Commission Study on Intellectual Property Rights Enforcement Directive Fails Industry

The European Commission follow up study on the Directive on the Enforcement of Intellectual Property Rights (IPRED) disappoints the innovative industry in Europe by failing to propose amendments to reinforce the proportionality principle. Unless IPRED is amended, companies in strategically key sectors in Europe will continue to be exposed to abusive litigation claims, particularly in Germany.

The Commission has published its highly anticipated Follow-up study on the application of the Directive on the Enforcement of Intellectual Property Rights confirming what industry has been calling out for years: national courts across member states apply IPRED inconsistently.

The study reveals that from a sample size of 600 patent cases, proportionality was considered in only 0.6% of cases, with courts granting an injunction in 94% of cases. The effect is an automatic injunction, which exposes companies in Europe to abusive litigation practices.

The report recommends the Commission consider a set of guidelines to assist national courts with the interpretation of proportionality. However, the Commission already tried this in 2017 with little affect on court practice.

The FSA calls on the Commission to take bold action to create a consistent level playing field for companies across the EU. The current situation undermines Europe’s competitiveness. The study notes that Patent Assertion Entities (PAE) that only buy and assert patents against other companies are highly concentrated in Germany with the majority of cases targeting automotive, telecommunications and semiconductor industries – three sectors that are critical to Europe’s industrial base and technological sovereignty.

On the day following the report’s release, the Federal Court of Justice in Germany heard the case between HMD v. VoiceAge, a prime example where the proportionality principle was not applied in a patent litigation context. VoiceAge is an American PAE that purchased a portfolio of patents to assert against manufacturers like HMD – the maker of Nokia phones.