IP2I welcomes the European Parliament's formal request, adopted today, calling on the Commission to investigate the practices of patent assertion entities in Europe.
Brussels, 11 November 2021 – The European Parliament has instructed the European Commission to investigate in-depth how PAEs, also known as non-practising entities, or more colloquially patent trolls, game the European patent system.
“The Commission needs to analyse in an in-depth study whether Patent Assertion Entities misuse litigation and abuse loopholes in current litigation. Such an in-depth study will contribute to a better understanding if there is a problem and how it could be tackled,” said Marion Walsmann, MEP leading on the Parliament’s report on the EU Intellectual Property Action Plan.
A study published earlier this week by Professor Valerio Sterzi, associate professor of economics at the University of Bordeaux, written in collaboration with colleagues from the University of Insubria and University of Turin, points to a growing problem of PAEs buying technology patents in Europe with the purpose of seeking payment from firms.
The study shows that PAEs have acquired almost 20,000 technology patents in Europe over the past ten years, and that a majority of them buy patents with no intention of using the patented idea at all.
"Most PAEs have nothing whatsoever to do with the knowledge transfer and innovation process. They buy patents to turn a fast buck, and the operation of Europe’s patent system enables that," said Patrick Oliver, executive director of IP2Innovate.
“I can’t say all NPEs are bad – some do encourage innovation by renumerating inventors – but there is a strong heterogeneity in the business models of NPEs – one focussed on monetization rather than intermediation,” said Professor Sterzi.
Safeguards designed to prevent the gaming of the patent system do exist in European law – the Intellectual Property Rights Enforcement Directive – but they are being ignored in the EU member states. As a result Europe has become an attractive place for PAEs to operate.
With the likely launch of the long-awaited Unified Patent Court (UPC) next year Europe is set to become even more attractive to PAEs. “This needs to be addressed by the Commission before the launch of the UPC,” said Patrick Oliver, adding: “Europe has to get its patents house in order.”
IP2Innovate, together with European Entrepreneurs CME-PME , a group representing the interests of Europe’s SMEs, have launched a campaign #SOSPatentAbuse - to fight patent abuse by PAEs.
Stefan Moritz, Managing Director of European Entrepreneurs CME-PME: “European SMEs are among the silent victims of opportunistic patent attacks, often settling out of court to avoid further legal and financial uncertainty. To these firms patents become a serious obstacle to innovation, instead of being catalysts for growth. This needs to be addressed by policymakers.”
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