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(LUXEMBOURG) – The EU’s legal framework for protecting intellectual property, in particular in the EU Designs Directive and fees mechanism, is not as effective as it could be, the EU’s auditors warned in a special report Tuesday.
Although the framework in place gives some guarantees, a number of shortcomings remain, say the European Court of Auditors, who also highlight that EU and national systems would benefit from being better aligned.
Intellectual property rights (IPR) are seen as crucial to the EU’s global competitiveness. IPR-intensive industries generate almost half (45%) of the EU’s economic activity, worth 6.6 trillion, and provide nearly a third (29 %) of total EU employment. Each year, counterfeit products are estimated to lead to 83 billion in lost sales in the legitimate economy.
If the problem of counterfeit products were tackled effectively, the auditors say the EU economy would gain 400,000 jobs according to a recent estimate of the EU Intellectual Property Office (EUIPO). Counterfeit products also have considerable safety risks, as was recently illustrated during the COVID-19 pandemic.
The EU Designs Directive should have equal effect throughout the EU, but as it stands, the EU’s regulatory framework for designs is incomplete and outdated, says the report. As a result, national and EU systems are not aligned, allowing divergent practices between Member States during the application, examination, publication and registration processes, leading to legal uncertainty. In addition, the auditors draw attention to the lack of an EU-wide protection regime for all products. The EU’s geographical indication framework does not concern non-agricultural products, such as crafts and industrial designs, although some Member States have legislation in place to protect them.
The auditors also question the EU’s fees mechanism, observing significant disparities between EU fees and those charged by the national authorities. They found that the EU’s intellectual property rights fees structure does not reflect real costs. While criteria exist for fixing fees at EU level, the auditors consider that there is no clear method for determining their structure and amount, resulting in an excessive level of fees that produces accumulated surpluses (over 300 million in EUIPO’s 2020 accounts). The auditors highlight that this is contrary to the principle of a balanced budget stipulated in EU law.
There are also some shortcomings in implementation of the Intellectual Property Rights Enforcement Directive, which is not uniformly applied throughout the EU, failing to ensure a consistently high level of intellectual property protection in the internal market. Weaknesses and inconsistencies in customs controls in the Member States also adversely affect enforcement and the fight against counterfeits. The protection of intellectual property rights in the EU therefore varies according to the place of importation. The auditors also note that different practices exist within the EU for destroying counterfeit goods, which may lead counterfeiters to import their wares into the EU in places with less stringent controls and sanctions, the auditors warn.
