Brussels, 17 January 2020
Thirty-five companies and four industry groups representing over 150 companies from different industry sectors, have written to European Internal Market Commissioner Thierry Breton, urging him to take action to clamp down on Patent Assertion Entities (PAEs) – otherwise known as “patent trolls”.
“The experience of our member companies indicates that Europe’s patent system is not working properly and is undermining Europe’s ability to compete globally in the next frontier of technologies,” said Patrick Oliver, Executive Director of IP2Innovate, one of the industry groups that signed the letter.
“The European Commission needs to take steps to stop PAEs from gaming the patent system. We are urging Commissioner Breton to draft a set of guidelines that address imbalances in the patent system – in particular guidelines that support the application of a proportionality requirement in patent enforcement by judges around Europe, as required by EU law,” Mr Oliver added.
Many European courts issue automatic injunctions upon a finding of a patent infringement, without considering a remedy that could be more proportionate. So for example, an unintentional infringement of just one patent among many others could result in a popular product being withdrawn from the market.
PAEs don’t invent, build or sell anything. They just buy up patents to assert them against innovative companies, including SMEs, and extract high settlement fees not based on the value of the underlying invention but rather based on the damage that would result from the removal of the entire product from the market.
“As litigation by PAEs has slowed in the US we have witnessed its rise in Europe,” Mr Oliver said, adding: “It’s not just big firms that are targeted – SMEs are also picked on by PAEs. Unjustified product withdrawals can sink a company. They also deprive the public of consumer choice and the benefits of innovation.”
Clear enforcement guidelines would help ensure Member States apply EU law properly. They would also bring more balance to the patent system and help avoid disproportionate outcomes and abusive litigation practices, Mr Oliver said.
“We stand ready to work with the Commissioner and his team on specific solutions to prevent PAEs from further exploiting the legal system to the detriment of Europe’s digital economy,” he said.
Notes to editors:
- The letter to Commissioner Breton and full list of signatories can be found here.
- IP2Innovate (IP2I) is a coalition of small and large companies that create innovative products and services in Europe and collectively hold thousands of European patents, as well as European industry groups that collectively represent 65 companies. Our members include: Adidas, Amadeus, Atos / Bull, Daimler, Dell, Freebox, Google, Intel, Microsoft, Nvidia, Proximus, SAP, Spotify & Wiko.
IP2I is concerned about a number of imbalances in Europe’s patent legal system that are being exploited to the detriment of innovation and growth in Europe. The exploitation of these imbalances is in particular shown by the rise of litigation related activity by Patent Assertion Entities (PAEs) in Europe.
- European Commission’s IP Package of 29 November 2017:
In its IP Package of 29 November 2017, the Commission acknowledged that there are differences in the way Member States apply certain provisions of the EU Directive on IPR enforcement (IPRED) (such as those on injunctions) across the Single Market, thereby limiting the effectiveness of the Directive. The Commission therefore undertook to “work with Member States’ national experts and judges on further, more targeted guidelines, to give more detailed and practical guidance on specific IPRED issues, based on best practices experience” (here, p. 29) with a view to improving the system of judicial enforcement in the EU.
Two years after the publication of the IP Package, the thirty-four companies and four associations signatories to the letter to Commissioner Breton call on the European Commission to expand its work with Member States, judges and stakeholders to publish targeted guidelines to support the homogenous and effective application of the proportionality principle to patents.
- For further information, please contact:
Executive Director, IP2Innovate
Brussels, 17 October 2019
In a recent press release the German Conservatives (CDU/CSU) Elisabeth Winkelmeier-Becker and Ingmar Jung express concerns over abusive litigation practices by patent trolls, which distort the market and undermine Germany’s attractiveness as a business location. They note that in light of the high complexity of modern products, companies can no longer completely rule out the possibility of patent infringements. In this context, an unlimited right to injunctive relief create unwarranted leverage for patent trolls who buy up patents only to assert them against companies and extract disproportionately high settlements. Solutions proposed by CDU/CSU are the introduction of a proportionality test in the German Patent Act as well as a synchronisation of infringement and nullity proceedings.
IP2Innovate has long advocated in favour of bringing more balance to the German patent system so that it supports innovation and economic growth. Statistical evidence as well as the experience of IP2Innovate members show that patent trolls are increasingly targeting Germany, depriving companies of significant financial resources that are no longer available for research, development and innovation. We welcome the political support for the reform of the German Patent Act to introduce a proportionality test on injunctive relief. Such a reform is necessary to support the development and marketing of complex, multi-functional high-tech products in Germany and across Europe’s single market.
Berlin, 2 Oktober 2019
Das Patentrecht ist ein wesentlicher Eckpfeiler für Innovation und – damit verbunden – für nachhaltiges Wirtschaftswachstum. Es kann dieser Rolle allerdings nur gerecht werden, wenn es die Entwicklung und das Inverkehrbringen komplexer, multifunktionaler Hightech-Produkte wie Autos, Telefone und medizinische Geräte unterstützt. Dies tut das deutsche Patentrecht derzeit nicht! Hauptmangel: Unterlassungsklagen werden automatisch erlassen, ohne alternative, geeignetere Rechtsmittel zu prüfen. Diese Situation schadet der deutschen Industrie.
„Wir setzen uns gezielt für eine Anpassung des Patenrechts und die Einführung einer Verhältnismäßigkeitsprüfung beim patentrechtlichen Unterlassungsanspruch ein“, sagt Kevin Prey, Chairman von IP2Innovate und Director IP Policy & Strategic Transactions bei SAP.
Der Unterlassungsanspruch ist eine notwendige und maßgebliche Säule, um einen starken Patentschutz zu gewährleisten. Dieser kann sich jedoch in einigen Fällen als unverhältnismäßig erweisen: Beispielsweise wenn das Patent sich nur auf eine Komponente eines komplexen Gesamtprodukts mit tausenden patentierten Komponenten bezieht und deswegen ggf. ganze Produktreihen vom Markt genommen werden müssen.
„Die Androhung einer automatischen Unterlassungsverfügung und die fehlende Verhältnismäßigkeitsprüfung bedeuten, dass deutsche Unternehmen mit einem erheblichen wirtschaftlichen Risiko konfrontiert sind“, so Prey weiter. Gerade in einem Hochtechnologieland wie Deutschland sei dieses Thema für viele Unternehmen von hoher Relevanz. Kevin Prey: „Sogenannte „Patenttrolle“ nutzen die fehlende Verhältnismäßigkeitsprüfung gezielt aus, um überzogene Zahlungen von Unternehmen in Deutschland zu erhalten.“
Letztendlich entzieht diese Situation den Unternehmen erhebliche Finanzmittel, die für Forschung, Entwicklung und Innovationen nicht länger zur Verfügung stehen. Dies hat auch Auswirkungen auf Verbraucherinnen und Verbraucher. IP2Innovate sieht hier dringenden politischen Handlungsbedarf.
IP2Innovate ist ein branchenübergreifender Zusammenschluss von Unternehmen und Industrieverbänden, die sich gemeinsam für ein innovationsförderndes Patentrecht in Europa einsetzen.
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Brussels, 1 October 2019
Ahead of the parliamentary hearing of the EU Commissioner-designate for the Internal Market Sylvie Goulard, the cross-sector industry coalition IP2Innovate sent a letter to the Commissioner-designate urging her to take steps as part of her mission to bring balance to Europe’s patent system to ensure it supports the region’s digital growth ambitions and enhances competitiveness in critical technology sectors.
Commission President-elect Ursula von der Leyen in her mission letter to Goulard asked her to “take a close look at [EU’s] intellectual property regime to ensure that it is coherent, is fit for the digital age and supports our competitiveness”. According to IP2Innovate, an effective and balanced patent legal system is an important prerequisite for Europe to be able to compete globally in the next frontier of technologies, such as blockchain and artificial intelligence. Unfortunately, the experience of IP2Innovate member companies, and many other European innovators, is that Europe’s patent system presently lacks this necessary balance, making it harder for companies to scale up and bring new products to market rapidly.
“In the digital age, products are increasingly complex, often covered by thousands of patents, which make them constantly subject to patent disputes”, IP2Innovate said in its letter to the Commissioner-designate. “Because the practice of many European courts is to issue automatic injunctions upon a finding of infringement, without considering a remedy that could be more proportionate, an accidental infringement of just one patent among many others can result in removing from the market a product necessary to access digital goods or services”.
According to IP2Innovate, this situation makes Europe more and more attractive to Patent Assertion Entities (PAEs), also known as “patent trolls”, who buy up patents only to assert them against innovative companies, including SMEs, and extract high settlement. These entities increasingly target the ICT-industry, central to growth and innovation across many industries.
Under the leadership of Commissioner-designate Goulard, IP2Innovate calls on the European Commission to take concrete steps to bring greater balance to Europe’s patent legal system to support the region’s digital growth ambitions and secure its competitiveness in critical technology sectors.
Read the full letter here.
For further information, please contact:
Executive Director, IP2Innovate
Erlangen, 25 March 2019
In light of the considerable evidence that imbalances in Europe’s patent system are being increasingly exploited by Patent Assertion Entities (“PAEs”), to the detriment of digital innovation, the industry coalition IP2Innovate welcomes the fact that leading academics, practitioners and government officials came together to explore ways to ensure consideration of proportionality in the granting of patent remedies, as required by EU law.
The International Symposium “Enforcing Patents Smoothly – From Automatic Injunctions to Proportionate Remedies”, was hosted on 22 March by the Institute of Law and Technology of the Friedrich-Alexander-Universität Erlangen-Nürnberg. The conference looked at proportionate remedies as an alternative to granting automatic injunctions, which give undue leverage to PAEs. PAEs (also sometimes referred to as “Non-Practicing Entities” (“NPEs”) or “patent trolls”) are entities that don’t invent or innovate their own patents, but buy them for the sole purpose of making money via lawsuits, thus damaging innovation.
While the EU Intellectual Property Rights Enforcement Directive (IPRED) makes a clear case for proportionate and equitable remedies granted by courts, members of IP2Innovate are concerned that these requirements are not effectively applied in many Member States. In practice, upon a finding of patent infringement, courts generally grant an immediate permanent order to remove the product from the market, without considering whether an injunction is the most appropriate and proportionate remedy in each particular case.
This practice is increasingly concerning in times of digital transformation with more and more multi-feature, integrated products incorporating thousands of patents. The leverage obtained from the threat of an injunction on a complex product can greatly exceed the value of a patent covering a minor feature incorporated into that product. This has opened the field to PAEs, whose activity in Europe is on the rise, as documented in the recent report by Darts-ip.
Prof. Dr. Franz Hofmann, LL.M., Chair of Private Law, Intellectual Property
and Technology Law of the Friedrich-Alexander-Universität Erlangen-Nürnberg, the organizer of the Symposium, said: “In many EU Member States, injunctions are conceived as default remedies. Although patents are an important tool for innovation, granting an injunction irrespective of the particular facts of the case can lead to hardship. Automatic injunctions are not necessarily ‘fair and equitable’, as required by the EU’s Intellectual Property Rights Enforcement Directive”.
Kevin Prey, Chairman of IP2Innovate, said: “The threat of an immediate permanent injunction is a powerful weapon when wielded by PAEs, and its availability in certain Member States is driving increased activity in Europe. We welcome the intensified debate on proportionate remedies and hope it will lead to a more effective application of the proportionality principle to patent cases across European countries, as required by EU law”.
For further information, please contact:
Executive Director, IP2Innovate