European courts failing over proportionality: IP2Innovate
Trade group IP2Innovate has warned that courts across Europe are failing to consider proportionality in patent cases, while urging the European Commission to promote similar reforms to those recently enacted in Germany.
In June this year, the German Bundestag approved reforms to the country’s patent laws, abolishing patent owners’ right to a so-called ‘automatic injunction’ in infringement cases.
"The reformed German patent law calls on courts to make a proportionality assessment, and to consider the interests of third parties when doing so,” said IP2Innovate, whose members include Google, Adidas, and Dell.
Using data sourced from Darts-ip, IP2Innovate found that between 2018 and 2020, courts in nine EU member states and the UK and Norway, handed out injunctions automatically in 98% of patent cases in which an infringement was found.
Of the 224 court decisions examined in this period, where an infringement was found and a permanent injunction requested, only four (2%) saw a proportionality assessment.
“The data shows that permanent injunctions are overwhelmingly granted by courts around Europe without any consideration of proportionality as is required by EU law,” said IP2Innovate, adding that proportionality in patent cases protects against unreasonable demands from patent owners and requires that any remedy be aligned with the value contributed by the patent.
It warned that automatic injunctions result in an “imbalanced patent system”. This imbalanced system deters productive firms and allows “unscrupulous patent holders to extract disproportionately high settlements based on the threat of harm that would result from an injunction halting production and sales, rather than the value contributed by the patent”.
The issuance of an injunction without consideration of proportionality is a particularly powerful weapon when wielded by patent assertion entities (PAEs), said IP2Innovate.
It added: “PAEs can use the threat of an automatic injunction and the damage that would result to seek settlements far greater than the value contributed by the invention or any actual harm resulting from the infringement.”
In France, Italy and the Netherlands—three of the largest patent jurisdictions in Europe after Germany—there were no proportionality assessments carried out at all during the period under review, said the trade group.
“It is clear that automatic injunctions in patent infringement cases are the norm in patent courts across the European continent,” said Patrick Oliver, executive director of IP2Innovate.
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