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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.


“The Commission needs to analyse in an in-depth study whether Patent Assertion Entities misuse litigation and abuse loopholes in current litigation. Such an in-depth study will contribute to a better understanding if there is a problem and how it could be tackled,” said Marion Walsmann, MEP leading on the Parliament’s report on the EU Intellectual Property Action Plan.

 

A study published earlier this week by Professor Valerio Sterzi, associate professor of economics at the University of Bordeaux, written in collaboration with colleagues from the University of Insubria and University of Turin, points to a growing problem of PAEs buying technology patents in Europe with the purpose of seeking payment from firms.

 

The study shows that PAEs have acquired almost 20,000 technology patents in Europe over the past ten years, and that a majority of them buy patents with no intention of using the patented idea at all.

 

"Most PAEs have nothing whatsoever to do with the knowledge transfer and innovation process. They buy patents to turn a fast buck, and the operation of Europe’s patent system enables that," said Patrick Oliver, executive director of IP2Innovate.
 

“I can’t say all NPEs are bad – some do encourage innovation by renumerating inventors – but there is a strong heterogeneity in the business models of NPEs – one focussed on monetization rather than intermediation,” said Professor Sterzi.

 

Safeguards designed to prevent the gaming of the patent system do exist in European law – the Intellectual Property Rights Enforcement Directive – but they are being ignored in the EU member states. As a result Europe has become an attractive place for PAEs to operate.

 

With the likely launch of the long-awaited Unified Patent Court (UPC) next year Europe is set to become even more attractive to PAEs. “This needs to be addressed by the Commission before the launch of the UPC,” said Patrick Oliver, adding: “Europe has to get its patents house in order.”

 

IP2Innovate, together with European Entrepreneurs CME-PME , a group representing the interests of Europe’s SMEs, have launched a campaign #SOSPatentAbuse - to fight patent abuse by PAEs.

 

Stefan Moritz, Managing Director of European Entrepreneurs CME-PME: “European SMEs are among the silent victims of opportunistic patent attacks, often settling out of court to avoid further legal and financial uncertainty. To these firms patents become a serious obstacle to innovation, instead of being catalysts for growth. This needs to be addressed by policymakers.”

 

 

Media contact:

Paul Meller

paul.meller@interelgroup.com

+32 497 322 966

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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

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