Copyright-dependent industries’ contribution to GDP and employment, various years

	Year of study	Contribution of copyright-dependent industries to GDP (%)	Contribution of copyright-dependent industries to employment (%)
Bulgaria		2.8	4.3
Hungary		6.7	7.1
Latvia		5.1	5.6
Romania		5.6	4.2
Netherlands		5.9	8.8
Slovenia^a		5.1	6.8

a Data subject to revision.

Source: WIPO online information. Viewed at: http://www.wipo.int/export/sites/www/ip-development/en/creative_ industry/pdf/eco_table.pdf.

233. Some studies have been critical of the proposed extension of the term of protection. For example, the Gowers Report argued that, as IP rights are a trade-off between incentives and access, if the exclusive rights granted by copyright (or any other form of IP right) lasts longer than it needs to, unnecessary costs would be imposed on consumers.[256] It found that the extension of the term of protection would bring minimal economic benefit to performers. Another study commissioned by DG Internal Market and Services found that 50 years of protection was substantially longer than the terms that previously existed in many member States.[257]

234. The Commission disagreed with the findings of these studies, considering that certain results/statements in the studies were unfounded. According to the Commission, the extended term would enable performers to earn money for a longer period, and benefit record producers who would generate additional revenues from the sale of records, thus helping them to maintain their investment levels in new talent. The Commission considered that accompanying measures contained in the proposal ensure that performers would benefit. The 'use it or lose it' clauses in the contracts linking performers to their record companies would allow performers to claim back their rights if the record producer does not market the sound recording during the extended period. In addition, record companies would be required to set up a fund into which they would have to pay 20% of their revenues earned during the extended period. The money from this fund would be destined to help session musicians.[258]

235. Although copyright holders have the exclusive right to reproduce their works, EU legislation allows member States to limit this right by permitting private copying on condition that the right holders receive "fair compensation". Nonetheless, there are questions regarding the amount of the compensation, and the collection system.[259] In Case C-467/08 (Padawan v SGAE) the European Court of Justice (ECJ) ruled that "fair compensation" is an autonomous concept of European Union law, and should compensate for the harm suffered by the right holder as a result of the unauthorized reproduction of his work. Given the practical difficulties in identifying private users, the ECJ considered private copying levies to be a valid form of providing for fair compensation. The ECJ also stated, however, that private copying levies must not be applied to digital reproduction equipment, devices, and media purchased for purposes clearly unrelated to private copying (e.g. for professional use by professional users). National legislation that provides for the indiscriminate application of private copying levies, regardless of the distinction made by the ECJ in case C-467/08, is incompatible with Directive 2001/29/EC.

236. Challenges for copyright protection also arise from the popular use of the internet. In December 2009, the EU ratified the WIPO Copyright Treaty (WCT) and the WIPO Performances and Phonograms Treaty (WPPT), the "internet treaties".[260] The provisions of these two treaties were previously implemented in Directive 2001/29/EC on copyright in the information society. In order to continue to meet the challenges of the internet-based knowledge economy, the EU began a number of projects. A key EU priority is to digitize and disseminate Europe's cultural heritage by creating digital libraries, which can be accessed by researchers and consumers across Europe. [261] In 2011, two proposals were made with respect to digital libraries and archives: one was made to enable the digitisation and online accessibility of "orphan works", the other was to set up collective licensing schemes for "out-of-commerce" works.[262] The EU has also been active in improving the distribution and availability of works for persons with a visual impairment.[263]

237. Online enforcement and data protection are important components of copyright protection. The EU has several Directives containing rules applicable to the online enforcement of IP rights, such as Directive 2004/48 (the Enforcement Directive), which establishes general applicable rules regarding IPR enforcement, and Directive 2000/31 (the Ecommerce Directive), which establishes minimum applicable rules regarding the conditional exemption of liability for internet service providers. However, certain flexibilities are left to member States in implementing these provisions.[264] For example, in many member States, ISPs (internet service providers) cannot store IP addresses for the specific purpose of online copyright enforcement; exceptions include France.

238. In October 2009, the Constitutional Council of France approved a revised version of its "Hadopi Law", (Loi No. 2009-669 of 12 June 2009 favorisant la Diffusion et la Protection de la Création sur Internet), which led to the creation of HADOPI (Haute Autorité pour la diffusion des oeuvres et la protection des droits sur internet).[265] Under the Law, individual internet subscribers must verify that their access does not infringe copyright legislation. In case of infringement, the HADOPI may start its "3-strike" procedure: (i) an email is sent to the connection owner, the ISP is to survey the internet connection, and the connection owner is encouraged to install a filter on his/her own connection; (ii) in the 6 months following the first step, if a repeated offence is suspected (by the copyright holders, their representatives, the ISP or the HADOPI), a certified letter is sent to the connection owner; (iii) in the year following the reception of the certified letter, if the connection owner fails to comply, or if copyright holders, their representatives, the ISP or the HADOPI suspect repeated offences, the ISP is required to suspend service for a period of 2 months to 1 year. The connection owner is blacklisted and third-party ISPs are prevented from providing him/her an internet connection. Before the last step, a judicial review may be conducted.

(b) Industrial property

Patents

239. Currently, there are three different avenues for patent applications: a national procedure is provided by the competent authority of each member State; a centralized procedure is available at the European Patent Office (EPO); and an international procedure is available under the Patent Cooperation Treaty (PCT) administered by the WIPO.

240. The European patent system under the EPO is considered as "incomplete", "fragmented", and costly.[266] For a European patent to take effect in member States, the patent owner must request validation at national level. This involves translation, local representation, and administration requirements. A European patent validated for example in 13 member States costs around?20,000, of which nearly?14,000 for translation. This is more than ten times the cost of obtaining a patent in the United States (on average?1,850).[267] Because of the costs, most inventors seek patent protection in a limited number of member States (on average five). Low validation entails a fragmented system for patent protection in the EU, with negative effects on the commercial value of patented inventions.[268] Further, in legal disputes, innovators wishing to protect their inventions may have to litigate in parallel in several countries. This implies high costs, complicated system, and the risk of contradictory court decisions in different member States. For example, an inquiry in the pharmaceutical sector found that 30% of court cases were conducted in parallel in several member States, and in 11% of cases national courts reached conflicting judgements (section (v)).

241. In December 2009, the Competitiveness Council adopted Council Conclusions on an enhanced patent system in Europe. Two key features were the creation of a single EU patent, and the establishment of a court with jurisdiction both for European patents and for future EU patents. Some researchers expected total private savings through access to a unified patent court to be between?148 million and?289 million in the four years following its creation.[269] The unified patent court is to be established by the conclusion of an international agreement involving the EU, its Member States, and other states of the European Patent Convention (EPC).[270] In June 2009, the Council submitted a request for an opinion of the European Court of Justice on the compatibility of a draft agreement establishing a unified patent court with the EU Treaties. On 8 March 2011 the Court ruled that certain features of the draft agreement were inconsistent with the Treaties. The Commission is now working on identifying appropriate alternatives on the way forward for the patent litigation system.

242. The Commission first proposed the creation of a unitary EU patent in 2000. However, no agreement could be reached on the translation arrangements, and the Council concluded that the objective of a single EU patent could not be achieved. Subsequently, the Commission responded favourably to the request of 25 member States for the creation of unitary patent protection in the framework of enhanced cooperation.[271] The European Parliament and the Competitiveness Council gave their consent to enhanced cooperation in early 2011. The implementation of the authorising Council decision requires the adoption of two regulations; first, on the creation of unitary patent protection, and second, on the applicable translation arrangements. On 13 April 2011, the Commission adopted the proposals for the implementing regulations.

243. In recent years, the number of applications for renewable-energy patents has been increasing rapidly. In 2009, the EPO received 1,259 renewable-energy patent applications, up 27% from 2008. However, patents are scattered across many databases and in different formats, which results in a lack of clarity. The EPO developed a unified database for clean-energy patents in June 2009; clean-energy patents are classified in 160 categories, so that they can be identified more easily. Reportedly, the EPO plans to create similar databases for clean technology in the areas of transport, buildings, and agriculture.[272]

244. Some member States are creating similar databases. For example, in June 2010, the Intellectual Property Office in the UK (UKIPO) launched a green technology database to facilitate the development of environment-friendly technology. This database contains patent applications processed under the UKIPO's "Green Channel" initiative launched in 2009. The Green Channel provides a fast-track service for patent applications for inventions with environmental benefits: patents may be granted in nine months compared with a current average time of two to three years.[273] Apparently, the databases run by the EPO and the UKIPO are separate; and the UKIPO database is much smaller.

Trade marks

245. The EU has the Community trade mark system, and national trade mark systems. Substantive provisions of the latter are harmonized by means of Directive 2008/95/EC so that the same protection applies throughout all member States.

246. The EU legislation relating to Community trade marks does not replace the laws of its member States. Also, the two regimes have different coverage and application requirements. A link is established through the concept of seniority, i.e. the possibility of claiming, in applying for the Community trade mark, the seniority of the earlier trade mark in the member State in or for which it was registered, preserving prior rights even if the earlier trade mark is not renewed. Another link is the concept of conversion, i.e. the possibility of converting a Community trade mark application that was refused, or declared invalid or revoked, into a national trade mark application in all member States in which the ground for refusal does not apply. The ensuing national trade mark applications will retain the filing date of the Community trade mark application.

247. Businesses can register a trade mark in each of the 27 EU member States, and at the same time a Community trade mark. Opposition against a national trade mark application can be filed based on a prior Community trade mark. Registering a Community trade mark may thus prevent a specific mark from being registered as a national trade mark by third parties. If, on the other hand, a company chooses to register a trade mark at national level and not as a Community trade mark, the same sign could be registered by another company in another member State. Trade mark infringement is dealt with by specialized national courts of first and second instance, or "Community trade mark courts", based on the Community Trade Mark Regulation 207/2009.

248. The Community trade mark has effect throughout the EU, and is registered and administered by the Office for Harmonization in the Internal Market (OHIM). In May 2009, OHIM fees were lowered and the procedures for the registration of a Community trade mark were simplified. The registration fee was eliminated so that businesses pay?1,050 instead of?1,750 for the application and registration of a Community trade mark, and the e-registration of a trade mark was reduced, from?1,600 to?900. It was estimated that these measures could save businesses some? 60 million a year.[274] The processing time for the registration of a "straightforward" (without opposition procedures) Community trade mark was reduced from 8 months to about 7 months.[275]

249. Given the time that elapsed between the harmonization of trade mark legislation and the creation of the Community trade mark, as well as the increasing demands of stakeholders, the European Commission carried out an evaluation of the overall functioning of the trade mark system in Europe. This included the commissioning of a comprehensive study whose final report was published in March 2011.[276]

250. On the basis of an impact assessment yet to be carried out, the Commission envisages presenting a package proposal to revise both the Community Trade Mark Regulation and the Trade Mark Directive in October 2011. The objective is to modernize the trade mark system both at the EU and national levels by making it more effective, efficient and consistent as a whole, including enhancing the complementarity between the EU and national systems by facilitating cooperation between the OHIM and national trade mark offices.

Geographical indications

251. At the EU level, there are three approaches for registering and protecting geographical indications: as protected designations of origin (PDOs) or protected geographical indications (PGIs) for wine, spirits, and agricultural and foodstuff products;[277] as collective Community trademarks; and through national appellation systems at member State level.

252. GIs are protected mainly under Regulations Nos. 1234/2007 (for wine), 110/2008 (for spirits), and 510/2006 (for agricultural and foodstuff products), in the form of PDOs or PGIs. In December 2010, the Commission submitted a proposal for a Regulation on agricultural product quality schemes.[278] Among others, it suggested that the GI regime be reformed by refining the eligibility criteria, shortening the application process, and inviting producer groups to take on a bigger administrative role. Also, a study was commissioned by the DG Trade on the protection of GIs for non-agricultural products.[279] The study found that, although it is difficult to conclude on the effectiveness of legal instruments on GI protection for non-agricultural products, many producers see the existing EU legal framework for PDOs and PGIs as an interesting route.

253. Applications for GIs of products originating from a geographic area in the EU are sent to the relevant member State; if the member State considers that the application meets the requirements for registration, it transmits it to the European Commission. Member States may charge a fee to cover their costs. The Commission verifies whether the conditions are met. If the Commission is satisfied with the application, it publishes its positive conclusions in the Official Journal, and if no objections are raised within six months, the product is registered.

254. The registration system for and protection of GIs is also available for products from third countries. For GIs of products of non-EU origin, the application may be sent directly to the Commission, or to the authorities of the country where the geographical area is located, which transmits the application to the European Commission. Nofees are requested for applications from third countries.[280] The authorities note that, the average registration time for foreign GIs and for European GIs is three years.

255. According to the Database of Origin and Registration (DOOR) online database (for agricultural products and foodstuffs), there are two third-country names among the 970 GIs (505 PDOs, 465 PGIs (Café de Colombia and Longkou Fensi (vermicelli)).[281] The wine register contains 1,923 names (1,336 PDOs and 587 PGIs),[282] of which, there are two third-country names (Vale dos Vinhedos (Brazil), and Napa Valley (the United States)). The spirits register contains 330 names, of which, two third-country name (Ron de Guatemala (Guatemala), and Pisco (Peru)), although neither has GI status at present.[283] One foreign GI has been registered since 2009: the Commission noted that is only a few applications from third countries have been received, and none has been rejected.[284] There were no application from third countries for wines or spirits during the review period.

256. A large number of third-country GIs are protected through bilateral agreements that the EU has signed with its trading partners.[285] In July 2010, the EU and Switzerland concluded negotiations on an agreement, covering GIs for agricultural products and foodstuffs (800 EU GIs and 22 Swiss GIs) registered before 15 September 2009; GIs for wine and spirits have been protected since 2002 under the agricultural trade agreement. The agreement is waiting to be ratified by both sides. The EU and China are also moving towards more GI protection. A "ten plus ten project" was initiated in 2007, under which, ten EU GIs are to be protected on the Chinese market, and ten Chinese GIs are to be protected on the EU market. EU-China bilateral negotiation on GIs are ongoing.[286]

257. Under the Community Trade Mark Regulation, GIs can be protected as Community collective trade mark.[287] Marks that identify the geographic origin of a product may be registered, as long as they have not become generic in the trade concerned. A collective trade mark may be applied for by associations of manufacturers, producers, suppliers of services, or traders, and may be used only by members of such associations. Community trade marks do not serve to identify the quality of a product.

258. GIs may also be protected and enforced through labelling rules, unfair competition law, Customs law, trading standards, and other IPR systems applied in the EU and at national level in the member States. Some member States operate specific GI systems covering products that the EU system does not cover (such as handicrafts), and agricultural product GIs that are pending registration in the EU register. For the latter, Member States provide temporary protection within their national territory. Once the agricultural product GI is entered in the EU register, only the EU system gives legal protection to the name. Among others, the European Court of Justice confirmed the exclusivity of the EU system to provide legal GI protection for registered names in its ruling of 8.9.2009 in case C-478-07 (Budějovický Budvar National Corporation v Rudolf Ammersin GmbH, OJ C 22, 26.1.2008). The EU has taken steps to increase the visibility of the EU scheme by requiring the EU logos or scheme name to appear on labelling. These provisions are optional for third-country GIs registered in the EU.

(c) Enforcement

259. Enforcement of IPRs in the EU is based on the 2004/48 IPR Enforcement Directive and the 2001/29 Copyright Directive, and as regards enforcement at the EU borders, Council Regulation (EC) No. 1383/2003 and implementing Commission Regulation (EC) No. 1891/2004 (Table AIII.2). Law enforcement authorities other than the Customs are assigned to conduct internal control on IPR enforcement within member States' territories.

Customs

260. At the external border of the EU, Customs authorities may suspend the release of or detain goods that are suspected of infringing or found to have infringed IPRs. In most cases, Customs authorities act upon applications from right holders: applications have been growing over the years, and in 2009, less than 10% of cases were initiated ex-officio.[288] However, Customs may also act ex-officio if they have sufficient grounds for suspecting that goods infringe an IPR. The Customs authorities then notify the detention/suspension to the importer and the right holder. The right holder must submit an application for action within three working days of receiving the notification. If no application is submitted within this period, the goods are released.[289]

261. In 2009, there were over 43,500 cases of goods being detained by Customs, totalling 118 million articles (Table III.13). In almost half of these detentions, the goods were destroyed immediately and in around a quarter of cases, a court case was initiated to determine the infringement. In 12% of the court cases initiated, the goods were released because they appeared to be non-infringing original goods, or because no action was taken by the right holder after notification by the Customs authorities. In 85% of the cases, Customs action began while the goods were under an import procedure; in 9%, goods were discovered while in transit to the EU, and in 3.5% in transit to a declared destination outside the EU.

262. In May 2010, Brazil and India both requested consultations with the EU and the Netherlands regarding the Customs treatment of medicines in transit through EU ports, produced in India and destined for developing countries. The suspension of release by certain EU Member States' Customs authorities was based on grounds of alleged infringement of intellectual property rights in the transit country, which is provided for under Council Regulation (EC) No. 1383/2003 and the national law of the Member States concerned (Chapter II(3)).[290]

263. Under the EU Customs Action Plan to combat IPR infringements for 2009-2012, a priority of the Commission and member States is to strengthen Customs enforcement.[291] In this context, in March 2010, the Commission opened a consultation process to review Council Regulation (EC) No. 1383/2003, 22 July 2003. The Commission intends to submit a proposal for a revised Regulation in 2011.[292] The draft Regulation aims to strengthen Customs enforcement of IPRs, while ensuring streamlining of procedures. In December 2010, the Commission also submitted a report on the application of Directive 2004/48/EC. The report concluded that the Directive provided a solid basis for the enforcement of IPRs in the internal market, and led to considerable improvement of the national legal framework. However, the same report also called for further clarifications of its provisions, because member States (and the courts) have different interpretations.[293] In January 2011, the Commission launched a consultation on the Commission report on the enforcement of intellectual property rights, aimed at identifying additional issues that should be addressed in the context of a possible review of the Directive.[294]

Table III.13