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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.
 

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