DIRECTORATE-GENERAL FOR EXTERNAL POLICIES POLICY DEPARTMENT DG EXPO/B/PolDep/Note/2015_142 April 2015 PE 549.030 EN IN-DEPTH ANALYSIS Re-communicating the EU's IPR strategy for third countries Authors: Roberto BENDINI, Susana MENDONÇA Abstract The European Commission's most recent initiative in the field of intellectual property rights (IPR), a 2014 communication, returns to an issue that has been largely side-lined since the European Parliament rejected the Anti-Counterfeiting Trade Agreement (ACTA) in 2014. While not a landmark, 'Trade, growth and intellectual property – Strategy for the protection and enforcement of intellectual property rights in third countries' (COM(2014)0389) serves as a good basis for constructive debate on securing better IPR protection in foreign markets, in cooperation with third countries and without infringing on civil liberties. The new document builds on a 2004 communication with a nearly identical title ('Strategy for the protection and enforcement of intellectual property rights in third countries'), which introduced a broad framework of initiatives aimed at combatting IPR violations outside the EU.
Transcript
DIRECTORATE-GENERAL FOR EXTERNAL POLICIESPOLICY DEPARTMENT
DG EXPO/B/PolDep/Note/2015_142 April 2015
PE 549.030 EN
IN-DEPTH ANALYSIS
Re-communicatingthe EU's IPR strategy for third countries
Authors: Roberto BENDINI, Susana MENDONÇA
Abstract
The European Commission's most recent initiative in the field of intellectual propertyrights (IPR), a 2014 communication, returns to an issue that has been largely side-linedsince the European Parliament rejected the Anti-Counterfeiting Trade Agreement (ACTA)in 2014. While not a landmark, 'Trade, growth and intellectual property – Strategy for theprotection and enforcement of intellectual property rights in third countries'(COM(2014)0389) serves as a good basis for constructive debate on securing better IPRprotection in foreign markets, in cooperation with third countries and without infringingon civil liberties. The new document builds on a 2004 communication with a nearlyidentical title ('Strategy for the protection and enforcement of intellectual property rightsin third countries'), which introduced a broad framework of initiatives aimed atcombatting IPR violations outside the EU.
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This paper was requested by the European Parliament’s Committee on International Trade.
AUTHORS: Roberto BENDINI and Susana MENDONÇA, with contribution from ElinaVIILUPDirectorate-General for External Policies of the UnionPolicy DepartmentSQM 03 Y 070Rue Wiertz 60BE-1047 Brussels
Editorial Assistant: Elina STERGATOU and Jakub PRZETACZNIK
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This paper will be published on the European Parliament’s onlinedatabase, ‘Think tank‘.
DISCLAIMER: The opinions expressed in this document are the sole responsibility of theauthor and do not necessarily represent the official position of theEuropean Parliament.
Reproduction and translation for non-commercial purposes are authorised,provided the source is acknowledged and the publisher is given priornotice and sent a copy.
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Table of contents
1 The ‘new’ EU IPR protection strategy in third countries -
some brief comments 4
2 Changes in the external context since 2004 4
2.1 Assessment of the 2004 strategy 5
2.2 The main conclusions of the 2010 study 6
3 The goals set by the Commission 6
4 A revised IPR strategy vis-à-vis third countries 7
4.1 Improving protection and enforcement of IPRs in third countries 7
4.2 Improving stakeholder engagement 8
4.3 Providing better data 9
4.4 Building on EU legislation 9
4.5 Enhancing cooperation within the EU 10
4.6 Geographic focus 10
5 Conclusions and recommendations 10
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1 The ‘new’ EU IPR protection strategy in third countries -some brief comments
The new Commissioncommunication on IPRprotection in thirdcountries was publishedon 1 July 2014
It mainly reproduces the2004 Strategy, with somenuances.
Published on 1 July 2014, the communication entitled ‘Trade, Growth andIntellectual Property, Strategy for the protection and enforcement ofintellectual property rights in third countries’ (COM(2014)0389) representsthe Commission’s first official initiative in this area since the controversialAnti-Counterfeiting Trade Agreement (ACTA) was rejected by the EuropeanParliament in July 2012. The objective of ACTA was to improve theenforcement of anti-counterfeiting laws at international level. This is anobjective that the EP endorses, but the agreement itself was considered byParliament (as succinctly put by the rapporteur on the matter, David Martin(S&D, UK), to be ‘too vague, open to misinterpretation and potentiallyjeopardising to the citizens’ liberties’.1
The Commission’s new document largely reproduces an earlierCommission communication from 2004, which had an almost identical title,namely: ‘Strategy for the protection and enforcement of intellectualproperty rights in third countries’. By so doing, the Commission appears tounderline the continuing relevance of the strategy while nuancing its goals,in light of the weakening support for IRP protection and extensive use ofthe internet as a trade channel.
The communication also takes inspiration from an older external studywhich had been tasked to outside experts with a view to assessing theefficacy of the 2004 IPR strategy five years after its entry into force.
The present note will offer an analytic review of the content of theCommission communication, referring where possible to the previouslypublished Commission documents dealing with IPR protection in thirdcountries. At the end, it will put forward a number of conclusions andrecommendations.
2 Changes in the external context since 2004
Globalisation, the rise ofnew trade channels andincreased sensitivity tolow prices all make IPRprotection more difficultto secure.
Over the past decade, the world’s economies have become extremelyinterconnected, and emerging economies are playing an increasing role inthe international trading system.
Although IPR legislation has improved worldwide, IPR infringements havereached unprecedented levels. According to a 2009 OECD study on IPRinfringements2 on a global scale, a total equivalent to USD 250 billion in
1 ‘European Parliament rejects ACTA’, press release, European Parliament, 4 July 2012,http://www.europarl.europa.eu/news/en/news-room/content/20120703IPR48247/html/European-Parliament-rejects-ACTA2 ‘Magnitude of Counterfeiting and Piracy of tangible products: an update’, November 2009,http://www.oecd.org/sti/ind/44088872.pdf
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Public and politicalsupport for IPRenforcement isweakening.
Contrary to its first aim,ACTA’s outcomecontributes toundermining support forIPR enforcement.
international trade is estimated to be in counterfeited and pirated goods(corresponding to about 2 % of world trade).3
Over the last years, public support for IPRs has somewhat faded and thelower prices of infringing goods have attracted a growing number ofconsumers. Technological breakthroughs and extensive use of the internetin world exchanges have certainly had an impact on this developments.However, the perception that counterfeiting and piracy are alternativesource of revenues, entailing lower risks than other illegal activities and theabsence of awareness on the negative impact of counterfeiting oneconomies, are also decisive elements of this equation.
Improving IPR enforcement in third countries remains the main challenge.However, this is something the EU cannot achieve on its own. It requires,inter alia, better training of customs and judicial officers, as well as theexistence of deterrent sanctions and of actual prosecutions. A firm politicalwill on the part of third countries’ authorities to seriously tackle IPRviolations and fight related organised crime is crucial in this context.
A successful ACTA agreement would have been a useful tool for furtherprogress on IPR enforcement in third countries. However, the hardlineapproach followed in the negotiations and the non-inclusion of thedevelopment agenda ultimately resulted in a failure in terms of IPRenforcement and contributed to increased public concern about its merits.
In other words, the tough line adopted by the EU and other advancedeconomies to counter counterfeiting and piracy does not seem to haveproduced the expected results, and has even alienated public support.
2.1 Assessment of the 2004 strategy
The Commission restatesthe relevance of the 2004strategy.
The Commission argues that the 2010 mid-term review confirmed therelevance of its 2004 strategy. Reference is made to the study entitled‘Evaluation of the Intellectual property rights enforcement strategy in thirdcountries’4 (final report), which was independently produced by aconsortium of academic experts.
The communication itself does not provide much further reference to the2010 study, the main conclusions of whose assessment can be found in theCommission’s staff working document accompanying the 2014communication5. It simply conclude that an evaluation of the 2004 strategytook place in 2010 and ‘confirmed its relevance’ while including severalrecommendations and remarks.
3 These figures are, however, outdated, and it would be useful if the Commission couldprovide more recent estimates of the scale of IPR violations at global level.4 http://trade.ec.europa.eu/doclib/docs/2010/november/tradoc_147053.pdf5 SWD(2014)0204 - Commission staff working document: Trade, growth and intellectualproperty - http://trade.ec.europa.eu/doclib/docs/2014/july/tradoc_152644.pdf
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2.2 The main conclusions of the 2010 study
The 2004 strategy isglobally relevant, but canbe improved.
Broader stakeholderinterests anddevelopment concernsare not sufficiently takeninto account.
Technical cooperationwith appropriate fundingproved to be the mosteffective tool.
The importance ofawareness-raising wasunderestimated ...
… and the lack ofconsistency within the EUundermined the positiontowards third countries.
The study is not entirely supportive of the Commission’s IPR strategy. It infact concludes that ‘the Strategy and the set of actions it consists of canglobally be considered as relevant, despite some limitations’. It is seen asresponding primarily to the needs of industry; the interests of otherstakeholders (e.g. consumer organisations, and even of SMEs) are notsufficiently considered in the 2004 Strategy.
According to the authors, ‘overall, and despite EC efforts, a very substantialgap remains in data and information on the scope of the problem and onthe challenges of IPR enforcement, which makes it difficult to influencepolicies, back them up with statistics, or optimise the prioritisation ofmeasures’.
While the Commission has traditionally been an active contributor to IPenforcement at multilateral level, in particular in the framework of theWTO’s TRIPS Council, it has managed to secure only limited progress,mainly owing to third-country opposition and the subsequent stalemate innegotiations. This is the reason why the ACTA agreement (undernegotiation in 2010) was seen as a potential catalyser for further progress ofIPR enforcement in third countries. The study noted that the EC strategyand the ACTA negotiation process were largely based on a hardlineapproach and did not take much account of the emerging developmentagenda, and that this ultimately resulted in failure to apply stricter IPRstandards in third countries.
According to the study, it is unclear (debatable) whether the Commissionand other EU institutions can be specifically considered to have contributeddirectly and significantly to improvements in the enforcement of IPRs inthird countries. Nevertheless, it argues that the Commission has beenpartially effective: ‘it was in reality most successful when providingtechnical cooperation projects on IP enforcement with appropriate fundingas part of bilateral arrangements involving third country input’. However, itconcludes that ‘the Strategy has underestimated the importance of raisingthe awareness of key target audiences of the need for IPR enforcement, andhas hence made, with a few exceptions, only a limited contribution in thisimportant field’.
The evaluation finally concludes that there was a persistent lack of cohesionin all aspects of IP promotion and IPR protection within the EU institutionsand Member States, and that this clearly undermined the credibility of themessage conveyed to third countries.
3 The goals set by the Commission
IPR enforcement in thirdcountries remains thepriority.
The Commission confirms that IPR enforcement remains the priority in thirdcountries. However, it considers that a policy response is needed in order tocope with new challenges and to put in place clear and suitable rules andprocedures for effective IPR enforcement. This also raises some important
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internal market issues, such as the need to identify and punish abuses, toprevent the proliferation of spurious rights (such as bad faith registrations)and to preserve the innovative role of IPRs while ensuring that they do notbecome an end in themselves.
Support for stronger IPRmeasures needs to berecovered.
With a view to improving enforcement, the Commission is eager torecapture public support for IPR action and to make consumers more awareof the negative consequences of IPR infringement.
The right balancebetween IPR protectionand public freedoms onthe internet has to befound.
The Commission is also willing to address the growing role of the internetin international trade and the world economy, which by its own nature isborderless and makes IPR infringements more difficult to tackle. Thisapplies not only to digital goods such as music, audiovisual products andsoftware, but also to physical goods that are increasingly traded through e-commerce.
It should be recalled that most of the objections to ACTA concentrated onthe internet and virtual economy side, while criticism of the measuresagainst ‘material’ counterfeiting remained rather limited.
Cooperation with third-country governments,taking account ofdevelopment andhighlighting the benefitsof IPRs is important.
In addition, the Commission accepts the need to include a developmentchapter in its IPR protection strategy. In this contexts, it intends to explorethe fact that ‘effective IPR regimes, complemented by an enablingenvironment and sufficient capacity to absorb technology, can helpemerging and developing countries to put in place a sound, viabletechnological base locally’. In other words, the Commission wants thirdcountries to understand that an enhanced IPR regime may well attractfurther technology transfer and foreign direct investment, acting as a toolto reinforce the economy and promoting research and innovation.
4 A revised IPR strategy vis-à-vis third countries
The revised strategybuilds upon the previousone and past experience.
As already mentioned, the idea behind the communication is not to comeforward with a new strategy, but to update that of 2004, on the basis ofrecent experience and recommendations and taking into account the maingoals spelt out above. In view of this, the Commission has come forwardwith concrete proposals, as described below.
4.1 Improving protection and enforcement of IPRs in third countries
Since developments atmultilateral andplurilateral levels areunlikely...
... efforts should beconcentrated on bilateral
The Commission has been a great supporter of the multilateral andplurilateral avenues, since this allows for wider harmonisation as well as amore effective and predictable IPR environment. However, resistance by thirdcountries has been increasing and further developments at this level areunlikely. As a result, while efforts at multilateral level should continue, theCommission intends to concentrate action and resources on bilateral work,notably as regards priority countries. The main bilateral tools in this contextare:
Policy Department, Directorate-General for External Policies
Bilateral action is bestfitted to address eachpartner’s specificproblems and, therefore,might contribute torestoring third countries’willingness to improveIPR protection.
Last-generation of EU trade agreements (DCFTAs, CETA, Japan,Morocco, TTIP, etc.), and specific agreements on the protection ofgeographic indications (with Moldova and Morocco; currently undernegotiation with China).
Political dialogues and working groups on IP.
Technical assistance, an instrument aiming at improving IPR systems indeveloping countries through training, capacity-building, legislativeassistance and awareness-raising.
WTO dispute settlement and other remedies foreseen in bilateralagreements, normally used as a last resort in case of clear breaches, butserving as an important deterrent to infringements.
The 2010 study is quite supportive of the added value of bilateral action. Itmakes it possible to address issues on a tailor-made basis, fine-tune the EU’sambition to its partners’ level of development, and improve coherencebetween IPRs and other relevant policy strategies towards third countries(e.g. research and innovation and the need for reciprocal protection ofIPRs).
In addition, bilateral activities might contribute to overcoming oppositionat multilateral level and to restoring third countries’ willingness to improveIPR protection.
Although the Commission has achieved positive results in bilateral tradenegotiations (on both legislative and cooperation provisions), it is nowfacing increasing difficulties, for instance in the negotiation of IPR chaptersin FTAs. As a response, the Commission is considering the possibility ofrestricting third countries’ participation in EU programmes or funding, e.g.in cases of continuous breach of IPR commitments.
Such a punitive approach, however, seems to conflict with the need tomore closely involve third countries, in order to dissipate the perceptionthat the EU’s IPR strategy does not take due account of third-country needs.Participation in EU programmes and funding contributes to increasingcoherence with other policy areas or chapters in an FTA (e.g. sustainabledevelopment goals, research and innovation, etc.), and could proveimportant as an additional incentive for countries to comply withinternational commitments and standards (thus operating as. an additionaltool for building respect for IPRs and improving enforcement systems inthird countries).
4.2 Improving stakeholder engagement
Improving stakeholderengagement is aprecondition for moreeffective IPRenforcement.
The Commission takes up one of the main recommendations of the 2010study, i.e. strengthening consultation with all stakeholders. Althoughconsultations had already taken place in the context of the 2004 Strategy,they were mainly designed for Brussels-based interlocutors and ‘those whoare actively engaged in trade protection issues’, to the detriment of theconcerns of other stakeholders (consumers, SMEs, developing countries,
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etc.).
As a way forward, the Commission suggests making use of ‘existingmechanisms such as the Commission’s Civil Society Dialogue and MarketAccess Strategy tools’.
4.3 Providing better data
Better data need beavailable.
The Commission intends to improve data collection and reporting, in orderto ‘more precisely quantify the role of IP and the impact of IPRinfringements’, which ‘will be important to policymakers for informedpolicy debate and any awareness raising efforts’’.
It suggests fostering the activity of the European Observatory onInfringements of Intellectual Property Rights as regards third-country data,(so far it has mainly focused on infringements in the EU). In particular, theCommission proposes that the Observatory should produce ‘countryguides on key countries’, thus contributing to keeping the list of prioritycountries up-to-date, and should concentrate its efforts on key issues thatare easily perceived by stakeholders.
4.4 Building on EU legislation
EU IPR legislation is still inneed of harmonisationand this has a negativeimpact on negotiationswith third countries.
The Commission highlights the benefits of harmonised IP rules foreconomic operators and their contribution to growth and jobs. It is alsoargued that such EU harmonisation constitutes a benchmark, facilitatingnegotiations with third countries. On the other hand, the fact that the EUhas not aligned its rules in all IPR areas (e.g. trade secrets, non-agriculturalgeographical indications, sanctions) is seen as limiting the Commission’smargin of manoeuvre in addressing IP issues with third countries.
In this context, the Commission is proposing stronger coordination withinthe EU, notably as regards enforcement measures. It also endeavours toencourage Member States to ratify international agreements (e.g. theTrademark Law Treaty and the Geneva Act of the Hague Agreement onindustrial designs). As far as enforcement is concerned, on 1 July 2014 theCommission adopted a communication on an Action Plan addressinginfringements in the EU6. The aim is to renew the consensus and reorientatethe debate on enforcement within the EU. To this end, it is suggested tochange the target of penalties from infringing citizens to commercial-scaleinfringers, in order to deprive the latter of the revenue motivating suchactivities.
6 Communication from the Commission to the European Parliament, the Council and theEuropean Economic and Social Committee: ‘Towards a renewed consensus on theenforcement of Intellectual Property Rights: An EU Action Plan’, COM(2014)0392 -http://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:52014DC0392&from=EN
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4.5 Enhancing cooperation within the EU
The Commissionacknowledges thatcooperation withMember States is oftengood but can still beimproved
In order to improve coordination within the EU, the communicationsuggests improvements on the existing cooperation in third countriesbetween the Commission and Member States, in particular as regardsexchange of information and coordination. To this end, it endorses the ideaput forward in the study of making use of existing set-ups (e.g. in thecontext of the market access strategy).
4.6 Geographic focus
The list of prioritycountries needs to becontinuously updated.
Concerning priority countries, the Commission intends to prolong thepractice of updating the list every two years, on the basis of informationprovided by stakeholders. In defining priority countries, account should betaken of the differences between countries (manufacturing versus transitcountries; level of development), in order to better balance the types of IPRinfringements addressed (protection and promotion of IPRs, sustainabledevelopment, industrial policy and innovation, health and safety concerns)and to avoid any kind of circumvention.
5 Conclusions and recommendations
IPR protection is crucial tothe EU’s innovation-driven economicperformance.
IPR protection and enforcement in third countries is certainly a difficult goalto achieve. The EU has a limited capacity to convince third countries toimprove their standards and secure better protection of EU, intellectualproperty. This objective is, however, one fundamental pillar of the Europe2020 strategy with its aim of making the EU more competitive both athome and abroad.
The EU cannot compete with emerging economies in medium to lowquality products, but it has a comparative advantage in up-market,innovation-driven and brand products, which are increasingly popular inthird countries and represent the real future of EU industry.
The performance of the EU economy depends heavily on innovation. As aresult, the existence of a level playing field for a knowledge- andinnovation-driven economy is crucial for competiveness and jobs. In otherwords, the fight against counterfeiting is an important tool for ensuring theEU’s competitiveness on global markets.7
However, the once existing momentum of support for advancing on IPRs isfading away, and no significant progress is likely to take place atmultilateral and plurilateral levels in the near future.
Although the Commission cannot be held responsible for the rejection of
7 See, for example, the March 2014 European Council conclusions:https://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/ec/141749.pdf
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Raising awareness of theoverall benefits of IPRs isimportant for improvingthe situation worldwide.
Dialogues andcooperation programmesappear to best suitcurrent needs.
Prioritisation is importantin view of scarceresources.
New topics and toolshave to be considered tostimulate broaderstakeholder engagement.
The availability of data oncounterfeiting and piracyis important for assessingthe situation.
ACTA, the failure to secure a proper agreement guaranteeing a betterenforcement of IPRs in third countries has been a real setback for the EUeconomy as a whole, as well as for those companies in the EU that havesought a more efficient defence of their IPRs in often difficult third-countrymarkets.
The question for the EU is, therefore, not so much how to improve thecurrent regulatory system, but, rather, how to raise overall awareness of thebenefits of IPR enforcement in a world where economies are increasinglyinterconnected and competiveness and jobs very much depend on thecapacity to attract knowledge- and innovation-driven investments.
Despite the intention to respond to these challenges, the communicationremains vague and can scarcely be called action-oriented. Objectives,priorities, and ways to increase the effectiveness of IPR enforcement are notclearly defined. The following recommendations could, therefore, beconsidered in the upcoming debate:
- The Commission should strive to ensure that dialogues and cooperationprogrammes focus more on raising awareness of the social and economicimpact of IPR infringements, taking account of the specific needs of eachcategory of interlocutors (rightholders, users and consumers, nationalauthorities, etc.).
- As the 2010 study suggested, one may also recommend extendingcooperation programmes to countries showing interest, building on pastexperience and introducing improvements as far as allocation of resourcesand funding are concerned.
- In view of scarcity of resources, consideration should be given to settingpriorities and differentiating the approach according to each third countryin terms of its importance to the EU (socio-economic or cultural links, etc.)and its specific needs (type of economy, level of development, etc.).
- As regards action to improve stakeholders’ engagement, the aim shouldbe to involve the widest range of non-Brussels-based stakeholders: SMEs,consumer associations, users of intermediate products and of internetcommerce, third countries’ public authorities, etc.). Dialogues might proveeffective to promote the development of broader exchanges on thebenefits or risks of IPRs in socio-economic terms (job creation, innovation,technology transfers, the fight against organised crime, etc.) and health andsafety terms.
Nevertheless, existing mechanisms (e.g. civil society dialogue) do not seemto be sufficient for achieving these goals. New tools, as suggested by thestudy (IT-based tools, enlarged lists of consulted parties, allowing time forassociations to consult their members), might therefore, be considered.
- Although the ideas put forward for providing better data oncounterfeiting and piracy are a step in the right direction, other ideas couldalso be considered. The first relates to information spreading and sharing ofbest practices, which are important to allow stakeholders to assess resultsand contribute to policymaking. A second idea concerns the ‘development
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Internal harmonisation ofenforcement wouldboost the EU’s credibilitywith third countries.
A constructive debateshould now start on thebasis of thecommunication.
of a generally accepted methodology for improving statistics oncounterfeiting and piracy’, as being crucial for the reliability of the data.Such a method would permit a clearer picture of the situation regardingcounterfeiting and piracy, facilitate coordination between the variousentities managing information (industry associations, law firms,international organisations, etc.), while ensuring complementarity andavoiding overlaps, and contribute to increasing confidence amongstakeholders.
- Eventually, information on counterfeiting and piracy (type of goods,manufacturing and transit countries, trading platforms, etc.) could beanalysed in conjunction with elements of demand in the EU (bothconsumers and users of intermediate products). The aim of suchcomparison would be to better synchronise action on both EU demand andthird-country supply of counterfeited and pirated goods.
- Another important element deserving further attention relates to internalharmonisation of enforcement, since this would increase the EU’s leveragein terms of pushing for improvements in third countries. Claims that the EUshould be ‘putting its own house in order first, before preaching to thirdcountries’ have not helped build respect for IPRs and the need to counterinfringements. On the contrary, increased consistency between the EU’sinternal and external action on enforcement is likely to facilitate the EU’sefforts to improve enforcement of IPRs in the context of bilateralarrangements (FTA negotiations, dialogues, capacity-building and technicalcooperation).
All in all, although the Commission communication is not a stepping-stonefor better addressing IPR issues and securing more efficient enforcement atglobal scale, it has the merit of shedding some light on a very sensitiveissue that was somewhat sidelined after the rejection of ACTA. It representsa good basis for a constructive debate (in the EP as well as in other forums)on how to secure better IPR protection in foreign markets in cooperationand not in opposition with third countries, and without harming civilliberties in the EU. This point of view offers a starting-point that may needto be closely monitored and properly addressed by the EuropeanParliament.
