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NPEs: hiding ownership and gaming the system

The lack of transparency around NPEs marks a serious problem for the European patent system, argues Patrick Oliver of IP2Innovate.

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IP2Innovate

IP2I calls on European Commission to protect Europe’s patent system from abuse

A new academic study by economists at the universities of Bordeaux, Grenoble, and Universitat Pompeu Fabra (Barcelona) highlights how patent assertion entities (PAEs) are continuing to take advantage of weaknesses in Europe’s patent system. The study, entitled Patent Privateering, looks at one specific method of patent abuse. Patent privateering is a term to describe a situation where a patent owner hands patents to a patent assertion entity (PAE) to exploit for mutual benefit, allowing the patent owner to maintain a secret stake in the patents. The study concluded that patent privateering is widespread in Europe. The practise has been around for many years but as other jurisdictions including the US have made it harder, Europe’s patent system is a ripe target for abuse. This is largely because patent courts in Europe do not apply the principle of proportionality, and instead hand out injunctions to patent owners almost automatically.
IP2Innovate

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.
Patrick Oliver

Patent abuse hurts European SMEs and undermines the knowledge transfer process

This year World Intellectual Property Day focuses on SMEs. As the two examples below show, patents can be an SME’s worst enemy, as well as their best friend. Abuse by patent assertion entities is a serious and growing threat in Europe, especially to small and mid-size innovative firms. The gaming of the European patent system must stop.
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