This study provides an overview of patent assertion practices and of patent assertion entities in Europe, taking into consideration their impact on innovation and technology transfer in European ICT markets.

Patent Assertion Entities in Europe. Their impact on innovation and knowledge transfer in ICT markets

Patent assertion has become a common practice in shaping the balance between technology creation and technology dissemination. The importance of this practice for the functioning of Information and Communication Technology markets has given rise to new entities that enforce patents but do not utilise the patented technology, commonly referred to as patent assertion entities (PAEs). Overall, views on the role of PAEs in markets and their impact on innovation and knowledge transfer are polarized.

Patent assertion may foster innovation by providing innovators with effective patent monetisation options and by increasing the liquidity of patent markets on the one hand. On the other hand, patent assertion might also increase the general level of patent litigation, the threat of litigation and arbitration efforts may impose additional cost on the innovation ecosystem and obstruct innovative initiatives.

This study was prepared in the context of the research project on ICT innovation 'European Innovation Policies for the Digital Shift' (EURIPIDIS) jointly launched by the Joint Research Centre and DG CONNECT of the European Commission. The PAE study provides a European perspective on patent assertion entities complementary to the situation in the United States analysed by the US Federal Trade Commission in a recent report ('Patent Assertion Entity Activity, an FTC study').

The US patent system has traditionally been more conducive for PAEs than the European one. Litigation costs and availability of funds are significantly higher in the US than they are in Europe. Regarding Europe, the legal fragmentation of patent protection under the existing European patent system dis-incentivises PAEs from carrying out assertion activity on a pan-European scale.

However, the foreseen introduction of the Unitary Patent (UP) and Unified Patent Court (UPC) in Europe will modify this. It has been described as game-changing event that could increase assertion activity in Europe. As discussed in the study, a number of factors will probably limit such scenario in the near future. Patent invalidation with unitary effect is likely to deter assertion attempts in Europe.  The strictness of validity criteria in Europe and the presence of a “loser pays system” enforce this. Injunction hearings and the separation between injunction and validity procedures will be considered on a case-by-case basis by qualified professional judges, who will bear in mind the principle of balance and proportion.