The Unified Patent Court (UPC) Industry Coalition, which includes big tech firms such as Apple, Cisco, Google, Microsoft and Samsung, issued a second open letter to the UPC, the common patent court of EU, to highlight the current limitations of the court which allows for NPEs, or PAEs, to abuse the system. They thus urge the UPC to address this lest the EU becomes a patent troll's paradise.
The letter listed the main flaw being that the court order for an injunction is separated from the determination of validity of a patent. This is also known as bifurcation, as mentioned in the letter. NPEs can use their patents to cause the court to order an injunction on products, even if the patent can be proven to be invalid, since a much longer time is taken to determine validity. As such, NPEs can make use of the flaw to ask for a settlement and thereafter use the patent on another company. This is a serious threat since they are not contributing anything to get some money in return, and the money actually comes from consumers.
Although there are not as many NPE in the EU compared to US, with the tightening of laws making it hard for NPEs to profiteer in the country, they will soon target the EU. In fact, seeing the path we are heading, NPEs will be akin to parasites moving across countries to find a suitable host when the existing host has lost its usefulness. I hope that the various patent courts across the world will be aware of the situation and plan to mitigate it before the NPEs strike them.
Sources:
http://www.fosspatents.com/2014/02/growing-industry-coalition-urges-eu.html
http://www.scribd.com/doc/209104430/25-February-2014-UPC-Industry-Coalition-Open-Letter
The letter listed the main flaw being that the court order for an injunction is separated from the determination of validity of a patent. This is also known as bifurcation, as mentioned in the letter. NPEs can use their patents to cause the court to order an injunction on products, even if the patent can be proven to be invalid, since a much longer time is taken to determine validity. As such, NPEs can make use of the flaw to ask for a settlement and thereafter use the patent on another company. This is a serious threat since they are not contributing anything to get some money in return, and the money actually comes from consumers.
Although there are not as many NPE in the EU compared to US, with the tightening of laws making it hard for NPEs to profiteer in the country, they will soon target the EU. In fact, seeing the path we are heading, NPEs will be akin to parasites moving across countries to find a suitable host when the existing host has lost its usefulness. I hope that the various patent courts across the world will be aware of the situation and plan to mitigate it before the NPEs strike them.
Sources:
http://www.fosspatents.com/2014/02/growing-industry-coalition-urges-eu.html
http://www.scribd.com/doc/209104430/25-February-2014-UPC-Industry-Coalition-Open-Letter
Bifurcation sounds very interesting. Correct me if I'm wrong, but it essentially means a patent troll can file a lawsuit when it can later prove to be invalid. Seems like the EU is handing them dinner on a plate. Definitely seems like something that should be fixed, since there is an unfair redundancy in making an injunction on a patent that might have been invalid in the first place.
ReplyDeleteYup, a patent troll can file a lawsuit even if it can be easily proven invalid. The trial for its validity and the actual lawsuit is handled by different courts, at least for now. I would say the main flaw is that both trials take a long time, and can incur a lot of cost before the real judgement. In order to avoid the risk of injunction, in the event the validity case is slower (which seems to be the case), while also incurring high cost of litigation, smaller companies just decide to settle, since the settlement cost tends to be lower than the litigation cost.
ReplyDeleteAlso, although the patent troll cannot withdraw the validity case if the patent was used to call for injunction and it is later proved invalid, the duration of time when the injunction was active will still incur too much cost for smaller companies and might cause them to go bankrupt even if the troll has to repay all the damages.
While it is bad, the current bifurcation does allow legitimate patent owners to halt infringers' productions and sales faster as compared to suffering greater losses due to additional delays for the injunction. I hope that some measures will be introduced to tackle this issue yet finding a balance between time and trolls.