IP2Innovate welcomes Draghi’s call to improve the pipeline from innovation to commercialization

IP2Innovate welcomes the report on EU competitiveness by Mario Draghi published yesterday, and in particular its emphasis on improving innovation.

The in-depth report cements competitiveness and boosting European productivity at the heart of the EU’s political agenda. It calls for Europe to improve the pipeline from innovation to commercialisation.

IP2Innovate fully agrees. One way to do that is to address the lack of proportionality considerations in patent litigation in European patent courts. Instead of granting remedies on the basis of a proportionality assessment, the default, automatic remedy is an injunction, even when the patent involves only a minor feature of a complex product.

This makes it far too easy for opportunistic patent assertion entities (PAEs) to sue productive businesses. It’s very profitable to PAEs but does nothing for the innovation process except penalise innovators and clog it up. This funnels money away from the development of new products in Europe, instead going to pay outsized legal settlements that often go far beyond what the PAE’s patent is worth.

Last year the European Commission launched a study to look at whether proportionality is being applied in Europe as well as looking into the presence and impact of PAEs in Europe.

In spring this year IP2Innovate called for the Commission to adjust the IP Rights Enforcement Directive (IPRED) in order to ensure proportionality is applied in an effective and meaningful way.

“With this new impetus from Mr Draghi we hope the European Commission will adapt the IPRED with targeted revisions that make proportionality the norm,” said Patrick Oliver, executive director of IP2Innovate.

A key aim of the Draghi report is to address issues that are holding back European competitiveness and productivity. Europe lags its key trading partners in both respects.

The US has addressed the patents issue through a Supreme Court ruling in the 2006 eBay Vs MercExchange case, which made sure courts evaluated the facts of a case before issuing a remedy. As a result it is no longer automatic for a PAE to win an injunction from a judge in the US.

“The same needs to happen in Europe. More balance in the patent system is needed to increase innovation and the take up of new technologies necessary to narrow the productivity gap between Europe and its trading partners,” Mr Oliver said.

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”.

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IP2Innovate welcomes Draghi’s call to improve the pipeline from innovation to commercialization

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IP2Innovate welcomes Draghi’s call to improve the pipeline from innovation to commercialization

Other blogs

Decades old patent framework harms Europe's competitiveness

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