A stronger and fairer Single Market – the European Commission Communication

On October 28th, the European Commission presented a plan, Upgrading the Single market: more opportunities for people and business, with the goal to “unleash the full potential of the Single Market”. The central elements of the Plan are: supporting development of small and medium-sized enterprises, especially start-ups, promoting innovation, easing access to funding for entrepreneurs, and empowering consumers. The Plan contains general principles regarding further harmonization of the intellectual property protection framework, combating discrimination of consumers and entrepreneurs on the basis of their nationality or place of residence, including so called “geo-blocking.”

Intellectual Property Protection

The Commission emphasized that an efficient and accessible IP protection system is essential for the SMEs, and especially start-ups. Such companies rarely have available funds to effectively protect their IP rights. For that reason the Commission intends to improve the small claims procedure and to review the national IP protection systems. Moreover, the Commission also stressed that national regulations on civil redress in cases of confidential business information misappropriation should be harmonized. The Commission’s research indicates SMEs very often rely on secrecy as a way to protect their know-how. Currently, only national laws regulate the protection of confidential business information, which makes prosecuting infringements quite difficult for SMEs.SMEs should also benefit from further harmonization of the industrial property rights protection system. The Plan indicates that in the years 2016-17, the Unitary Patent System should be adopted and the Unified Patent Court should be established. Now, the Commission shall address all questions regarding the relations between the Unitary Patent and the national patent systems, and also between the Unitary Patent and the national supplementary protection certificates (SPCs). Moreover, the Commission considers introduction of the unitary SPC title. The SPC title is particularly important for pharmaceutical producers, medical equipment, animal health products and crop treatment products. The Commission will also consider the introduction of the SPC manufacturing waiver for export purposes. This would allow EU-based manufacturers of pharmaceuticals to efficiently compete with pharmaceutical producers from non-EU countries.

Additionally, the Commission confirmed that it intends to combat the commercial-scale infringement of the IP rights. The Commission plans to adopt so-called „follow the money” approach that would cut off the funding sources of infringers.

Different sales conditions and geo-blocking

The Commission decided to take more decisive action against consumers and entrepreneurs’ discrimination on the grounds of their nationality or place of residence, including the problem of so called geo-blocking – practices preventing access to certain goods, e.g. films or music, dependent upon one’s location within EU. Currently, this issue is regulated by Article 20 of the Services Directive (Directive 2006/123/EC of the European Parliament and of the Council of 12 December 2006 on services in the internal market), which provides that Member States should ensure equal conditions of access to a service that are available to the public at large by a provider, regardless of the nationality or place of residence of the recipient. Still, this provision does not preclude the possibility of providing for differences in those conditions of access that are directly justified by objective criteria. The Commission acknowledged that the current language of this Article is too general to provide an effective tool against consumer discrimination.

Geo-blocking was the subject of the Commission’s Communication of May 6, 2015: „The Digital Single Market Strategy.” Geo-blocking is usually used by online sellers to deny a consumer based in another EU country access to their website. However, sometimes consumers are able to access the website, but the conditions of sale and the prices offered to them are different depending on their location. The use of geo-blocking may be justified where it originates from the differences in shipping prices based on the consumer’s location. However, geo-blocking cannot be justified in many cases and the Commission’s position is that it should be directly forbidden.

To effectively fight these practices, the Commission intends to introduce a thorough reform of the regulations on cooperation between the Member States regarding consumer protection. Already in September 2015, the Commission launched public consultations on geo-blocking whose results should indicate the right direction of those changes. Moreover, the Commission plans to commence the proceedings against Member States that do not act against the violations of the Article 20 of the Services Directive committed by entrepreneurs.

For now, the information provided by the Commission is very general and only dimly suggest some direction of changes and the philosophy behind the Commission’s legislative agenda. Even though strengthening the single market, including the digital single market, is the right approach, the announcement of the specific proposals by the Commission will surely give rise to many arguments and controversies, as in the case of the debates surrounding the unitary patent that ignited in Poland and Europe at the end of 2012 and the start of 2013. The only thing we can do is to take part in the public consultations and wait for the Commission to specify its plans.