The European Innovation Act was presented by the European Commission on 9 September 2026. Despite its broad name, the proposal is fairly narrow. It does not create new funding programmes. Instead, it tries to remove two specific obstacles between research and the market.
Good at research, weaker at commercialisation
The Commission’s starting point is a familiar one. The EU is a global leader in scientific research, but this does not translate into a corresponding level of innovation and commercial success. Ideas developed in Europe too often fail to reach the market, grow across borders or create new industries.
The Commission identifies two gaps. In the first, projects are still too risky or too fragmented to attract private investment. In the second, companies that have reached the market struggle to grow because of financial, regulatory and market obstacles.
A regulation, not a directive
The proposal takes the form of a regulation. Unlike a directive, a regulation applies directly in all member states without having to be written into national law, which the Commission argues gives faster and more uniform rules. The proposal now goes to the European Parliament and the Council of the EU, and the final text may differ. It contains no new funding; it changes the legal framework.
Patents as a basis for financing
The first part concerns intellectual property. Patents and other intangible assets account for a growing share of companies’ value, but in the EU they are still rarely used as security for loans or investment, because banks and investors mainly look at physical assets. According to the Commission, European start-ups raise around half as much capital as their American counterparts by their tenth year, and companies with few physical assets face a financing gap estimated at up to EUR 18 billion a year.
The proposal would give the EU Intellectual Property Office (EUIPO) three new tasks: a competence centre for financing based on intellectual property, a voluntary common framework for valuing patents and other rights, and a digital marketplace where rights holders and investors can meet. Using these services would be voluntary.
Common rules for buying research
The second part concerns public procurement of research and development. Much of this procurement currently falls outside the EU’s procurement rules and is governed by differing national rules. The proposal introduces common rules, including for so-called pre-commercial procurement, where a public body pays for the development of solutions that do not yet exist, and makes it easier for public bodies in different countries to procure jointly. According to the Commission, the EU spends about 0.6 percent of its public procurement on research and development, compared with 3.5 percent in the United States and 5 percent in South Korea.
Several provisions are aimed at young companies. Public buyers should not exclude innovative start-ups that lack a history of turnover but have other financial resources, such as venture capital or valuable patents, and the financial guarantees required of them should be lowered. As a rule, companies should be able to keep the rights to what they develop. Requirements should preferably describe what a solution must do rather than prescribe how it should be built.
The proposal also introduces a preference for European suppliers in research procurement, with exceptions where suitable European suppliers are lacking or the cost difference is too large.
The Commission’s estimates
The Commission’s impact assessment gives the following estimates:
- The patent measures would generate an additional EUR 10.2 billion a year in venture capital and loans to companies backed by intellectual property, and save companies about EUR 35 million a year in administrative costs.
- The procurement rules would save public buyers EUR 1 billion a year and increase company profits by an additional EUR 25.92 billion a year.
- Overall, EU GDP would be 0.25–0.42 percent higher after ten years, corresponding to up to 507,000 jobs.
The Commission’s Joint Research Centre presents the patent estimate as a range, from EUR 2.7 billion to EUR 10.2 billion a year. The figure of EUR 10.2 billion is therefore the upper end. All the figures are forecasts for a proposal, not measured results.
Part of a larger package
The Act is part of the EU’s strategy for start-ups and scale-ups. It draws on the definitions of innovative companies, start-ups and scale-ups that the Commission adopted in a recommendation on 18 March 2026. Rules for regulatory sandboxes, where new solutions can be tested under supervision, were originally planned for the Act but have been moved to a separate proposal.
Narrower than the name suggests
The European Innovation Act does not create new money for innovation. It aims to make two existing tools work better across the EU: patents as a basis for financing, and public bodies as early customers for research and development. Whether the Commission’s estimates hold will depend on the negotiations ahead, and on how public buyers, investors and companies use the new frameworks.
