The European Commission has set out a proposal designed to turn the bloc’s innovation weakness into a source of industrial strength, with a new legal framework intended to make it easier for public bodies to buy research and development services and for companies to turn intellectual property into financeable assets.
Unveiled in September 2026, the European Innovation Act is part of the Commission’s wider response to warnings from Mario Draghi, Enrico Letta and an expert gr...
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oup led by Manuel Heitor that Europe is struggling to convert scientific excellence into market success. The Commission says the regulation is meant to help innovative ideas move from laboratories into commercial use more quickly, while also supporting scale-ups that often find it harder to grow across the single market than their rivals in the United States or Asia.
At the heart of the draft law is a dedicated regime for R&D procurement. According to the Commission, the aim is to give public buyers a clearer and more workable legal basis for commissioning innovative solutions, including through pre-commercial procurement. The proposal would apply to contracts above set thresholds and would sit alongside the existing public procurement directives, while excluding some defence-related contracts already covered by separate rules.
The framework is built around the idea that public authorities should be able to buy solutions to a defined problem without dictating the technical route to get there. Tender documents would need to be transparent, functional and performance-based, and public buyers would be able to conduct market consultations before launching procedures. The draft also encourages multiple sourcing and successive phases, giving authorities more flexibility to test different approaches and to refine projects as they progress.
Innovation would not simply be a rhetorical criterion. The proposal says that innovation-related elements would have to carry real weight in evaluation, with at least 15% of the total award score linked to criteria such as the use of technologies or research results from EU and member state publicly funded programmes. The Commission’s stated objective is to ensure that innovation procurement is judged not only on price, but also on quality, resilience and the capacity to generate wider economic value.
One of the most consequential provisions concerns ownership of intellectual property created under these contracts. The draft would, in principle, allow contractors to retain rights to the results they generate, provided they meet obligations to protect, disclose and commercialise them and do not act against the public interest. If a contractor decides not to develop the results, the public buyer could, by agreement, allow the contractor’s staff to take over the rights or protect the results itself and license them on fair, reasonable and non-discriminatory terms.
The proposal also introduces a strong EU preference rule. In practice, that would limit participation in the new R&D procurement scheme to operators from member states and from third countries that have relevant agreements with the EU. The Commission would also be able to exclude some countries by delegated act if they fail to comply with those agreements, if exclusion is needed to avoid strategic dependencies, or if another exception in the agreement applies. Where public buyers cannot find eligible suppliers inside Europe, the proposal would allow them to open the process more widely, but only after demonstrating through market research that no eligible operator can provide the required service.
The Commission presents that restriction as part of a broader effort to reinforce technological sovereignty and make sure the benefits of publicly funded innovation remain in Europe. Supporters of the proposal argue that the measure could help build a stronger home market for critical technologies, while critics are likely to question whether the preference rule could reduce competition or raise costs in some cases.
A second pillar of the act is the creation of a Union Competence Centre within the European Union Intellectual Property Office. The centre would not be a separate legal entity, but it would be tasked with building the infrastructure that, according to the Commission, is needed to make intellectual property more useful as a financial asset.
Its responsibilities would include developing a voluntary EU-wide framework for IP valuation and disclosure, creating a matchmaking platform to connect rights holders with potential commercial partners, and helping to support a secondary market for IP assets. It would also be expected to assist public and private financial actors in designing IP-backed instruments, run awareness and skills programmes, maintain a helpdesk and build an evidence base on IP-backed financing. The core services, including the valuation framework, the matchmaking platform and some support functions, would be free of charge.
The Commission says the goal is to address one of the central weaknesses of Europe’s innovation system: the difficulty of turning patents and other forms of intellectual property into bankable collateral. That problem has long been cited as a barrier for deep-tech firms and other early-stage businesses that may have limited physical assets but substantial intangible value. By making valuation more standardised and more transparent, the Commission hopes to broaden the pool of financiers willing to lend against innovation assets.
The proposal also envisages a voluntary certification scheme for IP valuators and digitalised processes that, where possible, would be compatible with European Business Wallets. It further asks the EUIPO to report annually on its activities, resources and results, reflecting the Commission’s desire to embed the new functions in an operational structure rather than leave them as a purely political aspiration.
The draft legislation draws directly on earlier EU policy debates. The Draghi report argued that Europe suffers from a scale-up gap, while Letta’s work on the single market called for a deeper form of integration that he described as a “fifth freedom” for researchers, knowledge and technology. The Heitor report, meanwhile, warned that only around a third of EU patents are commercialised, underlining the bloc’s longstanding difficulty in bringing ideas to market.
Reaction to the proposal has generally been positive, but with clear caveats. The Conference of European Schools for Advanced Engineering Education and Research described it as a promising starting point for the fifth freedom agenda, while also arguing that it will need to be accompanied by broader simplification and better alignment of research and innovation policies across Europe. The European University Association welcomed the intellectual property and financing elements, but said the act does not fully engage with the wider innovation ecosystem, including mobility between universities and business.
Business groups have largely welcomed the direction of travel. Reporting by Science Business indicated that the European Startup Network sees public procurement as a potential source of funding for young firms, especially if it is paired with a more standardised approach to IP valuation that could make banks and other traditional lenders more willing to participate. The same report said the European Federation of Pharmaceutical Industries and Associations backed the move away from cost-only procurement criteria, while EuropaBio welcomed the intellectual property measures but warned that their impact will depend heavily on implementation and on whether financial institutions actually use the new tools.
The European Commission has framed the proposal as one of its flagship steps under the Startup and Scaleup Strategy and the Competitiveness Compass. Yet its success may ultimately depend on factors beyond Brussels: whether national authorities adopt the new procurement culture, whether public buyers have the expertise to use it, and whether financiers are willing to treat intellectual property as a credible asset class. In that sense, the European Innovation Act is less a finished solution than an attempt to build the missing machinery of a more innovation-friendly single market.
Source: Noah Wire Services
