Prof. Sikorski’s latest paper: IPRED needs targeted reforms to strengthen the principle of proportionality in patent litigation

There is broad agreement on the need for taking proportionality considerations into account in patent litigation cases but it’s not being applied in the courts in Europe. As a result, injunctions are being handed out automatically in almost all cases, even though EU legislation – the IP Rights Enforcement Directive (IPRED) – specifically calls for judges to apply proportionality.

IPRED needs targeted amendments in order to correct this. In his paper titled Permanent Injunctions and the Reception of the Principle of Proportionality in the European Union, Rafal Sikorski, assistant professor, Chair of European Law at the Adam Mickiewicz University of Poznan in Poland, calls for reform of the directive.

“The EU should consider introducing a set of factors to IPRED that the courts should consider when applying proportionality. In fact, this approach has already been taken by the EU legislator in the Trade Secrets Directive,” Professor Sikorski said in an interview.

He proposes that a number of factors - similar to those in the Trade Secrets Directive - should be taken into consideration before granting injunctive relief. First, courts should consider that non-practising entities, also known as patent assertion entities or more colloquially as ‘patent trolls’, often exploit patents purely for monetary gain that can be obtained through the enforcement system rather than for their inventive value. Judges need to be aware of the fact that such patentees seek injunctions primarily to obtain excessive royalties.

Courts should also bear in mind whether a patent owner knowingly tolerated the alleged patent infringement for some time before acting to defend their rights, as this would imply that injunctive relief is only sought to extract disproportionate settlements.

Third, courts should also look to the nature of the patented invention. This is important especially in cases involving single patents in complex multi-functional products like cars or smart phones. A patent protecting a relatively minor invention on one of many functionalities implemented in those types of products should not give a right holder power over the entire  product.

Third-party interests are taken into consideration in the US. They have also been considered by UK courts. For example, injunctions have been denied in a Microsoft Windows case where a patent protected a security feature. There, the court said that an injunction risked endangering the security of data of millions of users.

Another example involved a US court denying an injunction in a case involving a patented invention implemented in Toyota cars. There, the injunction would have affected the business operations not only of the manufacturer but also of multiple car dealers. 

“Courts should be moving in this direction in the EU too,” professor Sikorski said. “It’s important to be crystal clear on this, as the UPC gets going and starts developing its jurisprudence. Failure to act now will make it harder to implement proportionality at a later stage. It’s time for the EU to act now – make it clear that proportionality is something courts have to take onboard. Otherwise, the UPC will become excessively imbalanced,” he said.

Adding such a set of factors to IPRED would provide guidance for the courts. “It could assist them in applying proportionality when deciding whether to grant, tailor or deny an injunction. It would also provide much more certainty to the market participants - both the patentees and the patent implementers,” professor Sikorski said.

At the same time, he said it is important to demonstrate that patent rights are not being devalued, he said. “There is a role for injunctions but before granting them, courts should first consider the proportionality option. I’m not proposing anarchy. Rather, by introducing a set of factors, I aim at greater predictability as to how proportionality might be applied,” he said.

And by making the system more predictable, it will make it harder for so-called patent trolls to make opportunistic attacks on those implementing patented inventions.  “It’s a question of tempering absolute rights, while protecting the innovation process,” he said.