Advocacy
Europe’s patent system is undermined by the lack of application of proportionality as required by EU law
To ensure the patent system supports innovation, growth and competitiveness, EU law, in particular the Intellectual Property Rights Enforcement Directive (IPRED), requires that remedies for patent infringement be proportionate
Lack of proportionate remedies
Insufficient transparency
Injunctions are granted effectively automatically, without consideration of proportionality as is required by EU law.
An unintentional infringement by a manufacturer of a patent that relates to a minor feature of a complex product can result in the entire product range being immediately removed from the market.
Because of the threat of automatic injunctions, companies prefer to settle claims rather than face the risk of an entire existing product range being removed from the market.
SMEs are particularly vulnerable because they often do not have resources to defend themselves in court.
The scale of the problem faced by Europe’s patent system is only partially illustrated because of the limited availability of patent litigation data.
The system of automatic injunctions makes Europe attractive for PAEs
PAEs do not innovate and do not create and sell new products. They are financial vehicles that buy and assert patents against operating companies for the sole purpose of obtaining the highest possible payment. Sometimes they do so by abusing the imbalances in Europe’s patent system, in particular the threat of injunctions which are granted effectively automatically in Europe.
PAEs appear as current owners of almost 20K patent applications at the EPO*
Eight of the top ten most active PAEs in the EU are based in the U.S.**
ICT accounts for 74% of the patents asserted by PAEs in the EU**
In the UPC, NPE initiated infringement cases in the ICT sector account for almost 30% of the total number of infringement cases***
* Non-Practicing Entities in Europe: an Empirical Analysis of Patent Acquisitions at the European Patent Office, November 2021
** Clarivate report “2024 Non-Practicing Entity global litigation report - Analyzing NPE litigation behavior and outcomes from 2018-2023”, May 2024
*** The European Unified Patent Court and Non-Practicing Entities: A Year of Early Evidence, July 2024
Abuse of Europe’s patent system damages European innovators and Europe’s competitiveness
Excessive settlement fees
Significant business and sales disruptions
Bankruptcy of smaller companies
Reputational damage
Subsequent damages to European economy and society
Threat to Europe’s digital and green transition and competitiveness in critical technologies
Competitive disadvantage for Europe as a business location
Less choice and increased costs for consumers
Erosion of public confidence in the patent system