The Economic Review of Industrial Design in Europe — Final Report

MARKT/2013/064//D2/ST/OP January 2015

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The information and views set out in this study are those of the authors and do not necessarily reflect the official opinion of the Commission. The Commission does not guarantee the accuracy of the data included in this study. Neither the Commission nor

any person acting on the Commission’s behalf may be held responsible for the use

which may be made of the information contained therein.

Europe Economics is registered in England No. 3477100. Registered offices at Chancery House, 53-64 Chancery Lane, London WC2A 1QU. Whilst every effort has been made to ensure the accuracy of the information/material contained in this report, Europe Economics assumes no responsibility for and gives no guarantees, undertakings or warranties concerning the accuracy, completeness or up to date nature of the information/analysis provided in the report and does not accept any liability whatsoever arising from any errors or omissions. © Europe Economics. All rights reserved. Except for the quotation of short passages for the purpose of criticism or review, no part may be used or reproduced without permission.

Contents

Abstract..................................................................................................................................................................................... 1

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• Executive Summary....................................................................................................................................................... 2

1.1 Summary of method............................................................................................................................................. 2 1.2 Design-intensive industries................................................................................................................................. 3 1.3 Economic contribution of design-intensive industries................................................................................. 3 1.4 Protection of designs........................................................................................................................................... 4 1.5 Rationale for protection strategies................................................................................................................... 5 1.6 Enforcement and 3D printing ............................................................................................................................ 7 1.7 Industrial designs and visible spare parts......................................................................................................... 8 1.8 Further action that could be considered ........................................................................................................ 9 Introduction..................................................................................................................................................................11
2.1 Summary of method...........................................................................................................................................11 2.2 Key information sources...................................................................................................................................12 2.3 Report structure.................................................................................................................................................19 What is a “Design-Intensive Industry”? .................................................................................................................21
3.1 The European Patent Office and Office for Harmonisation in the Internal Market definition........21 3.2 The Haskel and Pesole definition of design-intensive industries.............................................................23 3.3 Summary and conclusions.................................................................................................................................26 Design-Intensive Industries.......................................................................................................................................27
234
4.1 Contribution to turnover, value added / GDP, trade, employment, the number of firms and innovation .......................................................................................................................................................................27

4.2 Why firms use or produce designs.................................................................................................................32 4.3 Summary and conclusions.................................................................................................................................35 The Options for Protecting Designs ......................................................................................................................37
5.1 Industrial designs.................................................................................................................................................37 5.2 Protecting designs using alternative forms of IPRs.....................................................................................37 5.3 Informal protection............................................................................................................................................40 5.4 Section summary.................................................................................................................................................41 How Designs are Protected.....................................................................................................................................42
6.1 The findings of previous studies......................................................................................................................42 6.2 How do firms protect designs in practice? — New analysis....................................................................49 6.3 Summary and conclusions.................................................................................................................................83 Section Appendix: Analysis by industrial classification........................................................................................83 Why do Firms Choose to Protect Designs in the Ways that they do?.........................................................88
7.1 Eight factors affecting the choice of protection ..........................................................................................88 7.2 Analysis of stakeholder input...........................................................................................................................98
567
7.3 Summary and conclusions...............................................................................................................................106 Enforcement...............................................................................................................................................................108
8.1 Why enforcement matters.............................................................................................................................108 8.2 What the current enforcement regimes are..............................................................................................109 8.3 How firms view enforcement........................................................................................................................117 8.4 Single Market implications of enforcement standards not being common.........................................125
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8.5 Might new or forthcoming technologies overturn the industrial design intellectual property regime or overturn manufacturing business models?..........................................................................................................126

8.6 Conclusions........................................................................................................................................................135 Visible Spare Parts.....................................................................................................................................................137
9.1 Design protection for complex designs ......................................................................................................137 9.2 Current legal differences across the EU .....................................................................................................137 9.3 The proposed “repairs clause”......................................................................................................................138 9.4 The European Commission’s proposal for harmonisation.....................................................................139 9.5 Competition authorities’ perspectives ........................................................................................................141
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9.6 Economic overview of visible spare parts in Europe: The automotive and watches and clocks industries .....................................................................................................................................................................142

9.7 Findings of our survey......................................................................................................................................146 9.8 The economic implications of the repairs clause......................................................................................153 9.9 The “competition” argument for the repairs clause................................................................................154 9.10 The “property protection” argument against the repairs clause..........................................................156 9.11 Summary of the argument to this point......................................................................................................157 9.12 A broader economic justification?................................................................................................................157 9.13 Does a lack of harmonisation undermine the Single Market?................................................................159 9.14 For how much longer will it remain feasible to enforce restrictions on the use of visible spare parts for repairs? .....................................................................................................................................................................159

9.15 Conclusions and suggestions for further action to be considered.......................................................159
10 Conclusions and Suggestions for Further Action to be Considered............................................................161
10.1 The definition of design intensive sectors and their contribution to the European Economy......161 10.2 Options available for protecting designs and the drivers behind the type of protection chosen.161 10.3 Enforcement.......................................................................................................................................................163 10.4 Visible spare parts.............................................................................................................................................163 10.5 Scope for improvement in the overall functioning of the system.........................................................164

10.6 Europe Economics’ suggestions for further action to be considered..................................................170

11 Appendix I: Search Strategy ..................................................................................................................................173 12 Appendix II: Long Literature Review List...........................................................................................................179 13 Appendix III: Literature Review Table................................................................................................................208 14 Appendix IV: Survey................................................................................................................................................225
14.1 Trade associations approached.....................................................................................................................225 14.2 Detailed characteristics of respondents......................................................................................................231 14.3 Full questionnaire..............................................................................................................................................233

Abstract

Abstract

This study reviews the economic contribution of design, how designs are protected, why they are protected in the ways they are protected, and certain complexities relating to enforcement and visible spare parts. It

finds that 3.4m firms in design-intensive industries, employing 23m people, add around €1.7trn of value to

the EU economy. It notes how firms have taken up OHIM community design registration as the route of choice when filing in multiple EU Member States.

However, it notes that only a minority of designs are formally protected. Many firms prefer informal protection via social and moral pressures from local networks, short product lifetimes, rapid innovation cycles or the complexity of manufacture. Others are simply unaware of industrial design protection. It is argued that this means that new technologies such as 3D printing offer the scope to overturn many existing business models and trigger much wider take-up of formal protection.

As regards visible spare parts used for repair, the study argues that, although there is no strong competition

reason why a “repairs clause” is necessary, there is also no good intellectual property reason for protecting

parts for repair, and recommends the introduction of a repairs clause across the EU.

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Executive Summary

1 Executive Summary

Europe Economics was engaged by DG Internal Market and Services to complete an “Economic Review of

Industrial Designs in Europe”. For the purposes of this study we understand the term “design” as it is defined

in the Design Directive (98/71/EC):¹

“The appearance of the whole or a part of a product resulting from the features of, in particular,

the lines, contours, colours, shape, texture and/or materials of the product itself and/or its

ornamentation.”

We use the term “industrial design” to refer to the formal legal right by which designs may be protected and the term “design” (without “industrial”) to refer to the design itself, whether or not it is in practice protected

by an industrial design. The core objectives of the study are to understand the characteristics of design-intensive industries, the extent to which designs are developed and contribute to the economy, the method by which designs are protected (if any) and the rationale for the choice of protection strategy. We also assess the economic consequences of the non-harmonisation of spare parts legislation and the functioning of the enforcement of industrial designs. Finally, we develop a number of evidence-based suggestions for further action that could be considered concerning the functioning of the industrial design protection at national and EU levels.

1.1 Summary of method

Our approach to the study relied on gathering information and data from a wide variety of sources which were drawn together during the analytical phase of the study. More precisely, we reviewed literature that could inform a theoretical assessment of how those seeking protection for designs would choose which method of protection to seek.² It also provided some evidence of the relationship between protecting designs and factors such as economic growth, innovation, employment and competition.

We then gathered relevant data which enabled us to identify design-intensive industries in the EU, estimate their contribution to GDP and employment in the EU, and assess the extent to which they use industrial designs to protect designs.

We also designed and distributed an online survey of those companies that develop designs in Europe. The key purpose of the survey was to provide information on the development of designs and the rationale for the use of different types of intellectual property right (IPR) to protect designs by different companies. It also enabled us to gather information on the enforcement of industrial designs in Europe and the consequences of the non-harmonisation of spare parts legislation.