Last Friday, the European Commission published a communication entitled “A Strategy for ICT R&D and Innovation in Europe: Raising the Game,” which recognizes the importance of intellectual property rights (IPRs) for innovative small and medium-sized companies in the EU. 

The communication, which is meant to be a first step towards increasing the benefits to be gained in the EU from technology research and development (R&D), announces an increase in funding for technology research of over 50 percent between 2010 and 2013.  And – it calls for the creation of a Community patent. 

The Commission’s proposal to the Parliament and Council rightly points out that "

[t]he framework conditions for regulation, standardization and intellectual property right (IPR) regimes need to be adapted to new realities,” and then goes on to observe that “[s]tandardization structures and processes must become more agile and reactive, and with a clearer distinction between missions requiring public intervention and those more related to market dynamics.”

The proposal adds: "The IPR system also needs to be improved by the creation of a Community patent for innovative ICT companies to protect their inventions in the single market."

It is great that the Commission understands how important it is for European companies (especially small and medium-sized ones) that create innovative products to be able to protect their intellectual property.  Many innovative start-ups rely on patent protection to establish themselves in the market place; without adequate IPR protection mechanisms, a lot of these small firms do not stand a chance of survival.  

From conversations with our European members, we know the lack of a single European patent which is legally valid throughout the European Union (as well as different tax laws, labor laws and corporation laws in the different member states) lead many of them to bypass the European market altogether in favor of bigger, integrated markets such as the U.S.

This conversational evidence is substantiated by a study ACT did last year in conjunction with the University of Birmingham and the University of Cambridge in the UK. 

The study, entitled Dreaming of EUtopia: Constructing a Vision of an Entrepreneurial Idyll, pointed out that  one telling example of the fractured EU regulatory framework is its system of IP protection: “EU based innovators have two patenting [options], either to file national patents in individual countries or apply for a ‘European Patent’ (EP) which according to the EC, is ‘essentially a bundle of national patents’. While the EP saves the patentee from filing multiple applications, to become legally binding the EP has to be translated into the language of each country they require protection in which is both time consuming and costly. Furthermore, disputes are considered through national courts, each adhering to different legal systems. Within Europe filing a patent can take takes twice as long to complete, 44 months, than in the USA and Japan, and […] the application process is more significantly more expensive.  These factors are impediments, and arguably deterrents to innovation and entrepreneurship in Europe.”

To alleviate fragmentation in the area of IP protection, the report suggested a number of measures:

“For the EU to even consider catching up with the USA and Japan a single IP protection scheme must be put in place. The utopian ideal would be a scheme whereby innovators can apply for IP protection in one country, online and at a minimal cost, which offers immediate protection across the environment. There would a central IP mitigation centre, acting independently of state/intra‐state influence, where there are clear guidelines on how to appeal against IP infringements. Within in [sic] a multi‐lingual environment translation is clearly an important issue but costs would be kept to a minimum by only requiring translations for the countries where the infringement is argued to be taking place. Alternatively, to attract applications from the USA and Japan, and given its status in global business, English could be adopted as the lingua franca.”

The European Commission is to be applauded for recognizing the importance a single IP protection scheme – let’s hope the Council and Parliament will come to the same conclusion.