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# 52014SC0204

**COMMISSION STAFF WORKING DOCUMENT Trade, growth and intellectual property Accompanying the document COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL AND THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE "Trade, growth and intellectual property - Strategy for the protection and enforcement of intellectual property rights in third countries" /\* SWD/2014/0204 final \*/**

  

COMMISSION STAFF WORKING DOCUMENT

Trade, growth and intellectual property

Accompanying the document

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

"Trade, growth and
intellectual property - Strategy for the protection and enforcement of
intellectual property rights in third countries"

TABLE OF CONTENTS

1........... Introduction................................................................................................................. 5

2........... The relevance of intellectual
property rights............................................................ 6

2.1........ Economic relevance of IPR.......................................................................................... 7

2.2........ Economic impact of IP abuse....................................................................................... 9

3........... The initial IPR strategy............................................................................................ 11

3.1........ Objectives................................................................................................................... 11

3.2........ Tools / Action lines..................................................................................................... 11

4........... Preparation of the new IPR
Strategy...................................................................... 12

4.1........ Evaluation of the 2004 Strategy................................................................................. 12

4.2........ Key IPR-related conclusions from
the public consultation on the Future EU Trade Policy (2010)            13

4.3........ ‘Revised IPR Strategy’ public
hearing held on 10.5.2011......................................... 14

4.4........ Input from Member States.......................................................................................... 16

5........... Key challenges – The need for
a revised IPR Strategy.......................................... 17

5.1........ External challenges to European
IP............................................................................ 18

5.1.1..... Protection and enforcement........................................................................................ 19

5.1.2..... Biodiversity and traditional
knowledge..................................................................... 21

5.1.3..... Technology transfer.................................................................................................... 22

5.1.4..... Climate change........................................................................................................... 24

5.1.5..... Geographical indications............................................................................................ 24

5.2........ Public debate.............................................................................................................. 26

5.2.1..... Development............................................................................................................... 27

5.2.2..... IPR in Free Trade Agreements................................................................................... 29

5.2.3..... Digital technology and the
internet............................................................................ 30

5.2.4..... Research and innovation ............................................................................................ 30

5.2.5..... Medicines.................................................................................................................... 30

5.3........ Harmonisation and coordination at
EU level............................................................. 35

5.3.1..... EU legislation............................................................................................................. 35

5.3.2..... Cooperation within the EU......................................................................................... 36

6........... Conclusion................................................................................................................. 37

1.           Introduction

This document accompanies the Commission
Communication entitled ‘Trade, growth and intellectual property — Strategy
for the protection and enforcement of intellectual property rights in third
countries’. The new Communication follows on from the Strategy for the
enforcement of IPRs in third countries[1]
adopted by the Commission in 2004. The 2004 Strategy and a recent assessment of
its impact are summarised in chapter 4 below.

The
challenges to intellectual property (IP) have evolved considerably in the last
10 years, both in nature and scope. This paper will describe this evolution
against the background of the continued relevance of IP and of the
socio-economic impact of IP abuse, and focus on today's key challenges to the
protection and enforcement of intellectual property rights (IPR). This analysis
has led the Commission to review and update its current IPR strategy vis-à-vis
third countries, which is spelt out in the Communication. Implementing a
revised strategy will not only support continued technological innovation within
the EU and thus drive long-term economic growth, but will also help to achieve
wider societal objectives both in the EU and in the developing world.

Previous
positions of the Commission

The new strategy is linked to several other
Commission initiatives, such as the ‘Europe 2020’ strategy[2], which cites
intellectual property rights (IPR) as one of the means to ‘improve framework
conditions for business to innovate’, the ‘Trade
and Investment Barriers Report 2011’[3], the 2010 Communication on the future Trade policy[4],
and a series of Communications regarding trade ('Global Europe: Competing in
the World'[5])
and IPR protection in the internal market (e.g. ‘Enhancing
the patent system in Europe’[6] in 2007, ‘An Industrial Property Rights Strategy for Europe’[7]
in 2008, ‘A Single Market for Intellectual Property
Rights’[8]
in 2011).

Position
of other EU institutions

Other EU institutions have also called for
an effective IPR strategy vis-à-vis non-EU countries.

In 2008, the Council adopted a Resolution[9] inviting the Commission
and the Member States to ‘step up the protection of intellectual property
rights internationally’, followed in 2009 by another Resolution defining a EU
Customs Action Plan to Combat IPR Infringements 2009-2012[10] (updated in 2012[11]) which included a section
on International cooperation. In this respect,
the new Council Resolution on the EU Customs Action Plan to combat IPR
infringements for the years 2013 to 2017 (OJ C80 - 19.3.2013) is also aiming to
strengthen cooperation with key source, transit and destination countries and
to build capacity in candidate and neighbouring countries on IPR enforcement
actions.

The European
Parliament has frequently called for better protection and enforcement of IPR.
For instance, in its Resolution of 22 September 2010[12] the European
Parliament:

–
‘Calls on the Commission to step up its
cooperation with priority third countries with regard to intellectual property
and promote a balanced approach in the context of the negotiations on
intellectual property’;

–
‘Supports the continuation and enhancement by
the Commission of bilateral cooperation initiatives’; and

–
‘Notes that the biggest challenge for the
internal market lies in combating infringements of intellectual property rights
at the EU’s external borders and in third countries; in this respect, calls on
the Commission to create more intellectual property helpdesks in third
countries (notably in India and Russia)…’.

2.           The
relevance of intellectual property rights

The protection of intellectual property is
recognised as a right in the Universal Declaration of Human Rights[13]
and also in the Charter of Fundamental Rights of the European Union[14].

The rationale behind intellectual property
regimes is that, in the absence of rules safeguarding creators and other
producers of intellectual goods and services by granting them certain
time-limited rights to control the use made of those productions, the low(er)
cost of copying such works will enable competitors to profit from someone
else's efforts without expending any energy or costs other than the relatively
minor costs required to duplicate the socially valuable creation. If the
‘original’ creators are not able to reap pecuniary rewards for their efforts or
even recover their costs, because competitors are simply copying their works and
undercutting their prices, this will in turn greatly reduce, or even eliminate,
the incentives to develop new knowledge and create new forms of innovative
expressions.

However, all intellectual property rights
are an attempt to balance two public goods — the need for new innovative works
on the one hand, and affordable access to them on the other. Striking the right
balance between the interests of right-holders and those of society in general
has always been delicate. It goes to the heart of how we stimulate innovation,
not only to enable progress and enjoy culture, but also to help solve wider
societal issues.

IPR legislation has always varied widely,
across countries and over time. That is why new measures have been adopted
periodically to address new situations, for instance, to facilitate access to
medicines in developing countries, or to protect emerging technologies.

Moreover, IPR promotes the dissemination of
knowledge and technology, as well as competition. As a World Bank study
on IPR and Development put it[15]:
‘Seen properly, IPRs do not necessarily generate monopoly market positions
that result in high prices, limited access, and exclusive use of technologies.
They are more similar to standard property rights, in that they define the
conditions within which a right owner competes with rivals (UNCTAD 1996).
Except in particular sectors, cases are infrequent in which a patent holder or
copyright owner becomes a strong monopolist. Rather, there are likely to be
competing products and technologies, including new ones that do not infringe
the property right."

Adequate IPR regimes are conducive to
innovation, especially for technological companies. Moreover, the protection of
IPR is a pre-requisite to its licensing, which may enable companies to generate
additional revenue without any need to expand their production capacities.
Similar reasoning applies to universities and other public research
organisations, which have no industrial/commercial activities but can leverage
their Research and Development (R&D) results by licensing them.

A climate favourable to innovation and
creativity depends on a well-functioning IPR system that covers the entire
spectrum of IPRs, including in particular patents, trademarks, copyrights,
designs and geographical indications, as well as trade secrets. It also
requires effective mechanisms to enforce these rights when they are abused by
others, since protection without enforcement is of little use.

2.1.        Economic
relevance of IPR

IPRs have been described as the ‘currency
of the knowledge economy’. The EU competitiveness (growth and jobs) relies
heavily on inventions and other intellectual assets, rather than on tangible
assets such as raw materials or basic manufactured goods.

The economic and trade relevance of
intellectual property has led the EU and other countries to promote harmonising
and strengthening of IPR protection and enforcement worldwide, either
bilaterally or multilaterally. Creating a level playing field of regulatory
frameworks facilitates trade for all countries concerned, whether developed or
developing. It is also an important factor in attracting foreign investment,
promoting transfer of technology, and ensuring citizens' access to the most
innovative and efficient technologies. Nevertheless, it is not a simple task to
obtain precise figures about the overall value or impact of IPR in the economy.
There are millions of right-holders for the different types of intellectual
property (copyright, trademarks, patents, geographical indications, designs,
plant varieties, etc.), covering the entire range of the economic activity
(from culture to agriculture, from pharmacy to aircraft manufacturing, from
software to textiles). Available data is often either limited to specific
sectors, limited to specific countries or regions or relatively outdated, and
the methodology used varies. Some data is provided by stakeholders and has
therefore been subject to criticism about its objectivity. There is
consequently a pressing need to work on a more precise quantification of the
value of IPR.

Recently the European Observatory on
Infringements of Intellectual Property Rights, together with the European
Patent Office (EPO), produced a noteworthy study demonstrating the considerable
impact that IPR has on the European economy. In the EU, around 39% of total
economic activity (worth some EUR4.7 trillion annually) is generated by
IPR-intensive industries, and approximately 26% of all employment (56 million
jobs) is provided directly by these industries. Also, 90%
of EU exports are accounted for by IPR-intensive industries[16].

Other
studies have shown that:

–
Between 50 % and 80% of the market value of many
large companies derives from their intellectual property[17].

–
In 2012, the EU exported over EUR 39 billion a year
in licenses and royalties. This covers only the income for IPR related
services, i.e. for the remuneration received for allowing third parties to use
certain intellectual properties. It is therefore only a fraction of the much
higher income resulting from the exports of physical goods incorporating IPR,
such as cars, pharmaceuticals, chemicals, luxury goods, wines & spirits,
etc.[18]

–
The value of the top 10 brands in each EU
country amounts to almost 10 % of GDP per capita. In smaller countries,
valuable brands can amount to over 30 % of GDP per capita.[19]

–
Trade mark intensive industries
account for 21% of EU27 employment, i.e. they employ 45.6 million people.[20]

–
Employment in creative industries increased by
an average of 3.5 % a year in the period 2000-2007, against just 1.0 %
a year for the EU economy as a whole[21].

–
Book publishing employs 140 000 people
full-time and contributes approximately EUR 23 billion to EU GDP[22].

–
The total value of the EU recorded music market
is around EUR 6 billion. The recorded music market accounts for about a
fifth of the music market, which as a whole is worth close to EUR 30
billion[23].

–
Motion picture production, distribution and box
office takings, as well as video rentals and sales account for 10 % of
copyright turnover. The audio-visual industry in Europe produces more than 1100
films a year and employs over a million people[24].

2.2.        Economic
impact of IP abuse

IPR infringement and its economic impact
are intrinsically difficult to quantify[25][26], particularly due to
the illegal and underground nature of the phenomenon. Moreover, while
infringements of patents and trade secrets may entail significant financial
losses for individual companies (e.g. regarding technologies applied in costly
goods such as railway equipement or power plants), they are often more difficult
to assess than for consumer goods protected by trademarks or designs.
Internet-based copyright infringements are also difficult to identify and
measure, considering the intangible nature of digital goods as well as the ease
of copying and disseminating these.

Due to inherent difficulties, the attempts
that have been made to quantify the impacts of IPR infringement are often
criticised[27],[28], especially when
provided by industry. However, even if some bias cannot be ruled out, industry
is well placed to assess the extent to which it is itself affected by IPR
infringement, and its data should not simply be disregarded. Furthermore, the
lack of coherence of the available data sources is also a problem, as it is
obviously not easy, and sometimes impossible, to compare or combine sets of
figures concerning different geographical areas, different sectors, different IPRs
and/or different periods.

All of
these considerations point to the need for more reliable and coherent data on
IPR infringement. At EU level, this reasoning led to the creation of a European
Observatory on Infringements of Intellectual Property Rights[29] in 2011. One of its
priorities is to assist the Commission in the development of a methodology that
quantifies the scope, scale and impact of IPR infringements on the European
economy. The Commission presented a first report on Measuring IPR
infringements in the internal market in September 2012[30]. In 2013 the
Observatory and EPO published a study on the contribution
of IP to economic performance and employment in Europe[31],
as well as a study on public perception of IPR[32]. The Observatory has also
been working on a study on the impact of IPR infringements[33].

Nevertheless,
the available data on IPR abuse strongly indicate that the scale of the problem
is very serious, growing, and has a considerable negative impact on the
European and global economy:

–
The OECD estimated
international trade in counterfeit and pirated products up to USD 250 billion
in 2007 (excluding domestic market and internet sales) — exceeding the GDPs of
150 national economies and affecting nearly all product sectors[34]. Other sources even put this figure around USD 650
billion a year, against global narcotics trade of an estimated USD 322 billion[35].

–
An European Parliament Report on the impact
of counterfeiting on international trade (2008/2133(INI)) states that ‘The counterfeiting market is worth approximately EUR 500 billion,
accounting for some 7-10% of world trade.’[36].

–
A report by Frontier
Economics estimates the total value of counterfeit and pirated products at
between USD 455 billion and USD 650 billion[37], and that 2.5 million jobs were
lost due to counterfeiting and piracy in 2009 in G20 countries alone[38].

–
The number of registered
cases of IPR infringements by customs over the last 10 years has risen from
7553 in 2001 to 90473 in 2012, an increase of 1200 % over a decade, reflecting
the growing practice of shipping such goods in small postal consignments.

3.           The
initial IPR strategy for third countries

3.1.        Objectives

The purposes of the 2004 Strategy were to
(1) provide the first long-term plan of action for the Commission with the goal
of achieving a significant reduction of the level of IPR violations in third
countries; (2) describe, prioritise and coordinate the mechanisms available to
the Commission services for achieving this goal; (3) inform right-holders and
other entities concerned of the means and actions already available and to be
implemented, and raise their awareness of the importance of their
participation; and (4) enhance cooperation with right-holders and other private
entities concerned, by seeking their input on the identification of priorities
and establishing public-private partnerships regarding e.g. technical
assistance, awareness-raising.

It did not intend to impose unilateral
solutions to the problem, propose a one-size-fits-all approach to promoting IPR
enforcement, copy other models of IPR enforcement, or create alliances against
third countries.

3.2.        Tools
/ Action lines

The 2004
Strategy on IP relied on eight action lines:

1.
Identifying priority countries (cf. the list of ‘priority countries’[39] regularly updated on the basis of surveys and additional sources of
input) on which to focus the EU's efforts

2.
Multilateral/Bilateral agreements (work related to the implementation of the TRIPS agreement by third
countries, negotiation of international treaties such as ACTA or those
administered by WIPO, IPR chapter included in bilateral trade agreements of the
EU with third countries, etc.)

3.
Political dialogue (‘IP Dialogues’ or other kinds of periodic meetings between the EU
and authorities of certain third countries, intended to address specific IPR
issues)

4.
Incentives/Technical cooperation (assistance regarding e.g. the drafting of domestic legislation,
the training of judges or other officials, public awareness raising, etc.)

5.
Dispute Settlement/Sanctions (based e.g. on the dispute settlement mechanisms provided for in
multilateral and bilateral agreements (such as that of the WTO), or on the Trade
Barriers Regulation mechanism)

6.
Creation of public-private partnerships (relying on companies and associations which are active in the
fight against piracy/counterfeiting, on the setting-up of helpdesks in certain
third countries, etc.)

7.
Awareness raising
(e.g. of right holders, of users/consumers in third countries, etc.)

8.
Institutional cooperation (between the Commission services responsible for the different
aspects of IPR enforcement, including by ensuring coordination with other
IPR-related Commission initiatives).

4.           Preparation
of the new IPR Strategy

4.1.        Evaluation
of the 2004 Strategy

It was decided in 2010 that it would be
timely to submit this IPR Enforcement Strategy to an evaluation, given
that it had been in force for 5 years.

The evaluation[40] which subsequently
took place attempted to assess, to the extent possible, the effectiveness of
the 2004 Strategy in relation to its ultimate goal which is a significant
reduction of IPR infringement.

As noted above, it remains difficult to
quantify the magnitude and impact of IPR infringement in third countries, and
consequently to establish trends to assess progress. Indicators were designed
at various levels, for example on actions undertaken in the context of the
Enforcement Strategy, actions undertaken by governments to improve enforcement,
and impact indicators in terms of overall IPR enforcement trends, to give a
sense of whether progress was being made.

Accordingly, the 2010 study sought to
examine these indicators and concrete results of the work accomplished so far
on the basis of the 2004 Strategy. The evaluation of the actions in place
helped further reflection on the existing Strategy and what changes could be
pursued in order to further increase the effectiveness of the fight against IPR
infringements on a global scale.

Conclusions of the evaluation: It was felt that the 2004 Strategy was targeting a real and
relevant problem by aiming to address IPR enforcement issues in third
countries. However, understanding the scale of this problem was difficult
because of data gaps and this was seen as an important obstacle when developing
policy. It was noted that the Strategy also needed to take more account of the
development agenda. It pointed to the need for coherence within the EU
institutions and Member States on IP promotion and IPR protection in order to
convey consistent messages to third countries. It suggested that EU
institutions needed to be more proactive in their outreach to a wider base of
stakeholders and that communication and awareness-raising needed to be better
targeted to have more impact. In terms of technical cooperation, the Commission
was felt to be most successful when projects were carried out as part of
bilateral arrangements involving third country input.

Recommendations of the evaluation: The evaluation proposed that the Commission approach be more
consistent, comprehensive, more widely-known, and its objectives and priorities
clearer. The evaluation also saw scope for improved consultation mechanisms
vis-à-vis stakeholders. It also called for efforts to 'Build respect for IP' to
be better incorporated in the development agenda. It recommended that resources
be developed for ambitious technical cooperation programmes that were well
designed, targeted and customised to local needs, particularly bi-laterally with
key countries. It suggested that legislative improvements should only be
pursued in countries where adequate legislation did not exist. It recommended
that a methodology be developed for improving statistics on counterfeiting and
piracy. The EU Observatory should be the centralised point for creation and
dissemination of best practice, and become the single reference point within
the Commission for external parties. It noted that adequate resources were
needed for EU harmonisation, which according to the evaluation should be
increased.

These conclusions and recommendations are
on the whole in line with the Commission’s own assessment and they are
therefore to a large extent reflected in the revised IPR Strategy set
forth in the Communication to which this document is an annex. However, the
Commission does not endorse all of the evaluation's recommendations. For
instance, the EU already dedicates considerable resources to technical
assistance programmes and these are fully designed in cooperation with the beneficiary
countries. Also it is not the purpose of the EU Observatory to be the external
reference point for IPR related matters for external parties (although the
Observatory can nevertheless facilitate cooperation with third countries); its
competences essentially relate to the collection and analysis of data regarding
infringements of IPRs within the internal market, and to awareness raising.

Annex 1 below includes a table comparing
the structure of the IPR Strategy with the study's recommendations.

4.2.        Key
IPR-related conclusions from the public consultation on the Future EU Trade
Policy (2010)[41]

As part of the
preparation for the review of the existing strategy the Commission sought input
from the public through a public consultation held in 2010. Most respondents
called for the need to strengthen IPR protection and enforcement, in order to
more effectively fight IPR infringements and protect investments. It was also
suggested that the EU must intensify its efforts to provide companies with
better protection against counterfeiting, although it was recognised that in
order to boost legal certainty in general, the affected trading partners would
need to be convinced of the advantages that accrue from the effective
protection of IPRs.

There was general
agreement among respondents that these issues should be addressed through both bilateral
and multilateral agreements. The WTO TRIPS agreement was seen as the key
agreement at global level which establishes minimum IPR protection standards.
Respondents therefore stated that effective TRIPS compliance should be
considered as one of the top priorities in the EU’s bilateral negotiations.
Finally, one respondent in the private sector suggested integrating IPR
legislation and practices that will apply to all EU Member States and set up a
Special Commission to invite all other non-EU countries to participate as an
International Working Group to establish a unified system of implementing,
supervising and policing all aspects of the process from application to
enforcement.

Respondents also called
on the EU to address the surge in counterfeiting and piracy in its bilateral
relations with key strategic partners such as for example China and India. At the multilateral level it was suggested that the EU should, through WTO and OECD,
push for promoting IPR enforcement efforts in third countries. Many respondents
consider that the EU was already doing a lot to improve enforcement but that
more could be done. Another suggestion was that a yearly report could list
examples of positive developments in third countries. Finally, in order to
provide companies, especially SMEs, with practical assistance, some called for
the EU to establish additional IPR help-desks in countries such as India, South Korea and Turkey.

A limited number of replies,
however, recommended avoiding excessively strict IPR enforcement provisions
such as TRIPS+, which in their view could be detrimental to developing
countries (in particular to access to medicines) and to citizens’ rights to
privacy (on the Internet). It was also suggested that the EU should be
encouraging the development and transfer of technology to meet the needs of
developing countries. One respondent found that agreements such as ACTA were
negative and that excessive attention to demands of IPR lobbies had harmed the
public image of WTO.

Some argued that IP
protection on medicines had to be relaxed, rather than the EU pushing for a
range of IPR measures that support the commercial interests of the
pharmaceutical industry, while hampering the opportunities for innovation and
access to medicines in developing countries. Others found that the existing
legislative initiatives aimed at combating counterfeit medicines were needed
due to the risk of counterfeits penetrating into the legal supply chain with
the risk of deaths, injuries and untreated conditions due to bad medicines.
There was also a call for the insertion of a clear and internationally agreed
definition for ‘counterfeit medicines’ as the one developed by the WHO, which
should replace the EU terminology of ‘falsified medicinal products’ as it would
better encompass the criminal relevance of such activities and the term was
understood globally. Some replies emphasised the relevance of geographical
indications (GIs) (also for handicrafts) and suggested that improving the
protection of European geographical indications outside of the EU should be a
priority. At the same time it was seen as important to include GIs in bilateral
and multilateral agreements in order to enhance local, regional and national
economies through their traditional products. Others mentioned the need for
better cooperation with the USA and Japan on IPR matters (harmonisation), the
need for more technical assistance to developing countries (awareness and
training). Specific problems, such as systematic (abusive) demands for
technology transfer to local companies in order to access for example the
Chinese market, were also mentioned.

Finally, some replies
noted the need for internal market mechanisms such as an EU patent system with
a corresponding litigation system. One government suggested promoting
international patent law harmonisation instead, with the aim to provide for a
more efficient global patent system.

4.3.        ‘Revised
IPR Strategy’ public hearing held on 10 May 2011

The Commission organised a public hearing
on the Protection and Enforcement of IPR in Third Countries on 10 May 2011 in Brussels. All interested parties were invited. Participants were mostly right-holders,
with some participants from civil society. The aim of the hearing was to obtain
feedback on the previous strategy and ideas on what those attending expected to
see in the new IPR strategy.

Stakeholders made presentations on the International
Fund for Innovation, to be based on a tax on patent applications, from
which revenues could be reallocated to manufacturing patented products under a
licence.

One association stressed the need to put
Protection of Plant Varieties on the IPR dialogues agenda.

A major IP Office said it was crucial to
link technical assistance to the political negotiations/agenda and trade
discussions. Awareness-raising too needed to be improved by showcasing best
practices and success stories.

A manufacturer of industrial equipment made
a presentation on a recent IPR infringement impacting the company. It involved
the illicit transfer of a licence to a subsidiary company that profited from
the transaction in various countries. The manufacturer concluded that it took
too much time and money for EU companies to enforce their IPRs and that the EU
needed a system of recognition of Singapore International Arbitration rulings,
along with a EU blacklist of companies that infringe rights.

There was a call for more reliable data on
IP infringements and their impact. This would ensure that EU legislation was
balanced and appropriate. It also called for more impact studies on the cost of
enforcing rights, not just direct costs, but also the costs of poor
enforcement.

Discussion
on the effects of the initial IPR strategy and on ways of improving the situation
followed and the main conclusions were:

–
The initial strategy included several action
points that are still very relevant and should be addressed again in the new
strategy. These included IPR dialogues, which are a good opportunity to promote
tools and mechanisms for countries that want to pursue research. They also
enable capacity-building, promoting partnerships with non-EU countries. Several
participants welcomed the new-generation FTA and multilateral trade agreement
negotiations, but said they should include commitments to accede to the major
IPR International Agreements/Treaties.

–
It is important to have adequate rules on IPR
enforcement: the new strategy should continue to focus on bilateral and
multilateral discussions to this end.

–
Universal multilateral consensus should be
sought, especially on enforcement.

–
Technology cooperation is still a very important
component of every IPR strategy.

–
The new strategy should aim for better political
dialogue, such as high level dialogues with China.

–
The new strategy should continue to tailor
actions to the needs of non-EU countries. The EU should assist other countries
in developing their own enforcement strategies.

–
The approach for the above should be tailored to
the level of development of each country involved.

–
Experts based in Delegations have had important
impact in some countries, such as China. Having them on site is an example of
best practice.

–
The current list of priority countries covers
those in which there are major problems, e.g. emerging markets in which there
are no or weak rules for copyright infringements. Some participants argued that
Russia needed closer monitoring, as despite joining the WTO, it has an IPR
enforcement system that does not comply with WTO membership requirements.

4.4.        Input
from Member States

Informal input was also solicited from
Member States’ administrations. Below are the main points that emerged:

All Member States agreed that all elements of the initial strategy should be kept.
However, one commented that it
would prefer a strategy with a clear, comprehensive vision, accompanied by an
action plan.

Regarding thematic focus, some Member States recommended paying more
attention to counterfeit medicines, to IPR infringement on the internet, or to
the protection of GIs. They noted that issues such as technology transfer and
biodiversity-related IPRs are important concerns for many developing countries, but that FTAs were not
considered to be the most appropriate or effective vehicle to address these.

Regarding geographical focus, some Member States said that least developed
countries should only be relevant to the strategy in terms of technical
assistance, programmes incentivising technology transfer and the EU’s
multilateral work. Others recommended relying either on the World Bank’s income classification
(low-income/middle-income/high-income), or concentrating on countries on the
priority list, which are either industrialised, or advanced emerging economies.

Regarding sanctions,
conflicting opinions were expressed, e.g.:

–
‘Additional remedies should be introduced
to ensure that third countries introduce and apply effective measures to deal
with infringement of IPRs. Sanctions for not doing so should be expedient and
effective, and should allow for countries to be restricted or removed from
participation/funding in EU programmes, or for other meaningful penalties.

–
Introducing additional remedies would
contravene principles such as of non-conditionality in aid and GSP
Regulation. It would also be a heavy-handed and counter-productive
approach, likely to damage relations with third parties and undermine
confidence in the EU’s commitment to development; and could fall foul of WTO
rules on non-discrimination.’

There was
also debate on the relative importance of bilateral and multilateral
initiatives:

–
Some saw "improving the legislative
framework for IP via bilateral agreements as the main avenue for
enhancing IPR protection and enforcement. Multilateral negotiations and
initiatives should be the priority if feasible."

–
Others felt that "bilateral agreements
are probably less effective than other measures and agreements. They
should be given less priority because they can undermine the drive for
multilateral agreements."

Other
highlights:

–
An annual seminar could be organised to let
stakeholders express their views on the implementation of the strategy.

–
The collection of data focused on IPR issues
relevant to trade with non-EU countries needs to be improved.

–
As regards institutional cooperation, efforts
should be made to improve the relationship with the European Parliament in the
light of the Lisbon Treaty.

5.           Key
challenges – The need for a revised IPR Strategy

The impact of counterfeiting and piracy is
not limited to companies whose rights are violated but are felt throughout
society. The impact includes:

–
Economic and social: IPR infringements deprive right-holders of
revenue from their investment in R&D, marketing, creative effort or quality control. They negatively affect sales volume, reputation,
jobs[42],[43],[44] and ultimately the viability of certain IPR-based
activities/companies which may be incentivised to relocate their business to
countries that are perceived as having stronger IPR regimes. High levels of IPR
violations also discourage foreign investment and the transfer of technology.

–
Health and consumer protection: The producers of pirated and counterfeit
goods most often disregard health, safety and quality requirements and provide
no after-sales service, guarantees or operating instructions. Such products not only
present dangers for the workers that produce them, since companies that are
involved in such practices tend to have scant regard for the health and safety
standards for their workers, but also represent a danger to consumers as
evidenced by the increasingly frequent seizures of fake medicines[45][46], food products, car and plane parts[47], electrical appliances and toys.

–
Public order and security: Criminal organisations are becoming increasingly involved in
large-scale international trafficking of counterfeit and pirated goods[48]. The business is very lucrative, and the
risk perceived as lower than for other criminal activities. The scale of the
problem and the sums of money involved mean piracy is as complex to tackle as
drug trafficking or money laundering. Europol, Interpol and other EU police
forces have created special departments in this regard,
and tackling organised crime involvement in counterfeit and substandard goods
is one of the priorities under the EU policy cycle 2013-2017. Counterfeiting and piracy are often seen as victimless crimes, and
the public is often unaware of the extent of organised crime involvement, as
Europol has pointed out.

–
Fiscal: IP crime is illegal and clandestine. This means that the
states lose tax revenue (VAT,
revenue taxes, customs duties), which is also the case when IPR-infringing
goods are sold at a lower price through official retail channels. This issue is
particularly sensitive in countries where there are economic sectors such as
tobacco or alcohol are under strict state control.

More specific
challenges are examined next.

Case study: Invisible hands

Pirated and counterfeit goods are usually produced 'underground' by
makers that pay no heed to health, safety and quality requirements. In the European automobile market, about 10% of all spare parts are
counterfeit, while in Asia, that figure could be as high as 30%. Inspections of
goods seized have revealed sub-standard manufacturing, including fake brake
pads made of compressed grass and wood chip (source: Walpole IP Working Group).
More effective IPR protection and enforcement would reduce such risks.

5.1.        External
challenges to EU IP

With the increasing globalisation of trade
in products and services, and as companies have sought value chain
optimisation, such as through outsourcing, the way in which products are created has changed. At the same time,
technological changes such as digitisation have made IP more volatile. This,
combined with the rapidly growing capabilities of third country manufacturers
in particular in emerging economies, and with the latter's appropriation of IP
through legal and sometimes illegal means, is having an unprecedented impact on
European industry.

The result is that third country attitudes
to IP matter more than ever. With a greater proportion of corporate value now tied
to intangibles, the risk that this value is exposed to when production or
R&D is outsourced to emerging economies must be factored in any corporate
IP value management strategy. Policy also has a role to play so as to help
ensure that other countries enforce IPR and that they have legal frameworks in
place that enable European companies to protect and enforce their IPR.

In particular there is a need to address the
'IPR erosion' increasingly noticed in a number of non-EU countries. This
phenomenon entails a combination of practices (very restrictive patentability
criteria; low threshold for compulsory licensing linked e.g. to a local
manufacturing requirement; questionable revocations of granted patents; etc.)
which, especially when combined, result in a substantial weakening of IPR protection
and thus in a serious deterioration of the innovation climate in the countries
concerned.

5.1.1.     Protection
and enforcement

Even for companies whose main market is the
EU, fighting IPR infringements in non-EU countries is important so as to reduce
the risk of counterfeits made abroad being sold in the EU. The 2005 Communication on a customs response to latest trends
in counterfeiting and piracy[49] already highlighted the impact of IPR infringement
from an external trade perspective.

Following the adoption
of TRIPS, the regulatory framework for IP in third countries is – at least on
the surface – generally reasonable, and most of the problems tend to relate to
how laws are enforced. Several
aspects of protection, however, such as validity criteria, duration of
protection, timeliness of registration, quality of examinations, are just as
important as enforcement, since right-holders can only enforce the rights they
have been granted.

Many of these
issues are, however, not covered in detail in the TRIPS agreement. For
instance, its regulatory data protection provisions applicable to
pharmaceuticals (Article 39.3) are drafted in such a broad way that significant
discrepancies may appear between how these obligations are implemented in
different countries. In addition, the TRIPS agreement does not include any
definition of the notions of ‘novelty’ or ‘inventive step’ which are key
criteria applicable to patents, nor of the novelty/originality criterion
applicable to industrial designs.

Some
right-holders have, for instance, expressed concerns as to the excessively restrictive manner in which some non-EU countries
interpret the patentability criteria or even introduce additional ones, sometimes allegedly to prevent the phenomenon characterised
as ‘ever-greening’ particularly in the area of pharmaceutical patents[50]. The term ‘ever-greening’ is somewhat pejorative and
wrongly suggests that the basic patentability criteria are not sufficient to
prevent attempts to patent products that are not new or do not involve an
inventive step. An overly restrictive definition of "inventive step"
is often used in India to deny patent protection for innovative pharmaceuticals
that build upon pre-existing products. Countries such as Israel have also designed patent term restoration rules applicable to pharmaceuticals in such a way as to work to the
detriment of foreign companies.

In many
non-EU countries, the quality of the IPRs granted by the examining authorities
is significantly lower than in the EU (particularly for patents[51],[52]), in particular due to difficulties or
inadequate resources regarding the examination process. This may lead to a proliferation of IPRs of dubious
legal value, hampering economic activity in certain (sub-) sectors, and encourage
unnecessary or even bad-faith litigation. Such situations may be aggravated by
lengthy, biased and costly invalidation procedures that may discourage third
parties from attempting to invalidate dubious IPRs. Such issues need to be
addressed, as a matter of priority.

Quality is
also important for trademarks, as a weak assessment of the examination criteria
by certain trade mark offices and Courts results in the registration of
quasi-descriptive terms. This raises the risk of accidental infringement, a fact
sometimes exploited by owners, leading to a proliferation of litigation.

The continuously growing demand for IPRs
puts IP offices under strain and risks either affecting the quality of the
rights granted or delaying the granting of rights. Backlogs have a negative
impact on both applicants and third parties, particularly as regards legal
certainty. A study by London Economics (2010) estimates that ‘an additional
year of pendency at the three Trilateral (US, Japan, EPO) offices is estimated
to impose costs of £ 7.6 billion per annum on the global economy’[53].

Certain
cooperation mechanisms are already in place or being developed (based on the Patent
Cooperation Treaty – PCT – and/or on initiatives such as Patent
Prosecution Highways) to ensure that at least part of one patent office’s
work (e.g. prior art search work) can be reused by other offices at which a
patent application for the same invention has been filed. It remains to be seen
if this will be enough to cope with the high volumes of filings in certain
parts of the world, such as China or Brazil.

Better
alignment of substantive legislation between one country and another would
certainly help, as this would make work-sharing and mutual recognition[54] a possible option, but discrepancies in rules and in quality mean
that much remains to be done. Nevertheless, promoting the accession of the EU’s
commercial partners to international Treaties such as the PCT, the Madrid
Protocol on trademark registration and the Hague Agreement on design
registration, is a way of reducing costs and complexity for EU right-holders
seeking protection in these countries.

Another
sensitive issue linked to protection is that of exceptions and limitations. IP laws
allow certain limitations on exclusive rights, that is to say, cases in which
IPRs may be used without the authorisation of the right-holders (with or
without compensation) but there is an
on-going debate at international level[55], and a balanced approach taking all stakeholders’
situations into account must be adopted. In particular, to maintain
the right balance between the interests of right-holders and the need to
incentivise innovation on the one hand and the interests of users of protected
works and goods on the other.

Improving IPR enforcement
internationally is the logic which underlies our
initial IPR enforcement Strategy, which is based on the acknowledgement
that the standards set in the TRIPS agreement for enforcement can no
longer deal adequately with all of today’s challenges.

At a bilateral level, the EU will continue to
encourage its partners to ensure that IPRs are effectively enforced in their
territory. This will include implementing action plans on IPR enforcement or
promoting cooperation on customs matters. Bilateral cooperation has led to
several successes. For instance, the EU and China have established effective,
lasting co-operation on IPR issues since 2004 through, in particular, an IP
Dialogue and an IP Working Group; in that context we have been able to provide
input regarding the revision of various Chinese IP laws and helped ensure that
the coordinating structure for the 2009-2010 Special Campaign against
counterfeiting and piracy was made permanent. In the area of IPR border
protection EU and China Customs authorities have been implementing since 2009
an Action Plan concerning EU-China Customs Cooperation on IPR. The Action Plan
provides for inter alia enhanced targeting of high risk consignments by
information exchange on relevant cases between key seaports and airports from
both sides. It also caters for effective cooperation with right holders in
deterring cross-border IPR infringement.

5.1.2.     Biodiversity
and traditional knowledge

Biodiversity and traditional knowledge are
particularly sensitive topics for developing countries. There are a number of
operational initiatives underway that may be beneficial both for the EU and for
developing countries. For instance, India’s Traditional Knowledge Digital
Library (TKDL)[56],
an extensive compilation of India’s ancient medical knowledge, is now available
to European Patent Office (EPO) examiners. This helps to improve the quality of
European patents and to prevent ancient Indian remedies from being patented by
e.g. Western applicants (although this database is not publicly available).

IP on traditional knowledge is indeed an
important issue. Ensuring the right protection of third countries traditional
knowledge can help creating confidence when developing cooperation (in R&D,
industrial projects etc.). This goes beyond biodiversity issues and the use of
genetic resources and should be open to include also other areas and
technologies such as house building. In case further research is done based on
traditional techniques, or based on properties of traditional materials, this
may have consequences for the definition of shared intellectual property and
its protection. For example traditional earthquake resistant assembly
techniques can be improved by modelling.

The EU has
also been active in the international debate on biodiversity-related IPR issues
and the protection of traditional knowledge, crucial for many developing
countries. The EU helped bring about a successful conclusion to negotiations on
a Protocol to the Convention on Biological Diversity (CBD) on access to
genetic resources and the sharing of benefits arising from their use (Nagoya
2010[57]).
By 2005, the EU had submitted a proposal to WIPO and WTO setting out a balanced
and effective way of including a requirement to disclose the origin or source
of genetic resources and associated traditional knowledge in patent
applications in international patent law. In the context of the WTO Doha
Development Agenda (DDA) negotiations, the EU has expressed readiness to amend
the TRIPS agreement to make it compulsory to disclose the country providing
material, or the source of genetic resources and/or associated traditional
knowledge (for which a definition would be agreed) in patent applications. That
would be part of a package of IP-related amendments (cf. ‘W/52’ proposal).

5.1.3.     Technology
transfer

Developing countries, especially LDCs, see
technology transfer as the corollary of protecting IPRs. The TRIPS agreement
includes a number of provisions on this point. For example, it requires
developed countries’ governments to provide incentives for their companies to
transfer technology to LDCs, so that the latter can create a sound, viable
technological base (Article 66.2[58]).

The EU and
its Member States strongly support the facilitation of voluntary transfers of
technology between its right-holders and partners in developing countries and
launched a number of initiatives towards this end, for example the EU’s Intra-ACP
Support to the Centre for Development of Enterprise programme[59], and UK DFID’s Technology
Programme for Branchless Banking[60].
Submissions from the EU[61]
and other developed countries are reviewed by the TRIPS Council on an annual
basis. Members may ask questions, request additional information, discuss the
effectiveness of the incentives provided, and review the reporting procedure.
The EU is fully committed to this process and submits an annual report on EU/MS
technology transfer activities. The issue of technology transfer from developed
countries to LDCs has been discussed in the TRIPS Council and in dedicated WTO
workshops.

In most cases, technology (and the related IPRs)
belong to private owners, and cannot be ‘expropriated’ for the sake of
technology transfer. This is why the above-mentioned initiatives need to
concentrate on incentives to encourage voluntary transfers.

In 2007,
ICTSD published a report[62]
identifying changes over recent decades:

–
a number of developing nations have become much
more technologically sophisticated, with an enormous change in the skills
available to a large portion of the developing world;

–
the world is now globalised in the sense that
free trade has spread, with many production facilities serving more than one
nation, and increasing specialisation and trade;

–
because of free trade rules, an indigenous firm
in the developing world may be less able to start operations in a protected
market.

Some countries have introduced measures
that are potentially detrimental to foreign right-holders. For example, the
Chinese ‘indigenous innovation’ rules (concerning the accreditation procedure
imposed to be eligible to public tendering), according to which, in key areas such as high technology or new-energy vehicles, there
are requirements for a high percentage of domestic IP and/or technology
content. While the initial rules have been heavily
debated and then substantially amended, continued monitoring of implementation
is needed.

Some countries have also developed
legislation requiring non-consensual technology transfer of foreign companies
to local partners (for instance in China[63]),
which may have a potentially detrimental impact on EU companies.

India's demand for “local working
requirement” can also be seen in this light, since it creates an obligation for
a right-holder to produce the IPR-bearing good domestically if it is to benefit
from IPR protection. This runs counter to the concept of free international
trade: if all WTO Members imposed a local working requirement there would be no
international trade of IPR-protected goods. Requiring companies to produce
locally in every country where they have obtained a patent, a trademark or a
design also goes against business rationale and discourages the entry of
foreign operators into such markets.

It may be tempting to consider that such
measures provide short-term gains for domestic users, but overall they are not
conducive to long-term innovation and growth. This actually harms the countries
concerned, since it results in a regulatory environment which deters innovation
and foreign investment in innovative sectors. Innovators realise this, and
logically take local IPR factors into account when making investment decisions.

Also, taxation and legal requirements
hampering joint ventures or private sector cooperation between domestic and
foreign companies should be revised to facilitate technology transfer or, at
least, not impede it. It is clear that in some emerging economies the situation
needs to be improved on these points[64],
there so as to create an environment conducive to technology transfer.

5.1.4.     Climate
change

Climate change is clearly one of the key
global challenges of the century. Developing countries in tropical and
sub-tropical regions are expected to experience the most severe effects of
global warming. In the context of on-going international negotiations (UNFCCC),
there is controversy over the role of IPR vis-à-vis climate change. A number of
developing countries argue that IPRs are barriers to the deployment of ‘green’
technologies. They have proposed weakening IPR rules (e.g. through compulsory
licensing or patentability exclusions), making a parallel with ‘access to
medicines’. This ignores fundamental differences between the two issues and
several studies[65]
demonstrate the flaws in this argument, and conclude that – contrary to the
above positions – by providing a legal mechanism to promote the dissemination
of information and the reward for much needed further R&D and investment in
‘green’ technologies, IPRs acts as a catalyst and not as a barrier.

A recent study[66]
conducted by the European Patent Office regarding the licensing of green
technologies states that ‘70 per cent of respondents said they were prepared
to offer more flexible terms when licensing to developing countries with
limited financial capacity’. This is positive, and further supports the
view that IPR issues are not the main factor affecting the transfer of such technologies
to developing countries.

There have been a number of other
interesting initiatives recently, including WIPO Green[67],
fast-tracking mechanisms at certain patent offices[68], classification
initiatives[69]
facilitating access to ‘green patents’, or the Green Intellectual Property
(GIP) project[70],
which all seek to maximise the benefits of a balanced and effective IPR system
towards progress in environmental technologies.

The EU's
position in climate negotiations is to be at the forefront of promoting and providing
financing for access to technology by developing countries while maintaining
that IPR is an essential pillar, not a barrier, to the dissemination of
innovative green technologies.

5.1.5.     Geographical
indications

Geographical
Indications (GIs) identify the name of a product whose quality, reputation or
characteristics are essentially attributable to its geographic origin. They
protect legitimate producers against misuse and imitation, and encourage them
to diversify production and develop related tourism.

The legal
protection of GIs is increasingly important for their producers, and often
represents a key element of their business development strategy. GIs are an
effective marketing tool capable of adding value to a product, and those with
significant commercial value are indeed exposed to misappropriation, misuse and
counterfeiting.

Ensuring that EU GIs can fulfil their
potential properly requires an adequate level of protection not only in the EU
territory but also internationally. Existing international rules on GIs present
some weaknesses that reduce their effectiveness. The
ongoing revision process of the Lisbon Agreement is aimed at making it more
appealing while keeping a high level of protection of appellations of origins
and geographical indications. While TRIPS remains the
only truly multilateral agreement to include protection for GIs it remains an
incomplete agreement as far as this category of intellectual property is
concerned. TRIPS, for example, offers considerable flexibility in terms of the
legal means Members may choose to protect geographical names at the national
level. The EU has been pushing for better protection of GIs at the
international level due to increasingly frequent misappropriation that European
GIs with high economic value (e.g. Champagne) face in many third countries. The
abuse of GIs limits access to certain markets for the original producers and
undermines consumer loyalty; such situations are detrimental not only to
producers, but also to consumers, which are misled about true origin and
qualities of the products found in the market.

A dedicated GI
policy helps to promote traditional cultures, geographical diversity and
production methods. It can help promote rural development by capitalising on
natural competitive advantages for agricultural and cultural products and it
can contribute to quality policy. It supports small-scale production and small
communities by helping to boost income and developing tourism. GIs can also contribute to preserving natural resources, rare plants
or breeds, and traditional know-how. GI labelling helps consumers looking for
products with qualities that have a strong link with a specific region.

At EU level,
specific rules have been developed to protect GIs for wines[71] and spirits[72], as well as
agricultural products and foodstuffs[73].
In 2007, Protected Designations of Origin (PDOs) and Protected Geographical
Indications (PGIs) of European agricultural products (excluding wines and
spirits) had an estimated wholesale value (in the EU) of EUR 14.2 billion. The
total sales value of GI products (including wines and spirits) was estimated at
EUR 54.3 billion in 2010[74],
with exports on extra-EU markets estimated at EUR 11.5 billion[75]. There was a rise in
value (+ 12 % between 2005 and 2010)[76].
The sales value of the European food and drink sector was estimated at EUR 956
billion in 2010 by FoodDrinkEurope.[77]
The share of GIs was 5.7% in 2010.

Protection
of GIs is therefore an important part of the EU’s agricultural quality policy[78] and trade policy. The
EU is actively participating in international negotiations via the World Trade
Organisation[79].
It is seeking to improve and facilitate GI protection through extending the
type of protection that applies to wines and spirits GIs to other products.
This would involve setting up a multilateral GI register with meaningful legal
effects. The EU is also engaged in the review of the Lisbon System of
Appellations of Origin at the World Intellectual Property Organisation[80].

The EU has
negotiated bilateral agreements on GIs for wines (e.g. with the USA, Australia, Canada)[81], and bilateral
agreements covering GIs for agricultural products and foodstuffs (e.g. with Switzerland, South Korea, Central America, Columbia, Peru)[82].
It is currently negotiating with several other trading partners.

5.2.        Public
debate

The increasingly
tangible influence of IPR policy on our daily lives (for example, on the way we
can ‘consume’ music and movies via the Internet), means that it is more than
ever in the public eye and IP is no longer the reserve of ‘experts’. There is
often controversy, and even opposition, when it comes to proposals to
strengthen, let alone reform, IP regimes. Some stakeholders argue that IPRs may
hinder innovation, as well as access to essential goods (such as medicines or
‘green’ technologies) or digital goods (e.g. multi-media content), and that the
law is sometimes unclear or detrimental regarding consumers rights.

There has been,
especially since the 1990's, a continuing debate on how to design IPR rules,
and in particular on how to strike the right balance between the rights of
right-holders and public interests in access (concerning mainly copyright and
patents). This debate has also been prompted by the negotiations of and later
the entry into force of TRIPS, and has focused on whether developing countries
should adopt more stringent IP standards, with a particular focus on how to
maximise the so-called TRIPS flexibilities and in particular on issues such as
access to medicines. The emergence of new technologies has raised questions
about how IP should apply to areas such as biotechnology (cf. biotech
directive), software (debate on software patenting) and not least to the
internet (see below).

Existing research
reveals common patterns in consumer decisions to buy counterfeits and pirated
goods and shows that such practices are a widely-tolerated and unspoken social
problem[83].
There is no doubt that some consumers see benefits in IPR-infringing goods
because they tend to be cheaper or perceived as free. However, this is a narrow
and short term perception, which ignores the wider economic and social impact
of counterfeiting and piracy, such as the potential risks to consumer health
and safety, as well as the wider long term negative impact on society in terms
of, for example, lost jobs in legitimate businesses, and innovation in general.

It is clear that any strategy to combat
counterfeiting and piracy will also have to address the demand side of the
problem. This will in the first place require further work to better understand
consumers’ attitudes toward such products and second to devise awareness
raising initiatives aimed at changing these attitudes.

5.2.1.     Development

There has equally been a long running debate about the role
of IP in the development policies and strategies of developing countries, where
some question whether IP policies can play a positive role in efforts to foster
development. Because most right-holders are based in developed countries it is
sometimes suggested that IPR protection and enforcement are therefore less
relevant or even counter-productive for developing countries[84].

Developing countries
obviously vary greatly in terms of their innovative potential, the education of
their work force, and the structure and funding of research and development
(R&D). However, emerging markets are catching up fast as regards the
balance of ownership. For instance, in 2010 Chinese applicants filed
293 066 Chinese patent applications (which was more than the total number
of European patent applications, irrespective of their applicants' origin), and
their share of all European patent applications increased from 0.7 % in 2002 to
6.9 % in 2011.

The benefits of IPR for
developing countries include protection of their intellectual assets which will
allow them
to compete in higher added value sectors of the economy, combating health[85] and safety
risks, safeguarding jobs and tax revenues[86], and promoting foreign direct
investment (FDI) and transfer of technology. For example, an IPR holder can
serve a foreign market through exports, FDI, or licensing. The OLI
(ownership-location-internalization[87])
framework suggests that firms that possess ownership advantages — for example
in the form of IPRs — tend to choose foreign production over export, if the
attributes of a particular location (for example, lower wages or proximity to
international markets) favour production abroad. The choice between FDI and
licensing would depend on internalization advantages and IPR policies can have
an effect on both location advantages and internalization advantages, such that
strengthened protection can lead a firm to invest in different places and
switch from wholly owned production to licensing. In other words, a good IP
regime can help attract either FDI or technology transfer although in itself
would not necessarily be sufficient. As
a working paper of the National Bureau of Economic Research put it: ‘IPR reform in the South leads to increased FDI … as Northern firms shift production to
Southern affiliates. This FDI accelerates Southern industrial development. The
South’s share of global manufacturing and the pace at which production of
recently invented goods shifts to the South both increase.’[88]
Evidently, IP reforms are only one of the many factors
able to attract investment; other factors to create an attractive investment
and business climate need to be in place, in particular for countries that are
trying to move up the value chain.

Trade policy has an important role to play
in development, as the Doha Development Agenda shows, and as
highlighted in the Commission Communication on ‘Trade, growth and
development’[89].

The World Bank notes
that the effects of IPR reforms depend on
circumstances, and that a ‘one-size-fits-all’ approach is unlikely to work[90]:
‘Although the current international framework for the protection of
intellectual property provides for some degree of harmonisation of global IPR
standards, TRIPS, in particular, still leaves important room to adjust IPR
norms to domestic needs.’

Similarly, a
UK report[91] on ‘Intellectual
property and development’ (2001-02) observed that:

–
‘The question is how they [developing countries] can mould their IP systems to suit their
own economic, social, and technological conditions, as developed countries did
in the past.’

–
‘We need to ensure that the global IP system
evolves so that the needs of developing countries are incorporated and, most
importantly, so that it contributes to the reduction of poverty in developing
countries by stimulating innovation and technology transfer relevant to them,
while also making available the products of technology at the most competitive
prices possible.’

The Commission’s Policy Coherence for Development Work Programme
2010-2013[92] includes a section on IPR, mentioning three targets:

– ‘To make better use of IPRs for development, for example, to promote
investment and innovation and to facilitate IPR protection in the EU of export
products from developing countries.

– Ensure that balanced IPR provisions (e.g. in bilateral agreements)
help developing countries to leverage the value of their intellectual creations
and to promote technological progress, innovation and support domestic and
foreign investment.

–
Preserve access to affordable medicines in
line with the principles of the Doha Declaration and subsequent WTO agreements
and EU legislation.’

The
Commission recognises that there needs to be a differentiated approach
regarding protection and enforcement vis-à-vis low-income developing countries.
To assist least developed countries (LDCs), the WTO decided in 2005 that
they would have until 2013 to comply with the TRIPS agreement[93], and even up to 2016[94] regarding pharmaceuticals. In November 2012, there had been a
proposal by LDCs to extend this deadline beyond that date. The Commission
supported an extension and as such the deadline has now been extended for a
further eight years until 2021.

5.2.2.     IPR
in Free Trade Agreements

There is a wider, trade-related aspect of
the above-mentioned controversy which affects the inclusion of IP provisions in
bilateral trade agreements or other international agreements. Some stakeholders both in Europe and abroad oppose any
further strengthening of IPR legislation through FTAs including what they
characterise as ‘TRIPS+’ provisions. However, focusing on whether a particular
provision constitutes a TRIPS+ element or not misses several important points.

First, the TRIPS agreement was concluded more than 18 years ago and the changes
in technology (e.g. the internet) and society that have occurred since then
have transformed the nature of the IPR landscape. This is already reflected in
many countries’ national legislations that strictly speaking go beyond TRIPS
because they seek to address emerging challenges. Second, negotiations of free
trade agreements also provide an opportunity for countries to stimulate
bilateral trade by providing legal certainty for economic operators by reducing
some of the constructive ambiguities contained in TRIPS. Third, many so-called ‘TRIPS+’ provisions actually have
an objective other than strengthening IPR legislation: e.g. they relate to the
ratification of purely procedural treaties (destined to harmonise or facilitate
the registration of rights), or they are of primary
interest to developing countries (e.g. provisions on bio-diversity).

That is why
it is essential for the EU to continue to negotiate with its trade partners a
number of provisions, not just to address technical[95] or commercial[96] developments, but also
to clarify uncertainties around IPR[97]
or to improve the functioning of the system. It is also crucial that public
authorities, including the EU, are more open to dialogue with all stakeholders,
including business as well as civil society, to clearly discuss the importance
and benefits of IPR but also its limitations and abuses.

5.2.3.     Digital
technology and the internet

Digital technology and the internet have
emerged as major opportunities and channels for information, culture, leisure
and business. They undoubtedly contribute to economic growth and social
progress. The European Competitiveness Report 2010[98]
says: ‘The creative industries account for 3.0 per
cent of total employment (2008) and 3.3 per cent of GDP (2006). […] In terms of
exports, creative goods account for 4.3 per cent of the EU-27’s external
exports.’ Although there is no direct correlation between
digital goods and the ‘creative industries’, these figures confirm the
significance of the latter, which increasingly rely on the digital marketplace.
However, the success of the internet has not only made it easier for legitimate
businesses but also for those that engage in counterfeiting and piracy to
market themselves locally, nationally and internationally at relatively low
cost and on a massive scale.

The huge impact of the internet on the
production, distribution and consumption of cultural and other goods has made
IPR a part of daily life, and has prompted calls for a profound review of
relevant business models and IPR rules.

In this debate it is critical to have a
better understanding of the potential consequences of the various options on the
different actors in the IP value chain and to maintain a balance between the
need to improve access to content and the need to incentivise content
providers.

The relevance of
IPR in the context of the digital world is not restricted to the aspects presented
above. The development of new computing concepts such as "big data"
and "cloud computing" has also significant cross-border implications
in terms of IP. Huge amount of data generated by users requires clarification
the best IPR regime applying to contextualised data, and under which IP regime
these data may be reused in cross border application scenarios. Contracts for cloud
computing services have to specify: (i) the ownership of the hosted data; and
(ii) whether the data hosted in the cloud are possessed by the cloud company or
just guarded, as each of them implies different rights/obligations for the
cloud company (the possessor has certain legal rights, while the guardian
mainly obligations) and possible liabilities for copyright-infringing content uploaded
onto the cloud.

5.2.4.     Research and innovation

The
global landscape of research and innovation has changed drastically over the
past decade. While until recently, the European Union, the USA and Japan dominated the scene, a number of emerging economies have invested considerably in the
strengthening of their research and innovation systems. As a result, a
multipolar system is developing in which countries such as Brazil, China, India, Russia or South Korea exert increasing influence.

At the same time, research and innovation
itself is increasingly an international endeavour. Internationally co-authored
publications are on the rise, research organisations are establishing offices
abroad and research and innovation investment of multinational companies is
often targeted towards the emerging economies.

Societal challenges, such as climate
change, food security or infectious diseases, are important drivers for
research and innovation. They are often global in nature and do not stop at
borders and therefore require critical mass to be built at global level in
order for them to be tackled in an efficient manner.

All of the above require the Union to step up its cooperation on research and innovation with its international
partners, while at the same time becoming more strategic in the choices it
makes and in setting adequate framework conditions governing the cooperation.
To this extent the Commission adopted in 2012 a new strategy for international
cooperation in research and innovation.[99] While the strategy aims for an increase in cooperation activity, it
also acknowledges the fact that this at the same time also brings with it new
risks and that the Union's economic interests must be safeguarded. In this
context, increased efforts must also be made to ensure fair and equitable
treatment of IPR in partner countries to avoid uncontrolled loss of the Union's know-how.

Should it wish to do so, the Commission may
restrict the participation in Horizon 2020 of legal
entities established in third countries where conditions for the participation
of legal entities from Member States in the third country's research and
innovation programmes are considered to be prejudicial to the Union's interests[100].

5.2.5.     Medicines

Ensuring access
to medicines in less developed countries is a matter of major importance for
the European Union. The EU has consistently sought to address the complex
challenges involved. It has supported countries in reforming and in
strengthening their health care systems, and is a major donor to organisations
and funds dedicated to achieving improvements (e.g. WHO, UNICEF, Global Fund,
GAVI, ).

For some years
a debate has been raging about the role that IPR plays in the accessibility to
medicines, and this debate has also influenced public attitudes towards IPR. In
particular, the increased level of patent protection provided for by TRIPS has
been criticised because of concerns about the effects this could have on drug
prices. Some, for example, argue that IPRs are a major factor in restricting
access to medicines in developing countries and should be relaxed. While TRIPS
does offer safeguards to remedy possible negative effects of patent protection
or abuse, some call for these flexibilities to be used systematically.

In fact,
patents are only one of many factors influencing access. Indeed it is worth
noting that many off-patent medicines (which account for 95% of the list of
essential medicines, as defined by the World Health Organisation) still
remain unavailable in some countries. High taxes on imports imposed by certain
developing countries on pharmaceutical products, mark-ups
on the price of medicines imposed by intermediaries, weak pharmaceutical
regulation, inadequate health infrastructure that, for example, prevent people
from accessing a particular medicine, inefficient distribution and supply
systems, irrational use of medicines, and lack of access to information play a
far more significant role. This was explicitly recognised in a European Parliament Resolution in 2007[101], and also by the World Health Organisation[102].

Another issue relates to the need for a system that
provides sufficient incentives for undertaking the investments required in
R&D. IPRs are fundamental to ensure that new medicines are developed because they allow innovative
pharmaceutical companies the possibility to recover their investments.

But there needs to be a careful balance between longer term
goal of stimulating pharmaceutical research into new treatments and the short
term goal of ensuring that
medicines are available and accessible for those who need them. Given the
importance of ensuring that IPRs do not hinder access to medicines, a number of exceptions have been introduced to IPR legislation,
particularly through some of the so-called ‘TRIPs flexibilities’. Some countries
(such as India[103]
or Israel) have used TRIPS flexibilities widely to develop a strong domestic
industry in generic medicines. There is, however, concern that some countries
may be starting to use these flexibilities less due to public health concerns
and more to pursue industrial policy goals for the benefit of their domestic
industry and to the detriment of foreign competitors.

It should also
be noted that LDCs are not obliged to implement their TRIPS obligations in the
areas of pharmaceutical patents
and data protection until 1 January 2016.

Case study: Fake medicines are
a hazard to health

Fake medicines are a real threat to public health. Patients taking
them risk treatment failure, and even death. Many countries in Africa and parts
of Asia and Latin America have areas where over a third of the medicines on
sale may be fakes. (Source: WHO). Africa's efforts to combat malaria are being
compromised by widespread use of fake medicines that could undermine the
effectiveness of even the most powerful treatments currently available.
(Source: Malaria Journal, January 2012)

The EU strongly supports the Doha Declaration on TRIPS and Public
Health and reaffirms that the TRIPS agreement does not and should not
prevent countries from taking measures to protect public health. It rapidly
implemented the WTO mechanism allowing compulsory licences for the manufacture
and export of generic medicines to developing countries with public health
problems and lack of sufficient production capacities (Regulation 816/2006).

In addition, the EU adopted rules (Regulation 953/2003)[104] on strongly reduced — so-called ‘tiered’ — prices enabling
exporters to deliver essential medicines for the treatment of some major
communicable diseases to developing countries[105] at prices only slightly above their own production costs, by
preventing their re-export to the EU. So far, only one pharmaceutical company
has made use of this mechanism. The Commission will explore how to make the
tiered pricing mechanism more effective. To assess the continued usefulness and
current functioning of this EU legislative instrument, as well as to answer the
question of whether the current instrument remains fit for purpose, and to make
proposals/recommendations on possible courses of action, a formal evaluation of
the instrument is necessary and will take place in 2014.

Effective enforcement of competition rules also helps to ensure
optimal regulation. In 2008, the Commission conducted a detailed inquiry
regarding competition in the pharmaceutical sector in the EU[106]. This concluded that certain ‘innovative’ pharmaceutical companies
had adopted debatable strategies so as to delay the marketing of generic drugs
after a period of exclusivity had expired. The resulting Communication[107] warns against patent linkage mechanisms[108]: ‘The Commission will continue to strictly enforce the
applicable Community law and, for instance, act against patent linkage as,
according to Community legislation, marketing authorisation bodies cannot take
the patent status of the originator medicine into account when deciding on
marketing authorisations of generic medicines’. Subsequently, the 2010 and
2011 reports on the monitoring of patent settlements in the pharmaceutical
sector[109] showed that there were fewer likely problems, demonstrating the
effectiveness of the Commission's efforts to seek a balance between the
interests of IPRs-holders and those of society as a whole.

On the political front, the EU has actively participated in the work
of the WHO — the Intergovernmental Working Group on Public Health,
Innovation and Intellectual
Property (IGWG)[110] — to address urgent health needs in developing countries, and played
a key role as facilitator to reach consensus on issues such as access to
compound libraries, patent pools, misappropriation of traditional knowledge, assistance
on TRIPS flexibilities and technology transfer.

Public-sector projects are sometimes complemented by private-sector
initiatives, such as the Medicines Patent Pool[111], the Global Responsibility Licensing (GRL)
Platform[112] or the Defend proposal (‘Developing Economies’ Fund for
Essential New Drugs’)[113].

It is also well
established that fake medicines can severely damage patients’ health. That
being said, ‘falsified or substandard medicines’ are not to be confused with
IPR-infringing medicines or even with the sub-category of IPR infringements
constituted by counterfeit medicines (in common language this expression
generally refers to a certain type of trademark infringement). ‘Falsified or
substandard’ medicines may or may not infringe an IP right, and IPR-infringing
medicines may or may not be ‘falsified or substandard’, depending on whether or
not they contain ingredients which are of low quality or in wrong dosage.

IPR legislation is by
no means the main answer to the health hazard aspects of the problem. However,
IPR-infringing medicines, in particular when they infringe a trademark
(counterfeit medicines), are often found to include products with wrong
ingredients. Both branded and generic products may be subject to
counterfeiting.

Clearly the problem
is wider than an IPR issue, but the question is whether IPR can make a positive
contribution or not. The answer is yes. For example, trademarks have a role to
play in guaranteeing the authenticity, and hence the quality of the medicine supply
(which companies themselves strive to maintain, thereby guarding their
reputation for producing quality goods). Not only does a solid regulatory
framework, including IPR systems, help ensure quality, but also, in developed
markets such as the US and the EU, the existence of well-functioning and
competent regulators such as the FDA or EMA.

Directive 2011/62 addresses the prevention of the entry
into the legal supply chain of falsified medicinal products[114]. Equally relevant is the Council of Europe's recent draft convention[115] which would, for the first time, offer a
binding international instrument in the field of criminal law regarding
counterfeiting of medical products and similar crimes involving threats to
public health.

Drugs in transit

In 2008, there were several detentions by
Dutch customs authorities of medicines in transit from India to Brazil, through the Netherlands, that led India and Brazil to initiate a WTO dispute
settlement case in 2010. Following discussions, the EU and India reached an understanding so as to suspend the case.

The Commission acknowledged that implementing Regulation 1383/2003
dealing with IPR enforcement by customs authorities should not hamper
legitimate trade in generic medicines. Accordingly, the Commission took
initiatives to draw the attention of EU customs authorities and the
pharmaceutical industry[116]
to this issue, insisting on the need for correct implementation of the
Regulation and emphasising the EU’s commitment on access to medicines.

Given the need to clarify the relevant EU legislation for customs
enforcement of IPRs, a Commission proposal[117]
was adopted in 2011 to amend Regulation 1383/2003. This was adopted on 12 June
2013 as Regulation (EU) No 608/2013. The revised Regulation is intended to
clarify that customs authorities should determine if there is a substantial
risk of diversion of the goods onto the EU market when assessing whether IPRs
are infringed. Customs authorities can identify any such risk through their
inspections[118].
In 2012 the Commission also published guidelines[119] for EU customs officials.

5.3.        Building
on EU legislation and coordination at EU level

5.3.1.     EU
legislation

The scope of harmonised
EU legislation often determines the level of ambition of bilateral trade
agreements, i.e. what the EU can negotiate (since bilateral trade agreements
are typically not used as a way to introduce changes in EU legislation).

Lack of harmonisation can complicate the
EU's ability to negotiate with third countries, in so far as issues not falling
within the scope of the Common Commercial Policy are concerned. For those
issues, absent any decision to exercise competence at EU level, consensus must
be achieved amongst Member States in order to arrive at a common negotiating
position. For example, the EU's ability to negotiate criminal IPR enforcement
provisions[120]
– which are useful as a deterrent, at least in the case of wilful and
commercial-scale infringements and in countries where civil litigation is often
ineffective – has been complicated by the absence of an EU acquis. Other
examples have been the previous absence of a EU patent and the lack of a EU-wide
regime to regulate trade secrets or geographical indications for
non-agricultural products.

The 2010 Commission Communication on trade policy states: ‘further harmonising IP rules within the EU would enhance the Commission’s capacity to negotiate on behalf of the EU stronger IP commitments with our key trading partners’[121]. Many areas of IP law have been harmonised by EU legislation with an impact on external trade, such as the Customs Regulation[122] or the Enforcement Directive[123], but also substantive rules creating unified EU-wide IPRs for trademarks, designs, geographical indications for agricultural products, rights related to copyright and, more recently, the EU patent.

5.3.2.     Cooperation
within the EU for promoting IPR in third countries

Commission services, particularly those
with external responsibilities have an important and well-defined role in terms
of promoting IPR in third countries. However, the most ‘operational’
enforcement responsibilities lie with Member States. The most visible and/or
immediate results in this fight are undertaken by the national customs
authorities, the police and national courts. There have already been steps to
improve coordination with national authorities in Member States with
responsibility for IPR issues, but there is a need for further improving
information exchange and coordination regarding IPR protection in third
countries.

In the US, for instance, internal
coordination was recently improved by the appointment of a central Intellectual
Property Enforcement Coordinator[124]
chairing an interagency ‘Senior Intellectual Property Enforcement
Advisory Committee’, and by the creation of a ‘National IPR Coordination
Center’[125].
Similarly, Japan’s ‘National IP strategy’[126]
is coordinated by an ‘IP Strategy Headquarters’ involving all ministers.

Europe benefits from highly competent IP Offices. While the Office for Harmonisation in the Internal Market (Trade
Marks and Designs) (OHIM) and the Community Plant Variety Office (CPVO) are
EU bodies, the European Patent Office is not, though all EU Member States are involved in its
decision-making process (and represent the majority of its contracting states). The two EU agencies are in
charge of the implementation of Union harmonised legislation for plant variety
protection (CPVO) and trademark and design (OHIM); within their mandate, they
are active at international level and support a harmonised approach in terms of
intellectual protection.

Attention should be drawn to the fact that,
in order to combat the problem more efficiently and to dismantle international
fraud networks involved in the traffic of counterfeit and pirated goods at the
external borders of the EU, the European Anti- Fraud Office (OLAF), which has
long been investigating the illegal trade in counterfeit cigarettes and tobacco
products, coordinates also investigations related to other counterfeit goods
that enter the EU through its external borders. However, due to its internal
procedures and the limited resources available, OLAF's investigative capacities
are only allocated to significant cases with specific emphasis on counterfeit
goods posing a risk for the environment or public health and safety.

In accordance with the customs mutual
administrative assistance provisions concluded with third countries, OLAF may
also participate upon request in investigations carried out in third countries
in order to obtain all the necessary evidence.

OLAF's investigations into fraud related to
counterfeit goods, which are carried out in close cooperation with the EU
Member States, significantly and constructively contribute to the activities
currently undertaken by other Commission services.

6.           Conclusion

This Staff Working Document helps
clarify the background to the Communication which it accompanies, and which
provides a coherent and consistent policy message on IP vis-à-vis third
countries. The Commission has taken on board the responses and evaluation of
its initial Strategy from 2004. What is clear is that IP has become
increasingly more relevant, valuable and personal. This necessitates a well
thought-out and balanced policy approach. Given the increasing impact of IP on
growth and society, the Commission must continue work to support effective IP
regimes in third countries, in order to promote innovation and protect social
welfare, so that the related benefits can be shared by all.

Annex 1 –
Structure of the 2014 IPR Strategy in relation to
the
2010 Evaluation of the 2004 Strategy

Objectives of the 2014 IPR Strategy || Actions envisaged by the 2014 IPR Strategy || Recommendations of the 2010 Evaluation

Promote EU competiti­veness, growth and jobs || || || Recommendation 1: More comprehensive approach

Enhance IPR protection and enforcement in selected third countries || Continue multilateral efforts to improve the international IPR framework, including by encouraging further ratification of existing treaties Ensure a strong and coherent role for the EU in international IPR fora in line with the Lisbon Treaty || Recommendation 5: Pursue legislative improvement where needed

Ensure that IPR chapters in bilateral trade agreements offer adequate and efficient protection for right-holders and address key weaknesses in partner countries' IPR systems while calibrating commitments to third countries’ level of development || Recommendation 2: Embrace the development agenda

Continue and where possible enhance ‘IP Dialogues’ with key third countries Leverage high-level trade and political dialogues to ensure progress on identified IPR issues || Recommendation 6: Pursue bilateral agreements

Provide, and promote awareness of, appropriate technical assistance programmes to third countries, including the possible use of IP flexibilities Leverage the expertise of relevant international organisations in implementing technical assistance programmes || Recommendation 7: Develop technical cooperation programmes Recommendation 8: More focussed training and awareness-raising

Ensure the Commission can make judicious recourse to dispute settlement mechanisms or other remedies where the EU's rights under international agreements are infringed Aim at better coherence between IPR and other policies, e.g. consider restricting participation or funding in specific EU-funded programes in sufficiently serious and clearly targeted cases ||

Provide assistance to EU right-holders in key third countries || Continue assistance to right-holders (through projects such as IPR Helpdesks) and consider their possible expansion Enhance networking and coordination between EU and MS representations in third countries Consider further posting of IPR experts to key EU delegations ||

Establish a stronger relationship between the Commission, Member States and EU business, to directly support economic operators in overcoming concrete difficulties on IP issues || Recommendation 4: Strengthen consultation with all stakeholders

Improve outreach and awareness-raising vis-à-vis all stakeholders || Ensure regular interaction with all stakeholders to raise awareness and guide policy

Enhance data collection and reporting, so as to improve our understanding of the role of IPR and the impact of infringement || Recommendation 9: Improve statistics and information sharing

Enhance harmonisation and coordination at EU level || Promote ratification of relevant IPR treaties by all EU Member States ||

Enhance intra-EU cooperation regarding third countries, e.g. using existing fora for IPR discussions between the Commission and Member States || Recommendation 3: Ensure adequate organisational set-up

(Global) Conduct regular surveys in order to maintain a list of ‘priority countries’ for focused EU efforts ||

Annex 2 – References

·
Policy statements from EU institutions

–
‘Strategy
for the Enforcement of Intellectual Property Rights in Third Countries’ — European Commission, O.J. 2005/C 129/03 –
http://trade.ec.europa.eu/doclib/docs/2010/december/tradoc\_147070.pdf

–
‘Enhancing the patent
system in Europe’ — COM(2007) 165 – http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2007:0165:FIN:en:PDF

–
‘An Industrial
Property Rights Strategy for Europe’ — COM(2008) 465 – http://ec.europa.eu/internal\_market/indprop/docs/rights/2008\_0465\_en.pdf

–
‘A Single Market for
Intellectual Property Rights’ — COM(2011) 287
– http://ec.europa.eu/internal\_market/copyright/docs/ipr\_strategy/COM\_2011\_287\_en.pdf

–
‘Customs response to latest trends in
counterfeiting and piracy’ — COM(2005) 479 – http://ec.europa.eu/taxation\_customs/resources/documents/comm\_native\_com\_2005\_0479\_3\_en\_acte.pdf

–
Council Resolution of 25 September 2008 on a
comprehensive European anti-counterfeiting and anti-piracy plan — O.J. 2008/C 253/01 – http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:C:2008:253:0001:0002:EN:PDF

–
Council Resolution of 16 March 2009 on the EU
Customs Action Plan to combat IPR infringements for the years 2009 to 2012 —
O.J. 2009/C 71/01 – http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:C:2009:071:0001:0007:EN:PDF

–
European Parliament
Resolution of 22 September 2010 on enforcement of intellectual property rights
in the internal market — 2009/2178(INI) – http://www.europarl.europa.eu/sides/getDoc.do?type=TA&language=EN&reference=P7-TA-2010-0340

–
European Parliament
Resolution of 12 July 2007 on the TRIPS agreement and access to medicines —
P6\_TA(2007)0353 – http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-//EP//TEXT+TA+P6-TA-2007-0353+0+DOC+XML+V0//EN

·
Studies from EU institutions

–
'Intellectual Property Rights intensive
industries: contribution to economic performance and employment in the European
Union. Industry-Level Analysis Report, September 2013

–
http://ec.europa.eu/internal\_market/intellectual-property/docs/joint-report-epo-ohim-final-version\_en.pdf

·
Work by other public
organisations or fora

–
‘Activities of WIPO in the field of intellectual property enforcement including
the global congress on combating counterfeiting and piracy’ — WIPO/ACE/5/2 (September 28, 2009)
— http://www.wipo.int/edocs/mdocs/enforcement/en/wipo\_ace\_5/wipo\_ace\_5\_2.pdf

–
‘Provisional Standards Employed by Customs for Uniform Rights Enforcement
(SECURE)’ — World Customs Organisation, June 2007)
— http://www.wcoomd.org/files/1.%20Public%20files/PDFandDocuments/Enforcement/SECURE\_E.pdf

–
OECD project on counterfeiting and piracy
— http://www.oecd.org/document/50/0,3343,en\_2649\_34173\_39542514\_1\_1\_1\_1,00.html

–
‘World Intellectual Property Report 2011’
— WIPO, 2011 – http://www.wipo.int/export/sites/www/freepublications/en/intproperty/944/wipo\_pub\_944\_2011.pdf

·
Internet

–
‘Memorandum of Understanding on the sale of
Counterfeit Goods over the Internet’ — signed by
several important companies and associations under the auspices of the European Commission on 4 May 2011 – http://ec.europa.eu/internal\_market/iprenforcement/docs/memorandum\_04052011\_en.pdf

–
‘Synthesis
Report on the Stakeholders’ Dialogue on Illegal Up- and Downloading 2009-2010’ — European Commission, Directorate-General
Internal Market and Services (2011) — http://ec.europa.eu/internal\_market/iprenforcement/docs/synthesis\_report\_2009\_2010\_en.pdf

·
IPR infringement

–
‘Report on EU customs enforcement of
intellectual property rights — Results at the EU border — 2010’ — European
Commission — Directorate-General Taxation and Customs Union — http://ec.europa.eu/taxation\_customs/resources/documents/customs/customs\_controls/counterfeit\_piracy/statistics/statistics\_2010.pdf

–
‘A review of statistical information on counterfeiting and piracy’ — WIPO, Advisory
Committee on Enforcement, 2011 – http://www.wipo.int/edocs/mdocs/enforcement/en/wipo\_ace\_7/wipo\_ace\_7\_5.pdf

–
‘IPR Enforcement Report 2009’ — European
Commission, Directorate-General for Trade
(SEC(2009) 1360) — http://trade.ec.europa.eu/doclib/docs/2009/october/tradoc\_145204.pdf

–
OECD project on counterfeiting and piracy — http://www.oecd.org/document/50/0,3343,en\_2649\_34173\_39542514\_1\_1\_1\_1,00.html

–
‘Estimating the
global economic
and social impacts of counterfeiting and piracy’ —
BASCAP, 2011 – http://www.iccwbo.org/uploadedFiles/BASCAP/Pages/Global%20Impacts%20-%20Final.pdf

–
‘Report on the impact of counterfeiting on
international trade’ — European
Parliament, Committee on International Trade, 2008 (A6-0447/2008) — http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-//EP//NONSGML+REPORT+A6-2008-0447+0+DOC+PDF+V0//EN

–
‘Media piracy in
emerging economies’ — Social Science Research Council, 2011 – http://piracy.ssrc.org/wp-content/uploads/2011/06/MPEE-PDF-1.0.4.pdf

–
‘Research report on consumer attitudes and perceptions on counterfeiting and
piracy’ — WIPO document WIPO/ACE/6/6,
September 6, 2010 – http://www.wipo.int/edocs/mdocs/enforcement/en/wipo\_ace\_6/wipo\_ace\_6\_6.pdf

–
‘Technical report: An Estimate of Infringing Use of the Internet’ — Envisional,
2011 – http://documents.envisional.com/docs/Envisional-Internet\_Usage-Jan2011.pdf

–
‘Building a Digital Economy: The Importance
of Saving Jobs in the EU’s Creative Industries’ — Tera Consultants, 2010 – https://oami.europa.eu/ohimportal/documents/11370/71142/Building+a+Digital+Economy,+the+importance+of+saving+jobs+in+the+EUs+creative+industries

·
Development

–
‘Making Global Trade Work for People’ —
Report resulting from a project sponsored by the United Nations Development
Programme (2003) — http://content.undp.org/go/cms-service/stream/asset/?asset\_id=1948218;
http://content.undp.org/go/cms-service/stream/asset/?asset\_id=1948200
(see chapter 11, pp. 203-234)

–
‘Intellectual property and development’ —
Report by the UK ‘Commission on Intellectual Property Rights’ (2001-02): http://www.iprcommission.org/graphic/documents/final\_report.htm

–
‘Intellectual Property and Development — Lessons from Recent Economic Research’ — http://siteresources.worldbank.org/INTRANETTRADE/Resources/Pubs/IPRs-book.pdf

·
Technology transfer

–
EU report on the implementation of Article 66.2 of the TRIPS agreement — WTO (IP/C/W/551/Add.7), 31 May 2011 – http://trade.ec.europa.eu/doclib/docs/2011/july/tradoc\_148081.2 %20EU%20May%202011.pdf

–
‘Meaningful Technology Transfer to the LDCs:
A Proposal for a Monitoring Mechanism for TRIPS Article 66.2’ — ICTSD
Policy Brief No 9, April 2011 – http://ictsd.org/downloads/2011/05/technology-transfer-to-the-ldcs.pdf

–
‘Transfer of technology’ — WIPO document
SCP/14/4, December 11, 2009 – http://www.wipo.int/edocs/mdocs/scp/en/scp\_14/scp\_14\_4.pdf

–
‘Project on intellectual property and
technology transfer: common challenges — building solutions’ — WIPO
document CDIP/4/7, September 25, 2009 – http://www.wipo.int/edocs/mdocs/mdocs/en/cdip\_4/cdip\_4\_7.pdf

–
‘Technology transfer to China: Guidance for businesses’ — China IPR SME Helpdesk, 2008 – http://www.china-iprhelpdesk.eu/docs/publications/Tech\_transfer\_English.pdf

·
Climate change

–
‘WIPO Green’ initiative — https://webaccess.wipo.int/green/

–
‘Are IPR a barrier to the transfer of climate
change technology ?’ — Copenhagen Economics (2009) — http://trade.ec.europa.eu/doclib/docs/2009/february/tradoc\_142371.pdf

·
Other issues

–
‘Digital Opportunity — A Review of
Intellectual Property and Growth’ — UK, 2011 – http://www.ipo.gov.uk/ipreview-finalreport.pdf

–
‘The fight against counterfeiting and piracy in the bilateral trade agreements of the EU’ — Dr Duncan Matthews — Briefing paper
requested by the European Parliament’s Committee on International Trade
(2008) — http://www.europarl.europa.eu/activities/committees/studies/download.do?file=21459

–
‘The Impact of Innovation and the Role of
Intellectual Property Rights on U.S. Productivity, Competitiveness, Jobs,
Wages, and Exports’ — NDP Consulting, 2010 – http://www.theglobalipcenter.com/impact-innovation-and-role-ip-rights-us-productivity-competitiveness-jobs-wages-and-exports/

–
‘Synthesis report of the Trade and Innovation
project’ — Working Party of the OECD Trade Committee, 2011 — Ref.
TAD/TC/WP(2011)13

Annex 3 – Glossary

Disclaimer:
The definitions offered below are not necessarily shared throughout the world,
and do certainly not override any definitions included in relevant legislation.
Moreover, some of these concepts may be subject to debate, in the absence of
any legal definition, e.g. as regards fake medicines. The definitions offered
below therefore simply constitute a bona fide informal attempt to help
non-specialised readers understand this Staff Working Document and the
Communication it accompanies.

Further
glossaries and general information on IPR can be found on relevant websites
such as WIPO's[127].
Specific glossaries are also available, for instance a WIPO glossary relating
to IPR, genetic resources and traditional knowledge[128].

Intellectual property || Intellectual property (‘IP’) refers to intellectual creations such as inventions, literary and artistic works, brands and logos – which may be protected by IPRs (see below). Intellectual property is usually divided into two branches: ‘literary and artistic property’ on the one hand (including e.g. books, movies, songs, photographs, software and artistic performances), and ‘industrial property’ on the other hand (including e.g. inventions, brands, logos, designs, plant varieties, geographical indications and trade secrets).

Intellectual property rights || Intellectual property rights (‘IPRs’) are titles of property on specific inventions, brands or other pieces of IP. With the exception of copyright and related rights, they are granted by public authorities under well-defined rules and procedures. An IP right allows for a monopoly by a creator, usually for a limited duration, in the sense that it makes it possible for its owner to prevent third parties from using the invention, brand, etc. concerned without his authorisation (cf. ‘Enforcement’ below). There are many types of IPRs, such as copyright and related rights, patents, industrial designs, trademarks and geographical indications. IPRs are ‘territorial’ in the sense that a French patent protects an invention only in France, a German patent only in Germany, etc. This means that it is often necessary to file applications in several countries to adequately protect an invention, or trade mark, etc. However, certain regional IP systems exist, such as the Community trade mark and the Community design, which make it possible to ensure protection in a number of countries bound by a specific treaty or other arrangement. For instance, a ‘Community trade mark’ covers by definition all EU member states. Most of these rights have a limited duration (only trademarks can be renewed indefinitely), which depends from the right and country concerned (e.g. patents have a typical maximum duration of 20 years).

Copyright and related rights || Copyright protection is enjoyed by creators (authors of original creations) for their literary and artistic works, such as books, poems, plays, newspapers, computer programmes, databases, films, musical compositions, choreography, paintings, drawings, photographs, sculpture, architecture, engravings, maps, etc. Authors can authorise or prohibit the reproduction, the recording, the broadcasting, the public performance, the rental and lending, the translation and adaptation of their works as well as the 'making available' of their works online. In the EU, copyright (the time during which authors can receive money in exchange for their permission for someone to use their work as listed in the rights above) last for 70 years after the author's death. Authors also enjoy moral rights, which have no time limit. Moral rights allow the author or his heirs to oppose changes to the work that could harm the author's reputation. ‘Related rights’ developed around copyrighted works and are held by performing artists (such as actors and musicians) in their performances, producers of sound recordings in their recordings (such as CDs), and broadcasting organisations in their radio and television programs. The length of protection in the EU for live performances and broadcasting organisations is 50 years, and for recorded performances it is 70 years (for both the producer and the performer). Unlike most other IPRs[129], copyright and related rights do not have to be registered (no formalities) and automatically appear at the moment of creation, performance, broadcast or recording.

Patents || Patents are IPRs specifically intended to protect inventions, in particular products (mechanical or electrical devices, chemical products and pharmaceuticals, etc.) and processes (e.g. manufacturing processes for chemicals). Their maximum duration is 20 years, with up to 5 more years for pharmaceuticals in well-defined circumstances (in the EU). The three patentability criteria are novelty, inventive step (non-obviousness) and capacity for industrial application (or usefulness). Three ways can be used to obtain patent protection in the EU:             (1) filing a national patent application in each of the countries of interest,             (2) filing a European patent application, which will undergo a single examination procedure (conducted by the European Patent Office) and give rise to national patents in the designated countries once (if) the European patent is granted, or             (3) filing an international application under the PCT system (Patent Cooperation Treaty – which involves an international phase to be followed by national/regional phases where desired). In all cases, however, enforcement takes place at a national level. This shortcoming will be addressed from 2014 onwards by the future unitary EU patent and Unified European Patent Court. In addition to patents as such, some countries make it possible to register ‘utility models’, which may be considered as a simpler (and shorter-duration) variety of patents, available only for certain categories of inventions (e.g. not for processes).

Trademarks || Trademarks are IPRs specifically intended to protect distinctive signs such as names, numbers, logos, shapes and even sounds. Such signs are always protected in connection with specific goods and/or services. In the EU, trademarks are initially registered for 10 years, but can be renewed indefinitely for additional periods of 10 years. Three ways can be used to register a trademark in the EU:             (1) filing a national trademark application in each of the countries of interest[130],             (2) filing an application for a Community trademark at the Office for Harmonisation in the Internal Market (OHIM) – a Community trademark has unitary character; it has uniform effect throughout the EU –, or             (3) filing an international trademark application at the World Intellectual Property Organisation (WIPO) (or via a national office) under the ‘Madrid system for the International Registration of Marks’ so as to protect the trademark in up to about 100 countries by filing a single application. National or international trademarks are enforced at a national level while Community trademarks having a unitary nature and are enforced at EU level by specialised trademarks courts. Therefore a decision by a German trademark court on a Community trademark is enforceable in any other EU Member State.

Designs || Industrial designs (or, in short, ‘designs’) are IPRs specifically intended to protect the appearance of the whole or a part of a product resulting from features such as lines, contours, colours, shape and/or texture of the product itself and/or its ornamentation. Designs may be 3-D (e.g. furniture and car body parts) or 2-D (e.g. patterned cloth and wallpaper). Like for trademarks, there are also three ways to register a design in the EU:             (1) filing a national design application in each of the countries of interest,             (2) filing an application for a Community design before the Office for Harmonisation in the Internal Market (OHIM) – a Community design has unitary character; it has equal effect throughout the EU, or             (3) filing an international design application at WIPO (or via a national office) under the Geneva Act of the Hague Agreement system, so as to protect the design in up to about 60 countries by filing a single application. In the EU, in addition to registered Community designs, it is also possible to claim protection for an unregistered Community design. An unregistered design is protected only by the simple act of making it available to the public, without any formalities. In the EU, registered industrial designs are in force for 5 years renewable (by periods of 5 years) up to a maximum of 25 years, and unregistered Community designs are protected for a maximum of 3 years (not renewable). National and international designs are enforced at a national level while Community designs having a unitary nature are enforced at EU level by specialised designs courts. Therefore a decision by a Spanish design court on a Community design is enforceable in any other EU Member State.

Geographical indications || Geographical indications (GIs) are names that identify products as originating in a territory where a given quality, reputation or other characteristic of the product is essentially attributable to its geographical origin (e.g. ‘Champagne’, ‘Tequila’ or ‘Roquefort’). While GIs may apply to all kinds of goods (including handicraft), they are essentially used for wines, spirits and agricultural products. A registered GI entitles its producers and those trading or selling the original product – but no other parties – to use the registered name. Unlike other IPRs which usually have a single and well-defined owner, there only exists a collective interest in the protection of a GI: no single producer from the related geographical area can claim exclusive rights to a certain GI. All operators fulfilling the conditions laid down in the product's ‘specification’ can use the protected name. At the same time, third parties from outside the region (or not complying with the specification) are not allowed to use the protected name. The list of GIs for agricultural products and foodstuffs recognised in the EU can be found in the Door database (http://ec.europa.eu/agriculture/quality/door/list.html). Wine GIs can be found in the E-Bacchus database (http://ec.europa.eu/agriculture/markets/wine/e-bacchus) and ‘E-Spirit-Drinks’ (http://ec.europa.eu/agriculture/spirits) is the database on GI protected in the EU for spirits.

Protection of IPRs || Inventions, trademarks, etc. may be protected by different kinds of IPRs, subject to well-defined procedures in certain cases (e.g. filing a patent application) but not in others (e.g. for copyright). Actually one should not refer to the ‘protection of IPRs’, which is an improper shortcut (an IP right protects an invention, trademark, movie, etc.). In this context, ‘protection’ – as opposed to ‘enforcement’ – relates to the substantive rules defining the conditions under which an invention, trademark, etc. may be protected by an IP right (e.g. patentability criteria, procedural rules for the registration of trademarks, etc.).

Enforcement of IPRs || ‘Enforcing’ an IP right means to ensure that it is respected, namely by initiating legal proceedings (civil, criminal or administrative), or possibly at other levels (e.g. by customs authorities), on the basis of the principle that an IP right enables its owner to prevent third parties from e.g. manufacturing, using, advertising or importing the underlying invention, trade mark, copyrighted work, etc. The exact definition of the prohibited acts, as well as the applicable rules, procedures and sanctions, may vary considerably according to the type of IP right and to the country concerned. However, in 2006 the remedies available to IPR owners were harmonised across the EU by the ‘Enforcement Directive’ (Directive 2004/48/EC on the enforcement of intellectual property rights), which aimed to ensure compliance with TRIPS, and to strengthen and harmonise the enforcement of IPRs.

Piracy || ‘Piracy’ is often interpreted as designating copyright infringement involving (quasi-)identical copying, on the basis of a footnote of the TRIPS agreement which defines ‘pirated copyright goods’ as ‘any goods which are copies made without the consent of the right holder or person duly authorized by the right holder in the country of production and which are made directly or indirectly from an article where the making of that copy would have constituted an infringement of a copyright or a related right under the law of the country of importation’. This means that piracy does not cover all cases of copyright infringement (e.g., the unauthorised translation of a book would not be considered as piracy). It is worth noting that the situation may be different in languages other than English. In Germany, for instance, an informal distinction is made between ‘trademark piracy’ (Markenpiraterie) and ‘product piracy’ (Produktpiraterie), depending on whether it is just the trademark which is counterfeited or the product itself (regarding e.g. patent or design rights). One may also note that the EU ‘Customs Regulation’ (Council Regulation 1383/2003) defines ‘pirated goods’ as ‘goods which are or contain copies made without the consent of the holder of a copyright or related right or design right’, which goes beyond the TRIPs definition as it also covers designs.

Counterfeiting || Similarly, ‘counterfeiting’ is often interpreted as designating trademark infringement involving (quasi-)identical reproduction of a trademark, on the basis of the same footnote of TRIPS which defines ‘counterfeit trademark goods’ as ‘any goods, including packaging, bearing without authorization a trademark which is identical to the trademark validly registered in respect of such goods, or which cannot be distinguished in its essential aspects from such a trademark, and which thereby infringes the rights of the owner of the trademark in question under the law of the country of importation’. This means that counterfeiting does not cover all cases of trademark infringement. It is worth noting that the situation may be different in languages other than English. In French, for instance, ‘contrefaçon’ designates all kinds of IPR infringements.

Generic medicines || From a pharmaceutical perspective, a generic medicine is the same as a medicine that has already been authorised, and contains in particular the same active substance(s). From an IPR perspective, the patent protection of a ‘generic’ medicine, as well as its data protection, have expired (or never existed) in the country at stake (indeed, IPR matters are always to be discussed on a territorial basis, i.e. country-by-country). This approach is taken in the Commission's Pharmaceutical Sector Inquiry (2009), according to which generics are ‘products that can enter the market upon loss of exclusivity of the original product’ – whether this is about a loss of patent, data or market exclusivity. This implies that a certain medicine may be generic in one country and still patent-protected in another one. Moreover, a generic medicine (even if it has lost patent, data and market exclusivity in the whole world) may still be protected by other IPRs, in particular trademarks, in certain countries.

Counterfeit medicines || Various definitions exist for ‘counterfeit’ medicines, including WHO's: ‘А counterfeit medicine is one which is deliberately and fraudulently mislabelled with respect to identity and/or source. Counterfeiting can apply to both branded and generic products and counterfeit products may include products with the correct ingredients or with the wrong ingredients, without active ingredients, with insufficient active ingredients or with fake packaging.’ This definition clarifies that generic medicines may happen to be counterfeits (infringing trade marks), as already mentioned above.

Fake (falsified) medicines || Fake / falsified medicines are distinct from counterfeit medicines. While the former concepts do not specifically involve IPR aspects, the latter refers more directly to trademark infringements (and is applicable to both branded and generic medicines), as explained above. Falsified medicines usually contain sub-standard or falsified ingredients, or no ingredients or ingredients, including active substances, in the wrong dosage thus posing an important threat to public health[131]. No official definition could be identified for ‘fake’ medicines. It is often informally stated that fake medicines ‘make false claims about what they contain or where they are from’, which does not particularly focus on IPR aspects. The definition of ‘falsified medicinal product’ included in EU Directive 2011/62 is not IPR-related either.

Data protection || Data protection is made mandatory by TRIPs Art. 39.3, which obliges WTO members' public authorities, where they require the submission of data as a condition of approving the marketing of pharmaceutical or of agricultural chemical products (e.g. clinical trials data), (1) to ensure the confidentiality of such data, and (2) to protect them against unfair commercial use. This definition has been interpreted in various ways by different countries. It should be stressed that this protection only applies to regulatory data, not to any product as such.

Data exclusivity || Once a new pharmaceutical or agro-chemical product (developed by an ‘originator’) has been authorised for marketing, the EU (as most other developed countries) prevents other companies from merely relying on the originator's test data – i.e. claiming that products are similar, therefore asking for an authorisation based on the data provided by the originator – during a certain period which is considered adequate in respect of the time and resources that invested in the generation of the originator's test data. Data exclusivity is a particular way of enforcing the ‘protection against unfair commercial use’ obligation (TRIPS Art. 39.3), namely by interpreting it as a ‘non-reliance’ obligation. This protection also only applies to regulatory data, not to any product as such.

Compulsory licensing || Compulsory licensing (CL) is a mechanism allowed by the TRIPS agreement (Art. 31) – one of the ‘TRIPS flexibilities’ –, making it possible for a country's authorities to force the owner of a certain patent to license it to third parties, for instance in order to address the insufficient domestic availability of patented goods (e.g. medicines). This mechanism is normally used in exceptional circumstances only, such as health emergencies, as it represents a serious curtailment of the patentee's rights. A number of conditions and procedural steps need to be fulfilled for a CL to be granted, e.g. prior unsuccessful negotiation with the patentee.

TRIPS agreement || This is the WTO's agreement on Trade-related Aspects of Intellectual Property Rights, which all WTO members need to comply with. Its text can be found at http://www.wto.org/english/docs\_e/legal\_e/27-trips.pdf. This agreement defines basic common principles relating to the protection and enforcement of IPRs, while leaving some freedom to WTO members to define more specific rules, and to implement certain ‘flexibilities’ (exceptions – e.g. regarding compulsory licensing). It should be noted that TRIPs does not cover all categories of IPRs; for instance it does not cover utility models nor unregistered industrial designs.

Bilateral trade agreements (BTAs) || BTAs, which include for instance Free Trade Agreements (FTAs), are comprehensive agreements, between two countries, or between the EU and a third country, addressing a broad range of trade-related issues, including for instance market access rules, investment, services, public procurement, intellectual property, etc. BTAs usually include an ‘IP chapter’ defining a number of rules regarding intellectual property matters, with the objective of creating a level playing field between the countries concerned. More information on IPR aspects of BTAs can be found at http://trade.ec.europa.eu/doclib/docs/2012/november/tradoc\_150081.pdf.

WIPO || The World Intellectual Property Organisation is a UN agency responsible for the negotiation and administration of most of the international IPR treaties, as well as for the operation of certain international registration systems (such as the Patent Cooperation Treaty, the Madrid Agreement concerning the International Registration of Marks and the Hague Agreement concerning the International Registration of Industrial Designs).

¨ ¨ ¨

[1]               Strategy for the enforcement
of intellectual property rights in third countries, 2005/C129/03, OJ C129,
26.5.2005.

[2]               Europe 2020 Strategy (COM(2010) 2020).

[3]               Trade and investment barriers report
2011(COM(2011) 114).

[4]               Trade, growth and world affairs. Trade policy as a
core component of the EU’s 2020 Strategy (COM(2010) 612).

[5]               Communication on global Europe: competing in the
world. A contribution to the EU’s growth and jobs strategy, of 4 October 2006,
COM(2006) 567 final.

[6]               Communication enhancing the patent system in Europe, of 3 of April 2007, COM(2007) 165 final.

[7]               Communication on an Industrial Property Rights
Strategy for Europe, of 16 July 2008, COM(2008) 465 final.

[8]               Communication on a single market for Intellectual
Property Rights boosting creativity and innovation to provide economic growth,
high quality jobs and first class products and services in Europe, of 24 May
2011, COM(2011) 287 final.

[9]               Council Resolution of 25 September 2008 on a
comprehensive European anti-counterfeiting and anti-piracy plan, OJ C253,
4.10.2008.

[10]             Council Resolution of 16 March 2009 on the EU Customs
Action Plan to combat Intellectual Property Rights infringements for the years
2009 to 2012, OJ C71, 25.3.2009.

[11]             Resolution on the EU Customs Action Plan to combat
Intellectual Property Rights infringements (2013 to 2017), of 10 December 2012,
Council of the European Union.

[12]             Enforcement of Intellectual
Property Rights in the internal market. European Parliament Resolution of 22 September 2010, 2009/2178(INI).

[13]             Cf. Art. 27.2: ‘Everyone has the right to the
protection of the moral and material interests resulting from any scientific,
literary or artistic production of which he is the author’, http://www.un.org/en/documents/udhr/index.shtml

[14]             Cf. Art. 17.2: ‘Intellectual property shall be
protected’, http://www.europarl.europa.eu/charter/pdf/text\_en.pdf

[15]             Intellectual property and development. Lessons from
recent economic research, Eds. C. Fink, K.E. Maskus, copublication of the
World Bank and Oxford University Press, Washington DC, 2005.

[16]             Intellectual property rights intensive industries:
contribution to economic performance and employment in the European Union,
Industry-Level Analysis Report, Joint project between the EPO and OHIM, Munich
and Alicante, 2013.

[17]             Redefining Intellectual Property Value – The case of
China, Price Waterhouse & Coopers, 2005, http://www.pwc.com/en\_us/us/technology-innovation-center/assets/ipr-web\_x.pdf.
Previously, in 2002, a survey of the Fortune 500 companies estimated that
anywhere from 45% to 75% of the wealth of individual companies comes from their
Intellectual Property Rights.

[18]          Eurostat
International transactions in royalties and licence fees: exports, imports and
balance (2012)

http://epp.eurostat.ec.europa.eu/portal/page/portal/product\_details/dataset?p\_product\_code=TEC00071

[19]         Commission Staff Working paper Impact Assessment:
Accompanying document to the proposal for a Regulation of the European Parliament
and of the Council amending Council Regulation (EC) No. 207/2009 of 26 February
2009 on the Community Trade Mark and the proposal for a Directive of the European
Parliament and of the Council to approximate the laws of the Member States
relating to trade marks. http://eur-lex.europa.eu/legal-content/EN/ALL/?uri=CELEX:52013SC0095

[20]             Supra note 16.

[21]             European
Competitiveness Report 2010, Commission Staff Working Document, SEC(2010) 1276

[22]             Federation of European Publishers: http://fep-fee.eu/The-profession,16

[23]             http://europa.eu/rapid/press-release\_IP-13-931\_en.htm?locale=FR

[24]             Multi-territory licensing of audiovisual works in
the European Union, KEA study, October 2010, p. 2, http://www.keanet.eu/docs/mtl%20-%20full%20report%20en.pdf

[25]             As confirmed e.g. in a US governmental report in 2010: http://www.gao.gov/new.items/d10423.pdf

[26]             Measuring IPR infringements in the internal market.
Development of a new approach to estimating the impact of infringements on
sales, S. Hoorens et al., Rand Europe (prepared for the European
Commission), Cambridge, 2012.

[27]             Revue
international de droit économique 2009/3, De Boeck Supérieur; see § 2.1.

[28]             Is the devil in the data? A literature review of
piracy around the world, N. K. Kariithi, The Journal of World Intellectual
Property, 2011, http://onlinelibrary.wiley.com/doi/10.1111/j.1747-1796.2010.00412.x/pdf

[29]             http://ec.europa.eu/internal\_market/iprenforcement/observatory/index\_en.htm

[30]             Supra note 23.

[31]             Supra note 16.

[32]             https://oami.europa.eu/ohimportal/en/web/observatory/ip\_perception

[33]             https://oami.europa.eu/ohimportal/en/web/observatory/observatory-publications

[34]             OECD, The economic impact of counterfeiting and
piracy, June 2008, http://www.oecd.org/document/4/0,3746,en\_2649\_34173\_40876868\_1\_1\_1\_1,00.html

[35]             An assessment of the social
and economic causes and impacts of counterfeiting and piracy in Ghana. An analysis of consumer and industry survey findings.
The National Crusade Against Counterfeiting Products Project Ghana, Project No. 2007/46046 – Lot 11 Country: Ghana, DFC, Spain, 2008.

[36]             Report on the impact of counterfeiting on international
trade of 9 November 2008, Committee on International Trade –European
Parliament, 2008/2133(INI).

[37]             Estimating the global economic and social impacts of
counterfeiting and piracy, Frontier Economics -BASCAP, 2011, http://www.iccwbo.org/uploadedFiles/BASCAP/Pages/Global%20Impacts%20-%20Final.pdf

[38]             The impact of counterfeiting on governments and
consumers, Frontier Economics -BASCAP, 2009, http://www.icc.se/policy/statements/2009/BASCAP.pdf

[39]             http://ec.europa.eu/trade/creating-opportunities/trade-topics/intellectual-property/enforcement/

[40]             Evaluation of the Intellectual Property Rights
enforcement strategy in third countries. Final report, Vol. I- Main report,
DG Trade - Contract N°SI2.545084, Analysis for Economic Decisions (ADE) and
European Commission, Louvain-la-Neuve, 2010.

[41]             The public consultation on the future EU trade policy –
overview of contributions. Final report, see Question 18,
http://trade.ec.europa.eu/doclib/docs/2010/september/tradoc\_146556.pdf

[42]             Regarding the impact of piracy on EU jobs in the
audio-visual and software sectors, for instance, see this recent BASCAP report:
Report on the application of Directive 2004/48/EC of the European Parliament
and the Council of 29 April 2004 on the enforcement of intellectual property
rights, of 22 December 2010, COM(2010) 779 final.

[43]             A study commissioned by BASCAP in 2009 estimated that
due to counterfeiting ‘approximately 2.5 million jobs are destroyed across
the G20 countries and potentially as many as 160 000 individuals unable to
find re-employment’ — Opinion on 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, of 7 and 15 June 2011, COM(2011) 288 final and
2011/0135 (COD).

[44]             IFPI estimates at 1.2 million the number of jobs projected to be lost in the European creative
industries due to piracy by 2015 — cf. IFPI digital
music report 201. Music at the touch of a button, IFPIA, 2011.

[45]             http://www.interpol.int/Crime-areas/Pharmaceutical-crime/The-dangers

[46]             In particular see Operation Biyela, where more than 1
billion illicit products were seized in 10 days, including 550 million
medicines, http://www.wcoomd.org/en/media/newsroom/2013/june/wco-and-iracm.aspx

[47]             Cf. e.g. The crash of the Partnair Flight 394
in 1989, in which 55 people died, due to counterfeit bolts.

[48]             Cf. e.g. IP crime: the new face of organised crime –
from IP theft to IP crime, B. Godart, Journal of Intellectual Property Law
and Practice, 2010, Vol. 5, No. 5, http://jiplp.oxfordjournals.org/cgi/reprint/5/5/378?etoc

[49]             Communication on a customs response to latest trends in
counterfeiting and piracy, of 11 October 2005, COM(2005) 479 final.

[50]             “Patent evergreening” generally refers to the strategy
of obtaining successive patents that cover different aspects of the same
product, typically by obtaining patents on improved versions of existing
products.

[51]             Study on the quality of the patent system in Europe,
G. Scellato et al., Patqual, 2011, http://ec.europa.eu/internal\_market/indprop/docs/patent/patqual02032011\_en.pdf

Patent quality from a European
Patent Office perspective: what is it? How do we recognize it? How do we
control it?, Y. Skulikaris, http://www.epip.eu/conferences/epip06/papers/Parallel%20Session%20Papers/SKULIKARIS%20Yannis.pdf

[53]             Economic study on patent backlogs and a system of
mutual recognition, to the Intellectual Property Office prepared by London
Economics, Newport, 2010.

[54]             Supra note 49.

[55]             http://www.wipo.int/copyright/en/limitations

[56]             http://www.tkdl.res.in/tkdl/langdefault/common/Home.asp?GL=Eng

[57]             The Nagoya Protocol on access and benefit-sharing: http://www.cbd.int/abs/

[58]             Article 66.2 TRIPs requires that ‘Developed country
Members shall provide incentives to enterprises and institutions in their
territories for the purpose of promoting and encouraging technology transfer to
least-developed country Members in order to enable them to create a sound and
viable technological base’.

[59]             Commission Decision on the Support to the Centre for
Development of Enterprise (CDE) to be financed from the 10th European
Development Fund, of 12 December 2011, C (2011)9425.

[60]             Speech by Hilary Benn, Secretary of State for
International Development, at Holyrood, Edinburgh: http://webarchive.nationalarchives.gov.uk/+/http:/www.dfid.gov.uk/Media-Room/Speeches-and-articles/2006-to-do/Governance-and-Development/

[61]             Climate change and technology transfer. Can
Intellectual Property Rights work for the poor?, K. Kretzschmar, Prague
Global Policy Institute Glopolis, Prague, 2012.

[62]             New Trends in Technology Transfer. Implications for
National and International Policy, J.H. Barton, ICTSD Programme on IPRs and
Sustainable Development, Issue Paper No. 18, Geneva, 2007.

[63]             Technology transfer to China: Guidance for
businesses, China IPR SME Helpdesk, European Communities, 2008.

[64]             In Brazil, for example, some examination processes of technology
transfer contracts, conducted by the patent office, are reported to have lasted
over a year and have lacked transparency over their purpose. Additional
taxation and legal constraints also exist: repatriation of royalty fees from
subsidiary to parent company are limited to 5 %.

[65]             E.g. http://trade.ec.europa.eu/doclib/docs/2009/february/tradoc\_142371.pdf

[66]http://documents.epo.org/projects/babylon/eponet.nsf/0/cc5da4b168363477c12577ad00547289/USDFILE/patents\_clean\_energy\_study\_en.pdf

[67]             WIPO Green: The sustainable technology marketplace,
WIPO, 2011, https://webaccess.wipo.int/green/

[68]             http://www.ipo.gov.uk/types/patent/p-applying/p-after/p-green.htm

[69]             Sustainable technologies. Access to patents for climate
change mitigation technologies, http://www.epo.org/news-issues/issues/classification/classification.html

[70]             Green Intellectual Property Project. A tool for
greening our society, http://www.greenip.org/policy.html

[71]             http://ec.europa.eu/agriculture/markets/wine/leg/index\_en.htm

[72]             Regulation No. 110/2008 of the European Parliament and
of the Council of 15 January 2008 on the definition, description, presentation,
labelling and the protection of geographical indications of spirit drinks and
repealing Council Regulation No. 1576/89, OJ L39, 13.2.2008.

[73]             Council Regulation No. 510/2006 of 20 March 2006
on the protection of geographical indications and designations of origin for
agricultural products and foodstuffs, OJ L93, 31.3.2006.

[74]             External study: Value of production of agricultural
products and foodstuffs, wines, aromatised wines and spirits protected by a
geographical indication. Final report, October 2012, http://ec.europa.eu/agriculture/external-studies/2012/value-gi/final-report\_en.pdf

[75]             Takes into account also re-exports. Some GI products
marketed on the intra-EU market are exported to the extra-EU market by
stakeholders which are not located in the Member State of production of the GI.
This phenomenon was particularly important for GI wines.

[76]             External study: Value of production of agricultural
products and foodstuffs, wines, aromatised wines and spirits protected by a
geographical indication. Final report, October 2012, http://ec.europa.eu/agriculture/external-studies/2012/value-gi/final-report\_en.pdf

[77]             Data and trends of the European food and drink
industry 2011, Food Drink Europe, Brussels, 2011.

[78]             http://ec.europa.eu/agriculture/quality/index\_en.htm

[79]             Intellectual Property: Geographical indications and
biodiversity, December 2008 package: briefing notes, http://www.wto.org/english/tratop\_e/dda\_e/status\_e/gi\_e.htm

[80]             Review of the Lisbon System: http://www.wipo.int/lisbon/en/review.html

[81]             http://ec.europa.eu/agriculture/markets/wine/third/index\_en.htm

[82]             Agreement between the European Union and the Swiss Confederation
on the protection of designations of origin and geographical indications for
agricultural products and foodstuffs, amending the Agreement between the
European Community and the Swiss Confederation on trade in agricultural
products, OJ L297, 16.11.2011.

Council
Decision No. 2011/265/EU of
16 September 2010 on the signing, on behalf of the European Union, and
provisional application of the Free Trade Agreement between the European Union
and its Member States, of the one part, and the Republic of Korea, of the other
part, OJ L127, 14.5.2011.

[83]             See for example BASCAP's Research Report on Consumer
Perceptions and Attitudes on Counterfeiting and Piracy, 2009, http://www.iccwbo.org/Data/Documents/Bascap/Consumer-Perceptions/Consumer-Research-Report/

[84]             As analysed for instance in the report Making Global
Trade Work for People resulting from a project sponsored by the United Nations Development Programme, 2003,
see Chapter 11, http://content.undp.org/go/cms-service/stream/asset/?asset\_id=1948200

[85]             http://www.interpol.int/Crime-areas/Pharmaceutical-crime/The-dangers

[86]             For example, in Ghana a survey revealed that 96 % of companies feel
that the harm caused by counterfeiting and piracy threatens enterprise
existence, http://www.acpbusinessclimate.org/PSEEF/Documents/Final/ghana\_impact\_en.pdf

[87]             http://en.wikipedia.org/wiki/Eclectic\_paradigm

[88]             Intellectual Property Rights, imitation, and foreign
direct investment: theory and evidence, L. Branstetter et al., Working
paper 13033, NBER, Cambridge, 2007.

[89]             Communication on trade, growth and development.
Tailoring trade and investment policy for those countries most in need, of 27
January 2012, COM(2012)22 final.

[90]             Supra note 15.

[91]             Integrating Intellectual Property Rights and
Development Policy, Commission on Intellectual Property Rights, London, 2002.

[92]             Commission Staff Working Document Policy Coherence for
Development Work Programme 2010-2013, of 21 April 2010, SEC(2010) 421 final.

[93]             Poorest countries given more time to apply
Intellectual Property rules, WTO : 2005 press releases, Press/424, of
29 November 2005.

[94]             Declaration on the TRIPS Agreement and public
health, WTO Ministerial Conference, fourth session, of 20 November 2001, Doha, WT/MIN(01)/DEC/2.

[95]             E.g. The considerable development of Internet.

[96]             E.g. The increasing importance of GIs and designs in
certain sectors.

[97]             For instance regarding the data protection provisions,
as analysed in a WHO Briefing Note: http://www.searo.who.int/entity/intellectual\_property/data-exclusively-and-others-measures-briefing-note-on-access-to-medicines-who-2006.pdf

[98]             European Competitiveness Report 2010, Commission
staff working document, SEC(2010)1276.

[99]             COM(2012) 497

[100]            See Article 7.2 of the Rules of
Participation: "The relevant work programme may
restrict the participation in Horizon 2020 or parts thereof of legal entities
established in third countries where conditions for the participation of legal
entities from Member States, or of their affiliated entities established in a
third country, in the third country's research and innovation programmes are
considered to be prejudicial to the Union's interests." http://ec.europa.eu/research/participants/data/ref/h2020/legal\_basis/rules\_participation/h2020-rules-participation\_en.pdf

[101]            TRIPS Agreement and access to medicines. European Parliament Resolution of 12 July 2007, P6\_TA(2007)0353.

[102]            Intervention of Margaret Chan,
Director-General of the WHO, 5th High-Level Symposium on Global
Health Diplomacy, Geneva, 2011.

[103]            Five years into the product patent regime: India’s response,
S. Chaudhuri et al., UNDP, New York, 2010.

[104]            Council Regulation No. 953/2003 of 26 May 2003 to avoid
trade diversion into the European Union of certain key medicines, OJ L135,
3.6.2003.

[105]            Identified in Annex II of the Regulation.

[106]            http://ec.europa.eu/competition/sectors/pharmaceuticals/inquiry/index.html

[107]            Communication from the Commission, Executive Summary of
the pharmaceutical sector inquiry report,
http://ec.europa.eu/competition/sectors/pharmaceuticals/inquiry/communication\_en.pdf

[108]            Patent linkage mechanisms typically lead to marketing
authorisation being refused as long as a relevant patent is in force.

[109]            First Report on the monitoring of patent settlements (period:
mid 2008 - end 2009), of 5 July 2010,

http://ec.europa.eu/competition/sectors/pharmaceuticals/inquiry/patent\_settlements\_report1.pdf

[110]            Intergovernmental
Working Group on Public Health, Innovation and Intellectual Property (IGWG), http://www.who.int/phi/igwg/en/index.html

[111]            http://www.medicinespatentpool.org

[112]            http://globalaccessinaction.org/gaa-grl-platform

[113]            A point of view on parallel imports, D. Joshi and
I. Limited, Global Policy Essay, 2012.

[114]            Directive No. 2011/62/EU of the European Parliament and
of the Council of 8 June 2011 amending Directive No. 2001/83/EC on the
Community code relating to medicinal products for human use, as regards the
prevention of the entry into the legal supply chain of falsified medicinal
products, OJ L174, 1.7.2011.

[115]http://www.coe.int/t/dghl/standardsetting/medicrime/CDPC%20\_2009\_15Fin%20E%20Draft%20Convention%2009 %2011 %2009CM.pdf

[116]            http://www.bio.org/sites/default/files/Access\_to\_Medicines\_Policy\_Statement\_Final.pdf

[117]            As stated in COM(2011) 285, http://ec.europa.eu/taxation\_customs/resources/documents/customs/customs\_controls/counterfeit\_piracy/legislation/com285\_en.pdf

[118]            Inspections are also necessary because: ‘Transhipment
is of growing concern because fraudsters break routes to disguise the
origin of the goods. Countries generally regarded as low risk by Customs, such
as Japan and USA, are becoming higher risk due to transit and transhipment
traffic in fakes. A seizure in 2004 showed that fake car mechanisms entered the
Community from the US although the goods were in reality of Chinese origin.
Cases have also occurred where the Community itself is used to disguise the
origin of goods (e.g. fake medicines from Asia transhipped through the EU on
route to Africa).’ COM(2005) 479,
http://ec.europa.eu/taxation\_customs/resources/documents/comm\_native\_com\_2005\_0479\_3\_en\_acte.pdf

[119]http://ec.europa.eu/taxation\_customs/resources/documents/customs/customs\_controls/counterfeit\_piracy/legislation/guidelines\_on\_transit\_en.pdf

[120]            The International Trademark Association (INTA)
highlighted inconsistencies in criminal enforcement of trademark counterfeiting
and copyright piracy laws within Member States, http://www.inta.org/Advocacy/Documents/INTAEUCriminalSanctions20082009.pdf

[121]            Trade, Growth and World Affairs: Trade Policy as a Core
Component of the EU's 2020 Strategy. COM(2010)612

[122]            Regulation (EU) No 608/2013 of
the European Parliament and of the Council of 12 June 2013 concerning customs
enforcement of intellectual property rights and repealing Council Regulation
(EC) No 1383/2003, OJ L181/15, 29.6.2013.

[123]            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.

[124]            2010 U.S. Intellectual Property enforcement
coordinator annual report on Intellectual Property enforcement, Executive
Office of the President of the United States, 2011, http://www.whitehouse.gov/omb/intellectualproperty

[125]            http://www.ice.gov/iprcenter/

[126]            Intellectual Property policy outline, Strategic
Council on Intellectual Property, 2002,

http://www.kantei.go.jp/foreign/policy/titeki/kettei/020703taikou\_e.html

[127]            http://www.wipo.int/tools/en/faqs.html,http://www.wipo.int/sme/en/, http://www.wipo.int/ipstats/en/statistics/glossary.html

[128]            Intergovernmental Committee on Intellectual Property
and Genetic Resources, Traditional Knowledge and Folklore, WIPO Second
Intersessional Working Group, Geneva, 2011.

[129]            This is also the case for unregistered designs and
trademarks (where they exist), as well as trade secrets.

[130]            Some countries also recognise unregistered trademarks,
whose protection is based on their use, which do not require any formalities.

[131]            Directive No. 2011/62/EU of the European Parliament and
of the Council of 8 June 2011 amending Directive No. 2001/83/EC on the
Community code relating to medicinal products for human use, as regards the
prevention of the entry into the legal supply chain of falsified medicinal
products, OJ L174, 1.7.2011.

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