Questions and answers on the European Innovation Act

Why is R&D procurement important?

Pre-commercial R&D procurement allows public buyers to drive research and innovation by expressing their needs. It guides the research, development and testing of new solutions. It can also support the production and supply of small quantities of solutions that have been successfully developed, so they better match public sector needs.

This enables the public sector not only to address societal challenges and modernise public services faster; it also creates opportunities for innovative companies in Europe – participating in R&D procurement – to gain leadership in new markets. Strong European market demand for innovative solutions is important for creating growth and jobs and for reinforcing European competitiveness.

To provide sufficient demand pull to bring innovations to the market, Europe should significantly step up investments, including through R&D procurement. In the EU, R&D procurement represents €17 billion or ~0,6% of annual total public procurement expenditure, while other leading economies in the world invest 5 to 8 times more and already dedicate 3% to 5% of their annual public procurement expenditure to R&D procurement.

What will the European Innovation Act (EIA) do for R&D procurement?

There are currently no common EU rules for a large amount of R&D procurement. This creates legal uncertainty across the Union and fragmentation across Member States.

The European Innovation Act would create common rules for R&D procurement to allow public buyers to operate across the Union. This would provide legal certainty for public buyers when carrying out R&D procurement, including joint cross-border R&D procurement with public buyers from multiple Member States, as well as for companies and other economic operators to participate in R&D procurements. Public buyers would also have certainty that they comply with State aid rules when they follow the rules on R&D procurement in the EIA. When public support is involved, R&D procurement under the EIA can in most cases be considered to be in line with EU State aid rules, which provide for several options for such support to be considered as no aid or compatible aid.

How will the R&D procurement rules of the EIA support European companies?

The proposed EIA would ensure that all types of innovative economic operators (including universities, startups, scaleups and large companies) can participate in R&D procurement to get their innovative ideas out of the lab and into the market.

The proposed rules would support European economic operators by:

• ensuring that public buyers use proportionate financial requirements, value for money-based award criteria, functional or performance-based specifications, agile contract modifications and innovation-friendly IP rights conditions;
• ensuring that public buyers evaluate their offers within maximum two months; and
• ensuring that public buyers apply an EU preference in R&D procurement.

How will the EU preference rules work?

The EU preference rules in the proposed EIA Regulation require public buyers to open R&D procurements in a non-discriminatory way to tenderers from EU Member States and from third countries with which the Union has concluded relevant international agreements. Today those third countries include the EEA countries and Western Balkan countries, because international trade agreements between the Union and other countries do not give access to R&D procurement. As R&D requires close R&D cooperation with public buyers and on-site field testing, the EU preference rules also require that minimum 50% of the research and development activities for the R&D procurement contract are performed in one of these eligible countries.

If limiting access to R&D procurement to tenderers would result in insufficient bidders meeting the requirements or in disproportionate costs, public buyers may also open the access to R&D procurements to countries that have a public procurement agreement with the EU, even if that agreement does not cover R&D procurement. If there are justified security of public order reasons, public buyers may restrict the access to R&D procurement to tenderers from EU Member States that are not controlled by a third country, or by a legal entity controlled by a third country.

Will the R&D procurement rules lead to more red tape and administrative costs?

No, to the contrary. The proposed Regulation reduces administrative burden and other costs for both public buyers and economic operators. One common set of R&D procurement rules across the Union reduces administrative and legal costs for both public buyers and economic operators. Public buyers are set to save €1 billion every year, while economic operators are expected to gain additional profits of €25.9 billion every year. Extensive digitalisation of R&D procedures will further bring down costs, because R&D procedures will be carried out digitally in electronic format through the Tenders Electronic Daily portal and, once available, through the EU digital marketplace for public procurement.

Are the R&D procurement rules mandatory for all types of public buyers?

No. In the proposed Regulation, the R&D procurement rules would not be mandatory for public buyers in defence. The characteristics and specificities of the field of defence makes R&D in that field very sensitive. Therefore, for military or sensitive security procurement, public buyers in defence are not under the obligation to follow the R&D procurement rules, although they may decide themselves to do so.

What happens with pre-commercial procurement in the European Innovation Act?

Pre-commercial procurement (PCP) is a specific type of R&D procurement. In PCPs, public buyers compare the pros and cons of alternative solutions from different providers. The R&D services are procured in phases (for example solution design, prototyping, product development, testing and first deployment) to de-risk innovations step by step, and to reduce the number of competing providers after assessing their merits at specific milestones. PCP also leaves the ownership of intellectual property rights (IP rights) with the R&D providers so that they can commercialise their innovations to wider markets.

Since 2007, PCP has proven to be a successful way of implementing R&D procurement to stimulate the development and first deployment of a limited set of first prototypes and products that are substantially made in Europe and to help startups enter and grow on the public procurement market. The Commission wants to continue promoting the wider uptake of pre-commercial procurement in the future.

Up to now, there is only a Commission Communication that explains the principles for public buyers to implement PCP. The European Innovation Act will improve the legal certainty for public buyers that want to use PCP more widely by providing an EU-wide procedure for R&D procurement based on the elements of the PCP procedure that are put in place for R&D procurement. The European Innovation Act allows R&D procurement that is not PCP to derogate from leaving IP ownership with contractors or from applying competitive development in phases, when there are justified reasons to do so.

What will be the role of the Competence Centre?

The Competence Centre established within the European Union Intellectual Property Office (EUIPO) will support and promote intellectual property-backed finance and the commercialisation of intellectual property assets. It will develop a voluntary Union framework for the valuation and disclosure of intellectual property assets, establish and maintain a Union-wide digital matchmaking platform to facilitate the licensing and transfer of intellectual property rights, and contribute to the development of a secondary market to support the disposal of intellectual property assets.

The Competence Centre will also support relevant public and private financial stakeholders in the development and implementation of IP-backed financial instruments by providing IP-related technical expertise, market evidence and data analysis. It will contribute to the development of an evidence database on IP-backed financing, using existing sources and information made available by public and private stakeholders, and will establish and administer a voluntary Union certification scheme for IP valuators.

Finally, it will provide various awareness-raising, capacity-building and other support services related to IP-backed finance and commercialisation, including through a Union-level helpdesk.

Why will it be the European Union Intellectual Property Office (EUIPO) in charge of the Competence Centre?

EUIPO is the EU's central intellectual property agency and has progressively acquired new responsibilities beyond registration activities. This evolution reflects its transformation from a registration office into a policy-enabling agency. Assigning responsibilities for IP-backed finance is a logical continuation of this development.

EUIPO possesses strong technical expertise, extensive research capabilities and trusted digital infrastructures related to intellectual property.

It also manages key networks and training platforms, including the Ideas Powered for Business Network and the IP Academy. 

EUIPO enjoys a high level of trust among businesses, IP practitioners and national IP offices and its neutrality and technical credibility also make it a trusted partner for financial institutions. This experience makes this EU agency the most suitable to be the steward for IP-backed finance and IP commercialisation. 

Will the IP valuation methodology be mandatory?

No, its use will not be mandatory. However, the EU institutions, agencies and bodies will use it in the management of Union financial programmes where the valuation of IP assets is a necessary component.

What would be the main elements of the EU framework for IP valuation?  

The framework would go beyond IP valuation; it would include support for EU firms to help them transform their suitable IP assets into bankable asset classes. This support would include help for firms to disclose their IP assets (i.e. identify those assets that are suitable for bank lending), screen EU firms based on their innovative potential, help these firms determine the value of their IP assets and transform these IP valuation reports into information that financial institutions need to take lending decisions. The framework will also provide digital tools for IP valuation and a network of intellectual property valuers and the preparation of guidelines for accreditation.  

Is the marketplace going to be a regulated market?

No, it will be a Union-wide, multi-lingual, digital match-making platform that only connects investors and brokers with IP holders, including those that generated IP with the support of Union financial programmes. The purchases of IP assets or the licencing deals will be concluded outside the platform, not on the platform. This platform will only facilitate transparent, efficient and accessible IP transactions, improve market liquidity and support the development of a fully functioning secondary market. It will also help IP-rich firms that defaulted to dispose their IP assets.

Who will be able to use the EUIPO's services?

The different services of the EUIPO will be accessible for all EU-based small- and medium-sized enterprises, midcaps and scaleups. The primary beneficiaries of these services will be:

1. innovative enterprises established in Member States, including innovative startups, innovative scaleups and spin-offs, whose innovative and competitive performance is driven by the ownership or use and commercialisation of intellectual property rights;
2. researchers, universities, public research organisations, research and technology infrastructures, public buyers, knowledge and technology transfer professionals and other entities established in Member States that have an interest in the commercialisation of intellectual property assets.

Some of the activities of the Competence Centre (e.g. those related to the development of new financial instruments and IP valuation) will also benefit institutional and retail investors, as well as the whole financial community (i.e. financial institutions) that is willing to invest in firms that have a strong IP portfolio and innovation potential.

Proposal for a Council Recommendation on common principles for the design and operation of regulatory sandboxes across the Union

What is a regulatory sandbox?

A regulatory sandbox is a structured framework that allows participants to experiment with an innovation for a limited time in a controlled environment, under the supervision of one or more competent authorities, and that results in evidence-based regulatory learning. Controlled environment can mean a physical, digital or hybrid environment - inside or outside of a laboratory - or otherwise simulated environment in which regulatory sandboxes may be established.

Regulatory sandboxes are usually set up on a case-by-case basis, with a clearly defined scope. They may include temporary, well-defined derogations from existing rules during the testing phase. Authorities may also guide participants on how legal rules and requirements apply to the innovative products or services being tested, thereby reducing legal uncertainty.

Why is the Commission proposing a Council Recommendation now?

This proposal builds on previous Council Conclusions that underlined the importance of regulatory experimentation and the exchange of good practices. As the use of regulatory sandboxes is growing across the EU, the Recommendation aims to encourage more consistent approach while respecting national differences. By proposing a Council Recommendation, the Commission wants to secure the active involvement of all Member States while allowing sufficient flexibility to reflect different regulatory frameworks, resources, and levels of innovation maturity.

The proposed Recommendation will help Member States develop and implement regulatory sandbox frameworks and promote regulatory learning more effectively. A minimum level of consistency across the Union is essential. Strengthening dialogue between Member States and the Commission across policy areas will also help maximise regulatory learning.

How do regulatory sandboxes help startups?

Europe's ability to compete globally depends not only on access to finance, talent and infrastructure, but also on having regulation that can keep pace with innovation.

To address this challenge, the Commission adopted the EU Startup and Scaleup Strategy in May 2025. The strategy sets out measures to make the Union's regulatory framework more innovation friendly and agile.

One important tool is the use of regulatory sandboxes.

Making information about regulatory sandboxes easier to access and ensuring they operate more consistently across the Union can particularly benefit startups and small businesses. These companies often have limited resources to navigate different national rules and procedures.

Are regulatory sandboxes a way to deregulate?

Alongside a clear definition, it is equally important to understand what a regulatory sandbox is not.. The purpose of a regulatory sandbox is not deregulation, but to improve the quality of regulation and support innovation. It is a temporary framework allowing experimentation, not a permanent change to the regulatory environment. Even in an experimental setting, appropriate safeguards must remain in place to ensure that policy objectives and legal requirements are respected. This includes for example, safety requirements when testing technologies such as self-driving vehicles.

One of the main objectives of the proposal is to support Member States and organisations participating in regulatory sandboxes, ensuring that authorised experimentations promote innovation while preserving trust and protecting fundamental rights and values. Legal and ethical safeguards – such as those relating to data collection, transparency, competition and the protection of fundamental rights – must be put in place, and risks related to health, safety or fundamental rights need to be properly managed.

For More Information

Press release - European Innovation Act

Factsheet on the European Innovation Act

Proposal for the European Innovation Act

Proposal for a Council Recommendation on regulatory sandboxes

Pre-Commercial Procurement - Research and innovation

EU Startup and Scaleup Strategy - Research and innovation