The Unified Patent Court (UPC) became operational almost a year ago as the first common court for the present 17 EU member states. As expected, the majority of cases relate to invalidity and infringement actions, followed by preliminary injunctions and evidence-protection proceedings. A major advantage of the Unified Patent Court is that its decisions will have direct and uniform effect in up to 17 EU member states without the need for separate proceedings in each member state. Against this background, it has been assumed that Non-Practicing Entities, so-called 'patent trolls', will now increasingly file lawsuits in Europe.
The phrase Non-Practising Entities (NPE) is commonly used to refer to all patent owners who do not normally exploit their patented inventions on the market themselves. These include individual inventors and university patent exploitation entities, but also the so-called 'patent trolls', whose primary objective is to acquire patents and enforce them more or less aggressively against companies active in the market.
In an early decision of the Munich Local Division of the Unified Patent Court dated 19 September 2023 (case number: UPC CFI 2/2023 regarding EP 4 108 782 B1), the applicant ‘President and Fellows of Harvard College’ was already classified by the opponents as a Non-Practising Company. The aim was for the judges to find no legitimate interest due to Harvard's lack of own market activity and thus to exercise their discretion under the UPC and not order a preliminary injunction. However, the judges did not exercise their discretion in this case and therefore also granted a preliminary injunction to a Non-Practising Entity at first instance.
Since injunctions against companies operating in the market are a powerful tool to exert pressure in licensing negotiations, this early decision by the Unified Patent Court may encourage patent trolls to increase their operations in Europe. The issuance of injunctions at the Unified Patent Court in Europe further gives patent trolls an advantage over the US, where the issuance of injunctions against Non-Practising Entities is excluded in preliminary injunction proceedings.
In fact, following this decision, patent troll plaintiffs have started to file infringement actions at the Unified Patent Court especially in the field of electronic communication technology (period: December 2023 to April 2024):
Overview patent trolls as claimants
Presently, the attacks focus on Texas Instruments Inc. (co-defendants Audi and Volkswagen) and Samsung Electronics Co, followed by Xiaomi Inc. and Qualcomm Inc., with the patent trolls almost exclusively choosing Germany and in particular Munich as the place of jurisdiction at the Unified Patent Court:
Overview distribution of infringement suits at the UPC
Currently, the patent trolls even seem to have taken such a liking to the uniform effect and the fast and inexpensive procedure of the Unified Patent Court that they intend in future first file infringement actions at the Unified Patent Court and only in a second step bring an action in the USA, as Gerald Padian of Atlantic IP publicly announced.
Against this backdrop, we expect that companies operating in Europe and in particular in Germany will also become the focus of patent trolls, who will most likely not only target the semiconductor market but also other technical fields for their actions before the Unified Patent Court.
Questions?
We can assess your individual risk of being sued by patent trolls and provide you with recommendations on how to best mitigate this risk.
If you have any questions about this topic, please contact Ute Feldmann.