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IP2Innovate calls on the European Commission to strengthen EU law to ensure a balanced patent system and enhance Europe’s competitiveness

BRUSSELS, 25 March 2024 - IP2Innovate is calling for targeted amendments to EU intellectual property law to ensure that European patent courts consider the proportionality of remedies in their handling of patent litigation cases.

The proposed amendments will help create a more balanced patent system. This will spur innovation and, in turn, help to address Europe’s lagging competitiveness.

The 2004 EU IP Rights Enforcement Directive (IPRED) requires that remedies for patent infringement be applied in a proportionate manner, but courts are handing out injunctions to patent owners in effect automatically, without considering the disproportionate impact that may result.

Guidance issued by the European Commission in 2017, aimed at correcting the misapplication of the EU law, has not materially improved the situation.

An analysis of patent court rulings provided by Darts-ip, the leading source of global patent case data, for the period 2018-2020, shows that 99% of cases saw no proportionality assessment – compared with 99.7% of cases observed between 2015 and 2017.

Clearly the Commission’s 2017 Guidance has not brought a material change in the application of proportionality,” said Patrick Oliver, executive director of IP2Innovate. “We are pleased that the Commission is currently conducting a new study to examine the problem.”

 

German patent law reforms

Legal reforms adopted in June 2021 in Germany, where most EU patent litigation takes place, appear to have encouraged more defendants to view proportionality as a potentially viable defence to an injunction. Since the reform there have been at least 17 court cases where proportionality was pleaded by the defendant during a 15-month period, compared to only two cases over the preceding six-year period.

It is still too early to assess the real impact of the German reforms but early indications show that at least proportionality is being raised more frequently than before the reforms. “We are now callingfor proportionality to be further codified at the EU level through targeted legislative action, and for the next European Commission to include codification in its political priorities,” Mr Oliver said.

“Further codification is necessary to address an imbalance in Europe’s patent system that harms competitiveness and innovation in Europe”, he said. “It is possible that other Member States will follow Germany’s lead and we definitely would encourage this, especially given the fact that many Member States never explicitly transposed the IPRED’s proportionality requirement into their patent legislation. However, having clear EU rules to ensure a harmonized approach across the EU Single Market is essential to effectively enforce the application of the proportionality principles in patent litigations,”he said.

Codification at EU level should take the form of targeted amendments to the IPRED, to make it clear that a proportionality assessment must be undertaken by courts in deciding what remedy to grant, and to spell out the factors that courts should consider in deciding whether to grant, tailor or deny a permanent injunction and/or alternative remedy. Indeed, to foster and protect EU innovation, it is imperative that courts consider whether the remedy for a patent infringement claim would not result in a disproportionate impact.

 

UPC context

Ensuring the equitable resolution of patent litigation in the EU through the targeted amendment of the IPRED is of even more importance with the establishment of the Unified Patent Court (UPC). If automatic injunctions become the norm in the newly established UPC, innovative companies would face Europe-wide automatic injunctions and not just ones at national level.

With the arrival of the UPC, the stakes have increased, making it even more important to ensure that courts will consider the proportionality of the remedies sought by plaintiffs seeking injunctions on the grounds of a patent infringement. Proportionality will ensure that the interests of plaintiffs and defendants, as well as the public, are flexibly assessed to ensure a balance of the reasonable interests of all sides, which is especially critical in the case of complex consumer products. The threat of having a product taken off the entire European market would worsen the imbalance between patent owners and implementers.

“We believe that further codification of proportionality in EU law would ensure that proportionality is effectively applied at UPC level, as well as in national patent courts,” Mr Oliver said.

Notes for editors

(1) The analysis covered all court decisions in patent cases in Europe provided by Darts-ip, part of the analytics firm Clarivate, for the period between January 2015 and December 2020 in which an infringement was found and a permanent injunction was sought. In total, 635 court rulings from 15 EU Member States as well as from the UK and Norway were analysed. Proportionality was considered in only 4 out of 635 cases in which a permanent injunction to stop patent infringement was sought (0.6%). For the EU countries, proportionality was assessed in only 0.3% of cases (2 out of 628 cases).

 

For further information, please contact:

Patrick Oliver

IP2Innovate

Executive Director

Email: contact@ip2innovate.eu

Mobile: +32-477-597065

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Patrick Oliver

Wide cross-section of industry urges the European Commission to take action to stop PAEs from gaming the patent system in Europe

Thirty-five companies and four industry groups representing over 150 companies from different industry sectors, have written to European Internal Market Commissioner Thierry Breton, urging him to take action to clamp down on Patent Assertion Entities (PAEs) – otherwise known as “patent trolls”. “The experience of our member companies indicates that Europe’s patent system is not working properly and is undermining Europe’s ability to compete globally in the next frontier of technologies,” said Patrick Oliver, Executive Director of IP2Innovate, one of the industry groups that signed the letter. “The European Commission needs to take steps to stop PAEs from gaming the patent system. We are urging Commissioner Breton to draft a set of guidelines that address imbalances in the patent system – in particular guidelines that support the application of a proportionality requirement in patent enforcement by judges around Europe, as required by EU law,” Mr Oliver added. Many European courts issue automatic injunctions upon a finding of a patent infringement, without considering a remedy that could be more proportionate. So for example, an unintentional infringement of just one patent among many others could result in a popular product being withdrawn from the market. PAEs don’t invent, build or sell anything. They just buy up patents to assert them against innovative companies, including SMEs, and extract high settlement fees not based on the value of the underlying invention but rather based on the damage that would result from the removal of the entire product from the market. “As litigation by PAEs has slowed in the US we have witnessed its rise in Europe,” Mr Oliver said, adding: “It’s not just big firms that are targeted – SMEs are also picked on by PAEs. Unjustified product withdrawals can sink a company. They also deprive the public of consumer choice and the benefits of innovation.” Clear enforcement guidelines would help ensure Member States apply EU law properly. They would also bring more balance to the patent system and help avoid disproportionate outcomes and abusive litigation practices, Mr Oliver said. “We stand ready to work with the Commissioner and his team on specific solutions to prevent PAEs from further exploiting the legal system to the detriment of Europe’s digital economy,” he said. Notes to editors: 1. The letter to Commissioner Breton and full list of signatories can be found here. 2. IP2Innovate (IP2I) is a coalition of small and large companies that create innovative products and services in Europe and collectively hold thousands of European patents, as well as European industry groups that collectively represent 65 companies. Our members include: Adidas, Amadeus, Atos / Bull, Daimler, Dell, Freebox, Google, Intel, Microsoft, Nvidia, Proximus, SAP, Spotify & Wiko. IP2I is concerned about a number of imbalances in Europe’s patent legal system that are being exploited to the detriment of innovation and growth in Europe. The exploitation of these imbalances is in particular shown by the rise of litigation related activity by Patent Assertion Entities (PAEs) in Europe. 3. European Commission’s IP Package of 29 November 2017: In its IP Package of 29 November 2017, the Commission acknowledged that there are differences in the way Member States apply certain provisions of the EU Directive on IPR enforcement (IPRED) (such as those on injunctions) across the Single Market, thereby limiting the effectiveness of the Directive. The Commission therefore undertook to “work with Member States' national experts and judges on further, more targeted guidelines, to give more detailed and practical guidance on specific IPRED issues, based on best practices experience” (here, p. 29) with a view to improving the system of judicial enforcement in the EU. Two years after the publication of the IP Package, the thirty-four companies and four associations signatories to the letter to Commissioner Breton call on the European Commission to expand its work with Member States, judges and stakeholders to publish targeted guidelines to support the homogenous and effective application of the proportionality principle to patents. 4. For further information, please contact: Patrick Oliver Executive Director, IP2Innovate Email: contact@ip2innovate.eu Mobile: +32-477-597065

Statement by IP2Innovate in reaction to Commissioner Breton’s comments about the European patent system

“IP2Innovate welcomes Commissioner Breton’s  today and we support his call for a balanced and effective European IP system,” said Patrick Oliver, Executive Director of IP2Innovate.
IP2Innovate

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.
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