Finally, a proposal on IP in public procurement

On 9 September, the European Commission published proposals for two major legislative packages: one on public procurement and the European Innovation Act. Both proposals contained long-awaited provisions on how intellectual property rights may and should be handled in public procurement.

The reasons why these kinds of proposals (public procurement and innovation) were so long-awaited are to be found in a report also published by the Commission on 9 September, a report regarding intellectual property in public procurement. The report was commissioned by the European Commission and written by Ellen Hausel Hedahl and me.

One of the report’s starting points is the book published by the same authors a few years ago, which focused on the situation in Sweden. As in the book, specific clauses drawn from actual procurement procedures were reviewed and analysed. The overall picture is, unfortunately, rather bleak: numerous clauses failed to meet even the basic requirements applicable to intellectual property agreements.

The report also included a business survey examining how clauses requiring extensive transfers of rights affect companies’ behaviour. A substantial proportion of companies refrain from submitting tenders under such conditions, with the result that the intended beneficial effect on competition is not achieved.

More importantly, however, companies reported that such clauses affected their ability to conduct their business. Approximately half of the companies stated that clauses of this kind impaired their ability to draw on prior experience and existing solutions. More than one-third reported that they refrained from offering their best solutions in procurement procedures containing such clauses. Clauses requiring extensive transfers of rights in public procurement therefore clearly affect the operating conditions of companies across Europe.

The European Commission launched a European Innovation Agenda as early as 2020. That agenda may be regarded as having paved the way for the proposed European Innovation Act. One criticism that could be levelled at the European Innovation Agenda was that it did not take intellectual property considerations into account. This became particularly apparent in its emphasis on the need for innovation procurement without even mentioning the potential effects of extensive acquisitions of rights.

The proposal for a European Innovation Act places considerable emphasis on intellectual property issues. For those who recognise that innovation is about bringing ideas to market, it is self-evident that intellectual property is key to turning ideas into reality.

A central element is the introduction of new rules on innovation procurement, including rules governing the treatment of intellectual property rights. The proposals are, to a large extent, consistent with the recommendations made in the report on intellectual property in public procurement.

The review of the general rules on public procurement has been anticipated for some time. Among other things, the proposal presented includes measures intended to make it easier for smaller businesses to become suppliers. Given that more than 99 per cent of businesses in Sweden fall within the category of small and medium-sized enterprises, this is a welcome development in the Swedish context.

Articles 62–64 of the proposal contain provisions on how intellectual property rights are to be handled in public procurement. These provisions clearly represent a concerted attempt to address the widespread problems identified in the report on intellectual property in public procurement.

It remains only to be hoped that these provisions will be retained once the proposals have completed the legislative process in the Council of the European Union and the European Parliament.