Commissioner Frits Bolkestein: Quo Vadis? Striking the balance on industrial property rights, Ischia, 6th October 2003

Ischia, 6th October 2003

Ladies and Gentlemen,

Industrial property rights are very important. They affect us all, often very directly. And when I say 'us all', I do not just mean industry. I also mean citizens and consumers.

It is because industrial property rights have such a big impact, that I have become convinced that we should focus on two key principles. First, we must better communicate why industrial property rights are important. Second, on substance, we have to make sure our approach is balanced. Intellectual property rights can stimulate economic development and growth, and benefit businesses as well as citizens, but only if we strike the right balance.

As far as communication is concerned, my recent experiences in the European Parliament, where I debated our proposal on the protection of computer implemented inventions, made it clear to me that our message is not coming through to everyone. I am afraid the impression is widespread that industrial property rights are there to serve the interests of industry, at the expense of citizens and consumers.

To a large extent we have ourselves to blame for this unfortunate state of affairs. Too many policy discussions in this field are conducted in the jargon of specialists and lawyers. These technical discussions have led to sound plans and proposals. But we have been less successful in making clear to the non-specialists what industrial property rights are really about. And we have had even greater difficulty in explaining that industrial property rights also benefit citizens and consumers.

For example, in the past weeks, I literally spent hours and hours trying to clear up one simple misunderstanding: our proposal on the protection of computer implemented inventions is not at all about software. I spent evenings explaining to MEPs and journalists that this proposal will not seal off the software market to initiatives and new inventions, but that it merely wants to reward those who invest in developing genuinely new products that depend on computer implemented technology. I spent days trying to persuade people, that our approach to industrial property rights in general always aims to strike a balance, between encouraging innovation via property rights on the one hand, and respecting that the prerequisite of competition on the other.

The key issue in the European Parliament and in the press was the "interoperability" of computer software. Many MEPs and even more lobbyists were very concerned that the protection we allegedly granted to software would prevent computer systems from "interoperating", "speaking to" or indeed "competing" with each other. But I am just as convinced as the European Parliament that the proposal on the protection of computer implemented inventions should respect the principle of interoperability. There should and there will be market access for all software developers. Consumers should have a choice. I am fully committed to making sure that they will not get a raw deal.

But it continues to be a difficult debate. Many people still need persuading. And that means we have to explain more clearly what our principle is, namely that we all stand to gain from well-designed legislation in this area. And what is more: we need to do this in 'plain speak'. The acronyms don't help.

On the Community Patent "Compat", as we call it our use of an acronym seems to have been less prejudicial. I was pleased when in March of this year we finally managed to get political agreement on the main elements of the proposal.

But there still are loose ends. To tie these up, we have to keep up the momentum. National pride has to take second place.

Turning now to substance, my second principle is that the benefits of intellectual property rights must be balanced. Well-designed legislation in the area is always about balance. Inventions are a good. And therefore we need patent rights. Patents provide the incentive to be inventive. But competition is a good as well. And therefore markets need to be open. That means that patent rights need limiting.

Let me explain the principle of balance by mentioning another example. Incredible progress has been made in the field of biotechnology. Biotechnology does not just modify our perception of life; it can also improve our lives. Novel techniques, such as therapeutic cloning, hold a great deal of promise. They could treat degenerative diseases, like Alzheimer's or Parkinson's.

However, these techniques also raise ethical concerns. One such concern relates to the availability of research results and medical treatments to the wider community. Many people feel that industrial property rights should not restrict access to new inventions in this sensitive and important area. New techniques should be available to all.

Let me be clear: these people are not wrong. But there is a flipside to the coin. For if there is no industrial property, where is the incentive for pharmaceutical companies to invest many millions in research and development? Where will new treatments and medicines come from? Scientific knowledge is not like manna from heaven. It takes many years of hard work to develop new products.

The same principle applies to Trade Related Intellectual Property agreements better known in our world as "TRIPS". Anti-globalisation protestors claim these agreements mean that medicines invented by companies in the West are too expensive for poor people in developing countries. Again, the protesters are not wrong: these countries do need access to cheaper medicines.

But we cannot completely ignore the rights of pharmaceutical companies either. That is why, at the WTO round in Cancun, the EU tried to find a balance. Our goal is to enable developing countries to manufacture medicines themselves, and to make them available on the market at an affordable price. This means intellectual property rights will have to be relaxed. But we also want to make sure that cheap medicines do not find their way back to EU and US markets via parallel trade. Parallel trade in cheap medicines could have devastating consequences. It could undercut the incentive to develop new ideas.

Finding the right balance is a time-consuming business. It needs a lot of tinkering with detail. That is why often we do not win many plaudits. But I am convinced this is the only sustainable approach.

To conclude, this conference is named 'quo vadis?', which means: "Where do we go from here?" Let me give you an answer. We need to persuade our critics, such as the open source and anti-globalisation movements, that our ideas are right. We need to persuade them that what we want is in the end not that different from what they want. Industrial property rights are not about corporate interest.

They are about an open and competitive economy that also provides incentives for research and innovation. They are about an environment in which citizens, all over the world, can benefit from new techniques and inventions, against a reasonable price. That is our basic philosophy! And I can think of no reason why we should be so modest about it.

Thank you very much for your attention, and I wish you a stimulating conference.

DN: SPEECH/03/446 Date: 06/10/2003