Comments for Will ‘Patent trolls’ soon appear on the European market?

As a reminder, « patent troll » is a company whose main activity is to sur other companies, whether or not they infringe their patents, in order to obtain compensation. This without releasing any product. The patent troll exploits the weaknesses of the patent protection system. That is why we need to look at it and ask ourselves what would be the risk of this phenomenon in Europe.

The Unitary patent Europan, which would end the deposit of a patent in every country of the European union, would be a boon for « Patent trolls ». It is the opinion of a number of companies that have written an open letter to warn of this risk where they denounce in particular the leverage effect that this could engender. Indeed, today the countries of the EU have a system less favorbale tot the emergence of these parasites than is the USA (professional judges ans lower penalties). For example, because of the new unitary patent system, if a patent is accused of infringement and loses the trial, the product can be retired throughout Europe by a single court decision rather than requiring several revocations in each country.
Patent troll don’t only have this disadvantage, they also menace the incentive to innovate because companies are discouraged to innovate, even throught this is the original goal of patents. Moreover, there is the loss that it could cause to the consumer, with the disappearance of market of certain innovations.

There are also arguments in favor of this new unitary partent system and the increase of the patent in Europe.
The activity of the patent trolls makes it possible to restore a fair balance between the independent inventors and the large groups against which they have otherwise no means of defense in case of proven counterfeiting. The average cost of a counterfeiting trial is in fact hundreds of thousands of dollars.
As Mr. Alain Strowel said in his article, with the consent of the Unitary patent system, it will be possible « to obtain a valid legal injuction on a large market », that is to say that patents could cover a bigger geographical area. I think that the Unified Patent Court (UCP) follows a good strategy because this system will solve problems relating to the validity of the procedure and the violation of the proposed new unitary patent. Companies could then protect their monopoly on inventions in the acceding states by filing a single patent with the European Patent Office (EPO). In addition, UCP is cheaper for Europen businesses because it’s easier to protect at lower cost (removes administrative barrier)

To conclude, I think that the single European framework provides more avantages, and that the proposed code promises to be beneficial to Europe despite the fact that risk is present, it is relatively small compared to the avantages.
One can also be intersted in other problems that the troll patents pose : the questioning of the patent system itself . Indeed, the strategies of the patent trolls are legal, it’s only the right offered to any owner to enforce the monopoly of exploitation that is conferred to him by the obtaining of the patent. So if theses companies exist and are legal, it is that the system has a failure

http://www.lemonde.fr/technologies/article/2013/09/26/des-entreprises-s-alarment-de-l-arrivee-de-patent-trolls-en-europe_3485720_651865.html
http://www.generalpatent.com/media/videos/patent-troll
https://en.wikipedia.org/wiki/Patent_troll

Patent trolls can be longer debated. Here I would just explain my own point of view about the concept, advantages, disadvantages and limits of the patent troll concept after have read his article.

The first confusion which made “patent troll” a very large controversy is the self “name” by his meaning. Patent Troll, as it is said on the article, refers on the meaning of small evil creatures. It immediately becomes more difficult for protagonists and actors to defend it because they are indirectly categorized by the notion of the concept. This article talks also about such licenses negotiated when there is a threat of an action for infringement. It is a little troubling cause we don’t know exactly the kind of negotiation we’re facing. Types of negotiation can be very large. Moreover, a good controversy question is what could happen when negotiation failed or is badly turning? Another one could be how a negotiation his concluded? Larges answers on this kind of questions can lead patent troll’s dissidents to thinking about BLACKMAIL. as mentioned on this article. But this is a subjective result because we aren’t inside of the negotiation when it is surrounding. We can find the same case on the others notions given as the NPE or PAE. It is always badly defined for protagonist. I my point of view, I’m mixed but I would even defend patent troll approach because it still an evolution and in our kind of market, evolutions and creativity make positive sense. But, there are also disadvantages, it is a fact!

What is really including licenses negotiation? What about the inventor, the first producer? These two questions are limits and disadvantages for patents troll cause. In my point of view, to make patent troll appreciated, we must explain what negotiations of license can be. An example could be to write a report or a file depicted the type of licenses negations it was for each negotiation of license. It could more easier for judging and also to put valid injunctions for authorities.

Finally, to answer to the questions Will ‘Patent trolls’ soon appear on the European market? It is clear with the open letter that some of countries in Europ are ready. Patent troll are a big leverage and we can deny this could be supported by European market. The question is how much time it could be support? It depend of the European market system which differs from US market system. Some approaches still the big principles of European market as the no-cross border effect products, type of judgement, and even type of jurisdiction.

Patent Troll must be analyzed before being settled .

I believe that there are chances that we face the same issues encountered in the United States if the project of legislation led by the EU does not take care of them at the root.

First of all, the EU has the advantage of not creating the legislation `ex nihlo´, offering them the opportunity to compare and analyse the different implementations used in the other countries. For instance, the steady increase of “patent troll cases” tried in court in the United States indicates that there is a major flaw in the way the patents are awarded and the extensive power they have over a whole industry. Google mentions in their open letter that it involved $29 billion of legal costs for the sole year 2011 (without counting the delays to launch a new product and the potential loss of market share) [1].

Second, even if I believe that protecting intellectual property is important, it should not be done at any price though. Indeed, patents provide an integral protection over ideas that are, in my mind, sometimes too imprecise to be consistently protected. On top of that, no tangible application of the concept is required to be awarded a patent: a simple idea and a description suffice. For instance, Mirror Worlds Inc. patented in 1999 a relatively vague concept to classify and access documents on a computer [2]. Apple introduced a similar functionality in the early releases of Mac OS X and were sued for that in 2008, after reversing a first unfavourable judgement, they agreed to settle at the end paying $25 million [3] – to a patent troll…

The third point is more ambivalent, the use of EU unitary patent rules will decrease the fee asked to protect an invention across Europe from €36,000 to €4,725 [4]. This is a major advantage for small companies which will now be able to afford a larger protection of their know-how and be rewarded for the research they made. But on the other hand, a lower initial investment could incite patent trolls to increase the number of patents in their portfolio and thus the speculation on intellectual property.
As we can see, the situation is not black or white. Even if the original goal of unifying patent rules is laudable, a lack of precision or a poor implementation could compromise the outcome by opening the gates to players who will use it to create profit (and refrain progress…).

References
[1] https://docs.google.com/file/d/0Bw8Krj_Q8UaEd3U1dUJ3SVp6LTQ/edit
[2] https://patents.google.com/patent/US6638313B1/en
[3] http://www.macrumors.com/2016/07/08/apple-mirror-worlds-cover-flow-patent-settlement/
[4] http://www.europarl.europa.eu/news/en/news-room/20121210IPR04506/parliament-approves-eu-unitary-patent-rules

Today, the opinions concerning the protection of innovation are diversified. A solution such as patent protection can hardly ever be perfect. This gives an incentive for some opportunists to search and exploit the weaknesses of the system in order to gain money easily and rapidly.

The patent trolls are a typical example of this behaviour. As a reminder, patent trolls are companies that do not invent anything, they prefer to buy patents (usually from bankrupt firms) for enforcement purposes. They try to make money off a patent that they are not practising. They enforces patents against infringers without having the intention to manufacture the patented product. These trolls have a very negative image and are accused of smothering innovation. Their credo is linked to their patent’s definition: a patent do not confer the right to practice an invention, it does give the right to exclude others from using, making, selling and marketing the patented invention. It is therefore perfectly acceptable to sue for patent infringement. Moreover, for the troll defenders, a patent is not needed to practice an invention. To roughly summarize their thinking, a patent has no other function than to sue, these patent trolls only focus their effort on enforcing patent rights.

At the moment, these patent trolls are confined to the USA. However, the desire of Europe to create a future unitary patent and an unified patent court makes suddenly appear a transmission risk. Why? The unification would give access to a huge market in one go. This combined to the « bifurcation » procedure where a litigation can be treated by 2 independent courts: one examining the validity of the patent and the second determining if there is a violation. However, the commercialization can be preventively suspended before the verdict concerning the patent validity (in all the 13 countries member of this unitary patent). This gives an enormous power to the patent trolls.

In the USA, the targeted firms are usually trying to negotiate a compensation in order to avoid long and expensive trials. The compensations are calculated with the goal to discourage the firm to take any legal action. The cost of defending your company against a patent infringement suit has been estimated to 1 million or more before the trial and to 2.5 million for a complete defense. So even if the company is successful the risk are huge and the process can be very long and time consuming. Moreover, the jury are composed of non-experts who can be easily manipulated with a good lawyer. For all these reasons, companies in the USA prefer to pay and endure this kind of “blackmailing” rather than taking risk in trials. The patent trolls are aware of this and are taking benefit of it. Patent trolls are also aware that they don’t have to defend their patent immediately. Companies may produce a patented products for years until being sued by a troll.

The patent trolls have a direct effect on the business. They make firms endure extra costs. A study coming from Harvard University demonstrated that firms forced to pay trolls were in the following years reducing their R&D spending. Which is running against the goal of patent (promoting innovation).

The patent trolls also have technics to identify the firm most likely to pay. Their targets are firms with few legal representors within their staff and with more available cash. This leads firms to invest in legal representation rather than in technology development. They like to sue firms that have a lot to lose because they already heavily invested to develop their product (so they do not hesitate to wait in order to be sure that the firm in question will have no other choice than to accept).

Unfortunately for innovators, the classical defense strategies are not effective against these trolls (monitoring patent activities, patent pooling arrangement,…).

For all these reasons, in my opinion, these opportunists, exploiting the weaknesses of the patent system and the ideas of others for the sake of money are plague for innovation.

Bibliography

– Wikipedia, “Patent Troll”, https://en.wikipedia.org/wiki/Patent_troll, page consulted on the 29/11/16
– Lambrecht, L. (2013). Les “patent trolls” bientôt sur le marché européen?. La Libre Belgique

According to former Chief Judge Randall R. Rader, a patent troll, also known as Non-practicing entities, is “a person or company that attempts to enforce patent rights against accused infringers far beyond the patent’s actual value or contribution to the prior art”.[1] It is important to mention that NPEs usually amass large portfolios of patents, which they purchase from companies that are going out of business, or from firms that have developed technology that they don’t intend to pursue. They also buy patents from inventors who can’t afford to develop their ideas. The trolls then look for successful products that use the technology covered by their patents and demand a licensing fee. Because patent suits are expensive to defend, the target company is often willing to settle out of court. [2] In other words, patent trolls’ aim could be purely intended as making profit by pursuing in justice the “infringers”.

But can patent trolls really be considered as a misuse of the patent itself? And could this technique be a threat for the European patent system, taking advantage from the unified patent package?
Surprisingly, patent trolls exist since the days of Henry Ford’s Model T. In fact, in 1903, George Selden, a patent attorney, sued Henry Ford and four other car manufacturers and insisted that he receive a royalty for every car that was sold. Despite not ever actively advancing automotive technology at the time, Selden held a patent, which was claimed to cover the automobile. [3]
Obviously, some promoters defend the nature of patent trolls by affirming that they rely on fundamental principles of the patent right recalling, for example, that it is in the full right of the patent owner to exclude others from commercializing the patented product, even if the latter has never been introduced into the market, and that patent trolls are an undeniable incentive to innovation.
Nevertheless, patent trolls are considered by many as a remarkable threat for the economy, insisting that a stronger regulation needs to be adopted. In fact, as reported by the Electronic Frontier Foundation, “A patent troll uses patents as legal weapons, instead of actually creating any new products or coming up with new ideas”. Although at first sight this could seem a problem that mostly affects small companies and start-up, many big companies in the US are impacted by patent trolls, and are joining their forces to minimize their lucrative practice. Furthermore, LOT Network, a non-profit community of companies that work together to minimize their exposure to patents owned by trolls, with members like Canon, Logitech and Subaru[4], affirmed that less than 1% of all defendants in PAE suits are ultimately found to have infringed a valid patent[5].

From the European point of view, although the unified patent package is a remarkable step forward in the harmonization of the patent regime that promotes efficiency and long-term competitiveness, patent trolls are a real danger under many aspects. Most of all, the unification of the patent system could give those “trolls” the possibility to attack in justice companies on a very large territory. Of course, the impact on the whole economy would be disastrous and with the time the situation will worsen.
To alert the authorities, 16 European and U.S. companies, including Adidas, Deutsche Telekom, Apple and Microsoft [6]decided to raise their voice against patent trolls’ threat through an open letter suggesting improvements to the Unified Patent Court’s proposed rules. These fixes will help the EU system avoid the issues that have plagued the U.S. and will ensure companies are investing in innovation and growth—not patent litigation.[7]

In conclusion, I strongly believe that patent trolls are a plague in today’s economy all over the world and that serious measures have to be taken in order to limit this kind of abuse.
Of course, every company in the world is in the position to raise their rights, but in every single case good intentions and fair-play have to be at the basis of any action undertaken.

Sources:

[1] https://en.wikipedia.org/wiki/Patent_troll
[2] http://science.howstuffworks.com/innovation/everyday-innovations/patent-trolls.htm
[3] http://www.davison.com/blog/2013/10/01/trolling-for-patents/
[4] https://techcrunch.com/2016/06/05/why-patent-trolls-wont-give-up/
[5] http://lotnet.com/the-patent-troll-problem/
[6] https://europe.googleblog.com/2013/09/troll-proofing-europes-patent-system.html
[7] https://europe.googleblog.com/2013/09/troll-proofing-europes-patent-system.html

There is one thing on which everyone would probably agree: the fact that these “patent trolls have no real business interests to defend” and that their “business model is based solely on extracting settlements through the assertion of often low-quality patents”. While I do not see any moral justification at all in that kind of business, I will not support the position taken by the companies that signed the open letter. Patent trolls are the consequences of system that has been perverted. For this matter we have to dig to the root of the problem. We must ask ourselves why this business is being so prolific and growing up the last years? How come such dubious patents exist? This makes us question the relevance of some patent’s quality.

The ECB defined a patent as “a legal title that can be granted for any invention having a technical character provided that it is new, involves an ‘inventive step’, and is susceptible to industrial application”. What exactly defines an ‘inventive step’ is another question. This might be something interesting to look into. My lack of knowledge in that field will not provide you an answer. After all, whether we are pro or against ‘patent trolls’, we can conclude that it is the consequence of a failure in the Intellectual Property Right system that was among others created to promote and push innovation. I have no doubt about ‘patent trolls’ being an ‘obstacle’ to innovations. My doubts are more focused on the process for which patents are granted and how they are reviewed in the following years. It might be the cause of those dubious patents.

The unified patent package could increase the bargaining power of such companies in Europe. Nevertheless, we have to be careful when comparing the US to the EU. ‘Patent trolls’ are more powerful in the US due to the US procedure and to the culture of litigation over there. Furthermore, as mentioned in several articles, ‘bifurcation’ already exists in Germany and has not attracted a sustainable amount of ‘patent trolls’ over there. No one can deny that Germany is an enormous market and that companies willing to sell to Europe are susceptible to sell in Germany as well.

I therefore agree with Professor Strowel’s stance on this subject. There is a risk of seeing these companies in Europe but we do not have to overestimate them.
As a conclusion I would like to point out that we have to focus not only on the tip of the iceberg (i.e. the patent trolls) but more how these patents are granted. This will solve more problems and will create a bright future for the next big innovations.

Sources:

https://www.ipdigit.eu/2013/11/will-patent-trolls-soon-appear-on-the-european-market/

http://www.lalibre.be/economie/libre-entreprise/les-patent-trolls-bientot-sur-le-marche-europeen-5261ffa83570314ade9eb46e

http://www.lalibre.be/economie/libre-entreprise/les-patents-trolls-bientot-sur-le-marche-europen-le-risque-n-est-pas-negligeable-5261ffa63570c7e5f9ee5755

https://europe.googleblog.com/2013/09/troll-proofing-europes-patent-system.html

https://docs.google.com/file/d/0Bw8Krj_Q8UaEd3U1dUJ3SVp6LTQ/edit

http://ec.europa.eu/growth/industry/intellectual-property/patents/

In my comment on patent trolls, I will look to highlight why they are not a threat to European businesses and why their existence isn’t antithetical to the idea of a free market, especially when other firms capitalize on the innovations of their competitors in similar ways.

First, to understand why patent trolls are not a threat to European businesses, we look at the kind of threat they possess. By extending the veracity of claims made in a plethora of patents owned by patent trolls, these firms are in a position to target innovative firms – both small and large – in fast-growing industries and stall the progress of research by demanding hefty payments to clear potential lawsuits. While this is a major problem in the US, which sees a remarkable number of lawsuits filed every year, it does not apply as much to Europe for two reasons. First, on account of the Loser pays principle in Europe, i.e., the loser of a lawsuit pays for the costs of both parties, the risk involved in pursuing uncertain litigation is substantial for patent trolls. Second, as cases in Europe are decided by professional judges and not by a collection of citizens in the jury, the potential to skew verdicts is much lesser as more knowledgeable people make this call. We can see that patent trolls in the US have thrived because of their position in negotiations – they have nothing to lose if they fail, but gain a substantial amount if they win – and a lengthy appeals process and easy bankruptcy norms mean that patent trolls do not face any of the threats that regular firms do. With the establishment of a unitary patent office, the threat of delays that forces companies to negotiate with patent trolls does not exist and thus, innovative firms can continue to pursue research safely in the knowledge that their work will be recognized.

But, more importantly, the existence of patent trolls in a free market shouldn’t be a cause of concern. Rather, they help push the boundaries of innovation, albeit not by their own efforts, as firms are forced to show tangible differences in their product line to escape the attention of patent trolls. Additionally, patent trolls target industries that are growing quickly, suggesting that the pace in innovation is such that patent trolls eventually will not be able to keep up with the flow of products. This can be further curbed by enacting stricter regulations on patents that are excessively broad in their claims. Finally, the behavior of patent trolls is not massively different from other firms that look to capitalize on the efforts of innovative firms. For instance, Rocket Internet has been known to back startups that look to scale up ideas as quickly as possible and get the product to the same or other global markets, sometimes at the cost of the original innovator. This suggests that companies should take this as a cue to improve their go-to-market capabilities as well. Alternatively, they can look to form partnerships that will enable them to license the technology and/or pursue methods to protect their innovation via trade secrets to ensure they benefit from their hard work.

References

[1] https://hbr.org/2014/07/the-evidence-is-in-patent-trolls-do-hurt-innovation
[2] https://europe.googleblog.com/2013/09/troll-proofing-europes-patent-system.html
[3]http://law.stanford.edu/wp-content/uploads/sites/default/files/child-page/188509/doc/slspublic/janssens_wp19.pdf

In a way patent trolls strategies are legal, as they help owners defend their rights of invention and their monopoly. Defenders would say that patent trolls contribute to “re-establishing justice” by rebalancing forces between inventors and users. However, after doing some reading and research on the subject, I realised how the patent system has increasingly been prone to abuse.

Firstly, the purpose of such patent trolls is not very glorious: they make their money by threatening companies with lawsuits. Studies show that almost 90% of cases are settled before going to court because it is cheaper than fighting the lawsuit as it costs 2 to 5 million dollars. Their main business is based on blackmail and determining the maximum amount of money that companies are willing to pay. Patent trolls can target any kind of company or business owner, and this is why I think that it can seriously threaten the development of our start-ups, SME’s and discourage entrepreneurship indirectly.

Secondly, when it comes to certain type of patents, it is much more difficult to identify a patent infringement. While patents for machines tend to be fairly specific, software patents can be so broad and vague that they may allow someone to later claim ownership for an invention. If a troll can get a vaguely defined software patent, they can demand payment for anything that fits that description. This is what happened to Austin Maya, who made a flight simulator app and got sued by the Uniloc company for patent infringement. The problem was that it concerned the technology upon which all android apps were based.

I totally understand why major companies cooperate in what is now called the “UCP Industry Coalition”. When it will eventually come into force, the unitary European patent will have a major impact and will empower and provide more opportunities for patent trolls to frighten Europe. The coalition includes the 5 biggest IT companies, as well as the pharmaceutical and aviation companies. They are the ones who could lose most in the blackmail, and are easy to target because of the broad dimension of their patent use. According to Alain Strowel, professor at UCL, “more and more non-operational entities should spread across Europe” (translated from French). Because of the bad image nowadays of patent trolls, some big companies subcontract this activity to smaller entities in order to harm their competitors or make profits. Microsoft and Nokia, for example, have already transferred about 2000 patents to Mosaid, a small troll.

I think that there is a risk that Patent trolls will come to Europe in the coming years but we should not overestimate the risk or be afraid of it. If they are implemented in Europe, I think that the cost of interest and damages would be more reasonable than in the US because we have a very different judicial approach and culture. Moreover, the first European patents will not be delivered before minimum 2017 and the delivery of a unitary patent takes at least 18 months. If patent trolls appear in Europe, I am hopeful and optimistic that our European institutions will set the right frames, limits and ask for possible contributions from the patent trolls.

http://perso.uclouvain.be/paul.belleflamme/papers/LLB2013b.pdf
https://www.youtube.com/watch?v=3bxcc3SM_KA
http://www.itespresso.fr/ecosysteme-it-dresse-patent-trolls-europe-90458.html
http://www.lalibre.be/economie/libre-entreprise/les-patent-trolls-bientot-sur-le-marche-europeen-5261ffa83570314ade9eb46e
https://www.ipdigit.eu/2010/11/what-to-think-of-patent-trolls/

In this comment, I will give my opinion about the “patent trolls” situation and decide if the unified patent package seriously reinforces the risk of ‘patent trolls’ landing in Europe or not.

First of all, I would like to remember the legal definition according to the US constitution of what blackmailing is.

“Whoever, under a threat of informing, or as a consideration for not informing, against any violation of any law of the United States, demands or receives any money or other valuable thing, shall be fined under this title or imprisoned not more than one year, or both.” 18 U.S. Code § 873 – Blackmail

Any law is subject to interpretation, but in my opinion this one seems pretty clear.

Therefore, as “patent trolls” have the law on their side, we cannot speak of blackmail in the conditions you mentioned. The problem here isn’t the trolls, but the law itself. Why is it possible to act like this in our markets?

In some regions of Belgium, there are laws forcing people to let the state handle the management of their real estates if not occupied for a determined period of time. It could be interesting to think about a similar idea to solve the “patent trolls” issue. If a company isn’t creating any additional value and is using patent as a tool to harvest money it should be punished. Today’s society has already shown the pressing need for more and more innovative products.

Therefore these companies should be forced to act in a more financial focused field which would not give them the possibility to actually own a patent. This could be seen as a simple model, if a company gives more “innovative well being” to the society than another, it should not be possible to stop it from using the tools it needs.

Concerning the pros and cons you presented, I think that only the size of the market ( directly related to the “trolling profits” ) and the type of judgement for patent cases are key success factors for patent trolls in Europe. whereas you see a jury’s decision as a advantage for patent trolls, I see it as a big pain in the neck. A judge can and will follow the law, but people tend to always favour smaller structures.

In conclusion, I think the problem here are the regulations. Where there are rules, there will be people to use them to make money. That is why European institution should think about a more adaptive way to manage patent issues. Some laws are frozen in time but patenting is a constant evolutive process and need to be protected more and more efficiently.

https://www.law.cornell.edu/uscode/text/18/873
http://www.rbdh-bbrow.be/analyses2006/luttecontrelgtsvides.pdf
http://www.amcreativityassoc.org/Resources/Documents/Cohen-TOP+10+Reasons+Why+We+Need+INNOVATION.pdf
http://www.law360.com/articles/625559/jury-favors-adt-s-rival-in-27m-alarm-trademark-suit

Patent trolls should be forbidden within the European Union.

In my opinion, companies misusing patents as a business strategy are not acceptable within a free, but regulated, market economy.
A patent troll normally acquires the patents from bankrupt or nearly bankrupt companies in order to make money out of it. After they have acquired the patent, they are not interested in commercializing the product or service. The only aim they have is to launch lawsuits against infringing companies or to hold the patent as such in order to make it possible for other companies to further invest and commercialize the product or service.

In order to proof my opinion, I would like to discuss some examples of innovations which were not successful at all. Let’s take the Google glass innovation. Google’s glass was intended to display quite a lot of information through a pair of glasses. Google invested a lot of money in this new technology but decided recently to stop the commercialization of this product.
Or take the Betamax video-recorder which was invented by Sony in 1975. Although the technology was extremely good, the product was never a commercial success.

In the pharmaceutical industry, the cost of research & developments is extremely high. Based on the very strict procedures to be followed by the pharmaceutical companies before the launch of a new drug, it can take more than 10 years for those companies to commercialize the product. The chance of success in quite limited, with a lot of innovations which will not come to a final consumable. Not only the effectiveness or also the efficiency of the product can be countered throughout the different phases in the research program. Also the strict security and health safety rules can lead to the stop of those research programs.

As the research & development activities for inventing such a product is considerable, and the risk of failure is important as well, it’s essential that those innovating companies have a legal framework which make it possible to invest in a correct and honest way.
Patent trolls are not interested in Research & Development. They are even not interested in bringing the product to the market. They even hold a patent with the only aim to make it impossible for other companies to commercialize the product.

References:
https://www.pwc.nl/nl/spotlight/assets/documents/pwc-het-waarderen-van-innovatie-2014-2-05.pdf
http://www.scriptiebank.be/scriptie/de-octrooiering-van-pharmaceutische-producten

Unifying laws from different countries is a double-edged sword : on the first hand, there are the benefits aimed by the different governments, but on the other hand, there are always areas that the unified law cannot cover correctly, and that is exactly where malicious companies strike, which is in our case, the patent trolls.

The purposes of the unified patent law are to promote innovation by reducing the complexity and the cost of the patent creation in Europe. But, in my opinion, the risks and the consequences coming from the patent trolls is so high that it can even erase the benefit. So I agree with the position of the open letter’s signatories, and I want to point out 3 main reasons.

First reason, the concept of letting malicious companies use laws to their benefit is unacceptable. Laws are made to help people when there is a conflict between them, they are made with the aim of social welfare. So even if trolls are using laws’ imperfection, there is no reason to let them act without punishment or change of the laws. Of course, such abusive use of the laws already exist in Europe, but in our case, it is a so openly and visible default that we can and must first correct this situation before accepting unified patent law.

Secondly, the more long the trolls survive, the more trolls will be created. If there will be a new opportunity in Europe, it will be more and more difficult to stop their progression. And moreover, pursuing trolls cost not only to the entrepreneurs, but also a lot to the country’s economy. In U.S., according to a report from the White House, 60% of the 2011’s lawsuits implicated patent trolls and consume about 29 billion of the U.S.’s economy.

Thirdly, trolls really harm the process of innovation. By claiming money or fee in exchange of the patent, they reduce so much the benefit of the innovator that he could not have enough budgets to go further in his project. Fighting against it is so exhausting in procedures (it can take years of court battles) and in money, and there is no guaranty that you can win… Only by thinking about this situation, that entrepreneurs can encounter so much money and time lost, can easily demotivate them to innovate. Start-ups is thus highly aimed by the trolls because of their need to innovate. By the way, it is not rare to see accusations on big companies that pay and use patent trolls to destroy the possible competition.

In conclusion, patent trolls’ effects are too dangerous to accept the unified patent law because they can go on the opposite direction and counter perfectly the benefits : they demotivate entrepreneurs to innovate and steal the economy of the country. A such obvious threat must be fix before going further, or at least, Europe must be first prepared to fight trolls efficiently.

Sources :
http://googlepolicyeurope.blogspot.be/2013/09/troll-proofing-europes-patent-system.html
http://www.lalibre.be/economie/actualite/les-patent-trolls-bientot-sur-le-marche-europeen-5261ffa83570314ade9eb46e
http://www.lemonde.fr/technologies/article/2013/09/26/des-entreprises-s-alarment-de-l-arrivee-de-patent-trolls-en-europe_3485720_651865.html)
http://www.lemonde.fr/technologies/article/2012/12/11/le-systeme-de-brevets-americain-largement-detourne-par-des-trolls_1804621_651865.html
https://www.eff.org/fr/issues/resources-patent-troll-victims

In reaction to economic downturn, the question of patents is crucial as they are at the basis of innovation. Indeed, having a patent ensure your company to possess a competitive advantage. Patent are, in this way, vital to convince companies to revive their economic activities.

In the USA, some companies called “patent trolls” make of patent legislation their business by pursuing other companies for patent infringement. They actually detain some patents that are most of the times not well defined and ambiguous. This leads to litigation that force attacked companies either to pay for exploiting the patent or to be ready to go to court and resort to lengthy and expensive trials.

President Obama wants to limit these practices by enforcing US patent legislation. He wants “patent trolls” to define clearly what contain the patent they own and show clearly how other infringes it before suing them.

The new European patent legislation fosters patent troll. Indeed, patents are now proofs of innovation applicable in twenty-five countries whereas it was only valid in one country by the time. “Patent trolls” businesses are more likely to develop in this environment, which looks like US one. On another side, having a patent that is valid in whole Europe is probably more than necessary to be able to grow in countries like Germany and France. So there are some asset and some disadvantages of the new European patent laws.

I personally am not convinced that patent trolls businesses are much honourable. As Obama said “They’re just trying to essentially leverage and hijack somebody else’s idea and see if they can extort some money out of them” . The real question that should be asked to the Patent Offices concerns the reasons they granted the patent. I think Patent Offices should put some effort in the process of decerning patent .

I also totally agree with the big companies that signed the open letter. It is a conscious issue to not reproduce what happens in US market. Europe should take into account the consequences of this new legislation. One of them could be patent trolling and that would not be in my opinion an asset for Europe.

References :

http://googlepolicyeurope.blogspot.be/2013/09/troll-proofing-europes-patent-system.html

http://arstechnica.com/tech-policy/2013/09/patenting-everyday-life-business-method-lawsuits-are-growing-fast/

http://www.nytimes.com/2013/06/05/business/president-moves-to-curb-patent-suits.html?_r=1

http://www.lalibre.be/economie/actualite/les-patent-trolls-bientot-sur-le-marche-europeen-5261ffa83570314ade9eb46e

A patent is defined as the exclusive right granted by a government to an inventor to manufacture, use, or sell an invention for a certain number of years. [1] Therefore, it is also in other words a way of encouraging people to innovate.

The unified patent system will concretely provide a unitary effect – uniform protection and equal effect – in all the participating Member States. Consequently, by the means of one single request, the proprietor of a European patent will be able to get patent protection in 25 Member States of the European Union. [2] Even if nowadays it is actually only possible in 13 European countries, the new unitary patent system will provide valuable benefits, such as simplifying patent examination procedures and reducing the risk of divergent decisions among Member States. [3]
Besides this, legal injunctions in case of patent infringement will have consequences in a much larger market than before.
But the implementation of this new system is a bit delicate as it can provoke both positive and negative impacts.

Firstly, this policy enables to maintain the European competitiveness against the biggest players such as Japan or the US. In the same time, it reduced costs for obtaining a granted European patent (EP). The reduction cost is seen as coming from paying a single renewal fee for all member states, rather than several, and no translation costs. [4] Therefore, it makes the European market more attractive and brings some unexpected foreign investors as well as others more speculative, called the “patent trolls”.

The patent trolls are defined as the companies/people that attempts to enforce patent rights against accused infringers far beyond the patent’s actual value or contribution to the prior art. Patent trolls often do not manufacture products or supply services based upon the patents in question. [5] Therefore, we can say that the unified patent system opens the doors to this intrusive phenomenon. Patent trolls have directly negative consequences on the market as a whole. Indeed, it brings an insane competition; it, in a way, distorts the companies’ spirit. In the first instance, it makes businesses worry about abusive patent legislation rather than putting their efforts into creating new products and serving customers. Moreover, as the goal of those patent trolls are to suit companies to court, most of starts-up touched by this abusive use of legislation can not afford such expenditures and have to postpone their activities for several years.
It can thus clearly be seen that “patent trolls” is stifling innovation.

Moreover, as taking someone to court is really expensive in Europe and takes many years, it makes things easier for Non-Practicing Enterprises to act en to enter the European market. Indeed, as those procedures slow down the companies’ innovations and make them losing money and wasting time, companies prefer to settle directly with NPE. This seriously raises the leverage effect of NPE on the European market.

Finally, knowing that the victims of patent trolls paid $29 billion in 2011, a 400% increase from 2005 — not to mention tens of billions dollars more in lost shareholder value. [6] I am not surprised by the “open letter” written by the 16 multinationals. The goal here is not to criticise the EP system but more to improve it in order to benefit to everybody. According to me, it is important to grant only valid pattern. It means those which targets their first use; conferring upon the creator of an invention the sole right to make, use, and sell that invention for a set period of time. [7] In other words those that serves a practical use and the promotion of an innovation rather than a financial gain.

REFERENCES

[1] http://dictionary.reference.com/browse/patent

[2] http://www.unified-patent-court.org/images/documents/enhanced-european-patent-system.pdf

[3] http://www.industrycoalition.eu/

[4] http://www.purdylucey.com/downloads/the_unitary_patent_in_europe_nov_2013.pdf

[5] https://en.wikipedia.org/wiki/Patent_troll

[6] https://www.whitehouse.gov/blog/2013/06/04/taking-patent-trolls-protect-american-innovation

[7] http://www.thefreedictionary.com/patent

In my view, it is true that the entry into force of the united patent in Europe is likely to increase the risk of patent trolls landing in the EU market. A single EU patent will actually bring to an end the fragmentation of patent rules and authorisation in Europe. This fragmentation has been allegedly perceived as one of the biggest constraints for patent trolls to not thrive as much in Europe as they do in the USA. With this in mind, it is easily understandable that some firms have raised concerns about the possibility of facing an increased number of patent trolls in Europe.

However, one should bear in mind that US and European companies have a very different behaviour and culture when it comes to judicial procedures. The same goes for competition regulation and market rules. Arguing that the EU united patent will lead to the same situation than in the USA would be an over simplistic hypothesis applied to a complex issue. Back in 2013, Joaquín Almunia – former Commissioner responsible for Competition policy – speaking about the likelihood of seeing more patent trolls in the EU market argued that “you can rest assured that we are watching this space very carefully. DG competition will hold patent trolls to the same standards as any other patent holder ”. Being the watchdog of the single market, the European Commission is unlikely to let patent trolls freely thrive in Europe. On top of that, I concur with Think Thank Europa which assumes that a united patent would make life even harder for patent trolls as it will be much more expensive for them to sue innocent firms; thus reducing their ambition of behaving aggressively as they do in the USA .

With regards to the fear of big companies against patent trolls landing in the EU market, I tend to agree with them. I do not think that patent trolls firms constitute an added value for the market neither for the innovation. As I see, they are just trying to make as much money as they can out of the patent system. When one could argue that they boost the competition between firms, I would say that they are mostly very costly and time-consuming for the whole system. Moreover, all the money that goes to their pocket and their lawyers would be much better spent in Research & Development activities for instance. Considering the amount of money wasted annually in litigation procedures in the USA, one can seriously question the positive impacts of such firms for the market and the society.

Sources:

http://europa.eu/rapid/press-release_SPEECH-13-1042_en.htm, see online on 16th of November 2016

http://english.thinkeuropa.dk/node/105, see online on 16th of November 2016

Peter Detkin defined the patent troll, after the litigation implying Intell and the « patent troll » Tech Search LLC, as « someone trying to generate a lot of money, through a patent it does not use, does not intend to use and in most cases, never used” .

Concerning the position of the open letter, there is no clear position to take. We could observe this “patent troll situation” in two different viewing angles.

On one hand, like the majority and like the point of view taken in the open letter, we could approach patent troll like a negative organization which profit to every flaws of the systems without developing any innovation. In this case, trolls represent huge cost for the firms which are producing innovation.

On the other hand, we know that even if the troll’s behavior could appear as opportunistic, they’re not reprehensible. Indeed, patent trolls exist because the market which regulates the intellect property is imperfect and no the opposite . In this point of view, patent trolls could be perceived as intermediaries who want to optimize the efficacy of the patent market. In conclusion, we should wonder why patent troll exist, what is its suitable environment and how can we act on this environment to reduce the impact of the negative behavior of the patent trolls.

Concerning the question if the United Patent European package will reinforce the risk of patent troll landing in Europe we can answer yes. We know that patent troll’s growth is linked to the political, legal and economic environment role. The changes which occurred following the Unified patent Court (UPC) reform have changed the way to make it a more favorable environment for patent troll. However, to construct the new reform, a lot of procedure had been built learning from the American’s situation in order to reduce the abusive impact of the patent troll.

We will start to describe why these new regulation may be a “boon” for patent trolls. Concerning the UPC’s goals, we know that there are multiple advantage for innovative firm an especially for the SMES. The UPC had as objectives to reduce the cost and the time necessary for the procedure, to simplify it through central administration, to unify enforcement over the territories,… All of these benefits which aim to boost innovation in Europe (which is lagging behind America in term of research and industrial production) could also facilitate to the patent trolls development. In fact, Europe is now more attractive for patent trolls because only one patent provide a much bigger playground, because UCP doesn’t address compulsory license issues, because of the simplification of the patent creation’s procedure, because of the cost reduction,… All these features will conduce to an increase of the risk to see opportunistic behavior appear in Europe.
After that, we want to highlight the precautions taken by the UCP to discourage patent trolls to act opportunistically.

Firstly, we know that the patent trolls are most likely to growth as court costs are important. If these costs are higher than the royalties asked by the trolls, the defendant will prefer an agreement with the troll.
Secondly, knowing that European people have aversion to the risk, more we have the probability to loose in front of the court more we prefer to make a deal with patent trolls by giving royalties.
Therefore, the UPC took different precautions to fight against the element which will create a suitable environment for the patent trolls.

To begin, the UPC is a central administration. This centralization will decrease the forum shopping effect. Comparing to the American situation in which a claimant can choose the court which is likely to be most favorable to his request, in Europe there is currently only one court: the UCP. The decreasing of forum shopping completed by an improvement in the quality of the judge by using a strict training program will decrease the fault of judgment.

Many others measures could also discourage patent troll. UCP practice the “loser pays rule” when the losing party must pay for the lawyer fees what is discourage trolls to act without certitude to win. The limitation of joining multiple defendants will also permit to limit the action of the patent trolls which usually target multiple defendants at the same time to try to get royalties coming from different unlinked firms. Moreover, UPC practices the discretionary injunction unlike permanent injunction. The permanent injunction was one of the elements which favored the defendant to make a deal with trolls instead of trust court judgment. At the end, limited discovery and rule of “proportionality and fairness” will eliminates a major weapon of abusive behavior of patent trolls. At the end, UPC is also stricter in the patent agreement concerning the subject of most interest of patent trolls like software and business methods.

To conclude this reflexion, even if the new environment-driven by the UCP will increase the risk of seeing appear patent troll, Europe try to prevent all the factors that create a propitious environment for patent trolls based on the observations done in the USA environment. Therefore, I think that USA will stay the riskier place because it fosters a lot of element that permit to the patent trolls to behave opportunistically.

Bibliography
Belleflamme P., Slits L. (2010) Le développement du marché des brevets et la problématique des patent trolls., Regards économiques. View on : file:///C:/Users/Julie/Downloads/pattent%20troll.pdf
Gail E., (2013), Europe’s unitary patent to launch in 2015 – but will companies embrace it? , Science|Business. View on: http://www.sciencebusiness.net/news/76292/Europe%E2%80%99s-unitary-patent-to-launch-in-2015-%E2%80%93-but-will-companies-embrace-it
Janssens de Bisthoven N., (2013), Patent Trolls and Abusive Patent Litigation in Europe: What the Unitary Patent Package Can Learn From the American Experience? View on: http://law.stanford.edu/wp-content/uploads/sites/default/files/child-page/188509/doc/slspublic/janssens_wp19.pdf
Lambrecht L., (2013) Les “patent trolls” bientôt sur le marché européen ?. La Libre Belgique 19 octobre 2013. View on : http://www.lalibre.be/economie/actualite/les-patent-trolls-bientot-sur-le-marche-europeen-5261ffa83570314ade9eb46e

European commission, Unitary patent View on: http://ec.europa.eu/growth/industry/intellectual-property/patents/unitary-patent/index_en.htm

The intellectual property in general has always been in the centre of multiple debates. But, first, what is it exactly? A patent is a type of intellectual property. It is “a grant made by a government that confers upon the creator of an invention the sole right to make, use, and sell that invention for a set period of time.” [1] It is useful to encourage technological innovation, to promote competition and investment, to provide information on the latest technical developments and finally to promote technology transfers. [2]

In Europe, there is a project to introduce the system of unitary patent and unified patent court. This system will extend the legal injunction of an innovation to at least 13 Member States, including the three largest countries of Europe, which are Germany, France and the United Kingdom. There is a big fear that the introduction of this system will reinforce the risk of “patent trolls” landing in Europe.

We first defined what the patents are, but what does “patent trolls” mean? Alain Strowel defines this term as “companies that acquire patent portofolios not to exploit them but to negotiate licenses, potentially under the threat of an action for patent infringement”. [3] We also speak of “Non-Practicing Entities” (NPE). This phenomenon is mainly present in the United States, but, with the introduction of the system of unitary patent and unified patent court, some companies fear that this could be land to Europe. Those 16 companies wrote an open letter criticising this new system.

To express my opinion about this, I first want to focus on the role of the patent. Like I mentioned before, patents are used to encourage innovation. Patent trolls, on the contrary, are detrimental to innovation. Like one of the advisers of the President Barack Obama wrote, “the abuse of the patent system is stifling innovation and putting a drag on our economy.” Not only big firms like the ones who wrote the open letter suffer from this phenomenon. Start-ups are also big victims of it. In the US, a lot of companies prefer to negotiate a license instead of going to court to sue the NPE. This license means of course that the companies have to disburse a lot of money, which start-ups cannot afford.

As far as the European unitary patent, I think this could attract a lot of investors to Europe and promote innovation. With this system, firms could, on the one hand, receive a patent, which would protect their innovation in at least 13 countries of Europe. On the other hand, a unified patent system could simplify the patent regime and could be very useful for firms present in different European countries.

In conclusion, I think the unification of a patent system in Europe is a great idea. But, it could bring the risk of patent trolls, even though I don’t think that this phenomenon could be as big as in the US. The open letter of the 16 firms is then totally justified. To avoid the landing of patent trolls in Europe anyway, the introduction of the new system should come along with some stricter rules. Firms, which obtained a patent, should prove, on a regular basis, that they really exploit them.

[1] http://www.thefreedictionary.com/patent
[2] Belleflamme, P. (2015). A primer on intellectual properties (slides). Not published, Louvain School of Management, Louvain-la-Neuve.
[3] Strowel, A. (2013). Will “Patent trolls” soon appear on the European market?
[4]Lambrecht, L. (2013). Les “patent trolls” bientôt sur le marché européen?. La Libre Belgique

Patents have always been subject of debates. With a new unified system, a lot of elements have to be taken into account. Indeed, such a system would have positive and negative consequences.

The aim of a patent is to promote and protect innovations and companies. Companies are making huge investments in R&D to develop new technologies and thanks to patents; anyone can use the patented technology just by paying the patent holder a fee. But in a unified system, patent trolls (NPE) are disrespecting this idea of sharing and rewarding. Indeed, they are filing patents with no intention of using their innovation but only to make more money. They are simply waiting for someone to commit patent infringement so they can file a legal injunction against them. We could say that this is a strategic move because this way, patent trolls are ahead of others in terms of new technologies and innovations but they actually just want to prevent others from using this technology for free.

I believe that a patent system is needed, but a unified system would in my opinion bring these patent trolls on the European market.

A unified system is a good thing because it would reduce the cost of patenting an innovation; it would enhance competitiveness in Europe and support long-term growth of innovative industries. This would bring new investors on the market but not only. With this system, the patent filling procedures would be harmonized between thirteen countries and legal injunctions in case of patent infringement would be valid in a much larger market than before, which would definitely bring Non-Practicing Enterprises (NPE) in Europe. Moreover, the costs of a lawsuit in Europe are very high and it can take years before it is over. This is, companies’ innovations are slowed down and they are losing money so they will have more incentives to directly settle with the NPE. This way, patent trolls have leverage on the companies and can get what they want.

To conclude, Patent trolls would have negative consequences on our economy, such as a slow down of innovation, a reducing of the investments in R&D and even a discouragement of entrepreneurs. I believe that the letter wrote by the sixteen companies is totally legitimate. The new patent system has great objectives and will improve the European economy but they want to regulate the system by improving it and they are totally right. They want to make sure that it will mainly stimulate innovation and investments rather than encourage patent trolls to come to Europe.

The patent trolls are companies that buy patents for the unique purpose to sue anyone who would violate them. They use patents as leverage to extract money to other firms. We call these companies Non-Practicing Entities’ (NPE) or “Patent Assertion Entities” (EAP).

First, I think the “patent trolls” does not bring anything positive in our society. These companies prevent innovation by bearing patents they do not intend to operate. They therefore highly penalize innovative businesses.

I think the “patent trolls” will not be profitable in Europe. European justice is highly regulated and operates in another way that American justice. It is also known that in America it is possible to sue anyone for any reason, and this with very little risk of losing. This is not the case in Europe. So I think if these patent trolls are located in Europe, they will have much less success than in America.

I fully agree with the open letter. Patents are used to promote innovation by sharing knowledge. But the patent trolls prevent this. They inhibit innovation using costly litigation threats to claim their questionable patents. Europe needs to do what is in its power to prevent or greatly limit the arrival of patent trolls in Europe.

http://www.lalibre.be/economie/actualite/les-patent-trolls-bientot-sur-le-marche-europeen-5261ffa83570314ade9eb46e
http://googlepolicyeurope.blogspot.be/2013/09/troll-proofing-europes-patent-system.html

The purpose of the patent system is to promote innovation by disclosing inventions, sharing knowledge. Disclosing this knowledge increases social welfare, the technology can be used by other companies, paying a fee or royalties to the patent holder, and can improve products or services, while rewarding patent holders for their R&D investments.

Patent trolls, however, file patents with no intention of using their invention, but to make money out of people using an invention protected by their sleeping patents (a sleeping patent is a patent consciously not being used by the patent holder, directly or through a third party, in this case for strategic reasons). On the one hand, patent trolls are ahead of others in anticipating new technologies or innovations. On the other hand, they have no intention to develop the technology, they want to prevent others from using it for free.

Their goal is to make money out of their patented ideas used by others. This can lead to reducing social welfare: companies would be sued by patent trolls for using a technology trolls own, and the price to pay to settle or to go to court can be high. Such a cost is not negligible, therefore the incentive for the company to invest in R&D is reduced because they already paid a lot for the use of a specific technology, and they could find a technology already patented and being sued again. Of course, these companies should have an eye on technologies already patented, to try to avoid such lawsuits.

A unified patent system in Europe would “promote efficiency and long-term competitiveness. “ (troll-proofing Europe’s patent system, url below)

I think this sentence is true when companies invest in R&D and make their inventions become reality by implementing them on products and services available to customers. Moreover, such a unified patent system would make the filing of patents much cheaper for companies, thereby increasing the incentives for firms to file more patents, and thus, to invest in R&D. However, patent trolls might benefit from this since with one patent filed, they would be able to sue companies all over Europe. One patent filed would cost less than filing a patent in several countries (at least 13 member states including France, Germany and the UK).

For the social welfare of Europe, I think patent trolls might be a threat. Implementing a unified patent system in Europe would, in my opinion, attract patent trolls on the continent. I also agree with the open letter from big companies, who ask Europe to change its rules by asking, among other things, that patents filed must be valid. However, benefits from a unified patent system on social welfare could be great. The “threat” of patent trolls (decrease in social welfare) must not be bigger than the increase in social welfare due to “honest” people filing patents (=will use the patent).

Sources:
http://googlepolicyeurope.blogspot.be/2013/09/troll-proofing-europes-patent-system.html
https://www.quora.com/What-are-sleeping-patents
https://en.wikipedia.org/wiki/Patent_troll

The regulations for European unitary patents entered into force from January 12th 2013 but there are still a lot of countries from the group of the potential 25 that haven’t ratified yet the unitary patent agreement. Among these countries, there is Germany, United Kingdom, and the Netherlands. Countries as Belgium, Austria and France have already ratified. Therefore we cannot see yet what the impact is of the unitary impact. We can speculate about what the risk on patent trolls could be if all the countries would ratify the agreement.

To be able to say that patent trolls can become more present in Europe by launching the unitary patent, we first need to define what patent trolls exactly are. Wikipedia defines it generally as a plaintiff (person or company) that attempts to accuse another company or person of infringing a patent far beyond the normal value of the patent. This is one of the many existing definitions. It is known that there is no precise accepted definition of what a « patent troll » really means. Therefore it is very difficult to identify patent trolls and to take them in court. (Janssens de Bisthoven, 2013)

I think personally that the risk for more patent trolls will not increase a lot after the complete ratification of the unitary patent system in all the 25 EU-Countries. There are several reasons to explain that:

Firstly, it is more difficult to get patents in Europe than in US because of the differences in interpretation of the patentability conditions. The U.S. « non-obviousness » standard seems to be laxer than the European « inventive step » requirement, and the U.S. concept of « utility » is much broader than the European « industrial application » standard. (Janssens de Bisthoven, 2013)

Secondly, follow Janssens de bisthoven the holdup or troll problem is particularly significant in component-driven industries notably information technology (IT). By coincidence there is a fundamental difference between US and EU patents. The software and business methods are questionable patent subject matter in the EU but are largely accepted in the United States. Therefore the American system is a much more attractive playground for patent troll activities.

Thirdly, in the US In comparison with US, the EU has a « losers pays cost regime », which means that the loser in court pays the other party’s attorney’s fees. In the American system, each party has to pay its attorney fees. Therefore the motivation for patent trolls in the United States of America is much higher since the patent troll will not have to pay the other party’s attorney’s fee costs if he looses. Furthermore, the motivation for a patent troll to bring an infringer into court is higher in the US since the damages awarded at the end of proceedings for infringements are much higher in the US than in Europe. (Wikipedia)

For these 3 reasons I can only partially understand that, in the open letter (September 26th 2013),of the several companies to the European institutional entities, they say that they complain about a threat of more patent trolls with the new European patent system explained. Since they say that patent trolls don’t have a business interest and that therefore consumer harms should be considered. Follow the letter the main threats are BIFURCATION and INJUNCTIONS. Injunction is a valid argument but only when the unified patent system would increase the number of Patent Trolls. The second threat, Bifurcation, is follow the open letter a problem that happens because the Unified patent court (UPC) agreement allows infringement questions to to be decided by different courts in the same case, but gives little guidance as to when or how this should or should not be done. Therefore plaintiffs could obtain a quick infringement ruling. Follow the Jannssens de Bisthoven (2013), this is not really the fundamental problem with patent trolls. He says that the main problem is not the patent problem themselves but the overburdened patent offices, the resulting “weak patents” granted and the “overvaluation” of patents.

In a paper about Patent Trolls (Janssens de Bisthoven, 2013), the author has a moderated message to Europe; « Save the trolls but sanction their abuses ». What he wants to say through this statement is that with the new unitary patent package there will changes that can make patent trolls become stronger in Europe. But since patent trolls are legally accepted and follow several definitions of patent trolls, every patent plaintiff can be somehow considered as a patent troll, we should rather save the patent trolls but sanction their abuses through more solid juridical practices. For example, avoid overvaluation of patents and avoid overburdened patent offices.

Besides the problem of defining exactly what patent trolls are, we can conclude, that the European unified patent system relative to the US system will not increase the threat of patent trolls substantially after a complete ratification of all the considered EU-countries. Furthermore the open letter of the several companies about patent trolls can seem alarming but is not making a pertinent statement about the fundamental problems of the patent trolls.

Sources:

Academic Papers:
Nicolas Janssens de Bisthoven (2013) Patent Trolls and Abusive Patent Litigation in Europe: What the Unitary Patent Package Can Learn From the American Experience?

Websites:
https://en.wikipedia.org/wiki/Patent_troll

Articles:
Jens Raabjerg Olesen (23 july 2014) Are the patent trolls here to get us?
http://www.hoiberg.com/en/about-us/articles/are-the-patent-trolls-here-to-get-us/

In the present article, Alain Strowel discusses the possibility that the creation of a unified European patent, which is currently still awaiting ratification from several of the 13 participating EU member states, might increase the risk that so-called non-practicing entities (NPE’s) or “patent trolls” emerge and cumber the innovative process in Europe. In particular, the author refers to a common letter of 16 large EU and US companies, who admonish that the larger degree of legal integration that a single European patent will create might indeed lead to an increasing appearance of “patent-trolls”, as it is already the case in the US. My contribution to this discussion will be two-fold. At first, I examine the notion of “patent trolls” from an economic point of view, in particular to disentangle the economic functioning of these entities from their negative connotation. Second, I explain why I think that the EU seems better prepared than the US to prevent “patent trolls” from illegitimately hindering companies in their daily business.

To begin with, the moral arguments against NPE’s, which are often employed by politicians and company executives alike to condemn the practice of speculatively buying patents and suing firms which disregard these titles, seem not justified to me. Instead, I think that in market economies, the benefit to society that arises from a particular action might not always be evident in a straightforward way. Indeed, as already argued by the philosophers Bernard Mandeville and Adam Smith in the 18th century, superficially selfish and unproductive activities, such as the filing of lawsuits based on intellectual property that was fostered by another party, can increase overall societal utility. Hereby, I refer to the functioning of NPE’s as buyers of patents from small individual patentees. As exemplified by the decades-long lawsuit of the inventor Robert Kearns against the three largest US automobile producers, taking notice of one’s rights and seizing advantage of it constitutes a lengthy and very costly procedure vis-à-vis opponents that are equipped far better in financial and personal terms. Hence, NPE’s principally just maintain the incentives for small entrepreneurs to engage in innovation by compensating them for their patent titles and then focusing on the most profitable cases. With the above considerations in mind, it is also not surprising that the mentioned common letter was signed exclusively by enormous multi-national enterprises, which of course regard these individual interests as mere nuisances in their daily business. Admittedly, there might also exist examples of NPE’s that conduct practices which are no longer in concordance with societal goals. This is especially the case when evidently pointless lawsuits are just filed to achieve infringement measures against defendant companies, which are then often forced to negotiate with these NPE’s off court, just to assure that daily production will not come to an unwarranted halt.

So in order to check whether this abusive type of “patent troll” might also appear on the European scenery, I consider it worthwhile to compare the reasons for the emergence of these entities in the US with the current European situation. In his work on what European patent law can learn from the American experience, Janssens de Bisthoven (2013) mentions three particular developments that have contributed to the rise of the “patent troll” overseas.
First of all, he alludes to the stark increase in US software patents since the 1980’s, which also increased the chances of NPE’s to profit from the implicit difficulty to clearly demarcate patent titles in this field of intellectual property. However, in contrast to the US, EU law acknowledges these difficulties, and hence only grants software patents under very narrow conditions.
Second, Jannsens de Bisthoven relates to unclear US court decisions on the patentability of business methods, which increased the possible breadth of patents, and once again the profit opportunities for NPE’s. As above, the EU’s position seems to be much more cautious and conservative here, since business methods are currently not protected by European patent law, and will neither be protectable under the unified patent system.
Third, Janssens de Bisthoven also mentions the high litigation costs in the US, which have made the suability such a profitable business for NPE’s. While Mr. Strowel already mentions in his text that the sums fined or reimbursed in Europe are far lower than in the US, from a legal perspective there may indeed exist several weak spots of a single European patent. Since different legal traditions merge in current EU law, it is not always clear how patent law might be interpreted by different courts. Furthermore, as it is already the case in the US, “patent trolls” might prefer to choose those regional or local courts which are known to file infringement procedures quite fast, which increases their extortionate leverage vis-à-vis corporate defendants. However, as mentioned in an article on IPKAT, there always exist strategies for firms to protect themselves from “patent troll” on the European market. Some imply that national patents are still obtained for certain products country-by-country, which clearly provides no progress over the status quo. However, this procedure might at least smoothen the transitory phase, and give the respective legal institutions the necessary preparation and training to become accustomed with the harmonization of legal practice within Europe. Others base on the advice that firms should act cautious and hence aim to settle legal issues with unclear patent rights in advance to a start of production or sales. That is to say, filing claims for revocation of existing yet unclearly defined patents at the central European patent office relieves firms from the fear of facing infringement measures on the whole internal market, especially if the timing of these falls apart from the date of revocation (also known as bifurcation). Despite these sporadic legal uncertainties, I think that, given its reflected action so far on patent implementation, the EU is quite prepared to prevent the emergence of “patent trolls” on European markets, hereby also benefiting from the insights derived from the American experience.

References:

The IPKAT Tuesday, 12 March 2013 Bifurcation of European patent litigation: a practitioners’ perspective http://ipkitten.blogspot.be/2013/03/bifurcation-of-european-patent.html, (fetched on November 9th, 2015)

Janssens de Bisthoven, N. (2013) – Patent Trolls and Abusive Patent Litigation in Europe: What the Unitary Patent Package Can Learn From the American Experience?, Stanford-Vienna TTLF Working Paper No. 19

Arnold & Siedsma – Patent letter: Europe becoming battlefield for patent trolls, http://www.arnold-siedsma.com/en/news-and-publications/news-and-articles-/patent-letter-europe-becoming-battlefield-for-patent-trolls , (fetched on November 9th, 2015)

https://en.wikipedia.org/wiki/Robert_Kearns#Legal_case, fetched on November 9th, 2015)

The presented problem of ‘patent trolls’ activity around the world is interesting and complex one. Mentioned ‘trolls’ use the created patent law system against its original idea, but according to the written rules they don’t do anything wrong. That is because everyone has the right to apply for patent, sell it to other entity and start a lawsuit when patent was infringed.

Therefore, patent system started to work against own aim, which is creating an incentive to innovate. ‘Patent trolls’ operations are a reason of growing costs for innovative companies, such as cost of employing lawyers and experts in patent law to avoid infringement, salaries of analysts who determine how costly an infringement can be and what is the possibility of losing the trial and financial loss in case of losing the trial.

In such situation, patents have double impact – positive and negative, so sum of these impacts should be taken to determine how useful the patent system is for the economy. Maybe if we take into the consideration growing negative impact then we can look differently on the subject of the most efficient way to create incentives for innovation.

European officials should look closely on the situation in the US in order to avoid the same situation. Large European patent system may attract companies to get involved in the same damaging activities as ‘paten trolls’ in the US, but we should remember that law in Europe is stronger than in the US. In Europe, the process of obtaining a patent takes longer, judges have expert knowledge unlike juries in the United States and loser in the trail faces more severe financial consequences.

I believe that European authorities should apply changes suggested in open letter published on Google’s blog and signed also by 16 other large companies. If Europe will continue to efficiently control patenting, problem of ‘patent trolls’ shouldn’t be as severe for the EU as it is for the US.

After some reading, I think the new patent system offers more pros than cons. Of course, this new system will favor “patent troll” but I think it’s a necessary evil. In my opinion, I think that the “patent troll” will always be more numerous in the United States than in Europe. The European judicial system is different from the American system. A professional judge often more perspective and better analysis business that jury. This is important in these cases to have professional judges who may judge the case.

First, the new system simplifies administrative procedures. Before that system, the patenting of all European countries was long and costly. We had to file a patent in each country. This resulted in huge costs and difficulties. For example, text translation difficulties could arise between countries and complicate the patenting. Some small businesses may have difficulties paying these costs. With the unique patent, it will be easier for small businesses to access the European market.

Secondly, a patent for the whole of Europe is faster now than before with this unique patent. Companies can therefore quickly put on the European market their innovations. This is an incentive for companies to innovate and that is a good thing for the European market.
Thirdly, with this unique patent, conventional companies (= companies that do not practice “patent troll”) are easier to attack companies that violate their patents. So companies can better protect their patents in the European market. Here again, companies have an incentive to innovate.

In conclusion, I think this system is generally good for business and for the European market. Of course, the risk of abuse of “patent troll” is present but I think we have to trust the European system of law.

As Paul mentioned in his lectures, the patent process is very different in US and Europe. In US, the priority is on fast delivery of patents, hence they don’t take much time to go through the patents. In fact the average wait time for getting a patent is 24.6 months with a fast track option to get it in 12 months. This system relies on courts to sort out issues regarding patent validity and infringement .Additionally patent cases are also tried by a jury comprising of normal citizens which are not well versed in the intricacies of patent laws. In such a system, it is easier for trolls to get a patent and they have a better chance of success if their target does not agree on an out-of-court settlement.

However, in Europe, the process is different. Here, the emphasis is on making sure that the patent is sound. Hence the process takes longer, around 43.7 months. This makes it harder for trolls to obtain a patent. Additionally, the patent trials will be judged by a competent judge,who will have be able to make a nuanced decision in accordance to patent laws. Also, there are provisions in European law that forces the looser to pay the litigation fees for the winner, which are absent in US. I believe that in light of these factors, patent trolls will find Europe a tougher nut to crack than US.

http://www.fastcompany.com/1802737/patents-numbers-average-wait-time-down-trolls-cost-us-80-billion-year
http://www.uspto.gov/main/faq/
http://en.wikipedia.org/wiki/Grant_procedure_before_the_European_Patent_Office
http://www.ambercite.com/index.php/amberblog/entry/how-many-granted-patents-contain-invalid-claims

It is a good idea for court to establish the unified patent packages.

From my perspective,the unified patent package will not reinforce the risk of “patent troll” as serious as in U.S. when landing in Europe.On the one hand,as it said above,”In Europe ,before the the created of unified patent package,there were serval different patent system,the companies ,which were sued infringe ,would like to pay for NPEs in oder to avoid being sued because this kind of case always costs lot compared with the tort fee the NPEs requested.Besides ,it always spend a long time to hear this kind of case and will even damage the image of the company. However, after the created of unified patent package, only professional judges rule on patent cases,thus limiting somewhat the uncertainties caused by juries”.In U.K.the general rule is that the losing party shall pay a big part of the litigation costs to the winning party .The party who try to initiate a request and then suspend the processing should pay the other party lots of cost.These rules may be blocked many patent litigations which lack of evidence and rival patent litigation.In this way ,the number of NPEs will decrease .On the other hand,because of deferent culture,the situation in Europe cannot the same as in U.S..

Admittedly, EU also had numerous cases of patent antitrust and unfair competition litigation involving “patent troll” behavior ,such as Nokia vs. Germany ‘patent troll “company IPCom,Google vs.Nokia,Microsoft vs.Masaid (a patent troll) in Canada and etc..Take the case of IPCom for instance,IPCom have suing Apple for infringe one of its mobile phone technology patents,claiming 1.57 billion euros.However,the German court dismissed the lawsuit and ruled that Apple did nit infringe on two patents which IPCom had said.From this case,we can find the fairness of legislation ,especially to the NPEs.It also prevent the lawsuits from the NPEs to some extent.

Finally ,regarding to the open letter,I do agree with that some proposed legislation should change and also take some important part into account.

In conclusion,to say the unified patent package seriously reinforce the risk of “patent troll”landing in Europe is overstated.It maybe a good choice to take the characteristics and local culture into consideration.

Sources:
http://www.cnpat.com.cn/show/news/NewsInfo.aspx?Type=G&NewsId=4671
http://baike.baidu.com/view/6550008.htm?fr=aladdin
https://docs.google.com/file/d/0Bw8Krj_Q8UaEd3U1dUJ3SVp6LTQ/edit

Unified patent system can provide the simple and efficient patent system in Europe,but it also introduces risks associated with the possibility of obtaining a legal injunction valid on a large market.Because Europe excited different legislation before,and if patent trolls want to earn damages from litigation,they should face different courts in different countries.It means that they will engage into a lengthy and costly procedure,and the cost for litigation might exceed the expected damages from the defendant company.However,the system of unitary patent and unified patent court will help them to solve this problem.Now,patent trolls just should to win a lawsuit in this court,and the defendant company will face a legal injunction valid on almost whole Europe(at least 13 member states).It absolutely is a huge loss for any company,and they may be under pressure to settle out of court.It means that patent trolls can reach their targets easily in the unitary patent and unified patent system.That might be a great attraction to patent trolls.

However,I think it is wrong to demonize that there will be a serious crisis of patent trolls appearing on the European market because of the experience of the United States.As we know,compared with the United States,Europe has distinct legal system.There is no jury system in Europe and the court tends to adopt reasonable evidence on trial.For example,In the UK,the court has specialist judges at trial and appeal level with technical backgrounds and a reputation for thorough and reasoned decisions;validity and infringement is normally head together.And the case also be handled quickly with a trial 12 to 18 months from start of an action in the UK.That will be much harder for patent trolls to win the lawsuit and get the money settlement.And the important thing is that the new unified patent system give the choice to patentees,they can choose where to sue.It is a good way to prevent patent trolls,because even though it is a “unified” system,the unified patent system is presently expected to have a dozen or more local and regional divisions.These will contain panels of judges drawn from different legal traditions.This measure will give the product company a great chance to win the lawsuit because they can choose the place where the law is more beneficial for him.On the other hand,it increases the risk to patent trolls.And the unified patent system adopt loser-pays rule.It means that if patent trolls lose the case,they will face the enormous loss.So they may be intimidated by these rules.

All in all,we should not demonize the crisis of patent trolls in the European market,but we also should not ignore this problem.Because the experience of patent trolls in the United States is a good example.And I think the risk which the companies said in the open letter should be take into account.Because this system does bring some risks to the European patent system.However, it is not so serious as the companies said in the open letter.

Resources:
Bifurcation of European patent litigation: a practitioners’ perspective
http://ipkitten.blogspot.be/2013/03/bifurcation-of-european-patent.html

Will US patent trolls soon be making their way to the UK?
http://www.theinquirer.net/inquirer/opinion/2288901/will-us-patent-trolls-soon-be-making-their-way-to-the-uk

Following this text, an unified patent system will be installed in Europe in order to create one single system and law for 13 members states, including biggest markets like Germany, the UK and France. It’s quite a difficult phenomenon because it leads to different positive and negative effects.

First of all, it seems logical that such a system will be created because it results from European Union thoughts to be one community, to become one system! In the first point of view we could say that it spurs innovation. Indeed, the main positive impacts brought with this unified patent is the reduction of transaction costs due to a simplification of administrative processes which allows companies to invest their time in research instead of losing time in “paperwork”.

However, biggest companies such as Google, Microsoft and Adidas are afraid about the possibility of emergence of “Patent trolls” in Europe with this unified patent. And the impact here of troll could be consequent. Indeed, a suit engaged by a patent troll for alleged infringement of patent could be disastrous. There are here two different aspects.

Firstly, because of the future “unified patent structure”, an injunction will be judge by two courts, one over the validity and the other over the eventual infringement of the patent. And this will take a long time meanwhile production processes and sales could be stopped into the whole Europe. That would be disastrous because it would be a considerable loss of profit and a slowing of innovation. Therefore, companies could be forced to settle out-of-court with these trolls.

Moreover, European law policy is quite different from the US law. In Europe, most of time, the suit costs are supported by the looser. Thus, it is risky for innovators to go to court if they are not sure to win. But in the view of “patent trolls” it also is a brake for them because they only have a low win rate (following results) and a loose could generate big liabilities.

Finally, what could be perfect solutions to avoid this kind of misbehavior? Actually, I do think that such a system can work if we well-define it. Strong and accurated laws are needed for patent granting and patent reviews. Indeed, a weak system would allow a lot of “patent trolls” to exist. In my opinion, another system could be imagined. In this one system, one would create associations which would help new companies and start-ups to struggle against these trolls. These associations would help them in the buying patent process. Maybe could we think of a policy of “coach”. What I mean by this is that they could give investments in these new companies to help them to buy the patent they would not have protected. By doing this, they would receive rewards in terms of money, of licenses.

First of all, I would like to express my opinion about these « patent trolls ». As stated in the article, they only enforce a legal right they own. But does it mean that it is ethical, and it does not harm the economy? “Smaller companies are getting hit just as hard, and 40% of technology startups targeted by patent trolls reported a significant impact on their business operations due the suit or threat thereof.” It is thus an obstacle to innovation, and I can’t see any positive effect of that kind of practices.

But I don’t really think they could enter the European Market that easily. The fact that patent issues are not settled by a jury, as it can be in the United States, but by a bunch of professional judges in all cases, is maybe a huge barrier to that kind of practices, because a smaller amount of abusive lawsuit will probably be engaged. Also, the damages awarded at the end of a lawsuit are lower in Europe, while costs involved in the process of the lawsuit are bigger.

Moreover, the fact that the bifurcation features of Germany are already in place and haven’t attract a significative amount of trolls, despite being a way for them to do their business, comfort me in my opinion that this unified patent package will not necessarily be a way to facilitate the entry of trolls, and that it will not become an as big issue as it is in the United States.

To conclude, I can see the points of the companies that wrote the open letter, but for me they should not fear that much the possible entry of “Trolls” in the European market. And if they do enter, maybe the fact that some new ideas will be blocked by these trolls and their patents, will drive firms to search for new ways of doing, and it will lead to a new wave of innovators. But I doubt it since apparently it never happened in others market where there was trolling about patents.

Legislation about patents have always been source of several debates and his effectiveness has always been called into question. Patents trolls are « companies who enforce patent rights against accused infringers in an attempt to collect licensing fees, but does not manufacture products or supply services based upon the patents in question, thus engaging in economic rent-seeking ». As soon as these companies get their innovation, their activities (no matter how dishonest their are) concerning a lawsuit about patents are legal.

Let me develop my opinion about these patent trolls in the context of the innovation. Like everybody knows, processes of innovation are sources of economic development and increase in consumer’s welfare, and are thus benefic. The real question is « Is the patent system benefic for innovation? ». For example we already spoke about patent races previous weeks, let’s see today what are patent trolls’ effects on innovation processes. In the one hand, we can see the existence of patent trolls as an extreme incentive to innovation in the sense that it could be seen as an extreme patent race. But disadvantages are in my opinion much more visible. Since lawsuits about patent infringements are really expensive, some companies could be reluctant to innovate because of the risk of legal consequences, synonym of heavy fine. Moreover, all money spent on lawsuits and fine is a total waste of consumers and industry’s welfare in the sens that every dollar spent could be invested in more useful domains, like R&D, leading to innovations.

Let’s speak now about patent’s troll’s arriving in Europe. In the letter written to the European authorities, several companies discuss about two aspects of the problem: patent’s validity and patent’s violation. Two different and independent courts are responsible for those two aspects of patent’s legislation. In my opinion, the first aspect is the key to the problem. If Europe develop and enforce law about patent acquirement, patent trolls would be much more hindered. For example, we could imagine procedure of justification of the innovation: a firm which ask for a patent must give proofs that these innovation will be used in the context of a new project’s development.

In my opinion, I agree with the system of patent trolls (despite the fact it is totally dishonest) because there is no legal basis counteract them. People would always try to subvert the law, but it is legal authorities’ role to improve it in order to avoid this kind of situation.

Without being an expert in patent legislation, I think that creating a unitary patent system for Europe seems like a good idea. A unified system for patents would most probably prove more efficient for innovators as it would not be necessary to file for a new patent protection under each different system in all European countries. The cost of obtaining patent protection would significantly decrease. I believe that introducing such a unitary patent system would increase the overall competitiveness of the industries of Europe, and especially be valuable for the long-term growth of innovative industries both when operating in the different countries of Europe and when expanding outside the region.

However, after having read the open letter to the EU signed by several big companies such as Google, Apple, Deutsche Telekom and Adidas, I do understand why they want to add some changes to the proposed agreement on a unified patent court and why they are afraid of patent trolls ravaging the European markets.

Patent trolls are entities that most often acquire patents with the purpose of filing patent infringement claims and like this they contribute to hindering innovation. Suffocating innovation is clearly not good for society overall, and from my point of view these kind of innovation-hindering activities should be fought against. The danger with the new legislation that the unified patent package involves is that it seems to present some risk for abuse by these so-called patent trolls. Some specific risks are highlighted in the open letter, and I agree with the signatories of this letter that these risks should be looked further into and that it may be necessary to change the proposed unified patent package in order to mitigate these risks. Europe would suffer if innovation-stifling measures became easier to impose as companies would move innovation activities to more innovation-friendly environments. I will now take a closer look at the risks that are identified in the open letter.

Firstly, the issue of whether a patent is valid and whether it has been infringed is common in patent cases. The proposed agreement on a unified patent court allows for decisions to be made by different courts in the same case, but provides little guidance on how this should be done. Therefore the signatories of the open letter think this could be a pitfall of this agreement as this could allow plaintiffs to obtain a quick infringement ruling from one court before it has been determined whether the patent is actually valid. Like this, plaintiffs could be able to extract substantial royalties from European companies based on low-quality- and even invalid patents. The signatories of the open letter further fear that “the proposed new patent system could undermine, rather than promote, innovation in Europe, as producing companies could develop strategies to avoid European jurisdictions in fear of an unfair litigation system being too advantageous for patent proprietors.” This could lead companies to divest in Europe and rather find other locations for their innovation activities. Also, the increased litigation costs would mean less of the company’s resources spent on innovation and growth. Injunctions let patent holders block unlicensed products containing their technology from the market. However, this could enable litigants to make unreasonable royalty demands for a minor patent on a complex product. The signatories argue that the new agreement must contain specific guidelines on when to grant injunctions, because if this is not clear there will be strong incentives for abusive behaviour by e.g. patent trolls. This could be particularly grave with this new European agreement as the injunction power will extend beyond single countries and include most of Europe. The risk of these kinds of abusive behaviour that are brought up in the open letter is not only theoretical. In the United States, litigation brought by patent trolls cost U.S. businesses 29 billion US dollars in 2011 and half a trillion dollars in lost wealth from 1990 to 2010.

In order to sum up my point of view on this case, I would say that the idea of creating a unified patent system in Europe seems to be a good idea and can create several benefits, as already mentioned above. Still, as highlighted in the open letter, there are some important points that need to be looked further into, and the proposed legislation might need some changes. I think it would be wise of the people who are working on this new unified patent package to listen to the proposed changes to the agreement that the signatories of the open letter has, as risking to implement a legislation that will enable patent trolls to ravage the European markets would be highly unfortunate for fostering innovation in Europe in the future.

Link to the open letter: https://docs.google.com/file/d/0Bw8Krj_Q8UaEd3U1dUJ3SVp6LTQ/edit

Patent trolls (or “‘Non-Practicing Entities’ (NPE) or ‘Patent Assertion Entities’ (PAE)”) are mostly a phenomenon of industrial countries and are meanwhile more than only a side effect of an organized patent system. They collect (broad) patents to enforce them against other companies or persons to gain license fees. In accordance to an increasing number of patent litigation due to patent trolls the USA took measures to restrict patents trolling e.g. in February 2014 Wisconsin passed a law to ban this kind of practices totally. Meanwhile overseas in Europe companies voice concerns about the agreement on a unified patent court which is planned by the European Member States. In an open letter the respective firms expect as a result of the agreement an increasing number of NPEs which cut the incentives for further innovations.
Are NPEs really a threat to Europe innovation’s incentive system and, if yes, are there remedies to establish a “healthy” equilibrium?
This is, among other things, I´d like to discuss in the following comment.

The groups which suffer severe from patent trolls may be little firms, single supplier and freelancers (e.g. independent programmer) once their financial setting is not that large to cope with long and expensive patent litigations. Especially the IT sector can be seen as a vulnerable market for such activities because final products often consist and rely on many single subpatents. But as we can see from the open letter, also a lot of multinational enterprises are concerned about an increasing number of patent trolls. Indeed, after the decision of authorities in the USA to restrict this behavior, a lot of European firms see themselves as a new target for patent trolling. E.g. the “Deutsche Telekom”, Europe’s biggest telecommunication enterprise with a head office in Bonn/Germany had to pay a three-figured million amount of money (in Euro) after a settlement with IPCom, a patent troll, due to approximately 20 court proceedings.

Indeed, patent trolls find already perfect preconditions in Europe. Firms criticize that there can be two parallel litigations, one which covers the validity examination of the respective patent and the other which deals with the infringement on the same patent. Therefore firms are exposed to the threat of a potential prohibition of sale on their product although the respective patent can declared invalid a few times later. The catch is, that this processes are hold by different courts which raises uncertainty and costs. This phenomenon is called bifurcation. The higher the expected costs, the higher the deterrence for companies to fight patent trolls rather than to pay license fees.
On top of this, especially in Germany, the courts are very fast, which also favors those actions.

To evaluate the impact on the incentive system of innovations, concerning the existence of patent trolls, there a two driving forces. On the one hand NPEs stimulate innovation for the operating company which transfers the patent to the troll, but on the other hand it stifles the incentive to innovate for the competitors. Which effect does outweigh the other? As we can see as well from the open letter, there is a variety of firms that operate across several markets and that companies signed the letter – so it may be the second effect which is higher. Additionally one have to keep in mind, that the troll’s business method focuses on legal litigation or the threat of litigation to obtain fees, beyond the intention to use the respective patent in an operative manner.

Furthermore there often exist mighty bankroller in the background of the NPEs which provide them with fresh money. This also leads to a wrong allocation of financial resources.

Finally, regarding all this aspects, what kind of remedies may exist to avoid or at least reduce patent trolling?
– Unlike the USA, Europe has “a loser pays cost regime” which ensure that only the party which loses a litigation has to cover all expenses
– There must be a raise of awareness on this issue, especially for small companies, to take protecting masseurs beforehand in shape of assurances (for patent litigation)
– Considered the fact, that every patent depicts a lawsuit license, the licensing process has to be provided with enough capacity to prevent in a preemptive way, markets and society of patents which are phrased in a “vague” manner

Sources:

http://googlepolicyeurope.blogspot.be/2013/09/troll-proofing-europes-patent-system.html
http://www.spiegel.de/wirtschaft/unternehmen/telekom-zahlt-hunderte-millionen-euro-an-patent-troll-ipcom-a-909323.html
http://graphics8.nytimes.com/packages/pdf/business/26trolls-letter.pdf
http://upstatebusinessjournal.com/another-bad-day-patent-trolls/
http://ec.europa.eu/internal_market/indprop/patent/ratification/index_en.htm

I do agree with the position defended by the companies that signed the letter. As said in the letters, “Patents encourage inventors to publicly disclose their inventions, sharing knowledge and spurring further progress while recouping their investment.” For me, the patent trolls are doing the contrary. In USA, it is a big issue. Companies used to spend a lot of money in their R&D but now, with those patent trolls, some of them spend more money on patent than in R&D. It has a huge economic impact and it is an issue to innovation.
I think that the unified patent system would promote innovation and competition between countries in Europe and according to an article of Le Monde, it is supposed to reduce the cost of filing patents.
However, patent trolls will maybe also take part of this new system like in the USA and it isn’t good for the EU.
But as you said in La Libre, I do agree that it is too soon to say that it will be bad and that it is overrated. Plus, in the EU, they don’t have the same culture as in the USA.
In conclusion, we do have to worry about the patent trolls in Europe but it doesn’t have to be a main issue, some laws against that could emerge.

http://www.lalibre.be/economie/actualite/les-patents-trolls-bientot-sur-le-marche-europen-le-risque-n-est-pas-negligeable-5261ffa63570c7e5f9ee5755
http://www.lemonde.fr/technologies/article/2013/09/26/des-entreprises-s-alarment-de-l-arrivee-de-patent-trolls-en-europe_3485720_651865.html

Patent trolls are those who want to buy companies’ patents in order to own a patent pool and after that prosecute others companies which break the law by using patents already granted by these patent trolls.In other words, by keeping the innovation secret until it is used by another company, patent trolls fight against innovation and are in favor of inaction.
The problem is; Patent trolls already have the innovation but don’t use it in order to provide litigation problems and because the justice process is long and costly and so companies avoid to go to court and prefer to pay the patent troll.
As far as I’m concerned, I partially agree that Patent Trolls are entirely harmful.

On the one hand, it seems evident that patent trolls implies that other company waste time and money. Indeed, as I said before, Patent Trolls already have the patent, they are just waiting for the moment when they could provide litigation problems and obtain money. By this, they supply no progress improvement and they also drain billions in the economy.
But on the other hand, it is a good opportunity for companies which cannot sustain their business and so, in order to provide a positive return of its R&D investment, decide to license their intellectual property.

Since 2014, the Unified Patent Court put in place the Unified Patent ¨Package (UPP) which has a lot of advantages but also disadvantages.
Indeed, on the one hand, UPP, by allowing companies to reduces their cost and simplified the administration, creates cooperation possibilities between its members and so spurs innovation. But on the other hand, the UPP will let to Patent Trolls a wild open space to take action and so it will enhance the Patent Trolls’ motivation.

In order to decrease Patent Trolls’ number, Microsoft, Adidas, Google wrote an open letter. Indeed, all of these big companies want to avoid a situation in Europe like the situation in the US and want to spur innovation and so, in order to realize this, want to decrease the number of obstacles against innovation. But we have to keep in mind that sometimes, Patent Trolling is a great opportunity for small companies which haven’t a big financial situation and want to obtain the fruit of their research even if they don’t use it.

In conclusion, I partially agree with all these big companies and I think that the unified patent court should find another way to manage Patent Trolls.

Easier said than done.

I think that the future unitary patent and the unified patent court is a good thing for Europe, but this new legislation has to be done carefully. Indeed, I’m convinced that more integration into the European Union is a real need, and a subject as important as the patent policy has definitively to be harmonized.

Nevertheless, if this legislation is adopted with sufficient securities, we might never see “Patent trolls” in Europe. For this, we need to make sure that the law remains as restrictive as it is concerning the patent granting, and patents reviews. If we adopt a smoother system like the one in place in the USA, we will for sure have to deal with the “Patent trolls”.

I’m convinced that those NPEs are very bad for a market such the European one. Indeed, we don’t have the same culture than Americans, and in my opinion, NPEs are just thieves, that don’t bring value to the society. They induce loss of time and money for companies that really want to innovate and damage justice, which is not seen as a business in Europe unlike in this USA. In case of “Patent trolls” would appear, it would be very damageable not only for companies, but also for the entire law system.

So, in one hand unitary patent “promotes efficiency and long-term competitiveness” as it is said in the letter of the 16 companies, but has to be well thought by the authorities in order to avoid such a lame system as in the US.

I think that integrate the “patent market” increases a lot the expected return of legal action and so rise the risk of patent trolls to appear. But I think also that it may be also a good thing if there is no exageration of these “Non-Practicing Entities”.
Personnaly I think that we could see this type of firm like an association of defense of private small inventor in the sense that these firms buys patents that private invetor could not protect from copying and, thanks to these firms, small inventors can yet have the return (of a part of it) that they deserve. And could we blame firms to preserve them legal right? For me buy a patent is a investment and they have to have a return on it an nobody else… It’s like Adidas buy a plant and Nike use this plant freely. It doesn’t see to be fair.
On an other hand, NPE that “plays” on the boundary of patent are certainly harmfull for society in general (extra costs for all firms, so prices higher, cost for government …). And in Europe the legal system is made as the exagerations are less possible than in the US (high cost of procedure so NPE could not engage ambiguous lawsuit). Thus if european judges do not work with completly independant specialist in technological field (I don’t think that a judge alone or a jury of normal people are able to discuss what is the extend of a patent) I think that there will be harmfull derives.

I believe that introducing the unified patent package increases the leverage and thus provides more incentives for patent trolls. To me the argument, that markets of individual countries are big enough does not seem plausible. I don’t understand the legality behind in detail, but if the patent systems are now effectively separated between countries, is it not possible for a troll to capture a small market by filing a patent there, and then sew the company that wants to expand to this market? I can imagine that the companies probably file a patent everywhere in case they want to those markets later, but that must be very costly. This cost may eliminate the innovators, who do not possess the means to capture all markets at once. This can serve as an example of what is probably the goal of introducing the unified patent package. By this I mean lowering legal costs for the innovators. Maybe the trolls should be viewed as a necessary side effect of the cost reduction, possibly a side effect that does not outweigh the gains of the reform and maybe cannot be avoided unless the whole patent system is revised.
The fact, that European judicial system is different from the one in United States may lower the risk for sewed companies. However the uncertainty goes both ways and the patent trolls may face higher risk as well. With higher risk for a patent troll to be successful, the expected payoff for the patent troll is lower. Thus the difference in judicial systems does not necessarily make the difference between U.S. and Europe with respect to their patent system.
The European regulatory authorities should definitely learn from the U.S. experience, but they should do it carefully, so they don’t damage the market environment, as it is customary in Europe.

As far as I am concerned I totally agree with the views defended by the companies that signed the open letter. As it clearly said along this article, patents are useful to promote economics and innovation. Patent Trolls are only coming in order to drag this growth by struggling innovation’s development, and are going to take down new business ideas. I think this kind of practices are completely against the ABCs of the economics development; then it’s clearly justified these companies try to fight this threatening wave coming right in front of them.

We have to keep in mind that without such human creations and such new technologies, the world of today would be very different and a lot of changes would have not been possible. When we talk about Patent trolls, I only see groups of people who want to waste the time and money of companies that give 100% of their capacity making the world we know a place better and better to live. I also think that money can be earned from a thousand ways; so besides the fact that I think trolls are jerks, they have succeeded to invent a borderline but right strategy to take the advantage of patented innovative technologies. Where stand the limit between right and wrong…that’s another issue.

Regarding the unified patent package, I believe things could get worse than ever. Indeed, this package will enhance the patent trolling more than ever; letting them a wild open space to take actions. So in my opinion, with this package coming in Europe, the war has just begin. However, as we already know, European and American conditions are not comparable at all. Then, one first defensive strategy could be to see if we can learn something from each other and try to react properly to these threats we fear.

As we have seen in previous courses, patents are at the heart of the European and US innovations. They help the companies protect their secrets and push them to always be looking for new innovations to keep their competitive edges on the other firms in the industry. What we have seen in the US is that patent trolls are both ways for companies uninterested in progress and innovation to make money and brakes to actual innovation because of the increased price of valuable patents.

I do believe that patent packages might seriously put a dent in the the search for innovation both in the US and Europe. More patents falling into the wrong hands not actually looking for innovation but for short to medium term profit. While it is completely legitimate and legal to purchase patents and patent packages, the repercussions of such purchases are not to be ignored and should be strongly regulated in order to offer the opportunity to those who want to speculate on the value of patents and those who want to purchase patents for innovative purposes.

Companies that have signed the open letter make a business of innovating but also to purchase patents to make sure that ideas worth the investment receive the support they deserve. To me, such practices have to be supervised by a European and US authority to make sure that both industries emerging from patent purchases can are both sustainable without hurting either of the industries.

Source:
http://eur-lex.europa.eu/legal-content/EN/ALL/;ELX_SESSIONID=2M37JySS7wsJQvn1Lps1nTl4ThL0JJ2nBYdnJMnLLSQQNHZ1pNSK!-428442889?uri=CELEX:32012R1257

I think that there might be some arguments in favor of the unified patent package in Europe and some arguments in disfavor of it.

First of all, I think that having a unified patent package in Europe might be beneficial for European companies on the worldwide market. I also think that it could increase the power of Europe facing the United States and China.

Second, according to an article of Le Monde, the unified patent package is supposed to reduce the cost of filing patents in European countries. Indeed, filing a patent is very costly for firms and companies. Moreover, the unified patent package is also supposed to reduce the complexity of filing a patent.

Third, Le Monde argues also that the unified patent package could facilitate a prohibition of selling a product in Europe that could contain a patented technology for which no license would be paid to the holder.

But the unified patent package could have some disadvantages in term of ‘Patent trolls’. Indeed, some say that a unified patent package let the door open to patent trolls in Europe, which is not necessarily a good thing for European companies that invest in R&D in order to develop new products.

Plus, according to an article published in the Harvard Business Review: “… many research studies suggesting that patent litigation harms innovation. And three new empirical studies provide strong confirmation that patent litigation is reducing venture capital investment in startups and is reducing R&D spending, especially in small firms”. The article also argues that the more a firm is performing with its R&D, the more it is likely to be submitted to a patent troll.

In their open letter, companies argued that patent trolls could allow complainants to get a quick offense decision which comes with an injunction requiring a prohibition of products selling in most of the European market even before that the validity of the patent has been determined.

Sources :

http://www.lemonde.fr/technologies/article/2013/09/26/des-entreprises-s-alarment-de-l-arrivee-de-patent-trolls-en-europe_3485720_651865.html

https://hbr.org/2014/07/the-evidence-is-in-patent-trolls-do-hurt-innovation/

After reading those two articles and most of their links, I see both pros and cons about the issue of patent trolls.

On one hand the function of those patent trolls is to make sure that rights given by some legitimate authorities are enforced. Who can be against that? Imagine that a patented technology developped by a small business is imitated without any authorization by a big company. The small business may be reluctant to file a claim because of the huge cost it implies. At the end there is a possibility that the small firm does not reap the fruit of its research. This possibility is much smaller with patent trolls. Indeed one of them could buy the patent to the small firm, thus rewarding fairly the innovator, and then going to court knowing that it has the strength to engage in legal battle with a big company. Therefore, it is not surprising that the fiercest opponents of patent trolls are big business such as the 16 signatories (Google, Apple, Microsoft…) of the open letter presented on IPdigIT.

On the other hand, the behavior of some patent trolls is much more questionable. Many of them take advantage of the cost, uncertainty and lenght of court’s ruling to file numerous claims knowing that most firms will pay them to stop doing so rather than going into some troublesome legal procedures. This method can clearly be compared to blackmail.
Also, patent trolls may weaken cumulative innovation as explained by Green and Scotchmer (1995). Indeed innovation became a risky activity if the use of any existing technology (which was patented without you knowing that) may turn into expensive battle in court against aggressive patent trolls.

In a perfect world, the best solution to these devious behaviors would be the implementation of a swift, cost-effective and efficient legal system. In this way, “blackmailed” firms would not be afraid to go in court and defend their rights.

However, such solution would be nearly impossible to implement in the real world. Because of the technical nature of patents, those trials will always last months and months. A realistic solution would be to improve the balance between the uncertainty and risks faced by firms and patent trolls. Firms are ready to accept disadvantegeous settlement because they feel they have more to lose than the patent trolls. If negative court’s rulings towards patent trolls were truly costly to them (significant fines, financial compensations…), they will be more reluctant to get into a legal battle about a patent whose validity is questionable.

Regarding the issue of unitary european patent, I don’t think this policy will lead to a significant developpement of troll patents in Europe. As explained by Alain Strowel, the differences between the american market and the so-called european market (=13 European countries including the U.K., France and Germany) will remain strong in many fields : legal culture, jury vs. specialized judges… . According to me, we should ask another difference to this list which is the fact that the validity of european patent is asserted ex-ante. Therefore, an European patent troll will not be able to file a claim about a patent that should not have been given in the first time (as it may happen in the U.S.).

After reading different articles on the matter, I am definitely against patent trolls. These companies do not bring any added value to the market and prevent good-performing companies to innovate. I think after patents have been granted, authorities should check what companies do with their patents. Maybe before granting the patent, the company should give some explanation of how it will exploit the patent and if he has enough money to do so. If his purpose is to file a patent and resell it, there is no problem with this but it should be done in a certain time-frame. If the patent is not sold during this period, the patent could become obsolete and put back on the market. I am well aware that this solution is not the best because some companies could wait a couple of years before acquiring the patent in order to put pressure on the company to sell the patent at a lower price (a lower price is always better than nothing – if the patent would be abolished). But, an argument in favour of my proposal could be that some patented technologies are only useful for a certain period. After a couple of years other companies will certainly find another way of manufacturing the product and as such loose the first-mover advantage. So maybe it would be better to acquire this patent quickly after all.

As far as the unified patent package is concerned, I think it is a great idea. As White (2012) says (1) it is paving the way for an “improved and cheaper enforcement of intellectual- property rights.” Michel Barnier also adds “creating a lower-cost European patent is one of several reforms that could aid innovation and economic growth” (1). Indeed, this unified system will bring along more patents in Europe since it will be easier to obtain patents across different countries.

A possible disadvantage of this unified patent package is the advent of more patent trolls as explained in the article. I guess the concerns of the companies writing the open letter are legitimate since these problems have occurred in the US where they already have a unified patent system. I think the concept is nice but there should be stricter rules regarding the issuance of a patent and what the company ultimately does with the patent. I already talked about a possible solution in the first paragraph. It is evident that the companies that have written the open letter are concerned since they are the big companies that bring a lot of innovations. Patent trolls are especially aiming at obtain money from these type of big corporations by suing them if they create a similar product.

In a nutshell, we can thus say that the unified patent package is useful and should be implemented in order to foster innovation. But, on the other hand, lessons have to be learned and we should try to avoid the scenario from the US where this system has brought along a lot of patent trolls, impeding big companies of innovating. In the end these big companies lose as well as their consumers so to protect society as a whole, measures have to be taken.

Sources:
(1) White (2012) http://www.bloomberg.com/news/2012-06-29/eu-leaders-reach-agreement-on-eu-patent-system-van-rompuy-says.html

I partially agree with the authors of the open letter. In my opinion, “patent trolls” are important obstacles to innovation and discourage ingeniousness. They have a right to show their dissatisfaction vis-à-vis that kind of practices which are totally against the basic idea of what a patent is and can bring to society as a whole.

Moreover, the UPP project could lead to an increase in the number of unlawful injuctions, as they would only be based on the will to be protected in a lot of very important countries (mainly Germany and France). That is against the principle of “legal security”.

But in my opinion, their fear may be exaggerated (which it might be positive). In fact I really think that their open letter is based on the situation happening in the USA and on what they think could happen in EU. I am not quite sure that the amount patent trolls would significantly rise up after the enactment of the UPP.
Taking into account the fact that our Patent-granting system is very strict, one can also easily realise that we (European citizens) do not have the same type of approach in relation to Justice. The fact that our judicial system is rarely “jury-based” and that we do not sue wildly should have a huge impact on that practice.

But one can not really be sure that it will not happen. Why not discuss with the authors of the letter in order to take their fears into account, compare the American and European situations and take precise advice on the topic. European authorities could take example on the American situation in order to prevent the increase in non-practicing entities, with one single goal : protecting people’s inventiveness.

These patent trolls are just using the weaknesses of the patent system. They are a restraint to innovation which is firmly promoted by the IP rights. They can be counterproductive. Because of these patent trolls, there was a rise in litigations but not in innovation.
But I believe that these so-called trolls could be useful for the market. What they do is legitimate. They have a right to do it. The fear of ending up in a litigations with these trolls could prevent people from copying ideas and to create their own.

The unified patent package does reinforce the risk of “patent trolls” landing in Europe as it will facilitate the “patent-hunting” for the trolls. The consequence of this unified patent package is that it will create a larger “play field” for them.

So I can only agree with the companies that signed the letter. Even if they hypothetically could be useful, the only thing the trolls have done yet is to be a threat for innovative companies!

In my opinion, I think we have to fight as much as possible against patent trolls because these entities do not respect at all the first purpose of the patent: promote innovation, as they register rights without doing anything effective with these.

Indeed, I think the unified patent package may lead to a reinforcement of the risk of patent trolls because of the effect of new validation of the patent on a larger scale than before (named the “cross-border effect”): it will be possible to obtain a legal injunction valid on a large market, including important countries such as Germany, France and UK. Whereas today, the scope of the injunction is much more restrictive: it is limited to one single country. But on the other hand, this unified package is a good tool to permit to all countries to fight actively against the patent troll, and on a larger scale.

I understand quite well the situation of the companies and the reason why they signed the open letter, they want to protect their interest, their customer and avoid high judicial costs before the court.

I do not think that patent trolls will enter Europe with the unique patent package. I actually think that they are already there. As stated in the article: one does not integrate the European market without the German market. Thus, the trolling companies are probably already there using the German market to control the European market.
But I do think that there number will increase through the unique patent package. Obviously this is a massive opportunity for trolling companies to invest easily the European market. It is even easier than by controlling the German market. They just have to apply for a European patent and once they get it, they will control the innovation in all the Member States. It is even easier and safer than through the control of the German market.
So, obviously, the risk of patent trolling in my opinion is enhanced. Europe always has looked at US as a federal model. So maybe or even certainly, will they consider the fault US made in the past by allowing too much patent trolling and quickly find solutions and answers to this phenomenon. Maybe will Europe draws itself from the US initiative. I do think that it would be a very good solution for patent trolling to have some sort of monitoring of the patent right once it is granted. It would allow the system to invalidate a patent only used for trolling. It will be very dashing for the Europe to create a system to manage and avoid patent trolling similar to the US project.
But the question has to be raised: is patent trolling something bad ? The concept as such is only the use by a company of a right they received from the law. Why should it be avoided if it is allowed by the law ? In a certain way, it is part of the way the market is working and, yes this market is not always fair, but it is the way it is: each system has downfalls and if companies are smart enough to use them to their advantage, why not ? As an easy shortcut we could say that if we eliminate patent trolls because it is not fair, we might first need to eliminate illegal child labor that also profits amoral companies. So if we really want to avoid patent trolling, prohibiting it in the law would be the best way to do so. Otherwise it might stay something that companies do because they have the right to.

I believe the companies’ reaction are totally understandable. Those companies know exactly what is happening in the US and what are the consequences of this massive patent trolling phenomenon. They are in their right to defend themselves and try to avoid a similar situation in Europe. But they have to realize that the situation will not be as bad as in the US. I indeed think that the American context has much to do with the massive phenomenon. Americans are known to have a tendency towards judiciary resolution. They throw trials for nothing and everything and their legal and judiciary system in not at all the same as the European one. Europeans are much more composed. Obviously, US also has massive damages awarded as compensation. That system does not exist in Europ. Those elements make me think that the patent trolling tendency will be present in Europe but not at the American level.

Patents trolls as such may be less disregarded in the European Union than in the United States where the ideal of the American dream makes people think that if they have the willingness to achieve something and the originality to do so, they have to be rewarded for what they do: if a patent troll is in the way and prevent a dynamic entrepreneur from making money out of his motivation, it seems truly unfair to them.

However in Europe, the myth of the entrepreneur who gets rich only by his work is less implanted in the cultural background. Important corporations and old firms rule the main markets and it leads to very few new projects born out of nowhere.

This cultural difference might lead to the acceptation of friendly non practicing entities, if they are ready to settle and accept, without using the legal proceedings, to license their patent and give the right to those ruling big corporation to use their inventions.

In order to foresee the potential arrival of patent trolls on the EU market with the enforcement of the new Unified Patent Court system, one needs to compare both systems and encompass the features that made such a biased usage of the American patent system possible.

First of all, concerning the judicial system as a whole, judicial proceedings in the US are much more expensive than in the EU, they are way more difficult to predict (since juries are awarded in some civil cases) and they are likely to outcome on way greater damages .

Second, concerning the granting of patents, the European and the American systems are not the same: in the American system, weak patents are granted, patents which are so wide that they impeach other companies to create and market a product which is not the same but still infringing the patent. However, those patents are unlikely to be given an enforceable power in front of a court: the only use they have is for non-practicing entities to put pressure on other firms and force them to settle.

In the European Union, and as long as the European Patent office is concerned, the patent are more evolved and more detailed, since there is an overview of the granting entity. This means that non practicing entities would be granted a patent narrow enough to permit the other entities to come and produce in the same field and that these patents would only be granted if the non practicing entity makes important and costly researches.

Thirdly, concerning the bifurcation mechanism, as already pointed out, the existence of bifurcation as such is not a threat of seeing non practicing entities landing in the European Union: the system is structured enough in order for companies to predict when they are in infringement of a patent or not.

To conclude, the threat of patent trolls does not seem so important to me: the most important featurs of the European market does not seem so welcoming for such non practicing entities, which still have to make sure they are sustainable: in a closed and low-damage awarding system, it is not so sure.

Nonetheless, the European law maker should hear the companies’ letter, since they are the actual actors and they make the European market as it is. A good law is one that also takes into account the position of the subjects that have an interest at stake.

Tomorrow will tell if the non practicing entities will find in Euroope a new field of practice.

sources:
https://docs.google.com/file/d/0Bw8Krj_Q8UaEd3U1dUJ3SVp6LTQ/edit
http://www.huffingtonpost.com/2012/11/08/apple-rounded-rectangle-patent-ipad_n_2092439.html
http://www.reuters.com/article/2013/11/19/us-apple-samsung-lawsuit-idUSBRE9AI0UU20131119

In my opinion, the companies that signed the open letter are in their right as it is to worry about the consequences of the unified patent package. Patent trolls already exist in the US because of the culture of bringing nearly everything in front of a court, but also because the market size is huge and that such an action could bring a lot of revenues in the worlds first economy. If the regulation is united in Europe, the motivation of those patent trolls could be even bigger and they may appear on our markets too.
Furthermore, the price of the legal actions is also very high and this would be one more pressure effect on the suited companies.

I also believe that this business model is not a “healthy” one, as Obama declared it. I believe that this is a negative trend that causes problems in the USA and it wouldn’t be good to give incentives to this kind of business model to develop in Europe.

The companies that signed the letter are thus wisely defending their interests on our continent. It is a matter of their own profit first, this is not discussable, but it will also avoid other companies to suffer from patent trolls. Maybe our regulators should review the unified patent package in the end.

Patent trolls may or may not rise with the new UPC coming into picture, but whatever be the repercussions, would that be a sufficient enough reason to roll back something which holds so much promise in itself.
With the new patent system coming into picture, it is bound to increase the number of patents that get filed in EU, which is already a very a less number and definitely needs a boost. The increase in the ease of the process is going to have a flip side, that flip side being that it will reduce the litigation fees and hence the so called ‘Patent trolls’ would become more than active.
So, in nutshell, we need to argue whether the increase in the trolling nature, which surely is not a promoter or a positive force in most which ways, become a deterrent to a change which promises to make the whole patent filing system more efficient and is a must considering it leads to strengthening of ‘Patent bonds’, if I may use this word, among the EU nations.

As per me, increase in patent trolls won’t be a positive change, but the right way to deal with the situation would be to make the laws more efficient, a concern raised by the 16 countries, rather than stalling a development which holds so much promise and is a must when we look at the bigger picture.

There is a risk of emergence for PAEs here in Europe, but there is a small chance that it will be similar to the US “trolls”. The increased transferability of patents reduces the transaction cost. In one hand, it is good for the diffusion of a technology and the expansion of the related industry (it has been already debated in the last week topic). In the other hand, the transferability allows the danger associated to a market and like speculators in the finance world, the PAEs can emerge.

As always, the solution is to find the right equilibrium in the legislation. Too specific and too complex, a global patent law will not resolve the expansive transaction cost. And not enough control allows the drift caused by PAEs.
We don’t know yet if the measures taken by the Obama administration in the United States are effective or not. Even though, like they did in their act, it is clearly important to watch over the transparency of such companies and to strengthen the review process of a patent. It is not about forbidding the enforcement of legal rights but avoiding abusive behaviour that happened already in another country.

So, the writers of the open letter are in their rights to be concerned although there is a small chance that patent trolls as the American ones exists one day in Europe. The European market is already wide open and it is unthinkable that big companies do not sell in some countries of the Union. So there is already a way to get all the patents of exploitation in Europe and a unitary patent court can “only” make the access to this package easier. PAEs had already the chance to emerge in Europe.
Moreover, the argument of the different culture of litigation seems pretty valid because trials are not held in Europe as in the US, which is quite obvious.

In my opinion, there is a chance to meet abuses with a united patent law. Such a law should be written very conscientiously. But there is a very little probability that PAE emerge in Europe or if they do, I think they will not cause as much as damage than in the US.

When we talk about Patent trolls, we are talking about the firms which are take chances for more on winning side and less on losing side. While, with new UPC, bigger companies, against which the litigation is going to be held in such cases, are more on losing side and less on winning side. How is that?

With current patent system, the number of patents filed in the EU lags far behind other parts of the world. Some 135,000 patents were filed with the European Patents Office in 2009, compared with 459,000 in the U.S., 348,000 in Japan and 315,000 in China.

In an impact assessment of new UPC,
1. The European Commission estimated that the costs of obtaining a patent in all 27 EU countries would drop from over 32,000 euro (mainly due to translation costs) to 6,500 euro (for the combination of an EU, Spanish and Italian patent).
2. The European Commission has calculated that, with the single court, litigation expenses incurred by European companies can be reduced by about 289 million euros a year.

As new UPC has brought down the litigation costs significantly (approx. by 80%), now it will be more of patent filing and less to lose for ‘patent trolls’ and so more of patent litigation by them.
With the new UPC, for bigger companies, if the patent is not valid, the time is lost in the proceedings with the issue of “if the patent has been infringed” without validity being determined or in coming out clean with the whole proceeding. Also, with the fear of unfair litigation, bigger companies would prefer to negotiate and settle with the patent trolls because losing in one country like Germany would impact their business in whole EU.
For bigger companies, It would either be monetary settlement or buying of license of patents – without getting into the ruckus of litigation while a go ahead for ‘patent trolls’.
With the above points, though new UPC is making system efficient, it has also reinforced the risk of ‘patent trolls’. I agree with the open letter signed by the 16 companies. – so there required is the strengthening of patent granting authorities and improvements in UPC to limit the risk of patent trolls – like the one done by US in limiting the litigation in pools against the same patent.

References:
http://en.wikipedia.org/wiki/European_Union_patent

http://www.euractiv.com/innovation-enterprise/european-patent-finally-agreed-news-517945

http://www.bloomberg.com/news/2012-06-29/eu-leaders-reach-agreement-on-eu-patent-system-van-rompuy-says.html

http://googlepolicyeurope.blogspot.be/2013/09/troll-proofing-europes-patent-system.html

http://www.nytimes.com/2013/06/05/business/president-moves-to-curb-patent-suits.html?_

The Law is the Law. If somebody uses a legal right, no one can tell him he is in the wrong. But is the Law fair? That’s not the same thing. Indeed, government always took the decisions which seem right to it. But, in this case, this is a technical topic so the authorities are maybe not able to decide what’s good for the society. Who can blame it? Even specialists have opposite points of view. As this topic is related to large amount of money, it will be – as often in the European Parliament – a fight between lobbies from both sides.

I think that those Non-Practicing Entities are totally wrong. Indeed, to make money, entities have to bring or to create something. Even intermediary firms which are sometimes useless provide a service or improve the product. But in this case, the NPE don’t do anything: they only make money through legal actions. Being aware about new technologies and using this information could be considerate as an asset and any assets deserve returns. But I find this method not as different as an insider dealing. Yet, this kind of action is determined as illegal.

Concerning the risk of patent trolls bringing by the unified patent package, I think it’s a serious one. First because, as mentioned in the article, those court actions are real economic problems for all kind of business. Indeed, small as start-ups already struggled with it in the US and big firms fear it according to the open letter’s signatories. Second and mainly because I don’t agree with the argument that a whole Europe injunction was already possible through a German injunction. Indeed, Europe is large enough to do business and be profitable without the German market. Now, with this unified patent package, the whole Europe could be paralyzed. That means a lot of money being hijacked by creative less businessmen.

In the USA, « patent trolls » are the primary source of lawsuits related to patents. According to a report from the White House, these « Non Practising Entities » costed $ 29 billion to U.S. economy in 2011. Why are there fewer « patent trolls » in Europe ? One reason could be that unlike Europe, the United States allow patenting of software, which has become the main source of trial by « trolls ».

Like Mr Alain Strowel said in its article, with the Unified Patent Court agreement, it will be possible « to obtain a legal injunction valid on a large market ». Thereby, I think that this system could be used to resolve disputes relating to the validity and infringement of proposed new unitary patents. Moreover, companies could protect their monopoly over their inventions across those EU member states that sign up to the scheme by filing a single patent at the European Patent Office (EPO). Another advantage of the UPC is that it will be cheaper for companies to file patents in the EU.

Neverthless, I agree that the number of « patent trolls » in Europe will probably increase with this agreement because it will be easier for them to take advantage of market’s inefficiencies. That’s why, in my opinion, companies that signed the open letter were right. They don’t want to take the risk that these « Non Practicing Entity » blackmail them and it’s fully justified.

I sincerely believe that we have to do our best to protect our economy against « patent trolls » because they don’t create any innovation and they don’t add new value on the market. However, they can earn a lot of money thanks to their patents. If we let them, it will discourage other firms to innovate.

In conclusion, I think that the Unified Patent Court has a lot of advantages but we have to keep in mind that it can have some consequences too. I consider that we have to revise the patent law to make sure that the number of « patent trolls » will not increase. One solution would be to ascertain that patents are not deliver to easily.

Sources :
(1) Des entreprises s’alarment de l’arrivée de “patent trolls” en Europe, http://www.lemonde.fr/technologies/article/2013/09/26/des-entreprises-s-alarment-de-l-arrivee-de-patent-trolls-en-europe_3485720_651865.html
(2) http://blogs.technet.com/b/microsoft_on_the_issues/archive/2013/09/25/microsoft-announces-industry-coalition-on-european-patent-system.aspx
(3) http://www.out-law.com/en/articles/2013/september/-eus-unified-patent-court-could-be-vulnerable-to-patent-trolls-tech-companies-warn/

There are multiple things to consider:
Firstly, it is true that UPC would make the gain of a legal injonction easier and broader, but it would also be easier for companies to defend their product in front of a single court rather than in 13 different procedures. Although potential losses may be high, it still allows to put the time and ressources spared by this unified procedure in R&D.
Secondly, the risks for the UPC depends of the way the legal procedure itself is designed. For example, in united states, cases are not only judged by a popular jury but are also ruled by “oral principle”, meaning that testimonies are more important than written evidences, which can only be submitted if validated by an expert, and where complicated proof are explained by “experts”. The resuls is that the decision of the jury depends more on an oral brawl rather than another thing. In europe, Jury are professionnal but we also have a principle called “primauté de l’écrit”, where written proofs are considered more important than testimonies. This makes it much more difficult for patent troll to win a case than in Europe.
In summary, I think that the question resides not in as to usify or not but more in how to do it? How will the patent be granted and if this procedure prevent patent trolling, and how the cases will be ruled: speed of the procedures, burden of proof, So, as it was said in the article “Bifurcation of European patent litigation: a practitioners’ perspective”, to say wether or not we are for the UPC, we have to wait to see if we can be confident about the quality of the decisions of the UPC and how well the UPC system is working

First, we must keep in mind that patents are necessary to protect innovation. And the unitary patent respond’s to a need of efficiency, it should reduce the cost and complexity of patent deposit within the EU. The unitary patent isn’t a problem but a solution. The problem is the possibility for some firms to abuse of the system like in the USA but the European situation is not quite the same. The European Courts are less favorable to patent and more specialized, moreover it isn’t possible to issue patent on software that are the main source of lawsuits by troll in the USA.

We have to learn on what has been done in the United States to combat the trolls. It is transparency measure, but also to charge legal fees to the complainant if he loses. This could be a strong deterrent given the costs of defense in Europe. We could also look towards governance rules and soft law to avoid malicious prosecution.

EU’s move towards a unified patent regime definitely promises to promote greater efficiency and long term competitiveness. It also promises to lower the cost of inventing a new product and thus promote innovation in general. However, companies are somewhat justified in being vary of the new regime, as it has the potential to open up a market for ‘Patent Trolls’.

As I understand, the companies have two major concerns. First, that the new code is heavily influenced by the German system whereby it is possible to get an injunction while the validity of the patent is still being debated. However, I believe this threat is not as large because under the proposed law, the preliminary hearing will include both validity and injunction arguments and it very unlikely that the judge decides that his court is not qualified enough to give judgement on one issue and not the other. Thus in most scenarios the validity and injunction arguments will be tried in the same court under the same rules, hence eliminating the threat of an injunction being granted in an ‘easier’ court.

Second, the companies are concerned about the possible leverage that the trolls might gain, hence making this a lucrative market. However, it is worth pointing out that the proposed system is most likely to follow the English system of allocating legal costs whereby the loser has to bear the legal cost for both parties. This, in my opinion, will greatly reduce the ‘trolling’ of patents as PAEs will also be forced to think about the legal cost of fighting a frivolous case.

Overall, I believe the proposed code promises to be very beneficial for Europe. The risk of PAEs entering the market does exist but I think that risk is too low when compared to the benefits

In September 2013, the European Union designed a patent system that will be implemented in January 2014. It will help protecting IP rights with the possibility of denouncing patent litigation all around Europe. However, it will reinforce the power of patent trolls which are companies that purchase patents rights with the unique intention of suing firms such as high tech companies for alleged infringement. Different courts will also be permitted to decide on the validity of a patent and then on its potential infringement. It will provoke a massive products ban (smartphones, tablets, etc) before any decision of whether the patent is actually valid. Then, the rigid application of this injunction decision can allow litigants to blackmail producers by requesting huge royalties. That’s why 14 companies published an open letter to denounce this decision (Apple, Google, Samsung, Microsoft, Cisco, HP, Yahoo, Intel , Blackberry). I agree with the position defended by the companies that signed this document.

Indeed, to me, patent trolls constitute a major hazard in the patent market. They shouldn’t intervene in this market because they don’t manufacture products as their business model is based on suing other companies. In other words, they are making profit on the back of other companies which is unethical. The pan European patent system will encourage the creation of this type of companies. This phenomenon is visible in Germany where new patent trolls companies emerge thanks to cheaper legal fees, speedier action and fragmented processes. Europe should not become a patent battle court like in the USA. A study made by a professor of the Boston University showed that in the US, in 2011, 2.150 companies were forced to mount 5.842 defenses in lawsuits, costing approximately $29 billion. It will also encourage the creation of privateers. They are patent trolls which work for a company and have on its disposal its patent portfolio. They aim at suing the operating company’s competitors in order to destabilize them and dissuade them from entering in the market. Furthermore, they are also a hindrance to innovation. In general, small companies such as start-up can be afraid of launching a product that uses other innovation and losing money because of patent trolls lawsuits. To me, this measure will harm more the small firms than the big ones as they can’t afford an efficient legal service to be in charge of dealing with patent trolls’ issues.

In conclusion, the European Union should revise its patent system .

References
http://www.forbes.com/sites/timworstall/2013/09/26/how-to-beat-the-patent-trolls-european-union-style/
http://bits.blogs.nytimes.com/2013/09/26/daily-report-tech-industry-warns-europe-of-concerns-on-patent-trolls/?_r=0
http://www.pcworld.com/article/2049520/patent-trolls-will-gain-from-a-single-european-system-vendors-warn.html
http://www.cnbc.com/id/101065336

Taking into account the arguments going in one sense or the other, I think that this unified patent system would not be an incentive for patent trolls to enter the market. This claim is based on several reflexions.

First, I think that patent trolls would take more risks by acquiring patents portfolios that offer protection all around Europe. Indeed, by broadening the protection, the cost of acquisition of these patents must be higher. Moreover, the infringement of the patents is a totally probabilistic event: it is impossible to know whether or not another company will violate the associated rights. So, even if the revenues are expected to be higher (because the violation is geographically more important), the initial investment could become too large for only expected revenues.

Moreover, the cost of legal defense can be very high in Europe and cases are examined by professional judges. As a consequence, big firms enjoying significant resources could put pressure on patent trolls by threatening them not to accept the license and to go to court. It would be very costly for patent trolls and the deep understanding of the patent troll’s activities by professional judges could tilt the balance in favour of the firm developing the product and contributing to the country’s GDP.

Finally, on the side of the companies developing the R&D activities, they can afford loosing the market of one country but the issue is much more crucial if all the European market is concerned. Given the huge investments needed to market the products, we can reasonably assume that the firms will pay a closer attention not to violate someone else’s patent, decreasing potential revenues of patent trolls.

First, I’d like to insist on the fact that the Union Members are more than likely aware of this potential issue. This problem exists in the US, so they must know that it can happen if we unify the patent law in Europe.
However, “patent trolls” remains a phenomenon which is quite hard to assess in terms of loss for the society. On the one hand, they encourage innovation by doing researches that would probably not happen if they didn’t exist, but on the other hand they only use these research to sue the companies that “infringe” these “sleeping patents”. I have to say I fully agree with President Obama when he’s saying that these companies are not producing anything at the end of the day, thus we must act to reduce the emergence of such companies.
But, it remains very difficult to assess the effect ot a unitary system in Europe, since we don’t know if this will attract as much patent trolls as in the US, since there’s quite much less profit to do (even though it can be large) and also because the law is very different, and we have different ways to approach the patent infringement.
I think it is very important to fight these patent trolls, because they clearly are a source of uneffiency, since their business comes from lawsuits. And I don’t think they really stimulate innovation, since they would also reduce the incentives for firms to innovate! In fact, if you know that your innovation might be patented by a sleeping patent, you would fear to waste your money in R&D, and hence you wouldn’t invest in innovation as you would have without these trolls.
Also, I think these trolls are abusing of the law. Of course, they own these patents, and they should have the right to sue companies who use their technologies. But it is a very narrow view ot the reality. Law should make sense. If those firms only patent technologies in order to sue other companies, then where’s the economic legitimity, since these companies are not even trying to consciously “steal” someone else’s idea, but end up being sued by companies which do not even consider using their technology, which is clearly a waste for social welfare?

Anyway, we must also consider the other perks of unifying the patent law in Europe, because there must be some, otherwise we wouldn’t even be considering to do it. Then we would have to check if the potential gains outweight (or not) the likely loss from unifying our system.

The aim role of a patent is to promote innovation and protect the author of an idea. To get ahead we have to do what we can do to innovate and develop technology.
The problem of patent troll is that it’s a well-constructed concept; it’s a good idea but abuses are easy and consequences are not negligible. Personally I don’t think that patent trolls are something completely bad.

In one hand they are interesting because they provide liquidity to the IT market. In addition, there are some inventors who don’t have the capital/resources to realize the second step, so they patented the idea. These people have to look for another way to cash out. Nevertheless there are abuses, but they are in their right to do what they do because the law allows it. Moreover the owner of the patent has to be sure that the patent has a value. Because, I suppose, that it could take years between the day of the validation of the patent and the day where it is sold or the introduction of a law suit. So there are maintains cost that we have to take into account.

In the other hand there is a huge problem because patent trolls don’t really create value in the case of the abuse. In fact it only stops the process of innovation at the first step. However we can say that by blocking the idea, it obliges companies to develop others ideas to avoid to pay high cost or lawsuit, in the other case, and to stay competitive and it’s a good thing.

I think that the bad side of patent trolls can be reduced by more control if we strengthen the patent law, so we can only validate potential add-valued patents, for example. Another possibility to explore is to limit NPEs (Non-Practicing Entities) because they generate social loss by threating the firm using their technology to intent a lawsuit or it has to pay a high cost.

Finally, regarding the unitary patent I think it’s something good because it will allow to small companies to keep easily informed. I also read that it will reduce the cost of patenting (1).
I think that the empowerment of patent trolls by the unitary patent is a justified worry because unifying the patent will give to NPEs a wider territory to play. So it’s possible to see appear patent trolls on the European market.

(1) http://ec.europa.eu/news/business/110415_en.htm

In my opinion, the fears of the 16 companies that the unified patent package will attract “patent trolls” in Europe aren’t all justified. EU have the advantage of looking at the US patent system and thus to improve the project of a Unified Patent Court with some procedures that would prevent from an excess of patent litigation.

First of all, I don’t agree with the position taken by the companies about the fact that bifurcation would make it easier for an NPE to enter in the European market. The companies are afraid that UE is adopting a German model where validity of patents and proceedings for infringement are deal in two separate courts, thus a “patent troll” could win a proceeding for infringement while the validity of the patent is still not recognize. However, even if this happens in US could not be the case in Europe. As pointed out by Kevin Mooney, a lawyer involved in this project of reform, in UE will be much more difficult that this happen because in the first six months of the proceeding validity and infringement are deal together by the judges. This procedure can be really helpful to solve the bifurcation problem thanks to the exchange of information between judges, thus companies involved in the proceeding will have much more reliability on the fairness of the judgment.

Furthermore, there will be a big difference in the costs faced by losers of the proceedings between US and UE. In the US patent system each party involved in a lawsuit pays its own fees, while in UE won’t be like that. In fact, Art. 69 of the UPC agreement specified that the losing party will have to pay the entire legal costs of the lawsuit. Here the difference with the US system is a crucial point against an excess of patent litigation because the financial risk for an NPE would be very high. If NPE are charged of the entire attorney fees it wouldn’t be always rational for them to enter in a lawsuit while in the US they would enter in a lawsuit anyway. Moreover, this procedure could lead to less standardization of practices used by NPE legal offices because costs of attorney won’t be somehow fixed anymore but it will be more uncertain.

In conclusion, I believe that the Unified Patent Court in Europe have many difference from the US system and this means that the 16 companies that signed the open letter shouldn’t be so much worried about the new UE patent system. However, is it also true that if this improves from the US patent system are not well implemented the risk that UE will be the next target of “patent trolls” is much more believable.

http://register.consilium.europa.eu/pdf/en/12/st16/st16351.en12.pdf
http://venturebeat.com/2013/09/27/samsung-google-apple-and-msft-warn-eu-officials-about-patent-trolls/

I believe the companies are correct in expressing their apprehension about the new Unified Patent Court (UPC). The two main aspects about UPC which is drawing major criticism from the companies are Bifurcation and Injunction. I would like to talk about both these aspects of UPC and highlight the concerns and at the same time benefits that they entail to the industry as a whole (which I see that the companies which have written the open letter are overlooking).
1. Bifurcation: The main issue with bifurcation is with the treatment of two parts of the patent infringement litigation – ascertaining the validity of patent and whether there has been any infringement. To speed up the legal proceedings, under new UPC, these two aspects can be tried in different courts simultaneously. The companies are arguing that they should be tried together with infringement being discussed only when validity of the patent have been ascertained. Here, is my view on this aspect –
Pros: This can speed up the legal proceedings. In fact, this may help the cases which deal with the real acts of patent infringement. The companies such as Apple, ARM, Cisco which have undersigned the letter can actually benefit from this aspect especially, when they are the one who are filing the infringement case for their patents. And these infringements cases are worth millions and billions to the companies as clearly evident from the recent cases of Samsung, Apple and some other companies in electronics industry. I believe these cases far outweigh, at least in monetary terms, the litigation cases concerning ‘patent trolls’.
Cons: As, mentioned in the open letter this may result in companies loosing huge amounts of money in legal proceedings even if the patent is not valid. This would result in companies trying to avoid the litigation by granting royalties to PAEs which they are not worthy of.
2. Injunctions: Companies’ argument against this aspect in their open letter is under the new UPC, the injunction power will extend beyond a single country to most of Europe, and it could be used with the intended effect of impeding product sales across the region.
Pros: After, the birth of European Union, Europe is now seen by many companies as a single market just like markets of US, Japan and China. Under UPC, the patent holders will be protected in all the countries of the European Union. Thus, they won’t have to register their patents in each and every country where they are doing business which will save significant amount of both time and money. This should actually be the way forward for the innovation industry where in the innovator just has to register its patent in one country, say US and is protected in different regions across the world.
Cons: The sales of the companies who are victims of the litigation by these ‘patent trolls’ will be impeded across whole Europe, at least, till the legal proceedings are going on. This will magnify their losses as compared to the ones which they would have incurred prior to UPC.
After looking at the pros and cons of these two aspects of UPC, I conclude that the intention behind UPC is true and rightly placed. It will help the patent holders who are victim of illegal patent infringement. But at the same time there are certain loop holes which can be exploited by PAE and reap benefits from this regime. I believe a solution to this issue can be through strengthening the patent granting authorities. The patent authorities can be further equipped with systems where they can validate the authenticity of the patents. UPC can include a clause that it will consider only those cases where the patent in question has been validated by the concerned authority. So, the problem of invalid patent litigations which companies have been vehemently expressing will go way. I believe there can be many more such improvements that can be brought about in UPC. With improved and stronger UPC, industry can actually be enjoy the its benefits.

Fist I want to stress that I completely agree with the position defended by the 16 companies which signed the open letter, they are sick of the “trolls” in the US, and they fear that with the new system of unified patent, the “patent trolls” phenomena will hurt the European Union. If it happens, that will result in a lot of unnecessary costs for producing firms. But on the other hand, I also understand the other side, firms that play on the laws and rules, staying legal, but unfortunately not fair. Our world is enough complex so that everyone must not especially produce or innovate, these non-producing and non-innovating firms are like brokers on the Wall Street, they don’t really takes account of the firm, what interests them… Is money.

My point of view about the utility or annoyance of the “patent trolls” is quite mixed… but still leans toward a rather negative picture of this practice.
In they favor, I can just say that one way or another, they’re contributing to foster innovation by their pressure on firms. Firms have incentives to produce more differentiated products and to innovate to patent their discovery, and then sold it on the patent market.
But now, the negative side of such practice is that the cost of defending against a patent infringement is very expensive, and the Trolls know it! They will offer a friendly arrangement for not suing the firm and avoid the justice fees. For example, in Texas (2004, see link below) the “patent pirates” asks typically $1 million or more, the fees for complete defense, even if successful are about $2.5 million. The problem for the economy is that they target not only huge firms like Apple, Microsoft or Google. They also attacks small businesses, for which such amount represent considerable part of their capital. So these firms will be discouraged to innovate and others just don’t start any business.

Regarding the reinforcement of the risk of landing of the ‘patent trolls’ in Europe due to the unified patent system I can say that risks are relevant, but I also agree with the article of Laurent Lambrecht in LaLibre (see link below), that talks about differences in the legal systems between the US and the Europa. Patent Trolls have already offices at our territory, but now, they should study well European Law.

en.wikipedia.org/wiki/Patent_troll#cite_note-pirates-10

http://www.wsgr.com/news/PDFs/09202004_patentpirates.pdf

http://www.lalibre.be/economie/actualite/les-patent-trolls-bientot-sur-le-marche-europeen-5261ffa83570314ade9eb46e

I think that the unified patent package represents a lot of advantages for the companies Firstly, it will simplify the validation procedure and will lighten the requirements of translation and renewal. Moreover, the unitary patent protection will greatly reduce the cost of European companies. According to the European Commission, a European patent could cost only 4725€, against 36 000€ before. Thanks to the system established by the European Union, any person, company or organization, whether European or not, will be able to opt for a unitary patent and obtain a unitary and immediate protection and therefore less expensive.

However, we have to learn lesson from the USA. In fact, the unified patent will probably reinforce the risk that patent trolls appear on the European Market. In fact, I think that this unified patent may allow the NPE to fill their application for patent in the least demanding country in terms of quality and validity and may allow the NPE to bring their disputes to the more accommodating court.

I want to add that it is because the legislation about the patent is not perfect that patent troll can appear on the market. By imposing more adequate law and by taking into account the mistakes made by the USA, Europe could better protect itself against these parasites.

I am not one of those who see nothing wrong in the practices of companies called “patent trolls”. I clearly think that this constitutes a problem that needs to be solved. In fact, in my opinion, patent trolls do not create any additional value for the society and they have no real business interest to defend. What upsets me even more is that money is an end in itself and not a mean for these firms. Even if I know that lots of capitalist companies have lost their “initial soul” as they became bigger and bigger, I have the hope that many of them were started thanks to the energy and the interest of entrepreneurs who were passionate about what they did. Moreover, non-practicing entities also deliberately hinder companies that try to develop innovations and they more generally put a drag on the general progress in specific fields. Indeed, the firm attacked would have to spend a lot of precious time and money to solve the problem and that energy could not be allocated to the development of their innovation.

Concerning Europe, on the one hand, I recognize that the unified patent system would constitute an additional leverage for patent trolls to get interested by our market. On the other hand, I believe that it is too early to know whether Europe will be invaded by these firms in a few years or not. In fact, the situation needs to be nuanced. The culture is not the same in the US than on the old continent. This important factor could interfere with the development of that kind of practice. For me, the example of Germany which already applies bifurcation and which did not meet an increase in patent troll is an encouraging sign.

Regarding the letter, I understand the fear of these sixteen companies. I agree about the danger of the “bifurcation”, it may give too much power to those who would want to misuse the system. But that would be a problem only if the two courts are not synchronized, that is to say only if the invalidity court is slower than the infringement court. Moreover, I think that the improvements they proposed are not the solution. For me, the answer would be to put a brake to the activities of patent trolls and not only to avoid giving them additional tools for their business. I know that what they do is legal and it is why I think that some laws should be created to stop them.

Sources :

http://www.pcworld.com/article/2049520/patent-trolls-will-gain-from-a-single-european-system-vendors-warn.html
https://www.ipdigit.eu/2011/10/what-to-think-of-patent-trolls-the-return/
http://www.npr.org/blogs/money/2011/07/26/138576167/when-patents-attack

I am quite agree with the position defended by the companies that signed the open letter. The purpose of a patent system is to promote innovation. “Patents encourage inventors to publicly disclose their inventions, sharing knowledge and spurring further progress.” But we can see that in the United States, the abuse of dubious patents has the opposite effect by blocking innovation. Patent trolls have harmful effects on the innovation. “Trolls use the threat of expensive and extended litigation to extract settlements, regardless of the merits of their claims.”

I find that of course the future unitary patent will have some positive aspects, it will lead to the reduction of costs at the time of grant, reduced costs for maintenance in force of a European patent on the whole territory of the EU. The amount of the annuity will probably lower the total national taxes paid today for the same territory, reducing costs for litigation involving several countries.

But I also think that the unified patent package will seriously reinforce the risk of ‘patent trolls’ landing in Europe. The costs of registration and protection in the courts will be reduced, so innovation and competitiveness will be strengthened, but at the same time, patent trollers will have a huge opportunity namely the excessive use of the law.

In conclusion, my opinion is that we should listen the 16 European and U.S. companies which have wrote the letter, they are suggesting improvements to the Unified Patent Court’s proposed rules. These fixes will help the EU system avoid the issues that have hit the U.S. and will ensure companies are investing in innovation and growth and not in patent litigation.

Obama’s administration, considering the Patent trolls as a non-productive and useless actor of the economy only extracting money from others, is engaged since 2011 in the regulation of Patent trolls. With the America Invents Act signed in 2011, patent holders must now, for example, file individual lawsuits to prevent that a patent holder sues tens of companies in a unique lawsuit. On 4th June 2013, the Obama’s administration proposed to the congress a powerful patent troll killer legislation that would allow federal judges to force abusive patent troll that lose in court to pay expensive attorneys fees of the corporation they sue. We can understand the decisions of the USA’s government since we know that patent trolls costs 29 billions of dollars to the American companies for the single year of 2011.

The European proposition to create a unique patent for all the European market, instead of patent own to each country, has many advantages for innovative companies because it reduces the costs of patents since there will be costs for a unique patent only instead of costs in each country. It’s also a considerable gain of time. But besides, it will makes the European market also more attractive for patent trolls. Indeed, the application of a unique patent make the threat of patent trolls more powerful because it will be possible for them to forbid the sale of some products, thanks to the “bifurcation”, on the whole European market where patent trolls had before to act country per country to forbid a product. It will thus certainly lead to the apparition of many patent trolls.

A unique patent for the whole European market seems to be a great decision but the European government has thus also decision to make in order to protect the companies from the adverse effects of this new law. Although the US market conditions are not the same as the European market conditions (jury in USA vs. Professional jury in Europe for example), the bifurcation would allow patent troll to extract money from big companies by asking them to pay to drop the charges for the violating of patents.

The European government has thus, according to me, to judge of the validity of a patent and to judge all the cases of infraction in the same court to prevent situations of abuse.

In addition, they should take some decision to deter the business of patent troll because I think it’s a useless actor that slows the real participative economy. It’s a business based on a deficiency of the patents. Patent trolls are investment funds. Therefore, the government should create more incertitude on the rentability of this business. By taking some decisions as the obama’s administration took on 4th June 2013, the European government could deter private investors, which are mostly not IP specialist, to invest in this business making it a more risky asset in their view.

I think the unified patent system will indeed increase the incentive for patent trolls to ‘enter the European Market’. It seems quite logical that the larger the market is, the larger the sums involved are, and thus the amounts patent trolls could get from infringing companies.
Though I haven’t enough information to tell wether the increase of the incentive will be large enough to attract patent trolls.

I totally agree with the arguments developped by the author when he says that the culture of litigation is very different in Europe in comparison to the American one.
I wanted highlight an argument against the araising of patent trolls. In European legislation, or at least in the Belgian one and I suppose it’s the same in other EU countries, there is no such as a punitive damage. Often these punitive damage raise the compensation for the attacker to incredible levels. Yet to ask for punitive damage, one has to prove that the defendant infringed the patent deliberatly. But as patents are public information and accessible to everyone, punitive damages are eligible in most cases.
This raises the expected revenue for the patent troll. But because European courts don’t recognize punitive damage, the expected value of the compensation is much lower and so is the incentive to sue infringers.
Though as I said above, research would be needed to look at the extend of these incentives to sue someone under the unified European patent system and if they are profitable enough for patent trolls.

I think that the risk of having patent trolls in europe is non negligible because,
as said in this article (http://www.lalibre.be/economie/actualite/les-patent-trolls-bientot-sur-le-marche-europeen-5261ffa83570314ade9eb46e), some american “patent trolls” have already opened offices in Europe. However these “companies” will have to adapt to the european market and law, especially the fact that courts in Europe are not composed of popular jury but of professional judges. In order to fill a lawsuit they have to prove that their patent are of sufficient quality and that they cover european jurisdiction.
These companies will however have incentives to investigate the market, and try their business model in europe, primarily because the UPC will cover 3 countries of the G8 and nearly 500 millions consumers (number that gives important leverages for injunction lawsuit, and for pay-off from companies).
Anyway there are already “patent trolls” on the european market (see IPCom, and France Brevets for instance) that are quite successful at patent litigation procedures.

What the UPC could change is:
1) The size of the infringement procedures (nearly 500 millions consumers) and thus, incentives to initiate lawsuits.
2) The possibility to fill a patent infringement in only one country, thus leading companies to choose the country with the quickest, most favorable litigation system.
3)Bifurcation process with the possibility to block patents while the validity is checked, could harm both producers (by preventing the commercialization of their products during the time of the lawsuit) and consumers (by reducing the number of products available). This could lead producers to opt for a compromise instead of defending themselves.

In view of these facts, I think the UPC should be first tested, and further modified if troubles arise. Fortunately, there is still the possibility for the companies to fill a european patent out of the UPC, or fill patents in each country in order to force “patent trolls” to fill lawsuit in each country.

Sources:
http://ipkitten.blogspot.be/2013/03/bifurcation-of-european-patent.html
http://www.iam-magazine.com/blog/Detail.aspx?g=b49115b8-922b-400e-8134-6ec61f0a7d48

I agree that the unified patent system reinforces the risk of ‘patent trolling’. This is pretty straight forward to me, as the bigger market for patents means that there are more profits to be made through litigation while the costs of litigation itself don’t increase.
The key to this problem, I think, is to be very careful in patent design when granting patents and when judging if there are infringements or not. In general, ‘patent trolls’ are seen as firms that pick up cheap patents and exploit them by preventing other firms to use the technology.
There are two parts to this: first, some patents are cheap to pick up, implying that it was easy to develop the technology they protect. If this is the case, one can ask if these technologies should be covered by patents. Maybe they are not ‘new’ enough to be covered by patents, given the industry knowledge. I think one should be careful to grant patents to such technologies, especially if they are not directly applicable and need further research to be implemented in marketable products. Apart from that, it is important not to grant patents that are too broad or long as it would be relatively easy to use them to prohibit other firms from innovating.
The second part of it has to do with jurisdiction. Assessment of possible infringements should therefore be equally careful, such that firms won’t be scared to be falsely convicted for infringements when developing new products.
As a conclusion, I’d say that when design and granting of patents as well as the jurisdiction work well, the problem of ‘patent trolls’ should be minimal. A market for patents could emerge where firms only try to benefit for patents according to their worth or research costs, as it should not be profitable to make big profits from easy patents. If this market works correctly, firms could justly pay for patents or licensing when developing its own products. The downside to this is that it would bring great costs to the governing authorities, for researching patent applications and jurisdiction.

Firstly I want to say that I think that a common regulation, thus position, from Europe is a good thing. It helps having a clear view and will benefit small companies which wish to expand but don’t have the means to be kept informed on all the regulations in every european country.

I do not think that the unification of the law is the real issue, I think what’s important is it’s content. Speaking as one is not the problem, what maters more is what we say. The patent trolls are companies making profit on the failings of the system so it’s important to be ahead of them with a well thought system.

Finally Europe is not like the United States in its way of doing things. Since a special judge is appointed to treat these kind of cases, it’s less likely that the same problems will arise. In the article it is stated that the legal procedures in Europe are often to slow, why not include in the package an accelerated procedures for these kind of demands so as to protect companies which are being leveraged.