Green IP: the interplay between IP law, sustainability and ESG in the EU

On 29 April 2021, the EU Commission announced that the initiative to update the EU rules on design protection is now open for public consultation until 22 July 2021. The proposal for a new directive is planned for the second quarter of 2022 and will be an important step towards more sustainability as one of the main reasons for revision is to ensure that the design protection regime better supports the transition to the digital and green economy.

This initiative should be seen as part of the broader EU Action Plan for IP, which, among other things, aims to align EU intellectual property (P) rights with Europe’s global green leadership.

Here, we tackle several (proposed or expected) legislative initiatives following this EU Action Plan for IP aiming towards a green IP.

Revision of EU legislation on design protection

The modernization of design rights will expedite the democratization and use of 3D printing technologies. As 3D printing is considered one of the key players in sustainable technology, it holds an important role in the transition towards a greener economy. The technique of 3D printing has many advantages compared to the traditional manufacturing methods. For example, the product is printed layer by layer in its precise shape and form and is not created by “sculpturing” out materials such as rubber or plastic, thus significantly reducing scrap waste. Furthermore, 3D printing simplifies the manufacturing process, as it enables the practice of “part consolidation”. Part consolidation allows for a final assembly to be created at once as a single unit instead of through multiple manufacturing stages to affix different parts together. This not only results in increased efficiency and less energy that is required for the production process, but also in increased durability.

3D printing technologies could thus significantly contribute to a greener economy, particularly in the textile industry, which is one of the largest polluters in the world. The technique of 3D printing, however, is not without risks for holders of design rights. Therefore, more clarity is needed in relation to IP protection in the context of 3D printing. As Computer-Aided Design (CAD) files are vital to print an object, the illegal online circulation, uploading and downloading of those files could enable anyone who owns a 3D printer to print and use designs based on these files without the authorization of the rights holder. A conclusive protection for holders of design rights in this regard is crucial, as the EU Commission itself states that “to ensure a smooth uptake of 3D printing technologies, we need clarity on the protection of 3D printing files and on the limitations for the private use of designs.”

The revision of the EU legislation on design protection also aims to further harmonize the protection for component parts used for the repair of complex products (such as car body parts or a windscreen). As the current partial harmonization causes the economically important spare parts market to be strongly fragmented, severely distorting competition and hampering transition into a more sustainable and greener economy, further harmonization in this regard is highly necessary.

Patents: launch of the unitary patent system and access to SEPs

Innovation is indispensable for sustainable economic growth. Only the emergence and diffusion of new technological improvements can lead to increased efficiency, pollution minimization, waste reduction and increased durability. To encourage and incentivize innovation, it is therefore highly important that innovators have access to fast, effective and affordable protection tools for their inventions. In this regard, the EU Commission highlights the importance of securing the launch of the unitary patent system, which will create a “one-stop shop for businesses, considerably simplifying patenting in the EU, boosting transparency and facilitating licensing.” Such one-stop shop procedure should become the norm. Further, the introduction of the Unified Patent Court will improve legal certainty and avoid parallel proceedings in multiple Member States, considerably reducing litigation costs. The launch of the unitary patent system is currently awaiting the ratification by Germany of the Unified Patent Court Agreement, which is on hold due to two constitutional claims against the ratification act. More information on the unitary patent system can be found here.

Once this system is launched (which is currently expected in early 2022) and implemented by the Member States, it will be a key tool for the EU’s industrial recovery, especially for the renewable energy, electronics, aerospace and defense, and mobility ecosystems.

As access to critical innovations and technologies is highly important (and has become even more apparent during the COVID-19 crisis), the EU Commission also aims in its EU Action Plan for IP to better foster access to Standard-Essential Patents (SEPs). Gaining access to SEPs is currently a cumbersome and a costly process for both patent holders and technology implementers, which results in fragmented frameworks of competing technologies in specific sectors, thereby hindering efficient global innovative interoperability and development. Hence, the creation of a more predictable framework for the licensing of SEPs, whilst still ensuring a fair return on investment, will undoubtedly be beneficial for the rapid development of innovative technologies and, consequently, the green transition.

Protection of AI inventions

Sustainable innovation will be increasingly driven by Artificial Intelligence (AI). Google’s DeepMind AI, for example, has already improved its energy efficiency by reducing its data center energy usage by 40 percent. AI may also offer opportunities in controlling industrial emissions and waste usage by detecting sudden issues or changes (such as leaks or other hazards). In any event, an adequate protection of works arising out of AI is increasingly important to promote investments in green technology. The EU Commission acknowledges and stresses in its Action Plan for IP that AI technology offers great potential and that therefore, clearer answers are needed regarding the IP protection in terms of authorship and ownership of inventions developed or implemented through AI technology.

On 21 April 2021, the European Commission published its long-awaited proposal for a Regulation on Artificial Intelligence. The proposal prohibits, amongst other things, a number of AI applications and provides for strict requirements regarding “high-risk” AI systems (more information regarding this proposal). While we believe that this proposal could have served to tackle the IP protection of AI inventions as well, it unfortunately remains silent in this regard.

Access and sharing of data: Trade Secrets Directive and Databases Directive requiring a further update

Fostering data sharing and technology transfers in order for businesses to continue investing in data generation and collection, while sharing them in a secure way without the risk of their sensitive business data being acquired, used or disclosed unlawfully, will also act as a catalyst in the further development and uptake of green technologies. The EU Commission states in this regard that while the Trade Secrets Directive already provides effective tools for protection, clarification should be provided in relation to the scope of the Directive, especially as to which type of data or datasets could qualify as trade secrets. The Database Directive will also be reviewed to facilitate the access, sharing of and trading in machine generated data and data generated in the context of rolling out the Internet of Things (IoT). In this way, a solid framework should be established to allow businesses to safely license their data and technology, which will undoubtedly benefit the development of a greener economy.

Stronger IP enforcement?

As the counterfeit industry negatively impacts our environment, an efficient and adequate prevention of counterfeit and piracy in the movement towards a green economy is indispensable. Not only are counterfeits produced under illegal circumstances with highly polluting machinery, the destruction of counterfeits after being seized by law enforcement leads to enormous emissions of air pollutants as well.

The EU Commission highlights the persisting problem of counterfeiting and piracy in its EU action plan for IP and aims in this regard to substantially strengthen the capacity of law enforcement authorities. As online counterfeiting has also significantly increased during the past decade, and over the past year in particular, the EU Commission also stresses the need to clarify and upgrade the responsibilities of online platforms in this regard. This should be achieved through the Digital Services Act, which is set to be adopted in the fourth quarter of 2021 and which aims to harmonize a set of specific, binding and proportionate obligations for digital services. Read more on the Digital Services Act.

Moreover, the EU Commission intends to reinforce cooperation between all players involved to curb piracy and counterfeiting. In this regard, the goal is to establish an EU Toolbox against counterfeiting, which will include practices and principles for joint action, cooperation and data sharing amongst rights holders, intermediaries and law enforcement authorities. The EU Toolbox will also promote the use of new technologies such as image recognition, AI and blockchain.

The EU Commission further urges Member States and the Council to include IP crime among the priorities of the next EU Policy Cycle for the period of 2022-2025. The Commission’s mandate will also be broadened and assigned to the European Anti-Fraud Office (OLAF), so that the latter does not only prevent counterfeit goods from entering the Single Market, but can also act against illicit production of counterfeit goods within the EU. The Commission will also support Member States’ customs authorities in improving risk management and anti-fraud actions.

Conclusion

It is undeniable that sustainability and IP rights go hand in hand. Effective IP legislation has always been vital for stimulating innovation, and their role has once again become abundantly clear in the road towards a more sustainable and greener economy. How and to what extent the EU Commission’s ambitious EU Action Plan for IP will eventually translate itself into EU legislation and impact sustainability, remains to be seen. Nonetheless, the reform will undoubtedly be one of the most interesting to come within the field of IP rights.