The European Innovation Act, in context
Mario Draghi’s 2024 report on European competitiveness laid the foundations for much of the EU’s current reform efforts, not least in the research and innovation space.
For one thing, his proposal for a €200bn budget for Horizon Europe’s successor has become something of a rallying cry for the research sector – though this often overlooks the fact that he proposed that this large budget increase be conditional on a swathe of reforms to Horizon, including refocusing on a smaller number of priorities, reforming the European Innovation Council into an “ARPA-type agency”, investing more in disruptive innovation, make applications much faster, and rethink programme management.
While the Draghi report was – extremely – wide-ranging, two central concerns were using Europe’s procurement levers more effectively and overcoming the bloc’s reliance on IP and infrastructure belonging to companies elsewhere in the world. On IP, this was to include a blueprint for fair and transparent royalty sharing, to “overcome bureaucratic barriers in universities and research institutions to managing intellectual property rights with their researchers.”
In general, Draghi concluded that the commercialisation pipeline in the EU was weak:
“Much of the knowledge generated by European researchers remains commercially unexploited. According to the European Patent Office, only about one-third of the patented inventions registered by European universities or research institutions are commercially exploited. A key reason for this failure is that researchers in Europe are less well integrated into innovation “clusters” – networks of universities, start-ups, large companies and venture capitalists (VCs) – which account for a large share of successful commercialisations in high-tech sectors.”
Two years on – the anniversary was earlier this month – and the popular consensus seems to be that much of what Draghi proposed is still a long way from being in train (one think tank’s Draghi implementation index puts its take-up at somewhere between 15 and 42 per cent, depending on how generous you choose to be). Draghi himself is chairing the new Rhine Group initiative to promote European competitiveness, notably outside the auspices of the EU itself.
It would be a mistake to diagnose that the problem lies in a lack of activity – the European Commission’s Startup and Scaleup Strategy represents a hive of initiatives, including plans for an academic IP licensing blueprint (summarised here).
And central to the strategy is the European Innovation Act. This draft legislation, published in September 2026, is intended to “strengthen the EU’s long-term competitiveness, prosperity and technological sovereignty” – language very much in keeping with Draghi’s major concerns.
The act itself
The legislation will inevitably undergo substantial changes as it slowly makes its way through the European Parliament in the coming year or so. But as it stands there are two main areas addressed: the creation of a common EU framework to value intellectual property, and reforms to R&D procurement.
On procurement, the act would create commons rules across the EU, intended to reduce fragmentation and increase certainty for both “innovative economic operators” – including universities, startups and scaleups, according to the Commission – and public buyers. EU preference rules will apply, giving priority in the first place to tenderers from member states and a limited number of third countries such as those in the European Economic Area.
The definition of R&D procurement, covered in article 3 of the legislation, covers fundamental research, industrial research, and “experimental development up to original development” – these definitions could well be refined by the European Parliament.
Probably the most consequential part of the R&D procurement reforms is article 19: risk-benefit sharing under market conditions. This would see the EU standard be for those performing R&D as part of public procurement to retain ownership of the ensuing IP, rather than the IP accruing to the contracting authority.
There are various caveats here – the public buyer would continue to enjoy free access to the IP (in a way that is not dissimilar to Horizon Europe grant agreements), and will have a right to object to IP transfer in certain circumstances, notably “where such licensing or transfer would be contrary to the public interest in sectors of vital importance to the socio-economic or technological development of the Union or of the Member States of the public buyers.”
The other half of the legislation is specifically focused on intellectual property, and will require the European Union Intellectual Property Office to establish a unit to “support and promote intellectual property-backed finance and commercialisation of intellectual property,” specifically in support of researchers, innovative companies and EU public bodies.
This new unit, dubbed the Competence Centre, will have four years to develop a framework for the valuation and disclosure of intellectual property assets in the EU. This will be a voluntary framework – but the Commission has said that EU institutions, agencies and bodies will make use of it.
In a nutshell, European researchers, start-ups and other bodies will have a central support point for establishing the financial value of their IP. This is aimed at the (assumed) reason why European intellectual property is under-used and under-valued: a lack of standardisation.
Next up
As we’ve noted, it’s likely that this piece of legislation has a complex parliamentary passage ahead of it.
The European University Association has said that the Act could have been more “substantial” in systematically supporting the wider journey from knowledge creation to commercialisation, rather than narrowing its focus to (aspects of) IP and procurement.
The R&D procurement reforms, in particular, represent a full-scale overhaul to how the EU uses the power of its public institutions to support innovation – a recurring theme in much contemporary policy, including in the UK.