Sign up for a free trial to IAM magazine including full archive access by clicking on the button below
You need to have cookies enabled in your browser to permanently hide this pop up.
It’s doubtful that when European officials and national negotiators sat down to build a unitary patent and court system their intention was to create something that would be attractive to non-practising entities (NPEs). But as this blog and others have been pointing out for a while now that is exactly what they have done. So far the message does not seem to have got through. Today another group of interested parties have attempted to point out the attractions of current plans to NPEs. We will see if they have any more luck than those who have gone before.
Perhaps the fact that companies such as Google, Samsung, Microsoft, Cisco and Apple – not usually the closest of friends – have come together to pen an open letter to EU members states, MEPs, the Commission and the preparatory committee of the Unified Patent Court (UPC) expressing their concern that the current rules of procedure for the UPC will undermine the benefits of a single EU patent and create “significant opportunities for abuse” may do the trick. But don’t hold your breath.
The letter sent by the self-styled “group of global innovators” points out what they see as two major problems with the current plans: uncertainty over the rules allowing for the bifurcation of cases; and lack of guidelines with regard to the imposition of injunctions. This should come as no surprise to those addressed in the letter – the same things have been pointed out for several years now.
The availability of injunctions to successful plaintiffs in disputes is an obvious area of attraction to NPEs and one that we have discussed on this blog any number of times before. The ability to shut a company out of a market of 500 million plus people is an immensely powerful weapon and one that has attracted the attention of many in the US. It is also one that anyone who spends even a short time speaking to NPEs there knows is generating a great deal of interest among them. Indeed, as the letter notes: “PAEs have already begun to set up shop in several European countries drawn by the potential for siphoning more revenue from European companies.”
One such “PAE” the global innovators may have in mind is Intellectual Ventures, which established its European HQ in Dublin in 2011. Funnily enough, the letter does not mention that among its signatories, Apple, Cisco, Google, Intel, Microsoft and Yahoo! are all IV investors. Neither is there any mention of BlackBerry’s stake in Rockstar (or Microsoft’s or Apple’s), or the fact that HP changed its patent sales policy in 2011 so that it can now do business with NPEs.
What we do see mention of, though, is the very dubious Bessen and Meurer claim that NPEs cost American businesses $29 billion in 2011; while there is a questionable attempt to extrapolate the problems that the US has with poor quality patents in some areas into a European context. This ignores the fact that Europe just does not have the same issues with quality and that many types of patent that are widely available in the US are not granted in Europe. Nor, for that matter, does the letter recognise that the cost of patent litigation is substantially lower in Europe, as is the level of damages awards.
In short, it is disingenuous at best to suggest that many of the “troll” problems that may exist in the US are likely to appear in Europe because injunctions are available. After all, in order to get an injunction you have to win a case. Thus, in Europe it is much more likely that for NPEs to enjoy real success they are going to have to invest in and enforce relatively high-quality patents; what’s more, it is highly probable that they will get many of these from operating companies looking to raise money and/or to outsource their own enforcement programmes.
All that said, there is very little doubt that as things stand the unitary patent system and court in Europe are of immense interest to NPEs. If the plans do not change I have no doubt we will see many more of them in the EU over the coming years. Should that happen, there is absolutely no way in which EU members states, members of the European Parliament, the Commission and the preparatory committee of the Unified Patent Court can say they were not warned.
IP politics, IP litigation, Patents, IP business
It might be worth adding that one origin of the US "troll" problem seem to be the costs on the defendants side due to discovery induced by a complaint.
Additionally, the Rules of Procedure of the Unified Patent Court enable the court to make any enforcement subject to the provision of security. This is considered to be an established tool to prevent the scenarios constructed.Gottfried Schüll, Cohausz & Florack on 02 Oct 2013 @ 18:00