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Keynote address by Günter Verheugen, Vice President of the European Commission
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Dear Minister Vizjak, Dear
President Brimelow,
Ladies and Gentlemen,
Introduction
It is a great pleasure to be with you here in Ljubljana today to participate in this important conference.
The theme is well chosen, indeed: "Climate change and the opportunities for IP". It is time to address the issues at hand. To combat climate change, the EU has set ambitious targets for reducing green house gas emissions by at least 20% by 2020.
The question is of course how to do that in the best way and how we can use the IP system in the best possible way.
The underlying question is: how do we promote the innovative potential of our enterprises? Their inherent capacities constitute a major practical contribution to the solutions that we need. In most cases, innovative potential thrives best in a well-functioning IPR-system.
Every problem also implies an opportunity. Therefore, our commitment towards a low-carbon economy has to be determined. We must work with the dynamic force that enterprises represent, and make the low-carbon economy a competitive advantage for European industry.
What shall we concretely do today for focusing the energy of our enterprises for a better tomorrow? We have already heard several interesting presentations here today. Let me add a piece to this thinking.
I see two major tools for achieving our common goal, namely a sustainable industrial policy and a sound application of the general IP system. Both are crucial pillars of the Growth and Jobs agenda.
A sustainable industrial policy
I would like to start by addressing sustainable industrial policy, and then come over to the IP system. In January 2007 and 2008, the Commission adopted two Energy packages, which both set very ambitious targets for greenhouse gas reduction, energy efficiency and renewable energy. And the Commission will soon adopt another, joint initiative of my colleagues Mr Stavros Dimas, Commissioner for Environment, Mr Andris Piebalgs, Commissioner for Energy, and myself.
This package provides the third pillar of the policy response of the European Commission to climate change. This pillar reaches out to industry and clearly promotes innovation.
The package takes an integrated approach, establishing an Action plan for Sustainable industrial policy and Sustainable consumption and production. With this integrated package of measures we want to promote sustainable production and consumption, while enabling industry to transform environmental challenges into economic opportunities.
You can all rest assured that we do not wish to create more red tape and bureaucratic obstacles. That is not what our policy is about. We do not prescribe what industry or other actors should do, but try to create the framework conditions for innovations in this and other areas.
It cannot be repeated enough that we must work with industry. Sustainable industrial policy - like the patent system - should focus on creating incentives for innovative initiatives from industry. Again, the problems relating to climate change can actually be seen as opportunities for important industrial sectors.
To come back to our sustainable industrial policy action plan, I want the EU to be active on three fronts:
- First: The Action Plan will bring better products, services and technologies onto the internal market. By "better" here I mean more energy- and resource-efficient, and with a higher environmental performance. This will be achieved by complementing minimum requirements with ambitious voluntary benchmarks, based on incentives.
- Second: sustainable industrial policy has to support the development and commercialisation of eco-industries, with a strong focus on the EU's industrial strengths. Further policy measures could be developed to make such industries the engine of eco-innovation.
- Third: Action at the international level will help to foster sustainable consumption and production outside the EU, creating a level playing field and enabling our industry to reap first-mover advantages. Sectoral agreements which set technological benchmarks for sectoral CO2 emission across the most important countries constitute one key pillar of this action.
Patent system
I want to make sure my message today is crystal clear: climate change needs to become a competitive advantage of Europe. How should we then go about it, as far as the patent system is concerned?
The patenting system can help achieve our goals by unleashing the innovative dynamics of companies. The effectiveness of our industrial policy measures depends on a patent system that stimulates all enterprises to develop better products and processes. The patent system must also allow inventors to transfer their technology so that it can be spread widely, with harmonised international protection.
So, how can the patent system be used to address the climate challenge and other innovation challenges?
To support the development of environment-friendly technologies, we need an IP system that stimulates innovation and that also facilitates dissemination. Four considerations are worth noting in that context:
- First, firms that get a return on their R&D investment from first-adopters can sell at a lower price once economies of scale are achieved. Factors that delay firms' entrance on third markets are therefore extremely negative for Europe and for the world economy. It is therefore particularly important that firms get an easier and affordable access to IPR protection in Europe, and also better global protection, notably against counterfeiting.
- Second, improved licensing markets would add transparency and allow an easier acquisition of the most cost-efficient environment-friendly technologies.
- Third, the fact that patent applications are published increases common knowledge - thus contributing to the dissemination of the technology. More user-friendly access to patent data banks also constitutes a very positive prospect.
- Finally, we should remember the importance of knowledge transfer between public research organisations and industry. We invest a lot in public research but we need to become better at turning the results into successful innovations. The Commission supports this process and thus recently adopted a recommendation to help Member States develop and adapt policies on the management of IP in public research organisations.
SMEs
I would also like to emphasize that we need to care about SMEs, start-ups and spin-offs. This is important not least because they are often the source of the breakthrough innovations that we need in many areas of environment-friendly technologies.
SMEs are particularly important in eco-innovation domains, such as some of the lead markets identified by the Commission: sustainable construction, recycling, and bio-based products. In these markets, SMEs constitute the bulk of the firms involved, and facilitate the take-up of innovations. A patent system that is easily accessible for SMEs in terms of support and costs therefore constitutes a strategic priority for Europe.
In this respect, skilful innovative SMEs often find it difficult to produce and to market new technologies or products. We need to facilitate the markets for technology transfer and especially for the licensing of patents. This will certainly be an important part of the dissemination of environment-friendly technologies.
Take the example of an SME that has developed a new form of more efficient wind turbine. Being an SME, it is unlikely to have the manufacturing facilities to produce the new turbines, nor the capital to build a factory. So it needs to contract out, which would be very difficult to do in a world without patents.
Very little would stop the manufacturer from "stealing the invention" and selling the turbine without paying any consideration to the SME which had developed the technology. Trade secrets would be of little help because it would most likely be impossible to manufacture the whole turbine without knowing the technical secrets.
In a world with patents, the SME can contract out the manufacturing via a patent licence in the secure knowledge that its investment in the technology is protected by the patent.
Alternatively, the SME might choose to manufacture the turbine itself. In that case it would need to co-operate with other entities to get a patent pool and a set of skills and investors to build a viable value-chain.
An adequate provision of advice and consultancy for the IPR activities of SMEs is therefore crucial. This could in particular include more co-operation between Patent Offices and innovation intermediaries.
The issue of costs of patenting is even more crucial. Most of you are aware that for European SMEs the costs per million inhabitants for patent deposit, maintenance fees and translation are 26 times higher in Europe than in the US.
These fixed costs are already a huge handicap, but in addition, litigation in the EU is unnecessarily costly for all parties involved, in particular since there is a risk of multiple litigations where the patent has been awarded in several Member States. The costs in one single Member State can be around €100 000 in the first instance.
This high level of fees and litigation costs is an acute problem in particular for SMEs, that reduces their likeliness to patent outside their national home market. This has direct negative consequences on their ability to grow and to internationalize.
An enterprise will market its invention where it is patent protected, to avoid being copied and to recoup the costs of its investment. In order to spread eco-friendly innovations, new technologies need to be adopted as widely as possible, in the entire EU.
In conclusion, patent protection covering the whole internal market, including maintenance and litigation, is cumbersome and costly at present. We therefore have an urgent need for a Community Patent, as well as for significantly reduced patent fees.
A Community Patent would also create more legal certainty, with coverage of 27 Member States and with a common jurisdiction.
Beyond patents
As described, adequate and affordable IP protection can thus favour and assist the development and use of environment-friendly technologies.
Of course, we must also be aware of the need for respecting the interests of both innovators and producers on the one hand, and those of consumers worldwide on the other, especially in developing countries.
We should, in particular, consider that patenting on environmental innovations is not always a straightforward issue, and that it depends on the sector concerned. For example: in many sectors for renewable energy, the relevant technological solutions are often not protected by patents. Specific features may be patented, but not the whole system.
Therefore, a number of patented products may co-exist, competing with each other. That competition results in a pressure on prices and royalties.
The situation could be different in cases where a patent can be applied to the entire system, creating a temporary monopoly on a product with no obvious substitutes.
We need to be aware of such differences between sectors or products when discussing innovations and patents in environmental technologies. The technical knowledge harboured by enterprises could in some cases be best taken care of by patents and in others by some other form of IPR.
Other forms of protection
In that context, it is worth keeping in mind that patents are not the only useful type of IP rights. Trademarks, copyrights or other IP protection can be useful signals to consumers about environment-friendly products and their quality. Informal IP protection also has an important role to play. Thus we need to ensure that trademarks and other rights are well protected too, and make sure that enterprises are aware of the protection offered by well-designed informal IP protection methods.
An integrated view of innovation issues in the management of IP therefore constitutes a key asset for innovative enterprises.
Conclusion
There have been some positive recent developments in the European patent system, notably the entry into force of the London protocol on 1 May 2008, which will reduce the cost of translations for the European Patent. We believe that this will also help to pave the way for a pragmatic compromise concerning translation arrangements of the Community patent.
Next steps could hopefully be an agreement on a harmonized litigation system, adoption of the Community patent, and a courageous policy to drastically reduce costs for patenting for SMEs, in order to favour the creation of a level playing field for them at international level.
I am convinced that by working together, we can achieve real change, including globally competitive enterprises that will support sustainable development. An effective European IP strategy can certainly contribute to such an achievement.
Thank you for your attention.