New report: Europe faces a growing problem of firms abusing the patent system for financial gain

A new report published today gives unique insight into how some non-practising entities (NPEs), also known as patent asserting entities (PAEs) or patent trolls, game Europe’s patent system. The report also provides further evidence that the problem of patent trolls is migrating to Europe from the US, and it proposes several policy responses to address the problem.

The report is largely based on two original case studies, which demonstrate a serious lack of transparency in patent and corporate ownership in Europe. Dormant companies with opaque ownership and almost no assets, commonly established in the UK, are used to acquire among others, European patents. The case studies show how patent trolls exploit those patents in courts in the European Union – especially in Germany.

“This report further supports our view that imbalances in the patent system in Europe are increasingly exploited by non-innovative companies,” said Kevin Prey, Chairman of IP2Innovate and a director of IP at the German software group SAP.

“Lack of transparency lies at the heart of the problem,” said the principle author of the report, Valerio Sterzi, Associate Professor of Economics, University of Bordeaux & GREThA, CNRS.

His report makes a number of policy recommendations to address the transparency issue, including the introduction of corrective measures to deter abuse.

“This report shines a spotlight on flaws in Europe’s patent system that until now have remained obscure. It’s clear now that the proportionality principle enshrined in Europe’s IP Enforcement directive is not being respected,” said Patrick Oliver, executive director at IP2Innovate.

“We urge policymakers in Europe to address this. If left unchecked then Europe’s intellectual property regime can’t be considered fit for the digital age, as European Commission President Ursula von der Leyen called for when she took office last year,” Mr Oliver said.

The study entitled Non-practising entities and transparency in patent ownership in Europe, was written by Valerio Sterzi (Associate Professor of Economics, University of Bordeaux & GREThA, 5113 CNRS), Jean-Paul Rameshkoumar (Researcher, VIA Inno, GREThA, 5113 CNRS, University of Bordeaux), and Johannes Van Der Pol (Researcher, VIA Inno, GREThA, 5113 CNRS, University of Bordeaux).

Professor Sterzi’s report was discussed during an online conference this afternoon. Guest speakers included Amaryllis Verhoeven, Head of Unit in charge of IP at the European Commission, Jean-Francois Cases, Director of IP at Amadeus, the travel IT firm, Edmund Mangold, Principle Expert in IP at the carmaker BMW, Maurits Dolmans, a Partner at law firm Cleary Gottlieb Steen & Hamilton, and Patrick Meinhardt, Vice President of European Entrepreneurs CEA-PME, a trade group representing SMEs.

Today’s event was supported by Marion Walsmann, MEP and Vice-Chair of the European Parliament’s Legal Affairs Committee.

Notes to editors:

1. The study entitled Non-practising entities and transparency in patent ownership in Europe can be found here: http://bordeauxeconomicswp.u-bordeaux.fr/2020/2020-10.pdf
   
   
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, BMW, Daimler, Dell, Deutsche Telekom, Freebox, Google, Intel, Microsoft, Nvidia, Proximus, SAP, Spotify & Wiko.
   
   
3. GREThA (the Research Group on Theoretical and Applied Economics of the University of Bordeaux) is a joint research institute (Unité Mixte de Recherche), associating the University of Bordeaux and the French National Centre for Scientific Research (CNRS). GREThA develops research programmes into theoretical and applied economics.
   
   GREThA’s Non-Practicing Entities and Innovation in Europe (NPEIE) project is funded by the French National Research Agency (ANR). Its principal objective is to constitute the first systematic and extensive research programme aiming at qualifying and quantifying the phenomenon of Non-Practicing Entities (NPEs) entering and affecting the market for technologies and innovation in Europe. For more information, please visit: https://gretha.cnrs.fr/

For further information, please contact:

Patrick Oliver
IP2Innovate
Executive Director

Email: contact@ip2innovate.eu
Mobile: +32-477-597065