The European Innovation Act: How the Law Could Change IP Investment in the EU

At a Glance

• On 9 September 2026, the European Commission published its formal legislative proposal for the European Innovation Act. Unlike an EU directive, the proposed regulation would be directly applicable in all EU Member States without the need for national transposition legislation. The Act represents a key initiative under the EU Startup and Scaleup Strategy.
• The Act has two principal objectives: (i) facilitating IP-backed financing within the EU by introducing a harmonised framework for the valuation and monetisation of intellectual property, including through the creation of a new Competence Centre for IP-backed finance within the European Union Intellectual Property Office (EUIPO); and (ii) streamlining joint public procurement between Member States for research and development.
• If adopted, the Act would particularly benefit IP-rich companies, R&D-intensive businesses, life sciences and deep-tech firms, public-sector technology vendors, IP licensors, and venture-backed scaleups operating or looking to invest in Europe.
• The proposal includes EU preference rules for R&D procurement that would put at an advantage companies with a significant European presence.

Background

The Commission's strategic agenda for 2024-2029 prioritises creating the conditions for the development, commercialisation, and scaling of innovation across the EU, with a goal of establishing a single market for startups and innovation by 2028. The proposed Act is intended as a foundational step toward that objective.

Traditionally, financial institutions in the EU have focused on tangible assets and conventional accounting metrics when making lending decisions. As a result, IP-rich companies struggle to secure financing. The Commission estimates that this has created a financing gap of up to EUR 18 billion per year for asset-light, innovative firms. The Commission estimates that this has created a financing gap of up to EUR 18 billion per year for asset-light, innovative firms. The absence of a harmonised legal framework for IP valuation, coupled with regulatory disparities between Member States, creates barriers to cross-border investment. This funding gap is especially acute in the transition from research to commercialisation. The Commission also highlights that the EU currently spends only 0.6% of total public procurement on R&D, compared with 3.5% in the United States and 5% in South Korea.

A Common EU Framework for IP Valuation

The Act would establish a single EU-wide framework for IP valuation, introducing common methodologies and standards, including a voluntary Union certification scheme for IP valuators administered by the EUIPO, to allow financial institutions to assess the value of intangible assets with greater consistency and confidence. It would also create a digital marketplace to connect IP holders with potential buyers, licensees, and investors, facilitating the monetisation of intellectual property across borders. The IP valuation framework and digital marketplace would be voluntary, and the EUIPO would be prohibited from charging fees for basic access to the valuation framework, the matchmaking platform, and the helpdesk. The Commission estimates that these measures would generate approximately €35 million in cost savings and unlock an additional €10.2 billion per year in IP-backed venture capital and debt financing. Critics of the proposals point to the fact that IP valuation in respect of patent-heavy portfolios requires specialist knowledge which sits outside the EUIPO’s institutional competence (which is limited to trademarks and designs, since patents are administered by an entirely separate (non-EU) body, the European Patent Office).

The proposal would also establish a Competence Centre within the EUIPO, tasked with developing skills programmes in IP-backed finance, building an evidence database on IP-collateralised transactions across the EU, supporting the development of new financial instruments backed by IP, and coordinating a Union-level helpdesk. For US companies with EU operations or IP portfolios, this framework could provide new avenues for leveraging European IP assets to access financing.

A Simplified Route for Research and Development Procurement

The Act would establish a common procedure for joint cross-border R&D procurement, enabling Member States to pool resources and coordinate purchasing of innovative solutions. This includes provisions for pre-commercial procurement which would allow public buyers to partner with innovators at an earlier stage.

Under pre-commercial procurement, IP ownership would remain with the contractor by default, enabling companies to commercialise their R&D results to wider markets. This approach differs from typical US federal procurement practice under the Federal Acquisition Regulation (FAR), where the government generally retains broader rights in inventions and data developed under government contracts. The aim is to improve legal certainty, reduce administrative complexity, and help new technologies reach the public-sector market faster. The Commission projects that these measures could deliver approximately €1 billion in savings for public buyers and generate an additional €25.92 billion in annual profits for companies.

The proposal includes some EU preference rules for R&D procurement access. Public buyers would generally be required to open participation only to EU-based operators with a significant R&D presence in Europe. The proposal does provide limited exceptions: where restricting access would result in insufficient bidders or disproportionate costs, public buyers may open procurement to operators from countries with broader trade agreements. Defence procurement is excluded from the mandatory scope of the R&D procurement rules.

Implications

• IP-backed lending and investment in Europe could be significantly simplified under the proposed framework, providing new avenues for companies to leverage their intangible assets.
• For the first time, IP valuation methodologies and R&D public procurement procedures would be codified under a common EU-wide framework, reducing the current fragmentation between Member States.
• Joint public procurement between Member States in R&D could become more frequent, potentially increasing cross-border investment and fostering innovation across the region.

Next Steps

• The proposal will now proceed through the ordinary legislative procedure. The European Parliament and the Council will each consider it, and the final text may differ materially from the current proposal.
• US companies with EU operations, EU-registered IP portfolios, or ambitions to participate in EU public R&D procurement should monitor further developments.
• Separately, the Commission has published alongside the Act a proposal for a Council Recommendation on regulatory sandboxes, which would provide a standardised framework across the EU for testing innovative products and services in a controlled regulatory environment.