On Tuesday 18 October 2016, PubAffairs Bruxelles hosted a debate on the role of IPR and brand protection in promoting EU growth with Mr Jean Luc Gal, European Commission, Intellectual Property and Fight Against Counterfeiting, DG GROW, Mr Gaetano De Salvo, Permanent Representation of Italy to the EU, Internal Market and IPR, Mr Paul Skehan, Director General, Spirits Europe and Mr Christopher Snowdon, Head of Lifestyle Economics, Institute of Economic Affairs (IAE). The debate was moderated by Matthew Newman, Senior correspondent at MLex.
The moderator introduced the speakers and opened the debate by providing statistical figures from an OECD report which asserted both the value generated by brands and the negative effects of counterfeiting on the European and the global economy.
Following on to an outline of the European legislation on the issues at stake, the moderator asked as a first point of discussion whether the European Union possesses a high quality intellectual property rights system.
Mr Gal explained how the concept of Intellectual Property (IP) evolved with the advent of technological innovations, as well as how it came along with the realisation that IP was good for design trademarks and patents; furthermore, he built upon the findings of the 2013 EU IPO (Intellectual Property Office) study, which revealed the positive effect of intellectual property intensive industries towards employment, level of wages, as well as SMEs’ performance indicators. The speaker also mentioned that the trends regarding IP protection have only been scrutinised in the past ten years and he added that controversies have arisen not only from plain packaging tobacco initiatives, but also from inventions emerging from information and communication technologies. Indeed, in the early 2000s few data on the relation between IPR and job creation were available. Mr Gal further explained that the ongoing European Commission initiatives on the protection of intellectual property rights for the industry are adding another layer of EU’s IPR protection standards, which should also include a unitary patent regime, as well as a ‘Unified Patent Court’. Mr Gal concluded by saying that, although there is still room for improvement, the European Union is going towards the right direction.
Mr De Salvo made his opening remarks by saying that, as a general answer, the level of IPR protection in Europe is fairly high, however, he continued by pointing out that there should be a distinction between different levels of IPR protection. Firstly, at the company level, he noted that great progress has been observed as companies adapted and learned how to fight counterfeiting through innovation and research instead of relying simply on legal means. Whereas, at a national level, he stated that while national regulations, as well as EU member states’ cooperation are already in place, further initiatives, such as the creation of shared platforms, databases and/or further public-private partnership to protect IPRs should be welcomed. At an EU level, the speaker believed that harmonisation and legal certainty are unfortunately yet to be improved as demonstrated by the difficulties of European courts to provide timely rulings on IPR cases recalling that the European Commission is also assessing the situation and is planning to take further action, including legislative measures, to tackle the issue. Lastly, at a global level, Mr De Salvo remarked that the task of improving practices or of actively participating in the effort to protect intellectual property rights is notably left to the international community as a whole, hence the creation of a level playing field becomes more complicated.
Mr Skehan observed that IPRs have a multi layered character in his sector of competence, as they can simultaneously feature as geographical indicators, separate product categories and brands, while trademarks are being subjected to a vast landscape of regulatory and legislative rules, which are not always enforced properly. He further talked about the negative effects of counterfeiting in the spirits sector and its detrimental societal effects, especially when illicitly produced products lead to fatalities as in the recent cases which occurred in Czech Republic and Ukraine. Mr Skehan then stressed that strict regulations are in place at the EU level, while large companies in particular are, to a certain extent, efficient in monitoring and dealing with infringements. However, according to the speaker, the degree of enforcement of these regulations varies according to member states, while punitive national tax regimes on spirits often result in encouraging illicit activities dangerous for both IPRs and social protection.
Mr Snowdon stressed the degree of controversy invoked by the very concept of intellectual property and the reactions it often provokes from all sides of the political spectrum. He expressed his worry that consumers and policy makers alike underestimate the value embedded in IPR and branding. According to Mr Snowdon, the fact that certain member states decided to take the initial legislation a step further and introduced packaging signals, together with the lack of harmonisation at a EU level contradicts the idea that a company that owns a trademark should have the right to use the very trademark at his best. Mr Snowdon also stated that the essence of Article 36 of the TFEU, which notably allows for quantitative restrictions on grounds of public morality, is an example of lack of harmonisation since interpretations of this article might differ greatly among EU member states. The speaker concluded his initial statement by affirming that extensive limitations to the use of IPRs and trademarks by their owners might open the Pandora’s box of unilateral decisions on which brands can or cannot be protected and used, to the detriment of both the producers rights and the consumers benefit.
A second point of discussion concerned the way in which the European Union deals with the negative effects that counterfeiting has on the value of brands and consequently on the European economy.
Mr Snowdon explained how the Australian ban of branding for cigarette packages gave, in his opinion, the opportunity to counterfeiters to fill in the gap produced by the ban on branding, allowing them to simply invent new colourful branded packages of non-existent brands, which consumers seemed to prefer to plain packaged cigarettes. According to Mr Snowdon, this example revealed that branding is the consumer’s sole guarantee of quality and that removing it altogether does not constitute a solution. In addition, Mr Skehan explained that member states’ reactions to deaths from illicit alcohol products have been somewhat inappropriate as national entities decided as a counter measure to either increase taxation on legal spirits or to prevent their legitimate circulation, damaging both legitimate larger businesses and SMEs. In Mr Skehan’s view, the key to better tackling the effects of counterfeiting is to invest in IP protection enforcement, which European member states should regard as a source of revenue, especially in the current conjuncture. Mr Gal stated that the idea of extending the confiscation of revenues from counterfeiting companies could serve as a deterrent to potential criminals. Additionally, a revision to the so called ‘IPRED Directive’ could incorporate a ‘follow the money’ approach to trace the revenue of the products in question, while additional monitoring of the supply chain could assure that counterfeited goods production is prevented at different stages. Mr Gal concluded by attesting that the outcomes of the consultation and the impact assessment on the IPRED directive are expected to be published by the end of December 2016, or in early 2017.
A third point of discussion concerned IPR protection in the pharmaceutical sector.
Mr De Salvo cited statistics from an inquiry in the pharmaceutical sector by the Intellectual Property Office to assess the effects of counterfeiting in the pharmaceutical sector on the European economy. Concerning the single market strategy and the supplementary protection certificates (SPC) proposal, Mr De Salvo stated that the industry provides divergent signals to the different Member States, while its revision is in the pipeline awaiting the European Commission’s final assessment. Mr Gal agreed that the complexity and specificity of the business model found in the pharmaceutical sector makes it very challenging to establish a level playing field. Mr Gal said that final results of the report on the SPC will be published in the coming months or weeks. On the same issue, Mr Skehan stated that the pharmaceutical sector is a great example of how investment is immediately correlated to the degree of protection achieved, which ultimately affects innovation and growth. He believed that enforcement of IP protection is key to promoting growth for Europe.
The final part of the debate, a Q&A session, also covered the following issues: agricultural geographical indications and ACP states, the role of consumer participation in protecting intellectual property rights, liability for online platforms in selling counterfeited goods, cross-border enforcement, the role of the European Union in the international context of protecting IPR, the differences between the EU and the US in IPR protection.
Do you want to go further into the issues discussed in our debate? Check our list of selected sources which we have provided for you
Intellectual Property | European Commission | DG GROW, Internal Market, Industry, Entrepreneurship and SMEs
The European Observatory on Infringements of Intellectual Property Rights | European Union Intellectual Property Service – Observatory
Copyright and the Digital Single Market | European Commission
Innovation Union, European Commission | A Europe 2020 Initiative
Counterfeit, piracy and other IPR violations, European Commission | DG TAXUD, Taxation and Customs Union
Improve the protection of intellectual property rights in non-EU countries | DG TRADE
Intellectual, Industrial and Commercial Property | European Parliament – Fact sheet
Re-Communicating the EU’s IPR Strategy for Third Countries | EP Think Tank
Intellectual Property, Transatlantic Business Council
Overcoming Transatlantic differences on intellectual property | EP Think Tank
Intellectual Property Systems: China – Europe Comparison | IPR SME Help Desk
Intellectual Property Rights Protection, Ownership, and Innovation: Evidence from China | Harvard Business School
Trademark owners are often targeted by fraudulent, deceptive registry services , Steve Brachmann | IP Watchdog
Intellectual property rights and pharmaceuticals: The case of antibiotics | World Intellectual Property Right Office
Plain confectionery packaging a heavy-handed response to health concerns | Christopher Snowdon, Director of Lifestyle Economics at the Institute of Economic Affairs | IP Watchdog
Winning the Drug Development Debate | Joseph Allen | IPWatchdog.com