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# 52014DC0389

**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 /\* COM/2014/0389 final \*/**

  

1.           Introduction

The March 2014 European Council reaffirmed the importance of
intellectual property (IP) as a key driver for growth and innovation and
highlighted the need to fight against counterfeiting to enhance the EU’s industrial
competitiveness globally. Intellectual Property Rights (IPR) are one of the
principal means through which companies, creators and inventors generate
returns on their investment in knowledge, innovation and creativity.

A recent study
has estimated that IPR-intensive sectors account for around 39% of EU GDP
(worth some EUR 4.7 trillion annually) and, taking indirect jobs into account,
up to 35% of all jobs[1]. In practical terms, through the granting of temporary exclusive
rights, IP is directly linked to the production and distribution of new and
authentic goods and services, from which all citizens benefit. The key to
achieving these goals is an optimal and economically efficient IP
"infrastructure" which spans the legal recognition, registration,
utilisation and balanced enforcement of all forms of IPRs.

The EU needs
innovation to stay competitive relative to countries with lower labour, energy
and raw materials costs, and must create the conditions that stimulate
innovation so that European businesses can help us trade our way out of the
crisis. This is why knowledge-based industries play a core role in the 'Global
Europe'[2] and ‘Europe 2020’[3] strategies.

Intellectual creations need protection if
creativity and innovation are to flourish, and this is the role of IPRs, which also play an important function in promoting development[4] and in addressing some
of today’s global challenges. For developing countries, a pragmatic and
flexible approach will help them maximise the potential of their own
intellectual assets and further their integration into international trade,
while achieving broader societal welfare.

Some estimate that the EU loses about EUR 8 billion of its GDP a year because of
counterfeiting and piracy[5],
and that global costs could reach as high as USD 1.7 trillion by 2015.[6] The EU has over many
years developed a modern, integrated IPR regime that
makes a major contribution to growth and job creation while at the same time
ensuring that a proper balance is struck between the
interests of right-holders and users.

The EU, including the European Commission, and
major international organisations (WIPO, WHO, WTO, WCO, OECD, G20[7]) have called for
measures to combat IPR infringement[8],[9],[10].

In 2004, the Commission Communication
"Strategy for the enforcement of intellectual property rights in third
countries"[11]
defined a broad framework for fighting IPR infringements in third countries, as
well as specific action lines, which have since been implemented.

But, as noted in the accompanying Commission
Staff Working Document (SEC(2013)30), not only has there been significant
technological change but also the nature and scope of
the challenges and risks to European companies' IP, and IPR-related societal
evolutions, have evolved considerably in the last 10 years.

This Communication therefore reviews the
approach adopted by the Commission in 2004 and sets a revised strategy to promote IPRs and combat IPR infringements abroad. It will highlight ways in which existing policy approaches can be
improved in keeping with the times, and also proposes tools and ideas to deal
with new realities. A blend of continuity and change will help to ensure we
sustain and encourage innovation and creativity, while balancing the interests
of all stakeholders.

The
Communication is complemented by an EU Action Plan that focuses on the
enforcement of IPRs on the Single Market and the development of deeper
cooperation between customs authorities in the EU and in third countries with
respect to trade of IP-infringing goods, as foreseen in the EU Customs Action
Plan.

2.           Changes
in the external context since 2004

2.1.        The 2004 Strategy

An evaluation[12] of the 2004 Strategy took place in 2010 and confirmed its relevance. 
Several recommendations were made intended to enhance and fine-tune it, e.g.
strengthening consultation with all stakeholders, embracing the development
agenda, and further developing technical cooperation programmes. The main
conclusions of this assessment, as well as a large amount of additional
information, can be found in the accompanying Commission Staff Working Document
(SEC(2013)30).

2.2.        Changes and challenges

Growth and employment remain vital in
today's challenging economic environment. Globalisation and developments in
technology not only represent huge trade opportunities but also major challenges.
The share of the BRIC[13]
countries in world trade increased from 8% in 2000 to 18.2% in 2010[14] and it is estimated
that developing countries will account for nearly 60% of global GDP by 2030[15]. While their
relationship with IP is changing from imitation to creation, counterfeiting,
piracy, IP theft and other forms of IP misappropriation are still widespread.
There is a huge drive by developing countries to continue their impressive
economic growth and move up the value chain by mastering or gaining access to
foreign technology, through legitimate competition or, by some actors, illegitimate
means. Therefore, it is not sufficient just for the EU to get its IPR policy
right – we must also strive to enhance protection and enforcement of IP abroad,
in particular among our key trading partners.

Indeed, despite increasing legislation
worldwide, IPR infringement has reached unprecedented levels, facilitated in
particular by digital technology that allows low-cost, high quality
reproduction in bulk. International trade in counterfeit and pirated goods in
2008 was estimated to be worth approximately USD 250 bn (i.e. 2 % of world
trade)[16].

The success of the internet makes it easier
not only for legitimate businesses, but also for those that engage in IP
infringement, who are increasingly organised and quick to adapt their business
models to exploit loopholes in IP protection, to market themselves locally,
nationally and internationally at relatively low cost.

A policy response is needed, not
just to ensure effective protection and enforcement of IPRs internationally, but also to raise public awareness
of the economic and other impacts of IPR-infringing goods and their detriment
to innovation and also on health and safety. In a globalised
economy of international supply chains, lack of proper IP protection in some
jurisdictions can dramatically affect business and therefore sustainable job
creation as well as consumers practically anywhere in the world. IPR-infringing
goods and services are produced with little regard for labour and environmental
standards[17].
The growing involvement of organised crime
is also a particularly serious concern for governments[18].

Given the scope of change in the IP
landscape, it is thus essential to ensure that the current Strategy responds to
today's challenges. This Communication reviews and updates EU policy
approaches, and introduces new tools and ideas. It aims to help the EU to
achieve not only growth but also wider societal goals, including in relation to
the developing world.

2.2.1.     Enforcement

Access to
effective remedies internationally is important for right holders to
protect their rights – incentives to invest are reduced in jurisdictions where
these are uncertain – hence the need for solid and predictable IPR frameworks that
create environments conducive to innovation and sustainable growth and offer
effective enforcement. There have been significant
IP regulatory reforms in many third countries as a result of the WTO’s Trade-Related
Intellectual Property Rights (TRIPS) agreement, but their enforcement
efforts have not always matched these. Often the possibilities for effective
enforcement of IPRs are limited due to serious deficiencies in the IPR
framework, e.g. customs authorities lacking ex-officio powers, courts issuing
insufficiently deterrent sanctions, officials lacking sufficient knowledge and
training on IPR. Enforcement efforts may also be hindered by a lack of
political will.

The EU experienced a tripling in the number
of IPR infringing goods detained at EU borders between 2005 and 2012.
E-commerce has led to increased trade in small consignments, which makes
detection of IPR infringements harder. Due to this new pattern, customs cases
involving IPR infringements in the EU more than doubled from 2009 to 2012. In 2012, almost 90,000 detention cases were
registered by Customs, involving almost 40 million detained articles (the value
of the equivalent genuine products is estimated to be worth
nearly EUR 1 billion[19]).

Effective IPR enforcement is of limited use
if clear and suitable rules and procedures regarding IPR protection are not in
place. Substantive rules (e.g. patentability criteria), including properly
crafted exceptions, and procedures to protect IP, should be clear and proportionate.
At the same time, the rules need to be strict enough to avoid IPRs being abused
and becoming an end in themselves, and to ensure that rights are of adequate
‘quality’ to prevent a proliferation of spurious rights (e.g. bad faith
registrations). Examination backlogs and low-quality rights create legal
uncertainty that is detrimental to applicants and third parties.

2.2.2.     Public debate

Support for IPR systems in some sectors of
public opinion has waned over recent years. A growing disregard of IPRs could reduce
their intended benefits. The increasing prevalence (and lower cost) of
infringing goods may have impacted consumer sentiment to the extent that
consumers are more willing to buy them. Some recent initiatives have been
affected by concerns expressed by the public. These concerns appear to be
driven by a combination of factors. First, a perception of overreach by
right-holders, making certain goods or services unaffordable and/or difficult
to access. Second, a perception that counterfeiting and piracy are victimless
crimes. Third, in some areas, a lack of awareness of the rationale and effects
of IPRs and the economic and wider implications of their infringement on the
economy.

While policymakers must continuously review
whether the existing rules are suitable for today's challenges, a reasonable
balance must be maintained between (1) the need to improve access to goods and
services protected by IPRs and (2) the need to incentivise right-holders to
continue to invest in innovation, and (3) the need to balance different fundamental
rights. Stronger enforcement alone will not solve this problem, which must be
addressed through debate and awareness-raising, targeting consumers and
producers. Consumers should be made more aware of the wider consequences of IPR
infringement. These relate to incentives to create, but also the impact on the
kind and number of works available, on the loss of EU jobs, if rights are
weakened or made more difficult to enforce. This also applies in certain
developing countries, where the production of goods infringing IPRs is often
facilitated by weak IPR frameworks.

2.2.3.     The
internet and IPR

The internet has become vital for many
sectors, especially the cultural and creative ones. It accounts for about 3.4 % of GDP in the 13 countries surveyed in a recent study[20], and even 6% in the UK and Sweden. In the G8 countries, South Korea and Sweden, the internet economy has generated 21%
of the growth in GDP from 2006 to 2011. While this growth has brought about
huge opportunities, IP infringements on the internet are
growing at an even faster rate (reportedly, almost a quarter of global internet
traffic infringes copyright[21]).
This involves not only digital goods such as music, audio-visual content and
software, but also physical goods that are increasingly traded on e-commerce
platforms.

This rapidly-changing environment, as well
as the fact that the internet has no frontiers, unlike IP laws, makes it
difficult to develop timely, well-balanced policies. WIPO's 'Internet
treaties' – the WIPO Copyright Treaty (WCT) and the WIPO Performances
and Phonograms Treaty (WPPT), adopted in 1996 – were a welcome development
to address these issues, but many challenges remain.

One such regulatory challenge relates to
the responsibility of intermediaries such as internet service providers. Given
their role in both legitimate and infringing activities, their obligations
continue to be debated. Service providers hosting IPR-infringing sites are
especially problematic to tackle when established in third countries lacking
appropriate legislation and/or willingness to act.

The legal framework needs to be properly balanced
between rights of individuals on the one hand – including fundamental rights
such as freedom of expression, protection of personal data, procedural rights –
and respect for IP – also a fundamental right - on the other[22].

In addition to public policy, creators and
intermediaries need to cooperate in taking operational initiatives within the
law to combat IPR infringements. This can be done through soft law measures
that complement legal frameworks, for example initiatives, on a voluntary basis establishing a code of practice in the fight
against such sales, and enhancing collaboration.[23]

2.2.4.     The potential contribution
of IPRs to development

For developed, as for emerging and
middle-income developing countries, experience and evidence suggest that
effective IPRs have several benefits, especially when complemented by
improvements in other aspects of the investment and business climate[24].

These
include:

–
leveraging the trade potential[25] of intellectual assets, e.g. agricultural products (including
geographical indications and plant varieties)

–
safeguarding tax revenues and jobs by combating
IPR infringement more effectively

–
improving legal certainty and promoting
innovation, making it more conducive to inward investment and technology
transfer[26].

–
indirect benefits that can exist on health and
safety from eliminating IPR infringing goods should also not be underestimated[27].

As noted earlier, emerging economies are
increasingly becoming exporters of IP-intensive goods, and thus benefitting
from stronger IP regimes, although these haven't reached EU standards yet. This
absence of a level playing field with emerging countries harms EU and third
countries' growth and development, and IP infringers seek to exploit such
differences.

Effective IPR regimes, complemented by an enabling environment and
sufficient capacity to absorb technology, can help developing countries to put
in place a sound, viable technological base locally. They can upgrade R&D
capabilities, prompt top-performing domestic firms to intensify their R&D
activities, and give incentives to multinational firms to introduce innovation
in these markets. In
particular, such regimes can play a positive role in
stimulating technology transfer and foreign direct investment – which involves
opportunities for rights holders as well as for recipients – including technologies
that may help solve global challenges such as climate
change.

There are several types of technologies as
well as several channels of transmission and indeed technology transfer is
often one component of a more complex project, rather than a stand-alone
activity. The acquisition by LDCs of a sound and viable technological base does
not depend solely on the provision of physical objects or equipment, but also
on the acquisition of know-how, on management and production skills, on
improved access to knowledge sources as well as on adaptation to local
economic, social and cultural conditions.

The EU ensures a differentiation in its policy
(as confirmed in a recent Commission Communication on "Trade, growth and
development"[28])
by taking into account the level of development[29] and institutional
capacity in developing countries. Depending on the country concerned, our Strategy
may thus rely more on technical assistance in capacity building than on
negotiations aiming to improve IPR regimes. In particular, the EU will fully honour the TRIPS
requirement that developed countries should offer their companies incentives to
transfer technology to least-developed countries (LDCs)[30], in line with the approach presented in 2003[31], and work to encourage
LDCs to building enabling environments for technology transfer.

2.2.5.     Emerging economies

The growth rate of middle-income countries –
and the increasing role they play in the world economy – represents enormous opportunities
for EU and international business, but has also raised the stakes for
IPR-owning companies, which are more exposed than before to IPR-related risks
abroad.

Some emerging economies have engaged in aggressive
policies that seek to appropriate foreign technology and to boost national
champions, in particular in sectors considered strategic, e.g. through ‘forced
technology transfer’, local content requirements, and domestic innovation policies
aimed at 'leapfrogging'[32].
Such policies, combined with rapidly growing capabilities of their companies
and the lack of an effective IPR framework, mean that some companies resort to
appropriating foreign IP through any means, in some cases through illegal means,
and this is having an unprecedented effect on industrialised countries’
industry. There are increasing reports that some of these activities may be State-sponsored[33].

On the other hand, changes are occurring as
many are increasingly recognising the benefits of IPRs to enhance their
competitiveness as they seek to move up the value chain. Companies in these
countries are therefore increasingly generating and protecting their own IP. For
example in China, patent applications grew on average by 34 % per year
from 2003 to 2007, and European patent applications filed by Chinese entities
increased about tenfold between 2001 and 2010.

Nevertheless, the risks of abusive
practices to access EU technology
must be effectively addressed. These may occur in areas
such as:

–
Public procurement. Many EU companies suffer
IPR-related problems such as breaches of confidentiality, protectionist
measures entailing forced technology transfer[34],
if not the mere offering (by third-country bidders) of technologies they have
not acquired legitimately;

–
Investment and conformity assessment procedures,
where similar problems arise (e.g. making access to non-EU markets conditional
on technology transfer, or conformity assessments requiring the disclosure of
sensitive information without proper IP guarantees), along with other
trade-restrictive measures[35];

Situations in which third countries have
implemented or are proposing measures imposing technology transfer on EU companies
established locally must be closely monitored, and lead to action where
appropriate.

2.2.6.     Research, innovation and
ICT

The
global landscape of research and innovation has changed drastically over the
past decade. Emerging economies have invested considerably in the strengthening
of their research and innovation systems and, as a result, a multipolar system
is developing in which countries such as the BRICs exert increasing influence.

Research and innovation 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 and
sustainable development are global. They require the EU to step up its
cooperation on research and innovation with its international partners, while
at the same time becoming more strategic in setting adequate framework
conditions for cooperation. To this extent the Commission adopted in 2012 a new
strategy for international cooperation in research and innovation[36]. While the strategy
aims for an increase in cooperation activity, it also acknowledges the fact
that this at the same time 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.

In the
context of the ICT industry, which has to seek globally interoperable networks
and devices, the global protection of IPR embedded in standards is also
important. It is essential that the international standardisation system
acknowledges not only the need to ensure access to the technologies included in
international standards but also safeguards an efficient way to reward fairly
and timely the investment in the development of these technologies.

2.2.7.     The challenges of access to
medicines

Access to affordable,
safe and effective medicines is crucial to all countries, and the challenge is
particularly large when it comes to LDCs and developing countries. Recognising this, the EU is a major
contributor to health-related aid – e.g. the Global Fund to Fight AIDS, Tuberculosis and Malaria and other key organisations[37].
It also initiated the European and Developing Countries Clinical Trials
Partnership (EDCTP) to accelerate the clinical research development process for
medicines against neglected diseases related to poverty.

The role of IP in
access to medicines has been highly debated. As a recent WHO-WTO-WIPO study
notes, the "lack of access to medical technologies
is rarely due to a single isolated factor"[38]. There are many factors affecting access (explained in more detail in
the accompanying Commission Staff Working Document (SEC(2013)30)), but mostly unrelated to IPRs, such as lack of access to quality
health care, poor infrastructure, lack of distribution
and supply systems, and lack of quality control. Still,
IPRs may affect the price of medicines. The challenge is to come up with a
broad response to this complex and multifaceted problem and to ensure affordable access to medicines without undermining the incentives needed for continued pharmaceutical
research. It should be noted that generic medicines play
an important role and should not be equated with counterfeit[39] medicines.

The EU
addresses these IPR challenges, in line with a European
Parliament resolution[40], through policies intended to reduce
obstacles to trade in both innovative and generic medicines, while also
promoting innovation and curbing trade in counterfeit and falsified medicines that
can be dangerous for patients[41].

In particular, the EU:

–
ensures that any multilateral
and bilateral agreements reflect these objectives;

–
supports the Doha Declaration on TRIPS and
Public Health (implemented through Regulation
816/2006);

–
has adopted rules on ‘tiered pricing’[42],[43],[44] and harmonised clinical trial exceptions[45].

The Commission
is also looking into ways of improving its support for developing countries implementing
the TRIPS Agreement — including its flexibilities in appropriate cases, such as
health emergencies.

2.2.8.     Environmental challenges

IP can bring an
important contribution to solving global environmental challenges. Despite
attempts to weaken IPR protection (e.g. through systematic compulsory licensing
or patentability exclusions), IPR incentives are crucial to promote investment[46] in green technologies. With regard to climate change, appropriate
IPR regimes can play a positive role in stimulating the transfer and
dissemination of innovative green technologies, which involves opportunities
for right holders as well as for recipients.

The EU has been
at the forefront in climate change discussions to promote
and provide climate finance, which includes support for green technology. The EU also actively contributed to the
successful conclusion of negotiations on the Nagoya Protocol to the Convention
on Biological Diversity (CBD) on access to genetic resources and the sharing of
benefits arising from their use. The EU implemented and ratified the Nagoya
Protocol in April 2014 and will continue to play an active role in the global
debate on IPR-related environmental issues.

3.           A revised IPR strategy
vis a vis third countries

It is appropriate to update the 2004 strategy
to take account of the insights from the 2010 evaluation, and generally pursue
the challenges reviewed above.

While right-holders are responsible for taking
adequate steps to protect and enforce their IPRs both in the EU and in third
countries, and for adopting operational measures (e.g. technological protection
measures for digital copyrighted works), public authorities also have their
role to play, namely by providing a framework that supports innovation and
creativity and protects IPRs. The EU has a range of ‘tools’ available, such as
working through international organisations or bilateral agreements, monitoring
and reporting on the adequacy of IP protection and enforcement in third
countries, and cooperating with third countries to address specific IPR
problems.

The effectiveness of these tools varies
greatly. In some cases the EU has legal rights that can ultimately be enforced
e.g. through dispute settlement procedures. In other cases the EU's ability to
achieve results depends on the willingness of third countries to address its
concerns.

In the EU focus is placed on the economic
potential of IP and its role as a key driver for innovation, growth and
employment. IPRs are indeed paramount for the inventor's/creator's trail as
they provide a safe environment in which ideas can be first invented and then brought
to market, rewarding investment. IPRs are also assets for innovative companies
as they help them attract funding and therefore allow them to thrive, create
jobs, propose new products and services to consumers and finally export these
products and services to third countries. This virtuous circle induced by the
inventor's/creator's trail can have a similar positive impact on growth and
employment in third countries.

3.1.        Improving stakeholder
engagement

3.1.1.     Present situation

The increasingly
tangible influence of IPR policy on our daily lives means that it is more than
ever in the public eye and, naturally, increasingly discussed in a wider
spectrum of debate.  Certain IP policy initiatives have
suffered from negative reactions which have resulted in their rejection, whether
at European level (cf. the proposed Anti-Counterfeiting Trade Agreement)
or elsewhere (cf. the SOPA and PIPA legislative proposals in the USA). There are different reasons for the failure of these initiatives, but a common thread
was a view that public concerns had not been sufficiently taken into account,
e.g. whether these rules were fit for a digital economy or the impact these
measures might have on fundamental rights as well as what is referred to as
‘internet freedoms’.

3.1.2.     Way forward

Recent debate has revealed a need for
broader dialogue with stakeholders about the role and importance of IP and the
impact of IPR infringements. It is also important to ensure that the IP
framework remains flexible enough to facilitate, rather than obstruct, the
capacity for digital technology to deliver growth while at the same time
stimulating innovation.

There is thus a need to improve interaction
not just with right-holders, but also with public authorities, civil society
(possibly using existing mechanisms such as the Commission's Civil Society
Dialogue and Market Access Strategy tools)[47] and the European
Parliament so as to discuss the EU’s goals and the impact of IPR infringements
in third countries, and explain the EU’s efforts to enhance IPR enforcement in those
countries and the environment to promote the inventor trail.

3.2.        Providing better data

3.2.1.     Present situation

In the last 15 years research into the
economics of IP has expanded considerably (of which the recent study on the contribution of IP to economic performance and
employment in Europe is particularly valuable)[48]. Certain data such
as the scale and impact of IPR infringements is inherently difficult to obtain given
that it deals with an underground phenomenon and because right-holders are often reluctant to disclose details[49]. There are still areas where further
studies are needed to support evidence-based policy-making and to more
precisely quantify the role of IP and the impact of IPR infringements.

Various industry associations (e.g. BSA,
IIPA) and law firms[50]
publish reports on specific sectors, and key international organisations such
as the OECD and WIPO are also performing similar work.

3.2.2.     Way forward

Improved data will be important to
policymakers for informed policy debate and any awareness raising efforts;
there are already several on-going initiatives. The Commission annually
compiles data regarding goods detained at EU borders[51], suspected of
infringing IP rights, and has set up a European Observatory on Infringements
of Intellectual Property Rights[52].
Among other tasks, the Observatory should ensure that comprehensive and
reliable data is available regarding IPR infringements in the EU. In 2013 it produced
the aforementioned study on the value of IP in the EU, and has also published a
study on the public perception of IPR. It will also produce 'country guides' on
several key countries. The Commission regularly
conducts surveys about the IPR situation in non-EU countries[53] (the technical
background of which is now provided by the Observatory), which help to
establish priorities and to inform stakeholders.

3.3.        Building on EU legislation

3.3.1.     Present situation

Harmonisation has intrinsic benefits in
creating a simpler and more predictable framework for consumers and industry,
which contributes to growth and jobs. Moreover, harmonised EU IPR
legislation (e.g. the Customs Regulation[54]
or the Enforcement Directive[55])
facilitates negotiations with third countries because it provides a clear basis
for establishing the EU’s negotiating position.

In recent Free Trade Agreement negotiations
requests have often been made, for example, to include the protection of trade
secrets, and certain non-food products as geographical indications, of which
there is currently no EU acquis. The lack of EU harmonisation in some IPR areas,
therefore, can complicate or at least limit the EU's scope for addressing some
IP issues through negotiations with non-EU countries.

3.3.2.     Way forward

The Commission is launching a new
Communication on an Action Plan addressing Intellectual Property infringements
in the EU. Non-legislative actions are envisaged in promoting proportionate and
equitable IP enforcement measures, and prioritising policy actions to bring
more focus, better coordination and streamlining to current policies in
protecting IPR.

The Commission has also recently adopted a legislative
proposal (directive) on trade secrets (as part of the 2013 Commission Work
Programme) in order to improve conditions in the EU for
innovative business activity. Given the importance of trade secrets, this may inspire
others to follow suit in providing such protection.

As harmonisation may be promoted not only
at EU level but also by international treaties, it would increase the EU's
leverage if all Member States ratified the relevant international treaties. For
example, some treaties such as the Trademark Law Treaty and the Geneva
Act of the Hague Agreement (concerning industrial designs), for instance,
have been signed by the EU but not by all of its Member States.

3.4.        Enhancing cooperation
within the EU

3.4.1.     Present situation

Cooperation between the Commission and Member States on the ground in non-EU countries is
often good. It is important that Member States’ diplomatic representations and
EU Delegations are better aware of each other's activities in third countries.
This ensures a strategic, coherent approach, and enhances the EU's ability to
effectively address IP issues in the countries concerned.

3.4.2.     Way forward

The scope for further improving the cooperation
between the Commission and Member States (of information sharing, for example) should
be explored building on the partnership that has, for example, been established
between the Commission, Member States and business to implement the market
access strategy and thus to be more resource-efficient.

3.5.        Improving protection and
enforcement of IPRs in third countries

3.5.1.     Multilateral
and plurilateral level

3.5.1.1.  Present
situation

International harmonisation enables broad
alignment of rules and thereby a more predictable IP environment. It entails
the negotiation of new multilateral treaties, their ratification and
implementation, as well as the extension of their membership to more non-EU
countries (e.g. UPOV for plant variety protection). In the post-TRIPS era, however, only a few significant multilateral
IPR agreements have been concluded (e.g. WIPO's internet treaties[56], and the Marrakesh[57] and Beijing[58] treaties).

As the 2010 evaluation study noted, "The
Commission was an active contributor to IP enforcement at multilateral level,
in particular at the WTO TRIPS Council, but it reaped only limited rewards
owing mainly to third country opposition." Regarding
geographical indications[59],
longstanding negotiations have been taking place in the WTO and will continue
to be pursued by the EU.

A plurilateral
approach can be effective for smaller groups of countries sharing similar
policy objectives.

3.5.1.2.  Way forward

While these options should be used wherever
they are available, opportunities are infrequent, and therefore other
approaches merit attention. This does not mean that our efforts regarding
multilateral work should be halted – for instance we will continue to promote
better protection of geographical indications in the WTO and will also promote sound protection of GI's on the
internet. At the same time it may be appropriate to reflect on a new
strategy for WIPO to make the organisation better deliver on its mandate.

3.5.2.     Bilateral level

There is a need to focus efforts and
resources on the most relevant countries. Bilateral interactions – of which
several categories exist, as set out below – offer a useful opportunity to
address in a tailored way specific issues and needs of individual partners
(particularly with our ‘priority countries’). Bilateral work can also be
continued with relevant regional intellectual property organisations (e.g.
OAPI, ARIPO[60]).

3.5.2.1.  Present situation

–
Bilateral trade agreements

Such agreements can address
country-specific IPR challenges, and have "facilitated more progress on
IPR enforcement in third countries", as the 2010 evaluation study
noted. We take as a reference the existing EU legislation, and calibrate our level
of ambition to the partner country's level of development. For least-developed countries and poorer developing countries, a more
limited set of IPR provisions may be considered.

Recently concluded negotiations on trade
agreements by the European Union have successfully integrated chapters on IP protection
and enforcement. The most recent, those with countries in the Eastern Partnership
(e.g. Georgia, Moldova, Ukraine) achieved significant regulatory standards as
per the EU acquis. Others contain substantial improvements on TRIPS (e.g. Canada, Republic of Korea, Singapore) while others are also notable for improving beyond minimum
international standards (e.g. Central America, Colombia, Peru).

Current negotiations on trade agreements
include those with Mercosur, Morocco, Japan, Thailand, the US and Vietnam. A bilateral agreement specifically addressing the protection of geographical
indications is under negotiation with China.

–
IP Dialogues

For countries with which the EU is not
engaged in negotiations, a practical way to address IPR challenges is to set up
‘IP dialogues’ or ‘IP Working Groups’ involving regular interactions between
the EU and the relevant authorities in non-EU countries. The 2010 evaluation
study highlighted the positive contribution of IP Dialogues to "raising
the awareness levels of national authorities on these matters and to clarifying
mutual interpretations and positions."

Several IP Dialogues are now underway.
These enable the Commission to raise systemic IP issues, to share best
practices and, where appropriate, to offer developing countries assistance,
e.g. in developing domestic legislation and enforcement practices. The IP
Dialogue and IP Working Group with China, for instance, enabled the
EU to obtain commitments for strengthened enforcement activities, such as the
so-called 'special campaign', and to provide input to domestic reviews of Chinese
IP law. There are also Dialogues with partners that have similar IPR regimes,
e.g. the US and Japan, to exchange information and views on problems and best
practices.

IPR enforcement is also a priority
identified in the EU's bilateral customs cooperation agreements. In this
context, a new EU-China Customs Action plan on IPR enforcement was recently
signed for the years 2014-2017.

– Technical assistance

Developing countries wishing to improve
their IPR system often lack the skills and/or resources to do so. IPR-related
technical assistance aims to address this[61],
through activities such as training of officials, awareness-raising and
legislative assistance (e.g. to comply with international commitments, and to
utilise available flexibilities).

While the impact of technical assistance
actions is rarely felt in the short-term, the 2010 evaluation study noted that
"EU funded projects and technical assistance have enhanced the
technical capacity of national institutions and law enforcement agencies (LEAs)
to handle IPR cases."

For example, the successful ‘EU-China Project on the Protection of Intellectual Property Rights’ (IPR2, 2007-11),
with EUR 16 million in joint funding, reflects a mutual commitment to effective
IPR enforcement in China. Involving organisations such
as the European Patent Office, the Office of Harmonisation for the
Internal Market (including through possible secondments to EU Delegations) and
the Community Plant Variety Office will enhance our capacity to design
and implement effective assistance.

–
Dispute settlement and other remedies

The EU continues to monitor the IPR
situation in third countries, and to push for compliance with international
agreements, in particular through dialogue and
negotiation. WTO dispute settlement procedures can also be resorted to for breaches
of the TRIPS Agreement. Indeed, the mere existence of these procedures can act
as a deterring mechanism to potential infringements. Similar procedures are
also built into most of our bilateral trade agreements.

The Trade Barriers Regulation[62] —
which enables EU companies to lodge complaints regarding possible violations of
international trade rules — has already been used to address breaches of IP rules,
and remains available for use in appropriate cases.

3.5.2.2.  Way forward

Although they are more resource-intensive
than multilateral or plurilateral avenues, such bilateral ways of action have
been intensively resorted to in the past, with positive results, and should
still be pursued under the revised Strategy. It is
important to aim at better coherence between IPR and other policies.

One example is in relation to the Union's
strategy for engaging in international cooperation on research and innovation,
where ensuring fair and equitable treatment of IPR by the Union's partner
countries is of the utmost importance. The Union's funding programmes for
research and innovation, currently Horizon 2020, are fully open to
participation from international partner countries, offering access to a
European internal market with predictable and fair rules as regards IP
protection. A long term goal should be to strive for this openness to be
reciprocated by all of the Union's partner countries, including by ensuring
equivalent protection of IPR.

In the context of trade defence
instruments, granting market economy status depends, amongst other criteria, on
IP protection in the country concerned.

For countries that persistently break
international commitments on IP rules in ways that have a major impact on the
EU, and where the authorities are unwilling to cooperate or where cooperation
shows limited results, the Commission may consider restricting their
participation or funding in specific EU-funded programmes in sufficiently
serious and clearly targeted cases. This would not affect programmes financed
by the European Development Fund or Development Cooperation Instrument.
Commission policy dialogues with partner countries might also be utilised to
engage on serious IPR infringement issues. To ensure coherence, efforts should
be made to encourage Member States to apply such or other approaches in tandem.

As regards Free Trade Agreements it
must however be recognised that the negotiation of IPR chapters will remain challenging.
 Many of the countries that the EU is in negotiations with (or about to start
negotiations) have the perception that they stand little to gain from a strong
IPR regime. To achieve meaningful outcome for the EU will therefore require continuous
awareness-raising and outreach for all stakeholders at both technical and at
times at political level.

3.6.        Providing
assistance to EU right holders in third countries

3.6.1.     Present situation

Having expertise available on the ground is
of great benefit both to assist EU right-holders[63] and to facilitate EU
interactions with local authorities. This is why several Member States have ‘IP
attachés’ within their delegations in key countries. For this reason as well,
the Commission has established three IPR Helpdesks to provide assistance for EU
firms, especially SMEs. These helpdesks cover Greater China, South-East Asia,
and South America. They aim to enable European SMEs to make the best IPR
decisions for their business and to ensure they know how to effectively protect
their intangible assets[64].

3.6.2.     Way forward

The EU will explore the possibility for
increasing the availability of IP expertise in EU Delegations in key regions,
either through additional staff or through IPR
Helpdesks. In the context of the 2014-2020 multiannual financial framework[65], the Commission is
considering extending the Helpdesk services for SMEs adapting them to new
needs. The increase of IP expertise in EU delegations would build upon and
integrate better existing resources (IP knowledge of attaches in EU delegations
and Member States embassies, and IPR Helpdesks). The Commission and Member States would also ensure that the IP expertise is widely shared through EU
initiatives that support the international expansion of SMEs[66]. This would allow the
benefits of on-going networking to be extended, ensure
better information to be gathered about the IP situation in key regions and
allow businesses to better know the IP practices they would need to take into
account when going international.

3.7.        Geographical focus

3.7.1.     Present situation

Every two years, on the basis of a wide
survey amongst European and international stakeholders, the EU updates its list
of priority countries where EU right-holders suffer inadequate IPR protection and/or
enforcement[67].

3.7.2.     Way forward

Such prioritisation has worked well and will
continue since it enables a focused and resource-efficient approach.

3.8.        Action points

The present Strategy is intended to ensure continuity
to the policy pursued by the European Union since 2004, by building on what
worked well and enhancing it in view of the significant technological changes
and IPR-related new challenges and societal evolutions arisen in the last 10
years. In order to tackle the above-mentioned issues, the following action
points will be taken up by the Commission:

·
Ensure regular interaction with all stakeholders
to raise awareness and guide policy;

·
Enhance data collection and reporting, so as to
improve the understanding of the role of IPR and the impact of infringement;
conduct regular surveys in order to maintain a list of ‘priority countries’ for
focused EU efforts;

·
Ensure a strong and coherent role for the EU in
international IPR fora in line with the Lisbon Treaty;

·
Continue multilateral efforts to improve the
international IPR framework, including by encouraging
further ratification of existing treaties; promote ratification of relevant IPR treaties by all EU Member
States;

·
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;

·
Ensure the Commission can make recourse to
dispute settlement mechanisms or other remedies where the EU's rights under
international agreements are infringed;

·
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;

·
Provide and promote
awareness of appropriate IP-related technical
assistance programmes to third
countries, including on the possible use of IP flexibilities; leverage the expertise of relevant international organisations in
implementing technical assistance programmes;

·
Establish a stronger relationship between the
Commission, Member States and EU    business to directly support economic
operators in overcoming concrete difficulties on IP issues; enhance networking
and coordination  of actions between EU and Member States representations in
third countries;

·
Aim at better coherence
between IPR and other policies, e.g. consider
restricting participation or funding in specific EU-funded programmes in
sufficiently serious and clearly targeted cases, and to improve coherence
between the Commission and Member States in third countries in this goal;

·
Continue assistance to right-holders
(through projects such as IPR Helpdesks) and consider their possible
expansion; consider further posting of IPR experts to key EU delegations.

[1]               Intellectual property rights intensive industries:
contribution to economic performance and employment in the European Union,
Industry-Level Analysis Report, Joint project between the European Patent Office
and the Office for Harmonisation in the Internal Market, Munich and Alicante,
2013.

[2]               See 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.

[3]               http://ec.europa.eu/europe2020/index\_en.htm

[4]               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.

[5]               CEBR, The impact of counterfeiting on four main
sectors in the European Union, Centre for Economic and Business Research,
London, 2000.

[6]               Global impacts study. A
new study, conducted by Frontier Economics examines the global economic and
social impacts of counterfeiting and piracy, ICC, February
2011. available at http://www.iccwbo.org/Advocacy-Codes-and-Rules/BASCAP/BASCAP-Research/Economic-impact/Global-Impacts-Study/

[7]               WIPO (World Intellectual Property Organisation), WHO
(World Health Organisation), WTO (World Trade Organisation), WCO (World Customs
Organisation), OECD (Organisation for Economic Cooperation and Development),
G20 (Group of Twenty)

[8]               Council Resolution 2008/C253/01 of 25 September 2008,
on a comprehensive European anti-counterfeiting and anti-piracy plan, OJ C253,
4.10.2008.

[9]               Council Resolution 2009/C71/01 of 16 March 2009, on
the EU Customs Action Plan to combat IPR infringements for the years 2009 to
2012, OJ C71, 25.3.2009.

[10]             European Parliament Resolution of 22 September 2010,
2009/2178(INI).

[11]             Strategy for the enforcement of intellectual property
rights in third countries, 2005/C29/03, OJ C129,  26.5.2005.

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

[13]             Brazil, Russia, India, China.

[14]             WTO, Eurostat, IMF.

[15]             OECD, Economy: Developing countries set to account
for nearly 60% of world GDP by 2030, according to new estimates, June 2010.

[16]             OECD, Magnitude of counterfeiting and piracy of
tangible products: an update, November 2009, http://www.oecd.org/dataoecd/57/27/44088872.pdf

[17]             http://www.unep.org/roap/Portals/96/Trade%20in%20Intellectual%20Property-21Nov2013.pdf

[18]             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

[19]             Report on EU customs enforcement of IPRs: results at
the EU border 2012: European Commission (2013).

[20]             Internet matters: The Net’s sweeping impact on
growth, jobs, and prosperity, M. Pélissié du Rausas et al., Report from
McKinsey Global Institute, May 2011.

[21]             Technical report: An estimate of infringing use of
the internet-Summary, Envisional, January 2011,
http://www.mpaa.org/Resources/8aaaecf5-961e-4eda-8c21-9f4f53e08f19.pdf

[22]             Report of the Special Rapporteur on the promotion
and protection of the right to freedom of opinion and expression, Frank La Rue,
United Nations General Assembly- Human Rights Council. 17th session,
Agenda item 3, A/HRC/17/27, May 2011.

[23]             As is the case with the Memorandum of Understanding
on the Sale of Counterfeit Goods over the Internet,  http://ec.europa.eu/internal\_market/iprenforcement/docs/memorandum\_04052011\_en.pdf

[24]             Intellectual Property Rights: Economic principles
and trade rules, C. Fink, May 2007- revised version. In: Handbook of
Trade Policy for Development, A. Lukauskas et al., Oxford Scholarship
Online, 2014.

[25]          Creative
economy report 2010: A feasible development option,
partnership between UNCTAD  and the UNDP Special Unit for South-South
Cooperation, 2010, http://unctad.org/en/Docs/ditctab20103\_en.pdf

[26]             Intellectual Property Rights, imitation, and foreign
direct investment: theory and evidence, L. Branstetter et al., Working
Paper 13033, National Bureau of Economic Research, Cambridge, 2007.

[27]             Record seizure of illicit medicines in Africa. The
World Customs Organization (WCO) and the Institute of Research Against
Counterfeit Medicines (IRACM) issue a new warning on the health and safety of
African populations, Paris, 2013,
http://www.wcoomd.org/en/media/newsroom/2013/june/wco-and-iracm.aspx

[28]             COM(2012)22 – Trade, growth and development.
Tailoring trade and investment policy for those countries most in need,
European Commission, Belgium, 2012, http://trade.ec.europa.eu/doclib/docs/2012/january/tradoc\_148992.EN.pdf

[29]             http://content.undp.org/go/cms-service/stream/asset/?asset\_id=1948200
— see Chapter 11.

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

[31]             Communication from the European Communities and their
Member States to the TRIPs Council of 13 February 2003, Ref. 032/03 – final.

[32]             I.e. accelerated economic development.

[33]             Policy recommendations to combat state sponsored IP
theft (SSIPT), Trans Atlantic Business Dialogue, http://transatlanticbusiness.org/s/TABD-Trade-Secrets-Policy-Recommendations-December-2012.pdf

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

[35]             DG TRADE, Ninth Report on Potentially Trade
Restrictive Measures, September 2011-May 2012, Report on G-20 Trade
Measures, WTO,

http://trade.ec.europa.eu/doclib/docs/2012/june/tradoc\_149526.pdf

[36]             COM(2012) 497.

[37]             Including GAVI, WHO, UNICEF.

[38]             Promoting Access to Medical Technologies and
Innovation. Intersections between public health, intellectual property and
trade, Trilateral study by WHO, WIPO and WTO, Geneva, 2012.

[39]             It is worth noting that certain concepts such as
substandard, spurious or falsified medicines do not entail any IPR aspects –
see related WHO discussion at http://apps.who.int/gb/ssffc/pdf\_files/A64\_16-en.pdf

[40]             European Parliament Resolution of 12 July 2007,
B6-0288/2007.

[41]             Counterfeit drugs kill!, final brochure WHO and
IMPACT, Updated May 2008, http://www.who.int/impact/FinalBrochureWHA2008a.pdf

[42]             Council Regulation (EC) No 953/2003 of 26 May 2003 to
avoid trade diversion into the European Union of certain key medicines, OJ
L135/5, 3.6.2003.

[43]             I.e. prices enabling exporters
to deliver essential medicines to poor countries at prices only slightly above
their own production costs.

[44]             The EU will initiate an evaluation of Regulation
953/2003 in 2014.

[45]             The EU introduced a ‘Bolar-type exemption’ in Directive
2004/27/EC.

[46]             Are IPR a barrier to the transfer of climate change
technology?, Report commissioned by the European
Commission (DG Trade), Copenhagen Economics A/S and The
IPR Company ApS, 2009, http://trade.ec.europa.eu/doclib/docs/2009/february/tradoc\_142371.pdf

[47]             http://ec.europa.eu/trade/creating-opportunities/trade-topics/market-access/

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

[49]             Thus, although the 2010
evaluation study rightfully states that "While there are numerous
indications that the volumes of IPR infringements are increasing, the overall
degree to which products are being counterfeited and pirated is unknown, and
there are, as yet, no methodologies that could be employed to develop an
accurate overall estimate", there are limits to what can be done in the
circumstances.

[50]             http://www.taylorwessing.com/ipindex

[51]             http://ec.europa.eu/taxation\_customs/customs/customs\_controls/counterfeit\_piracy/statistics

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

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

[54]             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.

[55]             Directive 2004/48/EC of the European Parliament and of
the Council of 29 April 2004 on the enforcement of intellectual property
rights, OJ L157/45, 30.4.2004.

[56]             WIPO Copyright Treaty, WIPO Performances and Phonograms
Treaty

[57]             Marrakesh
Treaty to Facilitate Access to Published Works for Persons Who Are Blind,
Visually Impaired or Otherwise Print Disabled

[58]             Beijing Treaty on Audio-visual Performances

[59]             I.e. the negotiation of the
establishment of a multilateral system of notification and registration of
geographical indications for wines and spirits, and issues related to the
extension of the protection of geographical indications provided for in Article
23 TRIPS to products other than wines and spirits.

[60]             Organisation Africaine de la Propriété Intellectuelle (OAPI),
African Regional Industrial Property Organisation (ARIPO)

[61]             http://trade.ec.europa.eu/doclib/press/index.cfm?id=328

[62]             http://ec.europa.eu/trade/tackling-unfair-trade/trade-barriers

[63]             E.g. the China IPR SME Helpdesk — http://www.china-iprhelpdesk.eu

[64]             The helpdesks cooperate with
local organisations and provide the following services: first-line personalised
expert advice, general and customised training materials, specialised training
workshops, liaison with outside experts and with target regions government
administrations, business networking and awareness events.

[65]             See COSME (EU programme for the Competitiveness of
Enterprises and Small and Medium-sized Enterprises),
http://ec.europa.eu/enterprise/initiatives/cosme/index\_en.htm

[66]             http://ec.europa.eu/enterprise/policies/sme/documents/internationalisation/

[67]             See Commission Staff Working Document SWD(2013)30, http://trade.ec.europa.eu/doclib/docs/2013/march/tradoc\_150789.pdf

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