Commission Report 2002 (Hungary)

• Progress since the last Regular Report
• Overall assessment
• Conclusion

Chapter 5: Company law

Progress since the last Regular Report

Since last year`s Regular Report, Hungary has made further progress in the areas of company law and the protection of intellectual and industrial property rights.

Regarding company law as such, no significant legislative progress can be reported. As regards accounting, modifications to the Act on Accounting, which were adopted in November 2001, have established the legal basis for the introduction of national accounting standards. Amendments in January 2002 to the Act on the Chamber of Auditors provided for the establishment of an external quality assurance system. Due to modifications to the criminal code in December 2001 (entry into force April 2002) regulations on the violation of accounting regulations have become more rigorous. 2002 has also seen the registration and initial operations of a Fund established to ensure the translation into Hungarian of the International Accounting Standards.

Some progress was made in the field of industrial and intellectual property rights with the entry into force of legislation on copyright in January 2002 improving alignment with the acquis on databases including the sui generis protection. The Act on protection of designs entered into force in January 2002.

To enhance administrative capacity, staff numbers in the Hungarian Patent Office have continued to increase to over 260. Furthermore, training of judges in Community law has continued so that, by the end of 2002, over 1500 judges will have been trained.

As regards the Regulation replacing the Brussels Convention on jurisdiction and enforcement of judgements in civil and commercial matters and the Rome Convention on the law applicable to contractual obligations, no progress can be reported.

Overall assessment

In the field of company law a significant degree of alignment has been achieved. Outstanding issues are of a technical nature. Provisions on economic interest groupings still need to be introduced.

As regards accounting, work has continued on the introduction of national accounting standards and steady progress has already been achieved with the adoption of legislation in this area and negotiations on the creation of the National Accounting Standards Board.

In the field of industrial and intellectual property rights, Hungarian legislation has been aligned further with the acquis. Further efforts are required to achieve alignment with the acquis on copyright in the information society and resale rights. Also, Hungary will need to fully implement the acquis on the legal protection of biotechnological inventions.

Hungary has not yet joined the European Patent Organisation.

Administrative capacity continues to be sufficient, with staff reinforcements made in some cases, and training activities have continued. Demand is also strong with patent applications up by 30% in 2001. There has also been a significant increase in trademark cases pending before the courts as a result of changes to the law, which requires that three professional judges sit in chamber for these cases.

Despite some leniency in imposing penalties in industrial and intellectual property cases, the percentage market share of pirated goods fell to an estimated 18% in 2001. The value of counterfeited and pirated goods seized in the first half of 2002 was less than EUR 2.6 million. Further efforts continue to be needed to ensure rapid and deterrent legal action against offences and to ensure efficient border control measures. The fight against counterfeiting and piracy should remain a priority.

Preparatory work is ongoing to apply the new Regulation replacing the Brussels Convention as of accession.

Conclusion

In its 1997 Opinion, the Commission concluded that Hungary had already taken on the most important Directives in the sectors included under this part of the acquis but that further work was required in all areas. It was highlighted that efforts would be required in the area of patents concerning pharmaceuticals. The Commission added that special attention should be paid to enforcement, in particular with regard to intellectual and industrial property. Efforts of a lesser degree were required to align legislation in the field of company law.

Since the Opinion, Hungary has made progress on alignment with the acquis in this area, and has further strengthened the relevant institutions. Hungary has to a large extent achieved alignment with the acquis in the area of company law, and with regard to industrial and intellectual property rights, although further efforts are still required with respect to patent protection, copyright in the information society and resale rights.

Negotiations on this chapter have been provisionally closed. Hungary has not requested any transitional arrangements in this area. It has agreed to the EU proposal relating to industrial property rights for pharmaceutical products and Community Trademarks. Hungary is generally meeting the commitments it has made in the accession negotiations in this field.

In order to complete preparations for membership, Hungary's efforts now need to focus on ensuring full alignment with the acquis along the lines set out above, intensifying measures to combat piracy and counterfeiting, strengthening border controls and ensuring rapid and deterrent legal action. co-ordination between and training for enforcement bodies (customs, police, judiciary) should be improved.

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