Guest Post by Peter Arrowsmith. Arrowsmith is a patent attorney and partner at the London based firm Cleveland IP.
Non practicing entities (NPEs) are a familiar part of the IP landscape in Europe, just as they are in the US. However, NPE activity has historically been lower in Europe. This article analyses the present situation in Europe compared to the US. In addition, we analyse how NPE activity might develop in Europe with the anticipated arrival of the Unified Patents Court (UPC).
Factors that encourage NPE activity
There are various factors in a patent system that might influence or encourage activity by a NPE. A non-exhaustive list of possible factors is outlined below, and Europe is compared against the US.
1. Low cost risk in litigation
A NPE is likely to be encouraged to litigate if they can initiate infringement proceedings without incurring a significant cost risk. In the US this is often possible because the losing side does not typically pay the winner’s legal costs. Additionally, NPEs can often find a law firm willing to take the case on a conditional fee basis. In Europe, by contrast, the losing side is typically required to pay at least a portion of the winner’s legal costs. Conditional fee arrangements are also less common.
Verdict: US more favourable to NPEs
2. High costs in litigation for the other side
A NPE is likely to benefit in a system where the opposing side will incur high costs in defending themselves. In such a system the pressure to settle will be significant, simply to avoid the costs involved in litigation. In Europe the cost of multi-jurisdictional litigation is likely to be high, but not necessarily higher than the costs involved in US litigation.
Verdict: Dead heat
3. Uncertainty
A NPE is likely to benefit in a patent system where the outcome of a case is difficult to predict, especially if this is coupled with high costs in litigation. This is likely to encourage a NPE to bring more cases on the basis that they are statistically likely to register some wins. In turn, this will increase pressure to settle before trial. Europe may be considered more predictable than the US in this comparison, simply because decisions are made by experienced patent judges, rather than lay juries.
Verdict: US more favourable to NPEs
4. Size of Market
A NPE is likely to benefit if their patent has a wide geographical scope in an important market because a single adverse decision could have a large economic impact on the other side. In the US a single decision can be effective across the entire country, whereas in Europe it is necessary to enforce patents country-by-country.
Verdict: US more favourable to NPEs
5. Bifurcation
A system in which the issues of infringement and validity are considered separately is also likely to favour a NPE. In such a system the NPE can obtain a favourable decision on infringement before validity is even considered. This may increase pressure on the other side to settle following an initial decision, even in cases where the validity of the patent is questionable. Europe may be more attractive to NPEs in this comparison since certain countries (notably Germany) permit bifurcation.
Verdict: Europe more favourable to NPEs
6. Speed
A fast system can allow a NPE to exert pressure on the other side, which can encourage early settlement. These systems are likely to favour NPEs. In this comparison there is little to choose between Europe and the US, since fast or slow decisions are possible in both systems, depending on the forum chosen to commence proceedings.
Verdict: Dead heat
Overall this analysis suggests that the US patent system is more attractive than Europe for NPEs, which is consistent with the reality that we see. The European system is, however, still viable for NPEs, although they may need to be more selective about the cases and targets they pursue.
The Unified Patents Court – a new opportunity for NPEs
NPEs have registered a number of recent successes in European Courts (see, for instance, Vringo vs. ZTE in the UK), demonstrating that the European patent system can support this business model. All of the factors above would need to be considered by a NPE to decide whether litigation would be worthwhile in each case.
Of course, the patent system in Europe is on the verge of significant change, and the Unified Patents Court (UPC) is close to becoming a reality. The introduction of this Court will significantly alter the litigation landscape, meaning that a change in NPE activity can be expected.
In the current European system only national courts of individual countries are competent to decide on the infringement of European patents. Once it is established, the UPC will be competent to decide on validity and infringement of patents across the cooperating states, which covers most of Europe. A significant motivation in the development of this Court has been the desire to increase simplicity and decrease the cost of pan-Europe patent litigation. If successful, the new Court is likely to have many advantages for conventional business. However, a side effect is that the new Court may increase the attractiveness of Europe from the perspective of a NPE.
In particular, the UPC would appear to present a number of potential advantages from the perspective of a NPE.
1. Size of Market
The UPC will issue decisions that are effective across most of the European continent. Thus, the economic impact of individual decisions is likely to be high for the losing party – much higher than in the present system.
2. Bifurcation
The UPC is likely to permit bifurcation in certain instances. This is likely to favour NPEs, since they may be able to obtain a favourable decision on infringement before validity is considered. This is likely to increase the pressure to settle, even in situations where a patent has questionable validity.
3. Uncertainty
There is currently a great deal of uncertainty about how the new Court will operate, especially in the early days, in the absence of a body of case law. This initial uncertainty is likely to favour NPEs, since it will be harder to predict how a case will be decided, increasing the pressure to settle before trial.
Once the UPC is established there will be a period during which patent owners can ‘opt out’ of the exclusive jurisdiction of the Court. During the early years, this will allow patent owners to continue to use national courts, while there is uncertainty over how the UPC will operate. Many European practitioners anticipate that conventional applicants are likely to exercise this opt out, provided the fee for doing so is not exorbitant. For a NPE there are likely to be more advantages in the UPC than the current system, meaning that few are likely to opt out of the Court’s jurisdiction. This means that a significant number of early cases in the UPC may involve NPEs.
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Question, is it illegal for firms in Europe to take cases on contingency?
Ned there are 38 Member States in EPC-land. Each has its own rules about professional conduct of its lawyers in private practice. Somewhere in this thread is me writing about contingency fee arrangements blessed by the English court. What obtains in other EPC Member States I do not know but I fancy that in many of them contingency fee arrangements are deemed to be contrary to the dignity of the profession. Funny, eh?
Contrary the dignity of the profession?
Wow.
I mean, wow.
I would not like to be a citizen in any such jurisdiction. If it were not for contingency fees, the small fry business or individual would simply have not rights at all, as a right without the means to enforce the right is just such, a right in name only.
Ned,
Perhaps your feelings here are just an indicator of the cultural difference I noted below.
I find myself agreeing with Ned.
link to amlaw.us
A Link for you Ned. I found it in 10 seconds, by Googling.
Germany is very litigious. The little guy will take you to court at the drop of a hat. Why? Because the court at the outset sets a “value of the action” which caps the amount of legal costs you pay to the winner, if you lose. Small value, small risk.
With the Link you can see that your lawyer works for a flat fee, again set by the value of the case. small value, small fee from your own lawyer.
And many people insure against the risk of legal costs. Hardly surprising, when every Tom Dick and Harry is off to court at the drop of a hat.
A prominent English patents judge (Hugh Laddie) once said “We here are not a branch of the Ministry of Social Services”. He had Germany in mind, the land where contingency fees are not allowed
Max, thanks. The German system helps. Small damages, small fees.
But, when one has a patent that is infringed by a major company, the damages will be large and the necessary out of pocket fees to enforce the patent will be large. (I presume both sides pay only their own fees and not that of the other side when the case is over.)
The result of this rigging of the system has to be that small fry cannot really sue the big company for big damages.
And, Max, I tend to think that this was and is the intention of the ban on contingency fees. It has nothing to do with the profession of law. It has to do with denying small fry rights and coddling the rich.
link to amlaw.us
A Link for you Ned. I found it in 10 seconds, by Googling.
Germany is very litigious. The little guy will take you to court at the drop of a hat. Why? Because the court at the outset sets a “value of the action” which caps the amount of legal costs you pay to the winner, if you lose. Small value, small risk.
With the Link you can see that your lawyer works for a flat fee, again set by the value of the case. Small value, small fee from your own lawyer.
And many people insure against the risk of legal costs. Hardly surprising, when every little David is off to court at the drop of a hat.
A prominent English patents judge (Hugh Laddie) once said “We here are not a branch of the Ministry of Social Services”. He had Germany in mind, the land where contingency fees are not allowed
Ned, you are wriong about the consequences of a ban in Germany on contingency fee payment.
There is great respect and trust in Germany for the Constitution, the Rule of Law and for the officers of its courts.
I agree with you totally, that:
“…a right without the means to enforce the right is just such, a right in name only.”
The question is, which countries give Little David, caught up in a civil legal dispute, not only meaningful valuable rights but also a means to enforce those rights, swiftly, economically, proportionately and effectively. Germany does, I’m sure of that. That of course is why Germany, as a country, is so law-abiding and courteous, and why Germans are so respectful of their fellow citizens. For them, lawyers are definitely not the stuff of jokes.
…German eyeglasses for a US set of eyes…
Germany has for example something, what the US has not: A sytem where every individual can claim it´s right. If you do not have the money to defend yourself, or start a legal challenge, the state will compensate for your lawyers costs. You don´t have to find a lawyer who is willing to work on a contigency basis. The only need is, that the claim you will push is “reasonable” to an independent counsel. If you are sued in a civil dispute, even this does not apply. It is called “Gerichtskostenbeihilfe”. And for companies the usual low maximum values for compensation gives them a lot of legal security. Look for example, how patent trolls have harmed the US economy. This is what has not happened (yet) to EU countries in general.
So the “I do not want to live there” is, like anon below indicated, cultural difference. I for myself do not want to live in the US for it´s great legal insecurity in every aspect of daily and economic life, where your lawyer must be your best friend and not your doctor.
Njall,
Thank you for noticing the difference in culture as well as adding a substantive point of difference in real world legal mechanisms.
Well done with that.
However, I would caution you to the rather Kool-Aid induced view that “how patent tr011s have harmed the US economy.” The “standard numbers” used to advance that piece of propaganda have been thoroughly debunked (talk about your Zombie arguments…). Repeating the mantra does not make that error into a non-error.
Also, who are litigation loser-fees collected from when the patent owner is a shell company with no assets?
Paul, I don’t know, but I guess that if at the outset the Shell can’t post an adequate bond, the proceedings simply don’t proceed.
But sorry, I’m not a litigator.
Fyi, the Supreme’s have asked the DOJ to weigh in on the copyrightability of the names, declarations and header lines of APIs.
link to arstechnica.com
I assume the subject matter isn’t entitled to patent protection in the EP. If it is entitled, query as to whether such protection would encourage or discourage NPE lawsuits in that area.
The Google v Oracle battle has spawned some truly classic exchanges on these blog pages.
Who could forget Ned’s prodigious admissions on the last thread on that topic?
See patentlyo.com/patent/2014/11/copyrighting-software-oracle.html
Funny that, Ned disappeared from all further dialogue concerning his admissions…
Don’t forget your man Lemley published a paper saying that all software was non-functional. That should be worth a belly laugh or two.
I have experience in this area and a number of comments and disagreements.
2. I disagree that the numbers are even close. One does not typically get patents in all EP countries anyway, and often selecting 1-3 key ones will be enough for a patentee. The costs in Germany are much, much less than the US through trial. Germany just has a few rounds of briefing and an oral argument.
3.
I fail to see how 3. Uncertainly in the US is a favorable factor for NPEs.
Whether or not it is true as between an NPE and an NPE’s target patent infringer, uncertainty is better for the NPE rather than the patent infringer, it is an entirely different matter as to whether a jurisdiction with higher uncertainty (purportedly the US) is better for an NPE than a jurisdiction with lower uncertainty (purportedly Europe).
NPE’s rely on IP property rights enforcement, the fact that they take risks, rely on wins offsetting failures, etc. does not reverse the basic law of causality that NPE depend on winning their cases, and the more certain an NPE can be of any particular win or any particular loss, any particularly good or particularly bad investment (patent), the more efficiently resources can be utilized and more profitable the NPE can be. It stands to reason an NPE can do much better (as any other business) in a climate of certainty centered on their greatest resource, IP.
To say more uncertainty is good for an NPE is counterintuitive and if true requires some sort of reasoned validation, which I do not see in the article.
Thanks for your comment, Anon2.
In a completely predictable system a NPE would only start litigation in cases where they can win. However, if uncertainty is high then they can consider litigation even in cases where they think they might lose. In these cases the other side may recognise that there is a chance of losing, and they may be inclined to settle to avoid the cost of defending themselves.
This is why I argue that unpredictability is in the NPE’s favour.
The Blackberry cases come to mind. I remember at the time the criticism of Blackberry’s CEO, that he could have had a settlement any time he wanted, just by paying the NPE enough money. Regardless whether or not the asserted claims had any validity, to choose not to settle was deemed to be perverse of him. The cost of the settlement would then be easily recovered, in higher fees to Blackberry customers.
When validity is not tested expeditiously, and when the validity test itself is unreliable, that’s when the NPE’s can best exploit any opportunity to do business.
Thank you for your reply.
Your conclusions/arguments are premised on the assumption that obtaining settlement over mediocre assets (patents) with risk averse parties because of uncertain litigation outcomes is a better business model, i.e. is more profitable over the long run than diligent assessment and assertion of valuable assets (patents) in a more certain context.
I would submit that the first business model is inefficient, and risky, and although the “gamble” or “game” can be played it is not optimal, or more profitable over the long run. The second business model is efficient (although requiring expertise), less risky, and in the end can provide more return on investment.
Ask yourself, if a first NPE chose the first (risky/ uncertainty/ mediocre asset based) business model and chose to operate in an uncertain jurisdiction, while a second NPE chose the second (diligence, certainty, valuable asset based) business model and chose to operate in a more stable/”certain” jurisdiction, which of the two would likely earn more money over the long term, which would you be more likely to purchase shares in as a long term investment (dividends)? (assuming your only motive is profit)?
If you personally would buy shares in the first… then I suppose you are being consistent with your argument.
I would invest in the second company.
Anon2,
Your posts remind me of Peter Zura and the old 271 blog, which highlighted the fact that (at least back then) the so called “Tr011s” not only did not prosecute “weak or purposefully vague” patents, but were very much interested in carefully vetting assets that they did pick up.
Shameful really, how tidbits like that are ig nored because they don’t fit into the desired narratives.
Re: “the basic law of causality that NPE[s] depend on winning their cases..”
Given unchallenged U.S. statistical reports, why is their not wider appreciation of how few patent suits are actually “won?” Approximately 97% are settled before any trial. [Often by defendants willing to settle just to avoid defendant litigation costs in the U.S., not because they think they would lose after full blown discovery, trial and appeal.]
When it is pointed out to English litigators how grotesquely more expensive it is to litigate in London than on the European mainland, specifically Germany, the usual reply is that it is a major plus point of litigation in England that it is so expensive. You see, the expense causes 95% of cases to settle before trial. This eases the burden on the court system of England, which is a good thing. On this logic, the more expense then, the better, eh?
Except in the US, that extremely high cost of litigation (particularly discovery before the claims are examined) causes more defendants to settle with NPEs. It works in the NPE’s favor, especially if they can sue a slew of corporations at the same time.
It appears tha many still are eager to confuse court reform (or general business structure reform) with patent reform…
By “winning cases” I mean conducting successful and profitable patent monetizing campaigns.
As you point out litigation is more often than not settled before trial.
For successful monetization I would go farther than that…getting agreement before getting very far into litigation is likely much more efficient for the patent holder assuming the license reflects reasonably what would have been enforced at trial in any case.
Nice comparison, but surprised that “claim scope” was not high on the list, especially since you note that infringement may get decided first. U.S. claim scope law may be a quagmire, but EPO patent claim scope law is a swamp – an artificial attempted compromise between inconsistent literal claim scope and central definition claim scope interpretations. [I am expressing this provocatively to encourage a discussion here.]
I’ll bite. It is true, Paul, that claim scope under the EPC is somewhere between the pre-1973 central claiming of Germany and the pre-1973 peripheral claiming of England. Back in 1973 then, People thought that it could fall anywhere between two ends of an extremely wide range.
But the Protocol to Art 69 EPC imposes on judges all over 38 Member State EPC land two mandatory requirements namely, i) legal certainty and ii) fair scope for the inventor’s contribution. Squeezed between those two imperatives, claim construction is tight. These days, there is more variation between judges in any one jurisdiction than between EPC Member State jurisdictions.
But maybe you know better, If so, do tell. Let’s have a discussion. Are you saying that, the more swampy claim construction is, the more it suits bad actors? Or what?
Let’s try again (cannot see the filter inducing word…)
My post was not salvageable, so here is a brief rewrite:
MaxDrei, can you clarify whether or not you are accepting Paul’s premise that EPO claim scope law is ‘worse’ than US claim scope law?
Your comment about variability is only a comment between two European entities and such relativeness does not tell me anything about the relative states between the US and EPO.
EPO claim scope law? What is that then? The EPO does not “do” scope of protection. While we’re at it, what is the USPTO jurisprudence on the DoE?
Did Paul say that Europe is “worse”? Is a swamp “worse” than a quagmire? I don’t know. They are two words for the same thing, aren’t they? You’re not putting words in Paul’s mouth are you?
What might tell you something about “relativeness” is to compare the level of confidence with which respective patent attorneys in their home jurisdiction i) UK and ii) USA opine on the question “Infringe Y/N?”.
You assure us you are registered to practice as an attorney. What then is your personal experience, in the FTO area, with individual real cases of real clients?
I’m just seeking a little clarity from you MaxDrie and I am certainly not trying to put words into Paul’s mouth (but surely – in context – you can see why I thought that Paul thought that the EPO claim scope law (Paul’s words, not mine) IS worse, given his post at 5.1.2.
Instead of answering your additional questions, perhaps you would deign to answer my first question.
Do you – or do you not – accept Paul’s premise that EPO claim scope law is ‘worse’ than US claim scope law?
A simple “I reject Paul’s premise” or a “I accept Paul’s premise” will do.
Thanks Max. But I suggest that this EPO combination of “legal certainty,” “fair scope” and “partial ‘central’ claiming” [which is NOT limited by the limiting words of the claim itself] makes for a mix of uncertainties and ambiguities. Making clear avoidance of infringement in advance, or by design-around, more difficult to predict. In contrast, in the U.S. if someone’s product clearly does not infringe a specified unambiguous claim element, one has the protection of the “all elements” rule, and even what little is left of the U.S. “doctrine of equivalents” will not just throw out a specific claim limitation. Plus, the U.S. has the claim scope limitation of prosecution history estoppel or disclaimer.
Paul you suggest what people suggested in the 1970’s.
In the decades since then, peripheral claiming has established itself in Europe. The imperative of “legal certainty” puts tight limits on the reach of anything like a DoE. In polyglot Europe, with every jurisdiction using a different language to argue what the meaning is of the claim that issued in English, inevitably the focus is on the substance rather than the nuances of meaning of any particular choice of English word in the issued claim.
In the beginning of the EPC (ie in the 20th century) it was different. Folks were litigating on claims that had been drafted with a “central claiming” mindset. Back then, the reach of the DoE was wider, in order to deliver “fair” protection to the inventor.
Hit me with some real cases of Europe going wrong. But please, let them be on recently drafted claims. The poster child, Improver, was written even before the EPC came into force in 1978.
Now, what specific contemporaneous cases do you have, please?
Polyglot… Focus on substance instead of nuance (which is the actual meaning)…?
That’s an awful glorious spin for what amounts to “strictly limited to ver batim reading.”
I am sure that you are aware that in the US, our non-polyglot ways allow for more of that nuanced meaning to come through, which is a good thing seeing how limited language can be.
Max, if European patent courts have moved, as you suggest, towards disallowing findings of infringement outside of the broadest literal reading of unambiguous claim limitations, that answers my question. Thanks.
Paul, yes “towards” is what I’m saying. I would say that, these days, you are as likely to find an English court as a German court giving a wider interpretation to a claim. For me, the Mabuchi Motor case is instructive: literal infringement in London; not even infringement by equivalent inm Munich.
However, in Europe, the Doctrine of Equivalents is not yet extinct. It lives on, under one name or another (“purposive construction”) and is still capable of kicking, if that is what is needed, in the circumstances of a particular case, to fulfill the imperative of the Protocol on the Interpretation of Art 69, EPC.
How about the capital markets? The US has the most advanced capital markets in the world which makes it easier for NPEs to raise money for their activities.
Also, maybe the NPEs are primarily in the US because the US is where most of the innovation is occurring in the world.
And the NPEs are a form of innovation so it is not a surprise that they were formed in the USA first.
(And everyone should note too that Germany’s awesome economic engine is built off of patents.)
To my mind, the problem in the US is these companies that are essentially patent application production machines. The way to go after them is 112. Still we should all realize that practicing companies have reacted to these patent application production machines by filing more patent applications and bringing patent applications closer to the innovation and spending up innovation.
The narrative that patents are bad is belayed by every macro economic statistic. The only “bad” things are anecdotal evidence.
Given the nature of Quid Pro Quo, is there anything (at all) wrong about fostering a “patent application production machine” cultural gestalt?
After all, every single (valid) granted patent means that the purpose of even having a patent system has been met.
The more IS the better – no matter what anyone else attempts to say. Yes, there can be a different conversation about what is an acceptable error rate in patent examination (looking at both Type I errors [patents granted in cases that should not have been granted] and Type II errors [patents not granted in cases that should have been granted]), but such a discussion does not reach the basic bedrock fundamental notion that patents are a good thing and in this case there is no such thing as too much of a good thing.
I think the patent application machines rely on very lax 112. I think we should tighten 112. I have pretty extensive experience at this point with NPEs and real tech companies. From what I’ve seen, these giant patent applications with vague disclosures don’t add anything but giant opportunities to claim whatever an attorney wants.
The real companies don’t write applications like this.
link to ft.com
OT, but these scientist are so ignorant. They don’t seem to know that all of this is just abstract and can’t be of any danger. Please tell these scientist to read Alice.
Night Writer,
You have wandered a step away from my post. Please note that the “patent application production machine” that I speak of is one that generates valid patents (and that includes meeting 112 requirements).
The overall cultural gestalt of “more patents, all the time” is – in fact – a good thing.
I understand what you are saying anon. But, I think we would all be served by a tighter 112. I think something as simple as charging more for each page over 20 would probably go a long way.
I have no problem if a “tighter” 112 were to be properly vetted through Congress.
That being said, I am curious as to why you would also want to charge applicants more for more pages (ostensibly to meet a tighter 112). Not sure I get that.
Because these giant specifications are just bad.
Here is an article that makes your point.
link to finditwestvalley.com
Night Writer,
You are comparing apples and oranges to a certain degree.
You claim that current massive specifications are “bad.”
But you seem to miss the point that I am not talking about ANY current specification, but rather merely pointing out to you the natural result of ratcheting up the 112 hurdle is that ALL future specifications will necessarily be larger.
Now I will agree that ‘must be larger’ does not necessarily mean that they will be more likely to be ‘bad,’ but like IDS’s, when you move to require ‘more,’ there is a natural human reaction to simply ‘be safe’ and throw everything including the kitchen sink into the mix. At the very least, the ‘solution’ of tighter 112 correlates poorly with removing ‘bad’ monster sized specifications and in fact necessesarily invites more of that ‘make the spec a monster’ mindset.
You cannot have both a “you need to define the invention in more detail” and a “you will be penalized for providing more detail.”
I agree anon. I was proposing just the solution of making it more expensive for filing large specifications. Basically, I think this would cut out about 80% of the problem without all these poorly thought out modifications to 112 (and the judicial activist modifications to 112.)
Let me throw another category into the mix: culture
To be a bit over the top, slavish guild (EP) vs rugged individualism (US)
While the overall tone of the article is somewhat whiny, I noted the following statement that may bear on this thread:
“More broadly, just 30 percent of employees in America feel engaged at work, according to a 2013 report by Gallup. Around the world, across 142 countries, the proportion of employees who feel engaged at work is just 13 percent.”
That’s more than double engaged at work in the US than ROW.
This too is perhaps a cultural phenomenon.
The article: link to nytimes.com
Might it be that there are fewer NPE’s in Europe because many countries in Europe have working requirements, whereas there is no working requirement in the U.S.?
Joel, I think not. What working requirements? News to me.
Care to let us in on your knowledge? Will you tell us more of what you have heard about life in Europe.
I’ve just remembered that Turkey has a working requirement.
Let me add something to the useful Arrowsmith tour d’horizon.
Germany is the biggest and wealthiest jurisdiction in Europe and it is notoriously patent-friendly. On claims brought, whether or not by an NPE, it stands ever-ready to enjoin swiftly, even on claims that turn out, years later, to have been invalid all along. A “strong” patent system, one might think. What more does an NPE want?
For Constitutional reasons, Germany tries infringement in fast District Courts, that presume validity. After all, the asserted patent has been through a rigorous examination process at the PTO already. Why shouldn’t it be valid? To contest validity one has to repair to Munich, to the Federal Patents Court, which is slower. After that, yet more delay. One appeals to the Federal Supreme Court, to find out definitively whether the claim is, after all, not valid.
All this might explain why German manufacturers bring 2 out of every 3 oppositions filed at the EPO. They actively watch the patent applications of their competitors through to issue, precisely because they are such a threat, and then oppose the ones that they can mitigate.
Is there in Germany an outcry against NPE’s as patent owners? Hardly, given so many German NPE’s . For example, consider the Promega thread here in this blog. There you will see that the abbreviation “Promega” embraces Promega’s co-Defendant, the German Max Planck research institution. Most readers here will, I guess, think it a good thing that Max Planck files patent applications, prosecutes them to issue, and then exploits them.
For me, the issue is not whether or not any particular jurisdiction is attractive or not for NPE Plaintiffs. More important is whether a jurisdiction swiftly enforces claims that are not invalid, and swiftly revokes when the asserted claims are invalid. Public policy should be that litigation is a last resort. To drive that policy home, the default should be that the losing party has to pay the winner some of its legal costs.
It is said that when the UPC frees Germany of its Constitutional restraint its local UPC courts will choose to decline to bifurcate infringement and validity. Then they will be better able to do justice, revoking bad claims just as swiftly as today they enforce good claims.
All pie in the sky of course. In the real world of clever and hard-working litigation lawyers, expect increasing delays.
I do not think that you are taking into consideration the “win at all costs” American attitude with your advocating of “Loser Pays.”
This then is just another of your “here, use my eyeglasses, since they work for me” posts that you like to share.
(I would also advise against the “should be a last resort” line of thinking, as we have enough vilification of lawsuits thank you, and the law suit is the vehicle provided by civilized society for two parties to resolve their differences) By adding more angst to the concept of “litigation is bad, oh noes” you are only providing more power to that flea on the tail of the dog to wag that dog. Far less than two percent of all active patents are involved in litigation – let’s keep that in perspective.
This post provides a very useful comparison. I would suggest the addition of the following:
– in the US, the scope of discovery is far broader than the procedures available in Europe for the collection of evidence
– in the US, the discovery phase involves substantial expenses for the défendant at an early stage of proceedings
– there are likely to be differences as to the availability of injunctions and the amount of damages awarded to the NPE if they prevail.
Good points, francis.
Interestingly, my past comments about the possible unintended side effects (cheaper for both sides may induce MORE patent holders (yes, that is inducing oneself in a legal setting) to use the court system to enforce their rights, resulting in MORE litigation – is effectively noted by this article’s author in that the author bifurcates items 1 and 2 of his list as separate items.
Excellent points, Francis. My limited understanding is as follows.
When I was inside counsel for a corporation, they were involved in litigation in Europe. My understanding is that they had to have an owner having access to the allegedly infringing device give them access to the allegedly infringing device in order to prove infringement. Without that access, it would be very difficult to prove infringement.
Compare that to when the same corporation was sued by an NPE in the US. The corporation estimated the cost of the production of documents to be in the six figure range, likely as much or more than the cost to settle.
Problems getting evidence of infringement? It ain’t so impossible as it used to be.
Jim Forster used to sing the praises of the French “saisi contrafacon” for getting evidence of infringement to use in the courts of France and elsewhere. England does discovery. To keep players honest, the threat of discovery and cross-examination is needed. That’s why the EU now has an Enforcement Directive:
link to en.wikipedia.org
English discovery is tightly constrained. Is that wise, or foolish?
MM: Is there in Germany an outcry against NPE’s as patent owners? Hardly, given so many German NPE’s . For example, consider the Promega thread here in this blog. There you will see that the abbreviation “Promega” embraces Promega’s co-Defendant, the German Max Planck research institution. Most readers here will, I guess, think it a good thing that Max Planck files patent applications, prosecutes them to issue, and then exploits them.
Max Planck Research Institution and other institutions that are studying the physical world and, in many cases, synthesizing new compositions of matter and/or using those compositions to effect new transformation of matter, are typically not the “NPEs” that cause problems for the patent system.
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