European Innovation Act: Procuring Research and Financing Innovation

Introduction

The proposed European Innovation Act, published by the European Commission on 9 September 2026 alongside the proposed Public Procurement Act, addresses a narrower but strategically important question: how public institutions procure research and development, manage rights in the resulting discoveries, and help useful intellectual property find commercial application and financing. It is a legislative proposal, not enacted EU law, and its provisions may be revised by the European Parliament and Council.

Unlike an ordinary contract for a product or service already available, standalone R&D procurement involves paying for work whose technical outcome may be uncertain. Buyers must decide how many approaches to fund, when projects should continue, who bears development risk and who is entitled to exploit successful results. Suppliers and investors need to know whether publicly funded research leaves an enduring commercial asset and what obligations attach to it.

The distinction from the companion Public Procurement Act matters. The main proposal contains an innovation procedure which may progress through development and testing towards deployment. The Innovation Act proposal addresses standalone R&D procurement, including pre-commercial procurement, and then reaches beyond contracting into intellectual property valuation, licensing and potential access to finance.

R&D purchasing as European industrial policy

The proposal combines procurement mechanics with industrial and economic-security objectives. Conditions on which operators may participate, and where funded research takes place, would influence how public demand supports Europe’s research base, specialist labour and strategic technologies. Public buyers would need to consider not only whether a technical idea is promising, but whether the tender structure can support competitive development without excluding the firms most capable of delivering it.

Proposed market consultation, functional requirements, staged assessment and multiple sourcing seek to preserve alternatives while research is still uncertain. Their value depends on how buyers define milestones, allocate development budgets and decide when to narrow the field. Supporting several approaches may reduce dependence on one supplier but also requires clear decisions about the cost of parallel contracts and the value of technical diversity.

Intellectual property and the route to commercial value

One of the proposal’s defining commercial questions is ownership of intellectual property generated under an R&D contract. The draft describes a contractor-ownership starting point, combined with public-buyer rights to use results and mechanisms to respond when outputs are not protected or commercialised. The precise balance of ownership, licensing, obligations and remedies could materially change a young company’s ability to attract investors, license research or sell into other markets.

The proposal also considers priority purchasing arrangements, security requirements and cooperation between public buyers across Member States. These are relevant where discoveries have supply-resilience implications or where the costs and benefits of a research programme need to be shared across national institutions. Priority rights and follow-on commercial procurement require careful distinction: an R&D award should not be treated automatically as an assured future sales contract.

The two-part briefing programme

Part 1 — R&D Procurement, Rewritten as Law: Examines which R&D purchases are covered, proposed participation and research-location conditions, market consultation, competitive development, phased awards and multiple sourcing. It then addresses intellectual property ownership, public-buyer licensing rights and the commercial consequences for start-ups, universities, technology developers and public buyers. The UK’s Contracts for Innovation/SBRI experience provides a practical comparison, while the difference between an R&D contract and a later commercial sale remains central.

Part 2 — Crossing Borders, Turning IP Into Capital: Explores supplier security requirements, joint procurement by buyers in different Member States, and the proposed arrangements for determining rights in shared research results. It then turns to the prospective role of the EU Intellectual Property Office and a Competence Centre supporting valuation frameworks, licensing and transfer, specialist skills and IP-backed finance. The briefing examines what these services might change for technology businesses and lenders, and the limits of a voluntary valuation approach without an automatic guarantee of credit.

Why it matters to buyers, innovators and investors

Public bodies considering research procurement must weigh technical uncertainty against commercial incentives. If suppliers cannot retain sufficient economic value from successful development, the strongest specialist businesses may be reluctant to participate. If buyers retain too few rights, the public sector may struggle to use, maintain or scale what it funded. The proposed framework tries to address that tension through defined rights and duties, but contract design and procurement capability would still matter.

For innovative companies, the practical questions concern where research must be carried out, whether development can proceed through funded stages, how IP is protected and licensed, and whether more predictable rights improve fundraising or commercialisation prospects. Investors and lenders will also want evidence of ownership, freedom to operate, revenue prospects, enforceable licences and potential competing claims. A common valuation framework could help discussions, but would not remove underwriting risk or make intellectual property inherently liquid.

The companion ten-part Public Procurement Act series is relevant to any later procurement of finished products or services. Together, the two proposals illuminate the journey from publicly commissioned research to commercial deployment, without assuming the proposed rules will survive the legislative process unchanged.

Legislative position and access to the series

This overview reflects the Commission’s proposal of 9 September 2026. It is subject to legislative negotiation; future obligations, timescales and institutional arrangements cannot be treated as final. The analysis distinguishes proposed rules from current UK and EU practice.

About the Author

CPO Insights is a market intelligence and thought leadership service of Ipso Facto Consulting Limited. Drawing on founder Ajay Channana's more than 20 years of experience across the public and private sectors, its briefings examine market dynamics, competitive landscapes and their impact on procurement strategy, commercial decisions and supply chain risk.

Ipso Facto Consulting provides independent commercial and procurement advisory services, including fractional procurement leadership, technology and digital procurement, commercial due diligence and UK public-sector market access. The firm supports established organisations with procurement transformation and commercial strategy; private equity and venture capital investors with investment and acquisition due diligence; and founders, start-ups and scaleups with funding readiness, commercial growth and UK market entry.

Disclaimer

This briefing draws on published sources, market insights and the author's commercial experience. Where individual company figures are cited, they are attributed to their original sources. While the text may reference specific organisations, public bodies, departments, products or services, this does not imply endorsement. The briefing is provided for general information and discussion only. It does not constitute legal, financial, investment or other professional advice and should not be relied upon as such. Readers should seek independent specialist advice appropriate to their circumstances before acting on any matter discussed herein.