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Charlie McCREEVY
European Commissioner for Internal Market and Services
Protecting innovation in Europe
Conference on Industrial Property Rights
Strasbourg, 16 October 2008

European Commission - SPEECH/08/532   16/10/2008

Other available languages: none

SPEECH/08/532












Charlie McCREEVY

European Commissioner for Internal Market and Services




Protecting innovation in Europe

























Conference on Industrial Property Rights
Strasbourg, 16 October 2008

Members of the European Parliament, distinguished guests, ladies and gentlemen,

It is with great pleasure that I welcome you on behalf of the Commission to this conference on Industrial Property Rights in the Internal Market. In co-organising this two-day event with the French Presidency, we set out to bring together stakeholders, experts, members of the judiciary, and members of the European Parliament to share views and discuss issues which are crucial for European competitiveness. Innovation is a vital tool for maintaining competitiveness, growth and employment in the European Union. That is why the Commission has identified investing in knowledge and innovation as one of four key priorities in the 2008 to 2010 cycle in the renewed Lisbon strategy.

However, when it comes to protecting innovations European companies are facing a considerable competitive disadvantage compared to companies in emerging economic powerhouses and those of our main trading partners. Recent figures show that a current European patent can be anything from four to ten times more expensive than a US patent, when processing and translation costs are taken into consideration. The cost depends on the number of Member States targeted. And when you look at the total cost with up to ten years of protection, European patents are nearly double to five times more expensive, compared to Japanese patents which are 50 % cheaper than US patents.

To protect just one invention in more than one Member State, the excessively high translation and other transaction costs which applicants have to pay to an array of patent offices and patent agents, have to be reduced.

With respect to patent litigation in the EU all available data shows that the existing system also involves prohibitive cost. The cost for an individual case in one Member State may range from €50,000 to a staggering one and a half million Euro at first instance, and from €40,000 to a million Euro at second instance. Needless to say, that with the risk of multiple patent law suits in different countries concerning the same patent issue, such a system is prone to abuse and does not provide access to justice for SMEs.

Providing for an accessible and affordable patent system has become even more urgent as we face an economic meltdown arising from our current financial crisis. A reformed patent system will ensure that European SMEs who are at the cutting edge of technology, can protect their inventions without undue burdens in order to obtain the venture capital they need to realise the full potential from their innovations.

What business needs is an efficient cost-effective patent system with high standards in the quality of patent examination.

We need to put an end to the fragmentation of the market in patents and reduce unnecessary costs and red tape. I strongly believe we can only do this by creating a Community patent for the Single Market.

What we also need is a specialist patent jurisdiction that will provide for trans-national or EU-wide decisions. With this, we can do away with cumbersome and costly litigation where the same patent is argued over in the national courts of our different Member States. This doesn't just cause headaches for Small and Medium size Enterprises, a recent multi-forum case involved the technology the European Central Bank uses to make our Euro banknotes! The German and Dutch courts upheld the patent owned by Document Security Systems, but the British and French tribunals revoked it – and we still don't know the results in other countries yet. So, we could say Europe's current patent litigation systems have put a cash crisis of another variety on the ECB's plate!

We, in Europe, have been struggling for decades to deliver on this. And we continue to struggle. Our public consultation in 2006 reminded us what users want and need, and the urgent need for action. We responded with our April 2007 Patent Communication to re-launch the Council debate.

Substantial progress has been made in the course of the Portuguese and the Slovenian Presidencies and the current French Presidency is continuing those efforts.

A draft Agreement and Statute on a uniform patent jurisdiction is now on the table. This would deal with infringement and validity actions for both European patents and future Community patents. The proposed system would involve local or regional divisions hearing infringement cases, a central division dealing with direct actions challenging the validity of the patent, and a common appeal court for consistent jurisprudence.

There would be a pool of judges to reinforce the local and regional divisions and an academy for patent justices. But we still have work to do. In particular, we still need to decide on the linkage with the European Court of Justice, the role of technical judges, and the rights of representation of patent agents and attorneys. There are also some financial issues. But we all need to be pragmatic to reach a compromise on these points.

On the Community patent, the stumbling blocks are the linguistic and translation requirements, and the setting and distribution of annual fees to maintain the patent. Again, significant progress has been made since April 2007. We now have the new innovative approach of machine translations which would be provided by a central service for information purposes. Thanks to constant technological advances, it has become possible, at a reasonable cost, to produce technically-accurate machine translations. These are already being used by major patent offices. By extending these to all Community languages, applicants would no longer face the hassle involved in obtaining and paying for translations.

This would save them hundreds of millions of Euros every year. And patent information could be available in all 23 official Community languages for European citizens. I am also optimistic that we can agree on appropriate fee levels that would be attractive for patent holders and help finance our patent offices.

We need an agreement on both a unified patent litigation system and a Community patent, if we are to eradicate the long-known flaws of the existing European patenting landscape. What has been achieved with the creation of the Community trademark in 1994, and the Community design in 2002, can also be achieved in patents. The Community Patent will make it cheaper and easier to protect new inventions in all EU Member States. But we can't have this without a high-quality jurisdictional system for both the Community patent and the European patent.

This package will remove a serious competitive handicap suffered by Europe's innovators and SMEs. It will also stimulate investment in research and development. Europe cannot afford to lag behind countries such as the United States, Japan, Korea, India and China, simply because we cannot fix translation issues or cannot agree upon a specialist court that has been demanded by patent users and industry.

After decades of protracted discussions, where people have been safeguarding numerous self interests, the moment has now come for decision taking. Cherry-picking will no longer be possible. Either we make it or we break it.

I am committed to achieving solutions that are supported by patent users, particularly SMEs. We need to try to avoid the features of the failed 2003 Common Political Approach that have been universally criticised by our stakeholders. And let me assure you, that the Commission will not support any compromise which is not endorsed by industry. We are not pushing for this reform simply for the beauty of having a Community patent. We are doing it to make life easier for European companies.

Further progress with the patent reform agenda requires the acceptance of political realities and pragmatic solutions that will work in practice. The window of opportunity for a breakthrough is currently open. Now, what is needed most is the political will to reach a compromise. And once a political agreement is reached, the required legal instruments will already have been agreed.

Clearly, reforming our systems is vital and I could hardly close this address without mentioning the continuing problem of counterfeiting and piracy. We must set common, tangible plans to help remedy what has become a highly corruptive and extremely destructive trend.

A huge range of sectors are now being hit. More and more evidence exists of counterfeits appearing on the market which are directly endangering lives; from fake pharmaceuticals made from brick dust, to toothpastes tainted with chemicals.

In August, the European Alliance for Access to Safe Medicines (EAASM) reported that 62% of medicines purchased online are now either fake or substandard, including drugs for serious conditions such as heart disease and mental health. Our own statistics verify the threat: 79 million counterfeit items were seized at our EU borders last year. This represents almost 10 times the amount seized three years ago. In cosmetics and personal care items for example, there has been an incredible 264% rise in the volume of seizures.

The focus of our efforts in our Industrial Property Rights Strategy is to enhance enforcement by better information gathering, awareness-raising and improved cooperation networks at all levels. I am pleased to say that the Council strongly supports this approach and I would like to thank the French Presidency for working so diligently to help the adoption of the Resolution on a Comprehensive European Anti-counterfeiting and Anti-piracy Plan.

On a practical level, if we are to make this enforcement strategy as effective as possible we need to underpin it with a stronger knowledge base. A European Anti-counterfeiting and Anti-piracy Observatory will be set up to help us collect data, analyze statistics, and propose new methodologies.

It is my firm belief that industry is best placed to lead us in this. You have the expertise, knowledge and information that can boost our enforcement efforts. So I encourage you to share information and to work with us to deliver better ways to exchange this information and to enhance cooperation across the board. The general concept of the Observatory is now widely accepted and has the full backing of Member States, industry and the Parliament. We are currently laying the groundwork by developing concrete steps for its creation.

Alongside this, we will focus on helping to build stronger Administrative cooperation. Mechanisms to exchange information between Member States have never been more essential. We are working to develop ways to provide a solid structure that will improve and promote more effective alliances between administrations and enforcement bodies in all Member States.

What else can we do? In the EU we have some of the strongest legislation in the world on counterfeiting and piracy and we are still under pressure. That is why I am more convinced than ever that more legislation is not the solution. So the Commission will focus on non-legislative measures aimed at more effective collaboration. In this respect, I am extremely pleased that the International Chambers of Commerce, and the "Business Action to Stop Counterfeiting and Piracy" initiative, will unveil new Intellectual Property Guidelines to help businesses to manage and protect their valuable property.

So let me conclude by saying that I believe that intellectual property is one of Europe's greatest assets. It is a primary fuel for business and allows our consumers to benefit from living in the most inventive region in the world. The future for Europe is dependent on creating the conditions and support for top quality intellectual property. That is why we must continue to strive for an IPR system which is the most competitive in the world.


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