September 26, 2013, 7:30 AM — The creation of a pan-European patent system will help spread abusive patent litigation to Europe and could lead to E.U.-wide sales bans on products, leading tech vendors have claimed.
Tech giants including Apple, Google, Samsung, Microsoft, Cisco, HP, Yahoo, Intel and BlackBerry sent an open letter to European officials on Thursday outlining their concerns about the formation of a new unified patent court system in the E.U.
While the unified system has been heralded as simplifying the patchwork of rules that currently exist across the single European market, vendors say it also brings the threat of a one-stop-shop for quick region-wide sales bans. And allowing cases to be split up, with the validity of a patent decided in one court while infringement issues are decided in another, can expose product vendors to penalties even before the patent in question is declared sound, they claim.
The proposed rules of the new system could favor the practices of Patent Assertion Entities (PAEs), popularly known as patent trolls, the companies wrote. PAEs are individuals and firms that own patents but do not directly produce goods or services using the patented innovations and instead assert their intellectual property rights against companies that do.
The current draft rules create "strong incentives for abusive behaviors and harm the innovation that the patent system is designed to promote," the companies wrote in the letter. The letter was signed by 14 companies and two industry associations, among them Adidas, Bull SAS, Deutsche Post, Deutsche Telekom, Telecom Italia, the European Semiconductor Industry Association (ESIA) an the French Syndicat de lIndustrie des Technologies de lInformation (SFIB), a French IT industry association.
To mitigate potential abuse, PAEs should not be allowed to use sales injunctions for the sole purpose of extracting excessive royalties from operating companies that fear business disruption, they wrote. Also, when granting injunctions courts should be required to assess proportionality -- in practical terms, that a proposed measure is no more onerous than is necessary to achieve the immediate objective.
PAEs could also abuse a system that allows courts to separately deal with the questions of whether a particular patent is valid and whether it has been infringed, the companies wrote.
The unified patent agreement allows the validity and the infringement questions to be decided in different courts in the same case.
Splitting those decisions into separate cases is known as bifurcation. A similar system is currently used in Germany, which makes Germany an attractive country for European patent litigation because in some cases it can allow plaintiffs to obtain a quick infringement ruling while the validity case drags on for years.