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Decades old patent framework harms Europe's competitiveness

​​Decades old framework harms competitiveness​. Modernising EU’s patent system will be key to EU’s ability to innovate, compete and grow. 

​​Two decades is a long time to lag behind. But that’s how long the European Commission’s Competitiveness Compass tells us the EU has been trailing ​other major economies​. 

Why? ​​​​Part of the problem is that the system holding Europe back sits on decades old framework. The application of the IPR Enforcement Directive (IPRED), created before today's tech revolution, results in the heavy-handed enforcement over patents which damages innovation. 

The Compass recognises that to compete, Europe must be able to lead in critical technologies like AI, robotics, biotechnology, and clean energy – all sectors characterized by complex products incorporating thousands of patented technologies. 

Yet the current application of the IPRED does not cater for complex products.   

Currently, European patent courts nearly always grant automatic injunctions in patent infringement cases, even if the manufacturer of a complex product has accidentally infringed a patent reading on a minor component of that product. This means companies have to take entire product ranges off the market or pay excessively high settlements, with costs rising into the hundreds of millions.  

This is impacting investment decisions and​​​ diverting resources from key technology areas​​​​​, and what’s more, it​’​s enriching an ecosystem of ​​​investors​ that buy up ​trivial​ patents specifically to benefit from the imbalanced system.   

After 20 years, this outdated framework needs updating to ensure remedies for infringement are proportionate, and abusive patent litigation doesn’t hinder innovation and competitiveness.  

The United States ​​​made this adjustment almost twenty years ago​. The 2006 eBay v. MercExchange US Supreme Court decision required courts to evaluate the facts of each case before issuing injunctions. This balanced approach has​​​ put a stop to automatic injunctions​ while protecting legitimate patent rights. 

As Europe aims to close its productivity gap and lead in critical technologies, modernising IPRED is key. A more balanced patent system would support Europe's innovative capacity in the exciting and complex technologies that will drive future growth, and help bridge the competitiveness gap. 

The Compass states the EU needs to close the innovation gap and simplify rules to leverage the benefits of the Single Market. Otherwise, it will “will lose relevance” in a world characterised by strength of the “big powers”.

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