Brussels, 9 June 2020
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.
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Notes to editors:
- 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
- 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.
- 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:
Brussels, 25 May 2020
“IP2Innovate welcomes Commissioner Breton’s comments today and we support his call for a balanced and effective European IP system,” said Patrick Oliver, Executive Director of IP2Innovate.
“We also share his view that Europe’s patent framework needs to be adapted to better suit the challenges of the digital age, and we share his goal of a single European patent. The UPC has the potential to raise the quality and efficiency of the European patent system if implemented well. However, we would urge that the system is adapted first, otherwise the existing imbalances in the European patent system risk being amplified to the detriment of European innovators,” Mr Oliver said.
IP2Innovate, along with 35 companies and other industry groups wrote to Commissioner Breton in February expressing their concerns about the growing impact of patent Assertion Entities, or patent trolls on Europe’s patent system.
They urged the European Commission to draft a set of guidelines to 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 under the 2004 EU IP Enforcement directive (IPRED).
IP2Innovate is hosting an online conference on the topic of patent trolls on June 9th. The event will showcase a new academic study. Speakers include senior European Commission staff, top IP executives from industry and legal experts. The event is open to all: http://patents4digital.ip2innovate.eu
Commissioner Breton’s comments on the patent system start at 09.13 am: https://multimedia.europarl.europa.eu/fr/juri-committee-meeting_20200525-0900-COMMITTEE-JURI_vd
Brussels, 17 January 2020
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:
- The letter to Commissioner Breton and full list of signatories can be found here.
- 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.
- 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.
- For further information, please contact:
Executive Director, IP2Innovate
Brussels, 17 October 2019
In a recent press release the German Conservatives (CDU/CSU) Elisabeth Winkelmeier-Becker and Ingmar Jung express concerns over abusive litigation practices by patent trolls, which distort the market and undermine Germany’s attractiveness as a business location. They note that in light of the high complexity of modern products, companies can no longer completely rule out the possibility of patent infringements. In this context, an unlimited right to injunctive relief create unwarranted leverage for patent trolls who buy up patents only to assert them against companies and extract disproportionately high settlements. Solutions proposed by CDU/CSU are the introduction of a proportionality test in the German Patent Act as well as a synchronisation of infringement and nullity proceedings.
IP2Innovate has long advocated in favour of bringing more balance to the German patent system so that it supports innovation and economic growth. Statistical evidence as well as the experience of IP2Innovate members show that patent trolls are increasingly targeting Germany, depriving companies of significant financial resources that are no longer available for research, development and innovation. We welcome the political support for the reform of the German Patent Act to introduce a proportionality test on injunctive relief. Such a reform is necessary to support the development and marketing of complex, multi-functional high-tech products in Germany and across Europe’s single market.
Berlin, 2 Oktober 2019
Das Patentrecht ist ein wesentlicher Eckpfeiler für Innovation und – damit verbunden – für nachhaltiges Wirtschaftswachstum. Es kann dieser Rolle allerdings nur gerecht werden, wenn es die Entwicklung und das Inverkehrbringen komplexer, multifunktionaler Hightech-Produkte wie Autos, Telefone und medizinische Geräte unterstützt. Dies tut das deutsche Patentrecht derzeit nicht! Hauptmangel: Unterlassungsklagen werden automatisch erlassen, ohne alternative, geeignetere Rechtsmittel zu prüfen. Diese Situation schadet der deutschen Industrie.
„Wir setzen uns gezielt für eine Anpassung des Patenrechts und die Einführung einer Verhältnismäßigkeitsprüfung beim patentrechtlichen Unterlassungsanspruch ein“, sagt Kevin Prey, Chairman von IP2Innovate und Director IP Policy & Strategic Transactions bei SAP.
Der Unterlassungsanspruch ist eine notwendige und maßgebliche Säule, um einen starken Patentschutz zu gewährleisten. Dieser kann sich jedoch in einigen Fällen als unverhältnismäßig erweisen: Beispielsweise wenn das Patent sich nur auf eine Komponente eines komplexen Gesamtprodukts mit tausenden patentierten Komponenten bezieht und deswegen ggf. ganze Produktreihen vom Markt genommen werden müssen.
„Die Androhung einer automatischen Unterlassungsverfügung und die fehlende Verhältnismäßigkeitsprüfung bedeuten, dass deutsche Unternehmen mit einem erheblichen wirtschaftlichen Risiko konfrontiert sind“, so Prey weiter. Gerade in einem Hochtechnologieland wie Deutschland sei dieses Thema für viele Unternehmen von hoher Relevanz. Kevin Prey: „Sogenannte „Patenttrolle“ nutzen die fehlende Verhältnismäßigkeitsprüfung gezielt aus, um überzogene Zahlungen von Unternehmen in Deutschland zu erhalten.“
Letztendlich entzieht diese Situation den Unternehmen erhebliche Finanzmittel, die für Forschung, Entwicklung und Innovationen nicht länger zur Verfügung stehen. Dies hat auch Auswirkungen auf Verbraucherinnen und Verbraucher. IP2Innovate sieht hier dringenden politischen Handlungsbedarf.
IP2Innovate ist ein branchenübergreifender Zusammenschluss von Unternehmen und Industrieverbänden, die sich gemeinsam für ein innovationsförderndes Patentrecht in Europa einsetzen.
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