(1)

An efficient intellectual property (IP) rights system is a staple of any solid industrial strategy. Industries that make intensive use of IP play a prominent role in supporting a resilient, green, and competitive economy in the EU, contributing 47 % to total GDP and almost 40 % to total employment. European creative and innovative industries are frontrunners in green technologies and sustainable products. Globally, they hold a major share of green patents and have strong IP portfolios in technologies such as climate-change adaptation, carbon capture and storage, and waste treatment (1). At the same time, the EU has seen a significant increase in the registration of green trade marks in the past decade (2). Protecting IP rights equitably translates into increased economic activity, investment, employment, and productivity, including for small and medium sized enterprises (‘SMEs’) (3).

(2)

The considerable market value of IP-protected products has attracted criminal networks, leading to a rise in counterfeit goods and piracy. Counterfeiting is identified as a high impact crime in the Strategy to Tackle Organised Crime 2021-2025, which aims at dismantling criminal networks and their business models (4) . This criminal activity not only leads to losses of revenue for IP rightsholders (‘rightsholders’), but also poses significant risks to consumer safety, public health, and the environment. The COVID-19 pandemic created new opportunities for counterfeit and pirated goods to infiltrate markets due to the surge in online sales and shortages of essential products during that time. That has led to life-threatening incidents, including e.g. pirated semiconductor components in automated external defibrillators (5). Additionally, counterfeit bearings have infiltrated various sectors, threatening e.g. the energy sector and the well-functioning of wind turbines. A robust policy to fight counterfeiting and piracy is therefore necessary to ensure that IP rights achieve their full potential to support innovation, competitiveness, and a greener and more sustainable economy.

(3)

Despite efforts to curb them, IP-infringing activities in relation to counterfeit goods and piracy remain a growing phenomenon that have severe economic and social impacts on jobs and growth in the EU (6). IP-infringing activities pose threats to various industries and different types of goods, including common consumer and business-to-business products. Most importantly, these activities may be closely linked to criminal behaviour (7). Criminal networks involved in IP crime are infiltrating every step of the supply chain, and the crimes are difficult to investigate, as most of the counterfeited goods traded within the EU originate from abroad, making detection of key stakeholders more difficult. Accordingly, IP-infringing activities undermine the EU single market and the EU’s rules on environmental, safety and ethics standards for consumer goods. Furthermore, they significantly impact European companies, in particular SMEs which have a 34 % lower chance of survival if their IP is violated.

(4)

In its 2020 IP action plan (8), the Commission committed to improve IP enforcement, by first adopting Regulation (EU) 2022/2065 of the European Parliament and of the Council (9), which is a major leap forward in fighting illegal content online, and second, by establishing an EU toolbox against counterfeiting, which will be adopted with this Recommendation. The toolbox should promote and facilitate effective cooperation between rightsholders, providers of intermediary services, and competent authorities, and seeks to promote good practice and use of appropriate tools and new technologies. The European Parliament (10) and the Council (11) welcomed this initiative.

(5)

This Recommendation builds on the results of a broad consultation that has been carried out since 2021. This includes, in particular, stakeholders’ workshops organised during 2021 and 2022, contributions to the Call for Evidence of 2022 (12), a high-level roundtable hosted by Commissioner Thierry Breton in June 2022, expert group meetings, and the International IP Enforcement Summit held in June 2023. This broad consultation uncovered the importance of increasing cooperation and sharing of information among all relevant stakeholders, in particular public authorities, rightsholders, and providers of intermediary services. The consultation also recognised the importance of building the future policy on the enforcement of IP rights on existing tools and existing EU legislation, notably: (i) Regulation (EU) 2022/2065 on the Digital Services Act; (ii) Directive (EU) 2022/2555 of the European Parliament and of the Council (13) on measures for a high common level of cybersecurity across the EU; (iii) Directive 2004/48/EC of the European Parliament and of the Council (14) on the enforcement of intellectual property rights, and (iv) Regulation (EU) No 608/2013 of the European Parliament and of the Council (15) on customs enforcement of IP rights, as well as Regulation (EU) No 952/2013 of the European Parliament and of the Council (16) laying down the Union Customs Code.

(6)

Directive 2004/48/EC applies to all IP rights covered by Union law and/or by the national law of the Member State concerned as set out in Article 2. It seeks to ensure a high, equal, and uniform level of protection in the single market, reflecting the need for common IP enforcement practices. Following this coherent approach to IP enforcement, this Recommendation covers all IP-infringing activities carried out on a commercial scale, which are acts for direct or indirect economic or commercial advantage. For the purposes of this Recommendation, IP-infringing activities on a commercial scale concern both counterfeit and pirated goods and content, which have been subject to infringement of a trade mark, geographical indication, patent, design or copyright. Without interfering with aspects addressed by Recommendation (EU) 2023/1018 (17) on combating online piracy of sports and other live events, most guiding principles, good practices and tools developed under this Recommendation, can also be relevant to countering infringing activities that concern IP protected online content, for example in the areas of voluntary actions taken by online intermediaries, enhanced cooperation among competent national authorities and the sharing of information and data.

(7)

Regulation (EU) 2022/2065 provides harmonised rules for a safe, predictable, and trusted online environment. In that context, Regulation (EU) 2022/2065 refers to information concerning illegal activities such as the sale of counterfeit products as an example of illegal content and imposes specific obligations on certain specific categories of providers of intermediary online services. Some of these obligations are instrumental in improving the fight against counterfeiting and piracy. This is, for instance, the case with: (i) the designation of points of contact and legal representatives; (ii) the requirements on terms and conditions; (iii) the transparency reporting obligations; (iv) the notice and action mechanisms; (v) the complaint and redress mechanism; (vi) the trusted flagger mechanism; (vii) measures and protection against misuse; (viii) measures to require the traceability of traders – known as know-your-business-customer obligations; and (ix) measures to both assess and mitigate risks.

(8)

The Commission supports the implementation of the Memorandum of Understanding on the sale of counterfeit goods on the internet (‘MoU on counterfeiting’) and the Memorandum of Understanding on online advertising and IP rights (‘MoU on advertising’). Both are voluntary instruments open to rightsholders, online platforms and business associations. Participants in these MoUs commit to follow the principles and undertake the actions set by the MoUs, including bilateral cooperation and the exchange of information. The MoUs have proven to be successful industry-led initiatives. However, the entry into force of Regulation (EU) 2022/2065 provides an opportunity to reflect on the future of the MoUs to ensure they remain fit for purpose. It is therefore necessary to launch a modernisation process of the MoUs and encourage all signatories and other interested parties to actively engage in this process. Of relevance is Article 45 of Regulation (EU) 2022/2065, which provides for the possibility of drawing up voluntary codes of conduct at EU level to contribute to the proper application of Regulation (EU) 2022/2065. Article 46 also foresees codes of conduct for online advertising to contribute to further transparency for actors in the online advertising value chain. Finally, article 17 of Directive 2004/48/EC also encourages the development of codes of conduct to enhance the enforcement of IP rights as a supplementary means of bolstering the regulatory framework.

(9)

Rightsholders are uniquely positioned to detect, identify, and notify IP-infringing activities concerning counterfeit or pirated goods. Signatories of the industry-led MoU on counterfeiting, have gained significant competence and experience over the years as they regularly submit notifications that according to the MoU’s principles, should be processed without undue delay. Moreover, signatories of the MoU have committed to take commercially reasonable and available steps to notify in a responsible and accurate way and with necessary precision to identify counterfeit goods and to avoid unjustified, unfounded, and abusive notifications. Hence, rightsholders who are signatories of the MoU could consider applying for the status of trusted flagger in order to benefit from the specific treatment laid out in Article 22 of the Regulation (EU) 2022/2065. In this regard the Digital Services Coordinators are to assess whether the applicant meets the criteria foreseen in Article 22(2), namely i) if it has particular expertise and competence for the purposes of detecting, identifying and notifying illegal content, ii) if it is independent from any provider of online platforms, and iii) if it carries out its activities for the purposes of submitting notices diligently, accurately and objectively. The Commission, after consulting the Board of Digital Services, may issue guidelines on the application of the trusted flagger mechanism under Article 22 of the Regulation (EU) 2022/2065.

(10)

Cooperation and increased information sharing are essential and should be further promoted, at all levels, in accordance with Union law, the protection of personal data and the freedom to conduct business under Article 16 of the Charter of Fundamental Rights of the European Union (‘the Charter’). Good practices should be identified, and recommended to all actors, including e-commerce marketplaces, transport and logistic service providers, payment services providers, social media providers, providers of domain name services, etc. Secondly, further cooperation and information sharing should be encouraged. This relates to all competent authorities, including market surveillance authorities that currently may not have competences for IP-infringing activities, and promoting further the use of dedicated tools such as the IP Enforcement Portal (‘IPEP’), the Information and Communication System of Market Surveillance (‘ICSMS’), and the Safety Gate for dangerous products that may be counterfeits.

(11)

Transport and logistic service providers play a key role in the sale and distribution of goods and are essential for the preservation of reliable supply chains. However, transport and logistics services can be misused by infringers.

(12)

Similarly, although payment services may be central to rightsholders’ activities, they may also be used to support IP-infringing activities. In certain instances, uses of different payment services may allow practices to develop which: (i) make it more complicated to trace the flow of funds; and (ii) make the detection of any possible use of payment services for IP-infringing activities more difficult.

(13)

With the growing popularity of social media, new strategies are being developed which may further enable the misuse of social media to carry out IP-infringing activities. This raises new challenges for social media providers, rightsholders and competent authorities, and highlights the need for collaborative efforts. In this context, promoting good practices among key providers of intermediary services can help to support a coherent policy against IP-infringing activities.

(14)

Although domain names are of paramount importance in the online environment, they can be used to support IP-infringing activities online. This is the case when IP rights are misused in the name of the domain itself (i.e. cybersquatting or typo-squatting) or when the domain name leads to a website that supports IP infringements. Domain name registration data (WHOIS data) is critical to the security, stability, and resilience of the domain name system. For this reason, Directive (EU) 2022/2555 obliges Member States to require top-level-domain (‘TLD’) name registries and entities that provide domain name registration services to collect and maintain accurate and complete domain name registration data in a dedicated database that enables the holders of the domain names to be identified and contacted. Access to specific domain name registration data must be provided upon lawful and duly substantiated requests by legitimate access seekers. A reply should be sent without undue delay and in any event within 72 hours of receipt of any requests for access. Under Directive (EU) 2022/2555, legitimate access seekers are to be understood as any natural or legal person making a request pursuant to Union or national law. The accuracy and completeness of domain name registration data can also play a central role in the enforcement of IP rights. Only where the identity of an alleged infringer and their contact details may be disclosed in compliance with Union law, and in particular in compliance with protection of personal data, the fundamental right to privacy and right to conduct business, can there be accountability for infringements and any relevant damage. This is without prejudice to the rights of the defence, taking into account the circumstances of the case in question and the guarantees needed to cover the costs and the injury caused to the defendant, in compliance with Article 9(7) of Directive 2004/48/EC.

(15)

Monitoring the online market for IP-infringing activities can be a costly and resource-intensive task for rightsholders. Therefore, voluntary good practices such as the current domain name information and alert system for the.eu top-level domain operated by the European Registry for internet Domains (‘EURid’) and the European Union Intellectual Property Office (‘EUIPO’) should be expanded. The purpose of this collaboration is to facilitate awareness in order to safeguard the IP rights of EU trade marks owners and provide reliable information about the.eu domain names and their availability.

(16)

Cooperation between public and private operators is essential in the fight against IP-infringing activities. One of the first obstacle to establishing cooperation is the lack of identified contact point to address topics related to IP rights and IP-infringing activities either in a Member State or cross border. This lack of a contact point prevents quick and agile enforcement of IP rights and affects cooperation between stakeholders. However, as highlighted by the replies to the call for evidence, this problem could be easily remedied by designating a single point of contact for IP enforcement.

(17)

Coordination and information exchanges could be substantially improved if existing tools such as ICSMS, the Safety Gate and IPEP were more widely used by concerned economic operators and competent authorities to fight IP-infringing activities. IPEP is developed by the EUIPO and enables secure communication between rightsholders and competent authorities, e.g. with the electronic management of customs applications for actions (‘AFAs’) with regard to goods suspected of infringing IP rights. Some Member States have also developed their own trader portal for the same purpose. Such tools ease the work of both rightsholders and customs authorities by providing central entry points for rightsholders concerning IP protection in all Member States. The EUIPO has launched an extension of the IPEP platform and made it accessible to intermediaries, starting with e-commerce marketplaces. This means that e-commerce marketplaces are now able to easily verify IP rights and initiate communication with relevant rightsholders when needed. For this tool to reach its full potential, it needs to be further embraced by rightsholders and competent national authorities.

(18)

Many market surveillance authorities do not take action if they find evidence of alleged counterfeit or pirated goods e.g. by (i) reporting the findings in the ICSMS; (ii) cooperating with rightsholders or competent authorities through the IPEP, or (iii) sending alerts on dangerous products via the Safety Gate which is the EU rapid alert system for dangerous non-food products, including counterfeits. This results in a lost opportunity to further contribute to the fight against IP-infringing activities. Additionally, many market surveillance authorities do not have the power to enforce IP rights, even though they can play a key role in fighting counterfeit (18). Counterfeits are often seized at the borders, but can also be detected along the supply chain, e.g. during quality control inspections. Member States should therefore promote the role of market surveillance authorities in the fight against counterfeits. To reinforce market surveillance or other enforcement authorities’ capacity, and upon request from a Member State, technical support may be provided according to Regulation (EU) 2021/240 of the European Parliament and of the Council (19) establishing a Technical Support Instrument.

(19)

The EUIPO is collaborating with several participating national IP offices in Member States to create a collection of key national IP enforcement judgments. Since 2014, the participating offices, along with the EU’s Community Plant Variety Office, have been involved in the systematic collection of key enforcement judgments which are made available in the eSearch Case Law Database. This collection includes key judgments on all types of IP rights from all the Member States and covers both civil and criminal cases. The judgments are considered ‘key’ as they provide a new trend or development in jurisprudence. Criminal cases are also being monitored under the European Intellectual Property Prosecutors Network. Promoting awareness, regular contributions by IP offices, and the wider use of such databases, could greatly improve IP enforcement.

(20)

Continued cooperation between the EUIPO and EU enforcement bodies is important to streamline efforts against IP infringements. This includes supporting cooperation efforts like The European Multidisciplinary Platform Against Criminal Threats (‘EMPACT’), which is a cooperation platform driven by Member States to identify, prioritise, and address threats posed by organised and serious international crime, such as IP crime. The IP-enforcement community should embrace this multidisciplinary cooperation platform.

(21)

Alternative dispute resolution (‘ADR’) procedures offer a cost-effective, quicker, and more efficient alternative to traditional legal proceedings, especially for cross-border disputes and for SMEs. Access to ADR proceedings should therefore be broadened to all types of IP disputes, including in the context of domain name disputes.

(22)

Directive 2001/29/EC of the European Parliament and of the Council (20) and Directive 2004/48/EC grant rightsholders the possibility to seek an injunction against a provider of intermediary service whose services are being used by a third party to infringe their IP rights. Directive 2004/48/EC also provides for provisional or interlocutory infringement proceedings for imminent infringements. It provides that where a judicial decision finding an IP infringement is handed down, the judicial authorities may issue an injunction against the infringer aimed at prohibiting the continuation of the infringement. Dynamic injunctions have so far been available only in a few Member States. The scope and requirements of these injunctions vary among jurisdictions, including as to the extent to which a court order may set specific technical measures to implement the injunction (21). In 2017, the communication of the Commission of 29 November 2017‘Guidance on certain aspects of Directive 2004/48/EC of the European Parliament and of the Council on the enforcement of intellectual property rights’ (22) indicated that in certain cases the effectiveness of injunctions may be reduced because of changes in the subject matter in respect of which the injunction was ordered. This could be the case for example where ‘mirror’ websites appear under other domain names and thus remain unaffected by the injunction. Accordingly, subject to certain safeguards, dynamic injunctions can be an effective means to prevent the continuation of an IP infringement both online and offline. In line with the case law of the Court of Justice (23), when granting dynamic injunctions, fundamental rights should be taken into account, notably the right to freedom of expression and information under to Article 11 and the freedom to conduct business under Article 16 of the Charter.

(23)

IP-infringing activities are often multi-jurisdictional and cover different types of intermediary services, both online and offline. In that context, facilitating access to information – and sharing this information – among all relevant stakeholders throughout the IP enforcement cycle is essential to identify, investigate, and pursue IP-infringing activities, provided that any such access and sharing is carried out in full compliance with Union law, including the protection of personal data and the right to privacy. Article 8 of Directive 2004/48/EC already provides for a right to information on the origin and distribution networks of the infringing goods or services in cases which concern IP-infringing activities on a commercial scale. This right applies only in the context of proceedings concerning an infringement of an IP right on a commercial scale and in response to a justified and proportionate request of the claimant. The importance of the right to information should not be underestimated. As recently recalled by the Court of Justice (24), the right to information plays a role in upholding the right to an effective remedy and, ultimately, guarantees the effective exercise of the fundamental right to property under Article 17 of the Charter, which includes IP rights.

(24)

However, during the stakeholder consultation, stakeholders pointed to uncertainty in the area of the right to information and asked for further guidance as to the conditions, the type of information, the relationship with data protection, under which the right to information could be improved between rightsholders and intermediaries.

(25)

The Court has held in case C-597/19 that the right to information in Article 8(1) of Directive 2004/48/EC in favour of the rightsholder, constitutes a procedure separate to the infringement proceedings. It may be raised in separate proceedings as it is not always possible to request all the relevant information in the context of proceedings at the end of which an IP right is found to have been infringed. In particular, the holder of an IP right may only become aware of the extent of the infringement of that right only after the final termination of those proceedings (25). The exercise of the right of information provided for in Article 8(1) of Directive 2004/48/EC is not limited to proceedings seeking a finding of an infringement of an IP right. The request for information provided for in Article 8 of the Directive has a different purpose than the request for an action seeking a finding that there has been an infringement of an IP right. In C-628/21 the Court held that if this request for information were subject to the same standard of proof as legal proceedings seeking a finding that there has been an infringement of an IP right, the separate procedure established by Article 8 of the Directive, which is a specific feature of Union law, would lose much of its practical use. It is therefore necessary to distinguish the function of a request for information pursuant to Article 8 of Directive 2004/48/EC from that of legal proceedings seeking a finding that there has been an infringement of an IP right.

(26)

Payment of appropriate damages in the event of a judicial finding of an infringement of an IP right is another key element of IP enforcement policy, as provided for by Article 13 of Directive 2004/48/EC. During the stakeholder consultation, stakeholders stated that damages are often not appropriate to remedy the actual prejudice suffered by the rightsholder. As stated by the Court of Justice in case C-99/15, moral prejudice, such as damage to the reputation of the author of a work, constitutes, provided that it is proven, a component of the prejudice actually suffered by the rightsholder. (26). Directive 2004/48/EC applies notwithstanding the means provided for, in particular, by national legislation, in so far as those means may be more favourable for rightsholders. Directive 2004/48/EC lays down a minimum standard for the enforcement of IP rights and does not prevent the Member States from laying down measures that are more protective, provided they are in compliance with Union law. Therefore, the fact that Directive 2004/48/EC does not oblige Member States to provide for ‘punitive’ damages should not prevent the introduction of such a measure at national level.

(27)

Regulation (EU) No 608/2013, together with the general rules established under Regulation (EU) No 952/2013, currently under revision, allow customs authorities to detain or seize goods suspected of infringing IP rights. Directive 2004/48/EC allows the seizure of goods by other competent authorities as a measure to preserve evidence and the court may order destruction of those goods as a result from a decision on the merits of the case. For goods detained by the customs authorities, if the holder of the goods contests the destruction and the rightsholder initiates a court proceeding, the goods are to remain in storage during the entire proceedings. During the stakeholder consultation, rightsholders shared concerns over the costs related to the storage and destruction of goods seized or detained by customs and other competent authorities. These costs are not limited to storage and destruction but also include other related costs such as handling, verification, and transport costs. In some instances, these costs are considered too high by rightsholders and thus the rightsholders may decide not to enforce their IP rights (27).

(28)

An important aspect of the destruction of IP-infringing goods relate to the environmental cost of this destruction. It is important that the storage and destruction of IP-infringing goods are carried out in a way that avoids endangering human health and harming the environment. The environmentally safe disposal of IP-infringing goods remains high on the agenda of the World Intellectual Property Organisation. In addition, the World Customs Organization has developed guidelines on the eco-friendly disposal of detained IP-infringing goods. In the EU, the recycling or disposal of IP-infringing goods detained by customs authorities are subject to a decision of the customs authorities and the completion of the related customs formalities. They also require the agreement of the rightsholder. There is a need for the relevant stakeholders to make their best efforts to ensure the environmentally safe and sound disposal of IP-infringing goods.

(29)

IP-infringing activities are a lucrative business, because of the high value that may be associated with IP and because of the relatively low level of risk in terms of likelihood of detection and enforcement. This may result in IP-infringing activities being carried out by criminal organisations along with crimes such as money laundering, tax evasion, human trafficking, and forced labour.

(30)

The Court has held in Case C-655/21 (28) that when Member States are discharging their obligations under the World Trade Organization TRIPS Agreement on Trade-Related Aspects of Intellectual Property Rights (‘TRIPS Agreement’), including those arising from Article 61, they must be considered to be implementing Union law, within the meaning of Article 51(1) of the Charter. Differences exist in the Member States as regards criminal penalties in Article 61 of the TRIPS Agreement for wilful trade mark counterfeiting or copyright piracy on a commercial scale. The maximum term of imprisonment varies in the EU for the most serious forms of such criminal offences, i.e. those that are committed by criminal organisations as defined in Article 1 of the Council Framework Decision 2008/841/JHA (29). Member States are encouraged to re-assess whether the available criminal penalties for such criminal offences in their national law, are sufficient to provide a deterrent, consistent with the level of penalties applied to crimes of a corresponding gravity to ensure effective enforcement and respect the principle of proportionality, taking into account the case law of the Court of Justice of the EU, including Case C-655/21. They should also be asked to assess whether the criminal penalties for such criminal offences duly correspond to the harm caused, whilst ensuring compliance with the applicable rules of Union and international law, including as regards the protection of fundamental rights of all parties affected.

(31)

In addition, some Member States do not have specialised units in law enforcement or public prosecution that deal with criminal offences related to IP rights. This hinders effective cross-border cooperation in enforcement and makes it difficult for competent authorities to retain knowledge. The use of covert investigation methods (e.g. through phone and data interceptions and undercover operations), whilst ensuring compliance with the applicable Union rules and international law, including as regards the protection of fundamental rights of all parties affected, can make cross-border investigations against criminal offences committed by criminal organisations more effective. Similarly, financial investigations, including investigations into practices in online advertising and the use of cryptocurrency (30), and sufficient specialisation of competent investigative units and prosecutors, are of great importance. Specialisation of the relevant investigative units in Member States would also make it easier to set up EU-wide focus groups of police, customs, and prosecutors in cooperation with the European Union Agency for Law Enforcement Cooperation (‘Europol’), the European Anti-Fraud Office (‘OLAF’), and Eurojust. Therefore, the use of specialised investigation units with the appropriate resources should be strongly encouraged, whilst ensuring compliance with the applicable rules of Union and international law, including for the protection of the fundamental rights of all parties affected.

(32)

Emerging and rapidly developing technologies can pose challenges and present new opportunities to enforce IP rights. AI systems such as automated content-recognition systems and machine-learning algorithms may be used to recognise counterfeit or pirated products, or patterns associated with the promotion or distribution of such products and have the potential to become key technologies in the fight against IP-infringing activities. Economic operators are encouraged to exercise caution when using AI systems and avoid providing undisclosed confidential information, know-how or trade secrets as input to the system, as this may potentially prevent them from obtaining IP protection for such information at a later stage. Navigating the challenges and opportunities that AI present can be difficult, especially for SMEs. Member States and industry stakeholders are therefore encouraged to participate in the development of a comprehensive checklist that should equip SMEs with valuable insights, guidance, and practical strategies, promoting innovation, protecting IP, and ensuring the responsible adoption of AI technologies within the EU business landscape.

(33)

The market for anti-counterfeiting and anti-piracy technologies is complex and fast-evolving. Rightsholders may face challenges in navigating this market and finding appropriate technical solutions or technology providers. Nevertheless, resources such as the EUIPO Anti-Counterfeiting and Anti-Piracy Technology Guide can support rightsholders willing to use anti-counterfeiting technologies. Distributed ledger technology (including but not limited to blockchain-based technologies) are well suited to increase supply-chain traceability and transparency, in line with the digital product passport (31), which can help to identify and stop IP-infringing activities. Tokenised records of a good’s supply-chain path recorded on a blockchain are unchangeable and transparent and document every transaction and movement of the product and may be adduced as forms of evidence in compliance with national procedural law.

(34)

The European Blockchain Service Infrastructure (‘EBSI’) consists of a public peer-to-peer network of interconnected nodes running a blockchain-based services infrastructure. The EBSI is designed in an iterative manner, focusing on a small number of specific use cases (applications), which will then be expanded over time. Eventually, private companies and organisations will be able to join and use the EBSI as a service.

(35)

The EUIPO European product and Logistic Service Authenticator (‘EBSI-ELSA’) is a pilot programme for a blockchain-based system that would interconnect all the interested parties and their systems to ensure product authenticity throughout the whole supply chain, and eventually beyond. When goods are linked to the blockathon infrastructure, a digital twin is created, storing the information that proves its authenticity. This will provide stakeholders with the means to transfer a good alongside its virtual equivalent, with the latter being stamped with an immutable digital signature from the brand owner. The system also provides the possibility to share digital information with involved parties in the logistic chain, including intermediaries and competent authorities.

(36)

The recent Communication on Web 4.0 and virtual worlds (32) sets out the EU’s strategy on Web 4.0, a ground-breaking technological transition towards a world where everything is seamlessly interconnected. As the development of virtual worlds progresses, new challenges are expected to arise in terms of enforcement of IP rights and identification of alleged infringers e.g. the enforcement of IP connected to non-fungible token (‘NFT’). These challenges will require further monitoring and a stakeholders’ dialogue.

(37)

An NFT is a digital asset that represents the uniqueness and authenticity of a specific digital item or content using blockchain technology. Each NFT has a unique cryptographic identifier that sets it apart from others, making it scarce and verifiable. Among other uses, NFTs can enable creators to tokenise and sell their (digital or physical) creations while providing buyers with proof of the item’s uniqueness and the ability to trade or showcase these assets in online platforms in a secure and decentralised way. However, ownership of an NFT does not amount to the ownership of the underlying asset contained or referenced within it. While owning an NFT generally grants the owner exclusive rights over the NFT itself (thereby providing a right to transfer, sell, or display the tokenised representation of the asset), it does not necessarily confer any rights with respect to the original physical or digital asset, as these remain distinct legal concepts.

(38)

On 1 January 2021, the Commission and the EUIPO launched the SME Fund (33), which offers financial support for SMEs impacted by COVID-19 and Russia’s war of aggression against Ukraine, with the objective of helping SMEs to manage their IP portfolios. In 2024, to further support SMEs in enforcing their IP rights, the SME Fund also reimburses the costs of initial advice provided by an IP Scan Enforcement expert (34) designated by a national IP office (the IP Scan Enforcement voucher). This advice or guidance includes recommended actions to resolve existing IP infringements and prevent potential future infringements. The IP Scan Enforcement voucher does not include formal enforcement activities, such as drafting ‘cease and desist’ letters or filing litigation actions. With this additional tool, SMEs benefit from advice or guidance in situations: (i) when an SME becomes aware of an infringement of its IP right by a third party; (ii) when an SME is at risk of being accused by a third party of allegedly infringing the third party’s IP assets; or (iii) when the SME has to take preventive actions related to IP enforcement.

(39)

As the global economy has become increasingly digitalised, the risk has grown of unlawful acquisition, use and disclosure of undisclosed know-how and business information (trade secrets) through cyber-attacks. Such cyber-attacks include carrying out economic activity aimed at acquiring trade secrets, which could be later eligible for IP protection. SMEs are more exposed to cyber-attacks than larger companies due to their lack of cyber-security awareness and the insufficient robustness of their cyber-security measures. Cyber-attacks also cause SMEs serious economic harm and undermine their overall competitiveness. As announced in the 2020 IP action plan, the Commission is preparing an awareness-raising toolkit for SMEs to help them prevent or react to cyber-attacks against trade secrets.

(40)

Most European citizens say they have a good understanding of the notion of IP rights and an even larger majority (93 %) considers it important to protect IP rights. There is also widespread awareness among the European public of the negative effects of counterfeiting, with a large majority (around 80 %) of Europeans considering that IP-infringing activities: (i) support unethical behaviour and criminal organisations; (ii) impact businesses and threaten jobs; and (iii) are a threat to health, safety, and the environment. Despite this, more than a quarter of young Europeans (aged 15 to 24) have intentionally bought at least one counterfeited product online (35), showing a need for targeted actions to curve down this trend and to further enhance the evidence gathering and awareness about the health and safety risks when buying counterfeit products. In that context, the EUIPO has set up a network of experts from the education ministries of Member States and representatives from national IP offices, with the aim of bringing together the relevant decision makers and formulating a common approach to IP in education. One of the most visible results of this network is the ‘Ideas Powered @ School’ project, which produces and collects educational and training materials on IP.

(41)

In order for competent authorities, such as customs authorities, police, and public prosecution services, to be efficient and effective in their operations, they need to have the necessary in-depth knowledge on IP protection and enforcement, and always be up to date on the latest trends and technological developments in this area. In that respect, the EUIPO and the EU Agency for Law Enforcement Training (‘CEPOL’) have already set up the Virtual Training Centre on IP rights for customs authorities, police services, public prosecution services, and market surveillance authorities. The EUIPO and CEPOL have also created tailor-made training resources and materials for these groups. In addition, and upon request from a Member State, technical support may be provided to competent national authorities, according to Regulation (EU) 2021/240.

(42)

Trade in counterfeit pharmaceutical products in the EU has been increasing in recent years (36), with medicines being the seventh most-seized product category at the EU’s external border in 2020. Counterfeit pharmaceutical products are also widely advertised and offered for sale online. They often contain toxic ingredients, ingredients of bad quality, or ingredients with the wrong dosage and thus they are also considered falsified medicines under Directive 2001/83/EC of the European Parliament and of the Council (37). Consumers need to be assisted in identifying websites selling counterfeit pharmaceutical products online. Despite the fact that rules on a common logo allowing consumers to identify lawful online pharmacies are laid down in Directive 2001/83/EC since 2011, consumer awareness remains very low in this field.

(43)

The Commission’s report on the protection and enforcement of IP rights in third countries (38) aims to inform rightsholders, in particular SMEs, about potential risks to their IP rights when engaging in business activities in certain non-EU countries. It thus seeks to allow them to design business strategies and operations to protect the value of their intangible assets such as IP. The Commission has established IPR SME Helpdesks in China, Latin America, Southeast Asia, India, and Africa to support EU companies that seek to protect and enforce their IP rights in these regions. These services help EU economic operators to familiarise themselves with the legal environment before starting a business activity in these regions.

(44)

The Commission’s regular Counterfeit and Piracy Watch List contains examples of reported marketplaces or service providers whose operators or owners are located outside the EU, and which allegedly engage in, facilitate, or benefit from counterfeiting and piracy. The aim of this watch list is to encourage the operators and owners, as well as the competent national authorities and governments to take the necessary actions and measures to reduce the availability of IP-infringing goods or services on these markets. The watch list also seeks to raise consumer awareness about the environmental, product-safety and other risks of purchasing from potentially problematic marketplaces. The Watch List is prepared in cooperation with Europol and EUIPO, whose expertise, in particular on social media and online platforms, contributes to creating a more in-depth analysis of trends and challenges regarding piracy and counterfeiting on third country online services and the measures taken.

(45)

The growth of the number of free-trade zones (‘FTZs’) outside the EU may facilitate the sales of alleged counterfeit and pirated goods, because FTZs: (i) provide exemptions from duty and taxes; (ii) have simpler administrative procedures; and (iii) allow the duty-free import of raw materials, machinery, parts and equipment. Some economic operators may take advantage of the perceived inadequate oversight, inadequate checks, and lack of transparency in FTZs to carry out IP-infringing activities. To improve the situation, the Organisation for Economic Cooperation and Development (OECD) Council adopted in 2019 its Recommendation on Countering Illicit Trade: Enhancing Transparency in Free Trade Zones. That Recommendation includes an Annex on a Code of Conduct for Clean Free Trade Zones that contains recommendations for the operators of FTZs on how to reduce the availability of illicit goods in their FTZs. A Council Decision subsequently endorsed the OECD Recommendation (39). It is in the interest of both rightsholders and consumers in the EU that the operators of FTZs in the EU: (i) adhere to the Code of Conduct for Clean Free Trade Zones; (ii) improve the transparency of their FTZs; and thus (iii) help to reduce the availability of suspected IPR-infringing goods in their FTZs.

(46)

It is essential that Member States and stakeholders share relevant information about the follow-up given to this Recommendation and its implementation. The EUIPO, which plays a central role in the EU’s efforts to fight counterfeiting and to enhance enforcement of IP rights, should support the dissemination, implementation, and monitoring of this Recommendation. With its broad expertise and network of public- and private sector representatives, the EUIPO should be encouraged to help gather information, monitor good practices, and liaise with its network to increase cross-border enforcement cooperation between all relevant stakeholders. Considering that ADR offers a simple, fast, and low-cost out-of-court solution to IP disputes, its use needs to be expanded and promoted. The EUIPO Mediation Centre could undertake such tasks effectively.

(47)

To ensure respect for the fundamental right to the protection of natural persons in relation to the processing of personal data, as well as the free movement of personal data, the processing of personal data in the context of any measures taken to give effect to this Recommendation should be in full compliance with the rules on data protection. In particular, it should fully comply with Regulation (EU) 2016/679 of the European Parliament and of the Council (40) and Directive (EU) 2016/680 of the European Parliament and of the Council (41) and should be monitored by the competent supervisory authorities.

(48)

This Recommendation upholds the fundamental rights and observes the principles recognised in the Charter. In particular, this Recommendation seeks to ensure full compliance with Articles 8, 11, 16, 17, 47 and 49 of the Charter.

(49)

By reason of the complementarity between this Recommendation, Regulation (EU) 2022/2065 and Recommendation (EU) 2023/1018, the effects of this Recommendation should be assessed, taking due account of the findings of the EUIPO, by no later than three years after the adoption of this Recommendation.