A Single Market for IPR – Necessary, but not Comprehensive Enough to Boost Innovation and Growth in Europe

The Communication of the European Commission about a “Single Market for Intellectual Property Rights” provides a comprehensive approach of initiatives covering all relevant Intellectual Property Rights (IPRs).  All proposed initiatives are justified based on the current knowledge about the economic impacts of IPRs and other intangibles on companies’, but also economies’ competitiveness and growth. Furthermore, the current fragmentation of the markets for IPRs in Europe is certainly a disadvantage for European companies especially related to the United States of America, Japan and, meanwhile, also China. However, the approach is not comprehensive enough to boost innovation in Europe.

Innovation is the successful implementation of new products, processes and services in the market. And their wide diffusion is crucial for economic success. Consequently, the Communication references the “development of standards such as GSM and UMTS is a European success story based on diligent management of IPR … due to … Europe’s viable IPR system”.  The success of these cases is only partly due to Europe’s viable IPR system, but more based on the intelligent and strategic management of standardisation processes.  Despite referring to successful cases of European standardisation, the Communication does not contain any proposal to promote a further integration of the European standardisation system with the Single Market for Intellectual Property Rights. However, a recently conducted study by the Fraunhofer Institute of Open Communication Systems FOKUS reveals that US companies are much more successful in positioning their patents in international information and communication technology standards and Asian companies have meanwhile also achieved the technology capacity including the relevant IPRs  to set world standards  (see preliminary results under http://ec.europa.eu/enterprise/policies/european-standards/standardisation-policy/policy-activities/intellectual-property-rights/index_en.htm).

Nevertheless, the opportunity for mentioning already started collaborations between the European Patent Office and the European Telecommunication Standardisation Institute ETSI and for making further proposals to integrate the European Single Market for Intellectual Property Rights more effectively with the European Standardisation Organisations has been missed. And even more severely, the upcoming stronger competition from the well known competitors in the US and Japan and the new competitors from the emerging countries, like China and Korea, has been ignored. However, not only the link to the standardisation system has been disregarded, but also the relation between IPRs and open source, especially in the software area. In general, the dimension of the successful diffusion of innovative ideas into global knowledge markets needs to be emphasised much more – in addition to the licensing of IPRs, which is according to the OECD (2009) focusing on patents already well developed.

Finally, the strong focus of the Communication on the Single European Market for Intellectual Property Rights – despite mentioning the international dimension – is already obsolescent for more and more innovative companies being active in global markets trying to exploit the benefits of the new paradigm of open innovation.