Why intellectual property matters for Europe

Our Senior Legal Adviser Elena Bertolotto explores the challenges, global landscape, and policy changes needed to strengthen Europe’s intellectual property framework.

IP is at the heart of Europe’s competitiveness, a key driver of how companies turn innovation into real economic value. Yet Europe still faces fragmentation, uncertainty, and growing pressure from faster-moving global competitors.

Transcript

SPEAKER_00 0:03

Welcome to Espresso Briefings by Business Europe. Timely insights and expert perspectives served in short, sharp episodes to fuel your thinking. Hello, my name is Alan Sherlock, Acting Director of Communications for Business Europe, and you're very welcome back to Espresso Briefings. Today we're looking at intellectual property, a core pillar of Europe's competitiveness and a crucial part of how companies turn innovation into real economic value. Intangible assets now sit at the heart of the knowledge economy, yet Europe still faces fragmentation, uncertainty, and a growing pressure from faster-moving global competitors. We'll explore the challenges, the international landscape, and the policy changes needed to strengthen Europe's IP framework. And to guide us through it all, we're joined by Elena Bertolotto, Senior Legal Advisor at Business Europe. Elena, you're very welcome to this episode of Espresso Briefings. Delighted to have you on. We're going into quite a technical topic today within intellectual property. But what I'm gonna ask you to do, I suppose, is kind of make it in some ways a little bit more relatable and consumable for our listeners. So before we get into it, what do we mean when we talk about intellectual property and why does it matter for businesses of all sizes?

SPEAKER_01 1:18

First of all, good morning, Alan, and I'm very happy to be here with you today. Intellectual property refers to creations of the mind like inventions, artistic words, designs, symbols, name, uh protected by law through patents, trademarks, and designs. And these rigor rights allowed creators to earn recognition or financial benefits and prevent unauthorized uh use of their intangible assets. So that's a bit what IP is about. Yes, IP matters for businesses, and we have some recent data, very interesting, from the European Patent Office and the European Union Intellectual Property Offices, and they show exactly that IPR-intensive industries are able to generate almost half of the EU GDP. And they also pay higher wages, they occupy more people, more jobs. So they also have an important value for our experts and they attract a lot of investment. So IP matters for businesses, for our economy, for investors. That's why we are talking about it today, and that's why Business Europe put a lot of energies and emphasizes in IP rights work.

SPEAKER_00 2:35

Okay. I did some research myself before I kind of came into the podcast today. You'll be glad to hear. And something that stuck out for me was that there's a particular relevance for SMEs within the space. So could you just call out for me why there is a particular relevance for that SME cohort in relation to IP?

SPEAKER_01 2:50

IP and SMEs is a very old-fashioned topic. Why? Because according to recent studies, only 9% of European SMEs do have some form of register rights. And it's a shame, this is a pity, because this means that a lot of our businesses are not using IP and they are losing the potential that IP rights could give to their businesses. Well, which are the challenges? I mean, there are different kinds of factors, and the first probably is lack of awareness. Many smaller businesses do not know about IP, they don't care because they don't have the expertise to understand what this is about. And sometimes they think that IP is a set of strange and very complicated legal rules, and which should not affect them, but they are actually, because we see that if they have IP, they grow faster, they scale up, and they can definitely make the most of it in their businesses. Which are the challenges, as I said. Lack of awareness and expertise is for sure the first one. Of course, the costs which are linked to IP are also a barrier because many smaller businesses they think maybe to survive first rather than invest in their innovations. IP enforcement is also a challenge. We see that many smaller businesses, even if they do have a patent or a trademark, they are not able to defend them, to prevent others from using them. So and the high cost linked to enforcement also it's a barrier, and sometimes they give up. They say, okay, I will not enforce my rights because it's too costly and complicated. I need to a lawyer. This is another challenge. Access to finance for especially for smaller businesses, but not only, it's a challenge for SMEs. Why? Because you have your IP rights, and then you go to a bank, you need a loan, but you cannot quantify which is the value of your IP. And here is an area where policymakers and industry associations we should work together. I mean, there are some nice projects out there led by the European Patent Office, by the UIPO. Also, Business Europe is supporting this and we are spreading this information towards our members. It's a long journey and we need a joint efforts to allow our SMEs to make the most and to use IP and to enter into the system.

SPEAKER_00 5:21

Something that stands out for me is essentially that a per grasp of IP will lead to an increasing gap in compatibility. There's a clear impact there. If we look towards other economies, how do these competing economies compare with Europe in terms of IP policy and ambition? Who's moving faster? So are we losing out within Europe?

SPEAKER_01 5:41

This is again another complex question and which also has implications on more global policy. But I have two examples in my mind: China and the US. China, because of their they are moving very fast and probably faster than Europe in terms of IP policy. They put a lot of emphasis on IP and because of state-led strategies that have prioritized uh speed to market and industrial scaling for their national competitors. Of course, China is a difficult animal. We also have our companies which they are facing the competition from Chinese players in China here, so it's not an easy one to compete with China. And the other one, probably the US. I mean, they are scaling up, they give a lot of help to their companies, and a lot of is linked to the dominance in the field of AI and digital environment.

SPEAKER_00 6:37

To bring it, I suppose, back to Europe, within your work in relation to that IP kind of policy landscape, where are the greatest challenges back here in Europe?

SPEAKER_01 6:48

I can say that the big challenge for IP in Europe is the fact that sometimes IP is not seen as a part of the industrial policy. And this is a problem because IP should be part of any discussion, policy discussion on industrial policy. Why? Because IP can contribute to the digital transformation, to the green transformations. It's a part of the business strategy, it's not just a set of technical rules. And I think here the EU should be better. For instance, a lot of emphasis is on research and innovation, spending and put efforts on research and innovation. But when you have a good innovation, then you have to bring to the market. And IP is key, fundamental, to bring your products, your ideas to the market. I think we are lacking behind other economies because of this link. And this work is to be done at different levels: business level, policy level, decision-making levels.

SPEAKER_00 7:41

That's coming through loud and clear for me. I suppose we've identified some challenges within the IP policy landscape. Business Europe likes to confront these challenges with solutions. So, from a regulatory perspective, what changes do you think would help Europe close this gap and strengthen the IP environment?

SPEAKER_01 7:59

I think we in Business Europe we are advocating on various aspects. We need rules which are fit for purpose. We need rules like designs which are fit for the digital age. And I mean, we we can say that the recent design protection reforms follow a bit these ideas. And new rules have been introduced to also allow the protection of new forms of designs which are more digital designs. So this is a good, definitely a good example. Rules fits for purpose also means less fragmented rules. And there are areas in Europe where we do have still 27 different legislations, and copyright is an example. We have done some good work in the patents, for instance, in the patent fields, where the unitary patent protection system, which has been introduced and entered into the operation three years ago almost, has put together some coordination and a more centralized system, for instance, for patent litigation and the fact that you can get a patent, and this patent has effect in uh in the participating country. So we need fit for purpose. We are doing something, but there is still work to be done.

SPEAKER_00 9:11

Let me just pick up on the unitary patent and the unified patent court. You mentioned them there a moment ago, and they're often cited as part of the solution to the challenges that we encounter within the IP policy landscape. Can you give me a moment as to like what exactly are these? Um, and you know, how do you see the system evolving in the coming months and years? What's going to happen within that space?

SPEAKER_01 9:35

Yeah. Just the unitary patent is like the more common name. In reality, the technical name is European patent with unitary effects. What does it mean? It means that you can get your patent from the European Patent Office and this, and then you can ask the unitary effect, which will extend the validity of your patent in all the participating countries automatically. And this is a gain of time and a save money. Why? Because you will not have to go through the national validation routes, you will not have to translate your patent in all the different languages of the countries where you want your patent to be validated, and this means unitary in fact. Plus, we have the unified patent court, centralization of litigation in Europe. So you go and your patents can be revocated or enforced in one single one court with effects in all participating countries. We see that this system is a very successful one. Uh, we can say that. We see that in the system entered into operation in June 2023, and since then we have 6,400 unitary patents in force in Europe, which is good. And also we also see that in the global uptake of unitary patents is basically one-third. One-third of European patents do have unitary effect. So it's growing, it's something that is growing as reduced fragmentation, so it's definitely one of the good solutions. And if I can go a bit beyond IP, we can say that the unitary patent system is also a good example of enhanced cooperations. It's very now on-fashion to say that sometimes if the EU cannot decide as 27 member states, those who are more motivated and are ready to go can go. And the unitary patent system has started as enhanced cooperation. And so my wish for the future is that today we have 18 countries participating. We hope that in the future more will join.

SPEAKER_00 11:42

You described earlier some of the challenges, particularly for SMEs, in relation to the DIB policy landscape. Unitary patent and the Unified Patent Court truly does seem like a key solution to those issues. Something else that I guess I'm picking up on across this space is in relation to harmonization. Why has Business Europe engaged in this debate? And from our members, what position are they putting forward in respect of harmonization?

SPEAKER_01 12:09

Yes, we are putting a lot of effort on harmonization and notably on patent harmonizations. And we have two different kinds of harmonizations: substantive patent law harmonization and procedural harmonizations. Procedural harmonizations, what does it mean? It means that the procedures at the at least at the biggest five office, patent offices, and we are part of IP5 cooperation, the procedure for examination for filing a patent are similar. So you can get more or less the same, you can predict what an office would do, and it's definitely save money and more effective and save costly for that. And why we are there? Well, we are there to ensure that the project on cooperation that are led by these offices always respond to users' needs and expectations. So that's why we are there. We had thus far some good results, which is in the global dossier, for instance, which is the possibility to see to access a certain file and to see it, all the documents related to a certain patent accessing for the five patent office bigger patent office. The next step would be to have real-time exchange of documents among IP5 offices. This is called active component of global dossier, and this is one of our priority in so far as procedural patent harmonization is concerned. The other aspects of harmonization we are very much involved in is substantive patent law harmonization. But a big patent system in the world, models like Europe, the US, and Japan. These systems are similar, but it would be nice if they could get closer for legal certainty, for predictability, and also to reduce the cost of our businesses that would need some expertise in every single country where they go and uh and do business. So more predictability. I mean it's a substantive patent law, it's a long journey. We are getting closer, we are confident in the future.

SPEAKER_00 14:10

Predictability is a theme that I hear a lot across all of our podcasts when we speak about any key themes or topics. Businesses respond well to predictability. So that certainly lands with me. As we finish up, I suppose, if listeners have kind of tuned in today, hopefully they've learned more about the policy landscape of IP. I certainly have. Is there any particular call to action or key developments listeners should keep an eye out for in the months ahead?

SPEAKER_01 14:35

In terms of call for action, Europe would need another IP strategy, a revamped IP strategy, where, as I said before, IP is put at the center of industrial policy discussions. And then from there, as a starting point, we should look at how to render our rules full for purpose, to strengthen awareness raising, to put a lot of efforts on enforcement, especially digital enforcement. Regarding the key developments to watch out, I mean I would say definitely more countries in Europe should join the unitary patent system. And this is also in line with the recommendations of the Draghi Report, who indeed said, well, more countries should join the system. Hopefully, all the 27 member states would join in the future.

SPEAKER_00 15:19

I think my own home country of Ireland has some work to do in that regard as well, Elena, if I'm not mistaken.

SPEAKER_01 15:25

Yes, Ireland should organize a referendum to join the system. We really hope that this will come in the near future. But we know the challenges in our lives.

SPEAKER_00 15:34

I'm optimistic that there will be progress. Elena, thank you very much for the contribution today. I've certainly learned more about the topic. I feel more educated. And indeed, if listeners would like to learn more about Business Europe's work on this topic, you can find out lots at businesseurope.eu. If you've enjoyed this episode of Espresso Briefings, don't forget to subscribe wherever you get your podcasts. We'll be back soon with more insights on the developments shaping European business. Thanks for listening and see you next time.