IP2Innovate welcomes the call by CDU/CSU to introduce a proportionality test in the German Patent Act to better protect innovators against patent trolls

IP2Innovate

BRUSSELS, 28 April 2023 – IP2Innovate welcomes the European Commission’s proposal to reform the licensing of standard essential patents. “This initiative should at least help level the playing field when standard essential patents licensing is involved,” said Patrick Oliver, executive director of IP2Innovate. “The proposal isn’t as bold as it was a week ago, but it still has certain important reforms in place. Opponents of this reform have lobbied intensely for the Commission to abandon it. I hope that in an effort to compromise, the Commission hasn’t opened up loopholes that would undermine its effectiveness,” he added. IP2Innovate welcomes the Commission’s effort to inject much needed transparency into SEP licensing, limiting the instances where patent owners could abuse the system. In his press conference on 27 April, Commissioner Thierry Breton referred to how the current SEP system enables patent owners to extract excessive royalties. “He is right. This happens not only with SEPs but also in the broader patent system too,” said Mr Oliver, adding: "We hope he is also right when he says this practise will become impossible in the areas of SEPs, and that he then turns his attention to fixing related problems that plague the broader patents system in Europe.” IP2Innovate members collectively have thousands of European patents, including SEPs. They believe that patents play a vital role in the innovation process. But when the system is abused patents become an obstacle to innovation. And it’s not only happening with SEPs. Many patent assertion entities (PAEs) are in business to exploit the weaknesses in the system. IP2Innovate was established in 2016 to combat patent abuse by these PAEs, often referred to as patent trolls. It has been pushing for courts to move away from granting automatic injunctions in patent disputes, and instead apply remedies that are proportionate, especially when highly complex products are involved.

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On Friday the European Commission and the Portuguese Presidency of the EU will invite member states to support a declaration regarding startups that seeks to create common standards in areas such as access to finance and social inclusion. Ms Rantasaari feels that patent issues are missing from this otherwise useful initiative.

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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.”