Contact
blog
IP2Innovate

UPC Early Litigation Data: The Innovation Paradox

The Unified Patent Court’s first two years reveal a troubling pattern: the system is being deployed against the most innovative companies – particularly in high-tech sectors that drive technological progress and economic growth. Without modernising EU patent rules, the UPC risks becoming an innovation tax on these critical industries.

Data source: Independent research initiative led by Valerio Sterzi (University of Bordeaux), tracking all UPC infringement cases since June 1, 2023, available at Key figures – UPCTrack

The data challenges a core assumption of patent policy: that litigation protects genuine innovators from competitors copying their inventions. In reality, the opposite is happening.

In high-tech sectors defendants consistently demonstrate higher R&D expenditures than plaintiffs (5,4 billion USD more on average per company per year in Information and Communication Technologies (ICT)). 

Meanwhile, 86.5% of ICT cases involve non-competitors.

The data shows that the patent system is being systematically deployed against those investing most heavily in R&D and leading technological advancement.

High-tech companies that bring complex products to the market face unique exposure because of how component patents interact with automatic injunctions.

  • 80%+ of all litigated patents cover components, not final products

  • In ICT: 94% of litigated patents are component inventions

Automatic injunctions, which are consistently granted by European courts, can shut down entire complex products for an infringement of a patent related to a minor component, creating massive leverage for the patent holder. This disproportionate threat – where a component patent can halt a sophisticated final product – is what makes litigation economically attractive for patent holders and exposes innovative companies to outsized risk.

Without automatic injunctions, many of these cases would never be filed, as the economic calculus would favour proportionate negotiated licenses over litigation.

Patent Assertion Entities (PAEs) – who create no products and exist solely to maximise royalty payments – are making significant use of and benefiting from this distorted system:

  • PAEs filed 38% of ICT cases in 2024

  • 97.3% of PAE-litigated patents are component-related

These entities use automatic injunction leverage for financial extraction, not market competition or innovation improvement.

The UPC has become a venue where component patent holders exploit automatic injunctions against companies building complex products – transferring value from genuine innovators to PAEs.

While the Chemical-Pharmaceutical sector operates closer to traditional models (25% competitor cases, smaller innovation gaps), ICT and Instruments show extreme distortions. Yet if the same automatic injunction rules apply across all sectors, it means that remedies that work for traditional industries are weaponised in high-tech.

Without reform, the UPC risks resulting in an innovation tax on high-tech companies: extracting value from R&D leaders rather than protecting them, rewarding patent accumulation over product development, and prioritising financial extraction over genuine innovation.

Amending antiquated proportionality rules in the EU IPR Enforcement Directive to prevent the systematic use of automatic injunctions in all cases is an urgent necessity – one that would protect innovation in high-tech sectors while having minimal impact where traditional patent litigation models remain appropriate.
 

Share

Other blogs

IP2Innovate

IP2Innovate submits feedback to the European Commission Consultation on the Single Market Strategy 2025

On 28 January, IP2Innovate submitted its key recommendations for the upcoming EU Single Market Strategy 2025, highlighting the need to modernize patent enforcement in Europe. In the submission, IP2Innovate stresses that consistent application of proportionality requirement to patent enforcement is essential for the functioning of the Single Market. Modernization of the EU IPR Enforcement Directive through targeted amendments is needed to fully exploit the potential of the Single Market to boost Europe’s productivity. IP2Innovate believes that, after 20 years, now is the time to modernize the IPRED through targeted amendments to ensure that courts in the EU Member States and the newly established Unified Patent Court consistently and effectively consider the proportionality of remedies in their handling of patent litigation cases. Such targeted amendments would ensure the consistent and effective application of proportionality across all EU Member States, creating a more predictable legal environment that supports the free movement of goods and services within the Single Market. By fostering legal certainty and reducing market inefficiencies, these changes will unlock the full potential of the Single Market to drive Europe’s productivity and competitiveness.
IP2Innovate

New academic paper calls for targeted reforms of the IP rights enforcement directive to boost European competitiveness

A new academic paper titled Realizing the potential of proportionality in patent enforcement A case for amending IPRED by professor Rafal Sikorski from Adam Mickiewicz University in Poznan, Poland makes a convincing case for making targeted amendments to the IP rights enforcement directive (IPRED). IP2Innovate spoke to him and asked why IPRED reform is so important for European competitiveness? Here’s what he said: “We are aware that patent enforcement, especially injunctive relief, can be leveraged by patent holders to obtain excessive royalties. Users innovate with their products but find there may be a patent in a small part of the product, one that may even have come from a component supplied by a third party. This is frequently the case with complex tech products. Clearing up these patent issues is both time consuming and costly and in some cases – that is when patent applications have just been filed by patent holders but not yet published – simply impossible”. Professor Sikorski said. “This impacts competitiveness because it can result in products being removed from the market. The injunction creates a barrier to entry and that stifles competition It deprives the market of competition, and it denies consumers the ability to buy these products. “Products have been barred from sale in Europe due to patent disputes. It has happened in the mobile phone sector, laptops, cars. Even a temporary injunction has a very negative effect on a firm’s business. “Mario Draghi’s report on how to restore European competitiveness has been interpreted by some patent owners as a call for strengthening patent enforcement. However, I would argue that Europe must have a more flexible system. Ensuring healthy innovation and competitiveness requires more than just rigid enforcement. It also needs flexibility to address concerns in individual cases.”
IP2Innovate

Decades old patent framework harms Europe's competitiveness

Decades old framework harms competitiveness. Modernising EU’s patent system will be key to EU’s ability to innovate, compete and grow. ​​​Two decades is a long time to lag behind. But that’s how long the European Commission’s Competitiveness Compass tells us the EU has been trailing ​other major economies​. Why? ​​​​Part of the problem is that the system holding Europe back sits on decades old framework. The application of the IPR Enforcement Directive (IPRED), created before today's tech revolution, results in the heavy-handed enforcement over patents which damages innovation. The Compass recognises that to compete, Europe must be able to lead in critical technologies like AI, robotics, biotechnology, and clean energy – all sectors characterized by complex products incorporating thousands of patented technologies. Yet the current application of the IPRED does not cater for complex products. Currently, European patent courts nearly always grant automatic injunctions in patent infringement cases, even if the manufacturer of a complex product has accidentally infringed a patent reading on a minor component of that product. This means companies have to take entire product ranges off the market or pay excessively high settlements, with costs rising into the hundreds of millions. This is impacting investment decisions and​​​ diverting resources from key technology areas​​​​​, and what’s more, it​’​s enriching an ecosystem of ​​​investors​ that buy up ​trivial​ patents specifically to benefit from the imbalanced system. After 20 years, this outdated framework needs updating to ensure remedies for infringement are proportionate, and abusive patent litigation doesn’t hinder innovation and competitiveness. The United States ​​​made this adjustment almost twenty years ago​. The 2006 eBay v. MercExchange US Supreme Court decision required courts to evaluate the facts of each case before issuing injunctions. This balanced approach has​​​ put a stop to automatic injunctions​ while protecting legitimate patent rights. As Europe aims to close its productivity gap and lead in critical technologies, modernising IPRED is key. A more balanced patent system would support Europe's innovative capacity in the exciting and complex technologies that will drive future growth, and help bridge the competitiveness gap. The Compass states the EU needs to close the innovation gap and simplify rules to leverage the benefits of the Single Market. Otherwise, it will “will lose relevance” in a world characterised by strength of the “big powers”.
Back to overview

Subscribe to our newsletter

Privacy policy

© IP2Innovate 2025 - Website door Two Impress