 

- 

- 

- 

1 

1 

- 

- 

- 

1 

1 

1 

- 

- 

- 

- 

5 

- 

2 

- 

- 

- 

- 

- 

- 

- 

- 

- 

1 

- 

- 

- 

3 

5. 

ESTIMATE  OF  OTHER  BUDGET  REQUIRED  -  COSTS  OF  ORGANISATION  OF  EXPERT 
MEETINGS 

5.1. 

Current yearly meeting costs 

As  set  out  in  the  Impact  Assessment,  the  Observatory  is  currently  being  convened  in  two 
meetings per year (in 2009, the year of the launch of the Observatory, there was one meeting 

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56 

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of  the  private  stakeholders  in  September  2009,  and  one  of  the  public  authorities  in 
December 2009; also in 2010 one meeting of the private stakeholders was held in February, 
and  the  first  plenary  meeting,  bringing  together  both  public  authorities  and  private 
stakeholders,  was  held  in  June).  Reimbursements  are  made  only  for  the  participation  of  the 
public sector. 

The meetings in 2010 that were partially borne by the Spanish EU Presidency and by private 
stakeholders can be summarised as follows: 

5.1.1. 

2010 Expenditure borne by the Commission budget 

–  Plenary meeting at Madrid (June 2010) 

flight  tickets  &  accommodation  for  all  national  representatives  in  Madrid 
(10/06/2010) : Total EUR 19,892.15  

–  Member States' meeting: N/A 

–  Private sector meetings (February 2010) 

Catering 

16/02/2010  Total EUR 1228,10 

–  Subgroup meetings: 

Legal Subgroup: 

Total EUR 611,93 

Statistics Subgroup:  N/A 

Public Awareness Subgroup: 

Total EUR 740.35 

Flights for winners to the RealFAKE competition awards ceremony:  

Total EUR 16,300 

Total expenditure Commission 2010: EUR 38,772.53 

5.1.2. 

2010 Expenditure borne by third parties 

–  Plenary meeting at Madrid: Total EUR 19,057.15 

–  RealFAKE competition: Total EUR 20,505.50 

TOTAL 2010 EUR 78,335.18 

5.2. 

Additional budget required to meet the Observatory's potential 

On the basis of these figures, the average costs for the reimbursement of travel expenses for 
Member States representatives can be estimated at EUR 50,000 per meeting, and the average 

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57 

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cost  of  the  organisation  of  the  meeting  (room,  conference  organisers,  limited  interpretation 
regime) can be estimated at about EUR 25,000 per meeting. 

As  financial  contributions  from  third  parties  were  made  on  an  ad  hoc  basis  in  the  past,  the 
Observatory  cannot  rely  systematically  on  any  comparable  support  in  the  future  if  its 
functioning is to be ensured. Consequently, for the purposes of this Impact Assessment, the 
full  costs  of  the  meetings  have  to  be  taken  into  account.  The  additional  budget  required, 
compared  to  the  baseline  scenario,  in  order  to  meet  the  Observatory's  full  potential  can 
therefore be estimated as follows: 

–  Costs  for  the  Observatory's  current  activities  that,  in  the  past,  have  been  borne  by  third 

parties: about EUR 40,000 / year 

–  Reimbursement of MS experts for two additional meetings involving the public authorities: 

EUR 100,000 / year 

–  Costs  of  meeting  rooms,  interpretation  and  conference  organisers  for  three  additional 

meetings per year: 3 x EUR 25,000 = EUR 75,000 / year 

–  Costs  of  subgroup  meetings  -  currently  the  Observatory  has  three  sub  groups:  public 
awareness, legal and statistic group, that are made up only of private stakeholders and that 
meet currently in a limited composition only a couple of times a year, due to the limited 
management  capacity  of  DG  MARKT.  Once  the  Observatory  has  sufficient  resources, 
these groups should meet on a monthly basis, which would lead to a total of 36 sub group 
meetings a year. These groups should be enlarged to comprise a limited number (maximum 
five)  of  representatives  of  public  authorities  for  whom  mission  costs  would  have  to  be 
reimbursed.  Furthermore,  their  activities  could  also  be  extended  to  other  areas  of  action: 
EUR 200,000 /year 

–  Mission  costs  of  Observatory  staff:  EUR  € 30,000  /  year  duri ng  the  first  two  years,  and 

100,000 / year as of year n+2. 

–  Costs  of  publication  and  production  of  promotion  materials,  specialised  information, 

handbooks etc.: EUR 50,000 / year 

The  total  other  budget  required  (in  addition  to  the  baseline  scenario)  can  therefore  be 
estimated at EUR 495,000 in years n and n+1, and EUR 592,000 / year as of year n+2. 

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ANNEX IV: IT COSTS 

IT costs are composed of the costs for the development of the system ("development costs"), 
the hosting costs, maintenance and support costs. 

Hosting  costs  arise  where  physical  space  is  rented  on  a  server  allowing  information,  web 
pages  and  files  to  be  viewed.  The  vendor  charges  costs  for  the  storage  and  retrieval  of  the 
information.  

Maintenance  covers  the  activities  necessary  to  correct  faults  after  delivery,  to  improve  the 
performance or other attributes or to adapt the system to a modified environment. 

Support  costs  cover  all  activities  necessary  to  ensure  customers  can  use  efficiently  the 
information system. Technical support concerns the diagnosis and resolution of faults during 
the  operation  of  the  system,  and  the  provision  of  a  contact  point  for  all  fault  reporting, 
upgrades  and  repairs.  Users  support  delivers  all  necessary  help  to  end-users  to  use  the 
functionalities, including training. Also promotional activities fall into this category. 

While development and hosting costs arise during the development phase of the system, after 
the end of that phase costs arise from hosting, maintenance and support. In the present case, 
the  development  phase  can  be  estimated  to  extend  over  the  years  n  and  n+1  so  that  the 
systems would become operational in year n+2. 

1. 

COSTS OF A DATA COLLECTION SYSTEM AND A CASE LAW DATA BASE

95 

A data collection system and the case law data base are relatively simple information storage 
and  analysis  systems.  The  main  costs  arise  here  for  the  staff  that  gathers  the  information, 
formats it and feeds it into the system. This latter staff would be regular staff working for the 
Observatory, so that its costs are reflected in Annexes III and IV, and not in this Annex. 

In terms of IT costs, for the data collection system, a cost estimate of EUR 300,000 seems 
appropriate  for  development  and  hosting  in  years  n  and  n+1  (i.e.  EUR  150,000  /  year),  and 
EUR 150,000 / year for hosting, maintenance and support from year n+2 onwards. 

For the case law data base the costs can be expected to be slightly higher given that it would 
have to be accessible from the outside. Therefore, an estimate of EUR 400,000 for the costs of 
development  and  hosting  during  years  n  and  n+1  seems  appropriate  in  this  case,  i.e. 
EUR 200,000  /  year.  As  of  year n+2,  hosting,  maintenance  and  support  costs  would  arise 
which can, again, be estimated at EUR 150,000 / year. 

2. 

COSTS OF A RAPID INFORMATION EXCHANGE SYSTEM 

The costs for a rapid information system would be substantially higher, due to the complexity 
of  the  information  to  be  fed  into  the  system  and  the  need  to  allow  different  users  (public 
authorities and private stakeholders, in  particular  trade mark owners) to  feed  in information 
through predefined channels. 

95  

Internal estimates. 

EN 

59 

   EN 

 
                                                 
2.1. 

Yearly costs during the development phase (years n and n+1) – Tables 14 and 15 

2.1.1.  Basic web-based system 

IT system 

Development 

Hosting 

Total 

Users and management 

100,000 

Classification products 
management 

Fraud management and 
notification 

Agents’ and right holders’ 
contact details 

TM and designs 
synchrony 

Machine Translations 

Stats and monitoring 

100,000 

50,000 

50,000 

100,000 

25,000 

50,000 

Total Basic System 

475,000 

TOTAL INCL. RISK 
FACTOR (x2) 

950,000 

2.1.2. 

Interconnected premier system 

IT system 

Development 

Costs basic system 

475,000 

300,000 

600,000 

Hosting 

300,000 

775,000 

1,550,000 

Total 

775,000 

Additions 
interconnected premier 
system 

Web services set up 
monitoring 

Interconnection with MS 

Subtotal premier system 

TOTAL (basic system + 
additions premier system) 

TOTAL INCL. RISK 
FACTOR (x2) 

50,000 

200,000 

250,000 

250,000 

500,000 

725,000 

550,000 

1,275,000 

1,450,000 

1,100,000 

2,550,000 

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2.2. 

Yearly running costs after completion of the development phase (as of year n+2) 
– Tables 16 and 17 

2.2.1.  Basic web-based system 

IT system 

Hosting 

Annual 
Maintenance 

Support costs 
(technical and user 
support) 

Total 

BASIC WEB-
BASED SYSTEM 

TOTAL INCL. 
RISK FACTOR 
(x2) 

300,000 

200,000 

462,000 

962,000 

600,000 

400,000 

924,000 

1,924,000 

2.2.2. 

Interconnected premier system 

IT system 

Hosting 

Annual 
Maintenance 

Support costs 
(technical and user 
support) 

Total 

Costs basic system 

300,000 

200,000 

462,000 

962,000 

Additions 
Interconnected 
premier system 

TOTAL (basic 
system + additions 
premier system) 

TOTAL INCL. 
RISK FACTOR 
(x2) 

250,000 

75,000 

66,000 

391,000 

550,000 

275,000 

528,000 

1,353,000 

1,100,000 

550,000 

1,056,000 

2,706,000 

3. 

TOTAL YEARLY IT COSTS – TABLE 18 

Years 

Info exchange system 

Others 

Basic System 
Including risk factor 

Sophisticated System 
Including risk factor 

n – n+1 

n+2 

1.55 

1.92 

2.55 

2.71 

0.35 

0.3 

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ANNEX V: COSTS OF OPTIONS 1B AND 2 

This  Annex  sets  out  the  costs  that  would  arise  if  support  tasks  to  the  Observatory  where 
outsourced  to  external  contractors  (option  1b),  taken  on  by  a  private  sector  initiative 
(option 2a), financed through a Commission grant (option 2b) or carried out in a PPP (option 
2c). 

1. 

ANNUAL INIDCATIVE CONTRACT COSTS 

In order to calculate the total cost of these options, the Observatory's tasks have been divided 
into ten different activities (data collection, training etc). Due to the different nature of these 
activities, consortia of tenderers will not easily be formed: these specialists normally do not 
work together and have no professional contacts. Consortia therefore only seem conceivable 
with  a  view  to  the  two  activities  in  the  area  of  promoting  cooperation  and  spreading  best 
practices, and with a view to the IT related tasks (listed under no 3 in table 19 hereunder). 

Table 19: Estimated costs of contracts 

Activity 

Annual indicative contract costs 
(EUR) 

1. Data collection, measurement and analysis 

Contracted team of researchers, economist and statisticians 

2. Promoting cooperation and spreading best practice96  

2a.  Programmes  to  develop  and  spread  best  practices  amongst 
public bodies, including enforcers  

2b.  Programmes  to  develop  and  spread  successful  strategies 
amongst private sectors bodies  

3. Building technical systems97 

500,000 

130,000 

130,000 

3a. Technical systems to collect, analyse and report data  

Years n and n+1 

150,000 

Years n+2 + 

150,000 

96  
97  

Cost estimates based on figures of the UK Natural Environment Research Council 2009. 
Internal estimates. 

EN 

62 

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Activity 

3b.  Rapid 
information 
exchange  system  (costs 
depending on features of 
the system to be chosen, 
IV)  and 
see  Annex 
including risk factor  

Simple web-based system for 
users to log-in and register for 
alert system according to product 
category; only free text 
information, machine translation 
function 

Interconnected premier system 
allowing for upload and use of 
pictures and other visual content, 
automatic feeding of information 
into national IT systems of 
Member States concerned 

Annual indicative contract costs 
(EUR) 

Years n and n+1 

1,550,000 

Years n+2 + 

1,924,000 

Years n and n+1 

2,550,000 

Years n+2 + 

2,706,000 

3c. Developing a case law database  

Years n and n+1 

Years n+2 + 

4. Developing strategies and initiatives for raising public 
awareness98 

5. Training and Development – designing and organising technical 
training, awareness events and programmes99 

6. Researching, assessing and making information available on 
technical tools and resources - tracking and tracing100 

7. Developing international cooperation and technical assistance101 

TOTAL 

200,000 

150,000 

500,000 

155,000 

250,000 

440,000 

Years n and n+1: 
Between 4.01 and 5.01 mio 

Years n+2 +: 
Between 4.33 and 5.12 mio 

98  

99  

100 
101  

These costs do not include the actual costs of the campaigns which will be similar under all options and 
depend on the type and scope of each campaign. 
Based on WIPO programme 17 http://www.wipo.int/about-wipo/en/budget/pdf/budget_2010_2011.pdf; 
these costs do not comprise the costs of professional trainers that, under all options, will have to be 
recruited externally. 
See e.g. http://ted.europa.eu/udl?uri=TED:NOTICE:246101-2009:TEXT:EN:HTML. 
Based on WIPO programme 17 http://www.wipo.int/about-wipo/en/budget/pdf/budget_2010_2011.pdf. 

EN 

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2. 

ESTIMATE  OF  OTHER  BUDGET  REQUIRED  -  COSTS  OF  ORGANISATION  OF  EXPERT 
MEETINGS 

For the Observatory meetings etc, an additional budget will be required.  

For  option  1b,  this  additional  budget  would  correspond  to  that  of  option  1a,  as  the 
Commission services would continue to take care of the organisation of the meetings. To that 
end, as under option 1a, also under option 1b the assistant currently seconded from the OHIM 
would have to be replaced by a Commission staff member, adding additional EUR 66,000 / 
year to the overall costs and leading to a total annual cost of about EUR (495,000 + 66,000 
=)  561,000  in  years  n  and  n+1,  and  EUR  (592,000 + 66,000=) 658,000/ year as of  year 
n+2. 

For the different sub-options, under option 2, these costs would be the following:  

–  Reimbursement  of  Member  States'  experts  for  three  meetings  involving  the  public 

authorities: EUR 150,000 / year 

–  Costs  of  meeting  rooms,  interpretation  and  conference  organisers  for  five  meetings  per 
year (two meetings each of the public authorities and of the stakeholders plus one plenary 
meeting): 5 x EUR 25,000 = EUR 125,000 / year 

–  Costs  of  subgroup  meetings  -  currently  the  Observatory  has  three  sub  groups:  a  public 
awareness,  legal  and  a  statistics  group,  made  up  of  only  private  sector  stakeholders,  that 
currently  meet  in  a  limited  composition  and  only  a  couple  of  times  a  year,  due  to  the 
limited  management  capacity  of  DG  MARKT.  Once  the  Observatory  has  sufficient 
resources, these groups should meet on a monthly basis, which would lead to a total of 36 
sub  group  meetings  a  year.  These  groups  should  be  enlarged  to  comprise  of  a  limited 
number  (maximum  five)  of  representatives  of  public  authorities  for  whom  mission  costs 
would have to be reimbursed. Furthermore, their activities could also be extended to other 
areas of action: EUR 200,000 /year 

–  Mission  costs  of  Observatory  staff:  EUR  € 30,000  /  year  duri ng  the  first  two  years,  and 

100,000 / year as of year n+2. 

–  Costs  of  publication  and  production  of  promotion  materials,  specialised  information, 

handbooks etc.: EUR 50,000 / year 

The additional 'other budget' required would therefore amount to EUR 555,000 in years n and 
n+1,  and  EUR 625,000  /  year  as  of  year  n+2. Depending  on  the  design  of  the  option,  some 
savings will be made in the EU budget. As under other options, the current two administrators 
in DG MARKT would continue to follow the observatory from the political angle whereas the 
organisation  of  the  meetings  would  be  taken  over  by  the  industry-led  initiative,  adding  the 
costs for an assistant to the overall budget required. The total 'other budget' required under 
the different sub-options of option 2 can therefore be estimated at EUR 621,000 in years 
n and n+1, and EUR 691,000 / year as of year n+2.  

3. 

COSTS FOR THE ADMINISTRATION OF CONTRACTS 

To these sums, the costs for the management of the contracts need to be added. In the case of 
option 1b (outsourcing to an external contractor) these costs would arise inside DG MARKT, 

EN 

64 

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under  the  different  sub-options  of  option  2,  these  costs  would  arise  for  the  external  body 
taking over the tasks from DG MARKT. 

It  is  estimated  that  running  five  contracts  would  require  the  equivalent  of  three  AD  and/or 
AST staff. In the case of seven to ten separate contracts, this equates to 4 to 6 AD/AST staff 
engaged solely in the tender procedures and their direct follow up. Even if, under option 1b, 
all  of  these  staff  were  recruited  on  contract  agents'  contracts,  the  costs  can  be  estimated  at 
between  around  EUR 264,000  and  396,000  a  year.  For  the  sub-options  of  option  2,  these 
costs can be estimated to be at least as high as the Commission's or even higher, as the size of 
the Commission leads to considerable economies of scale in this respect.  

EN 

65 

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ANNEX VI: SYNERGIES AND COSTS UNDER OPTION 3B (OHIM) 

1. 

ESTIMATE OF STAFFING SYNERGIES IN CASE OF OBSERVATORY'S TRANSFER TO THE 
OHIM / YEARS N+2 TO N+5  

If,  under  option  3b,  the  management  of  the  Observatory  was  entrusted  to  the  OHIM,  the 
Observatory's needs in terms of operational staff, during the years n and n+1, would be the 
same  as  under  option 3a.  However,  due  to  the  fact  that  the  Observatory  staff  could  use  the 
Office's  administration  and  infrastructure,  the  average  costs  of  staff  (including  overheads) 
would differ, and therefore the cost of this option would be lower than those of option 3a (see 
below, section 2.1). 

In  the  years  n+2  to  n+5,  the  number  of  operational  staff  to  be  employed  to  run  the 
Observatory  would  also  differ,  due  to  synergies  that  could  be  realised  with  existing  OHIM 
functions. Table 20 indicates the total resources required to perform the main functions of the 
Observatory between years n+2 and n+5. It shows the number of persons that would need to 
be recruited to work in the Observatory and alongside this, to what extent functions that are 
carried out by the OHIM could already be used for the purposes of the Observatory and could 
therefore lead to savings in terms of human resources. 

Table 20: Staffing needs under option 3b as of year n+2 

Observatory's 
main functions 

Description 

Total 
resources 
required 

To 
recruited 

be 

Economies by using 
existing 
OHIM 
functions 

1 

3 

3 

3 

Management 

Policy Support 

Data collection, 
measurement and 
analysis 

Developing public 
awareness strategies 
and public 
relations/press, 
webpage 

Head of Service to manage the overall 
project 

1 HoS 

1 Junior102 Policy Adviser to administer 
and implement day to day work 
programme and 2 Assistants. 

1 Senior Economist/Statistician to build 
and implement an international 
methodology to collect assess data and 
analyse global trends and 2 Junior 
Economists/Statisticians to support. 

1 Junior 
Administrator 
and 
2 Assistants 

1 Senior and 2 
Junior 
Economists/St
atisticians 

- 

- 

- 

1 Senior Public Relations Specialist and 
1 Junior Administrators to design and 
develop European awareness campaign and 
1 Assistant to support. 

1 Senior PR 
Specialist and 
1 Assistant 

Junior 
1 
Administrator 
by 
collaborating  with 
the  OHIM 
IPR 
Policy Department 

102  

Basic entry grades for AD staff are grades AD5 to AD8. 

EN 

66 

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Observatory's main 
functions 

Total 
resources 
required 

Description 

To 
recruited 

be 

Economies by using 
OHIM 
existing 
function 

3 

2 

2 

Training and 
Development – 
delivering technical 
training, awareness 
events and 
programmes 

Developing greater 
technical assistance at 
an international level 
in cooperation with IP 
offices  

Researching and 
making information 
available on technical 
tools and systems for 
prevention and 
investigation purposes  

Legal Section 

2 

Information exchange 
system 

2 

1  Senior  Training  Specialist  to  carry  out 
training 
research  and  assessment  of 
programs  on  enforcement  and 
two 
support specialists. 

Senior 

1 
Training 
Specialist  

1  Senior  and  1  Junior  Administrator  to 
work  in  conjunction  with  international 
organisations  like  WIPO,  WTO  etc.  and 
EU agencies like Eurojust and Europol, to 
develop  synergies  between  national  IP 
offices and enforcement working groups. 

1 
Senior 
Administrator  

catalogue 

1  Senior  Technical  Researcher  to  assess 
and 
and 
systems, for example tracking and tracing 
and  1  Junior  Administrator  to  support 
research work. 

technical 

tools 

1 
Researcher 

Senior 

1 Junior Training 
specialist and 
1 Assistant by 
integrating the 
organisation of the 
training programs 
with the existing 
OHIM training 
scheme.  

1 Junior 
Administrator, by 
coordinating this 
activity with the 
work of the OHIM 
Department for 
institutional affairs 
and external 
relations 

1 Junior 
Administrator, by 
cooperation with the 
OHIM Information 
Technologies 
Department 

the  EU, 

1  Senior Lawyer  and  1 Junior  Lawyer  to 
collect  and  assess  case  law  within  and 
the 
outside 
maintenance  of  the  data  base  of  relevant 
case  law,  to  provide  legal  advice  to  the 
service  on  all  enforcement 
related 
matters. 

to  assist 

in 

1 Junior IT Systems Analyst to ensure the 
global  project  management  for  a  cross 
border  system  to  allow  authorities  to 
on 
rapidly 
counterfeiting 
issues 
and 
(including  rapid  notification  and  alert 
facilities), and 1 Assistant. 

information 
piracy 

exchange 

1  Senior  and 
1 Junior 
Lawyer 

- 

IT 

Junior 

1 
Systems 
Analyst 

1  Assistant, 
by 
cooperation  with  the 
Information 
OHIM 
Technologies 
Department  

Researching 
promoting and 
spreading best 
practice amongst 
public authorities 

2 

1 Senior Administrator to research, 
promote and spread best practices and 1 
assistant  

1 Senior 
Administrator 
and 1 Assistant 

- 

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Observatory's 
main functions 

Total 
resources 
required 

Description 

To 
recruited 

be 

Economies by using 
OHIM 
existing 
function 

2 

Researching 
promoting and 
spreading successful 
private sector 
strategies 

1 Senior Administrator to research, 
promote and spread best practices and 
1 Assistant  

- 

1 Senior 
Administrator 
and 
1 Assistant 

Total  

25 persons 

- 

19 persons 

6 man years 

2. 

ESTIMATE OF STAFFING COSTS 

Table 21: Types of staff under option 3b as of year n+2 

Functions 

OHIM (Option 3b) 

Official/TA 

CA FG IV 

CA FG III 

CA FG II 

Setting up of the service 

Policy support  

Data collection 

Public awareness 

Training  

Technical assistance 

Technical tools  

Legal section 

Information exchange  

Best practices (public) 

Successful strategies (private) 

Total 

1 

1 

1 

1 

1 

1 

1 

- 

1 

1 

9 

- 

1 

2 

- 

- 

- 

- 

1 

1 

- 

- 

5 

- 

- 

- 

1 

- 

- 

- 

- 

- 

1 

1 

3 

- 

2 

- 

- 

- 

- 

- 

- 

- 

- 

- 

2 

The  average  staffing  costs  of  OHIM  (including  overheads)  of  EUR  155,000  for 
officials/temporary  agents  and  EUR  66,000  for  contract  agents  would  lead  to  a  cost  of  the 
staff  to  be  employed  specifically  for  the  Observatory  of  about  EUR  (4  x  155,000  +  6  x 
66,000=) 1.02 million / year during the first two years. 

EN 

68 

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In  the  following  years,  these  costs  would  rise  to  about  EUR  (9  x  155,000  +  10  x  66,000=) 
2.06 million. 

3. 

ESTIMATE  OF  OTHER  BUDGET  REQUIRED 
IN  CASE  OF  ENTRUSTING  THE 
MANAGEMENT  OF  THE  OBSERVATORY  TO  THE  OHIM  -  COSTS  OF  ORGANISATION 
OF EXPERT MEETINGS 

–  Reimbursement of Member States' experts and consumer representatives for two meetings 
of the public authorities/private stakeholders and one plenary meeting: 3 x EUR 50,000 = 
EUR 150,000 / year 

–  Costs of subgroup meetings (to be developed as set out in Annex III): EUR 200,000 /year 

–  Mission  costs  of  Observatory  staff:  EUR  € 30,000  /  year  duri ng  the  first  two  years,  and 

100,000 / year as of year n+2 

–  No additional costs would have to arise for meeting facilities and meeting organisation (all 
available within the OHIM) and for publications etc (infrastructure and general budget of 
OHIM could be used) 

The total of other budget required would therefore amount to EUR 380,000 during years n 
and  n+1,  and  EUR  450,000  as  of  year  n+2.  At  the  same  time,  the  EU  budget  would  be 
alleviated by the costs borne by it in the past. On the basis of the figures provided under point 
5 of Annex III for 2010, these savings can be estimated at EUR 38,773 for reimbursements of 
travel expenses of Member States' experts and the organisation of the Observatory's meetings. 

EN 

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