Growth companies and procedural safeguards in European patent litigation

Publication Date01 April 2018
DOI10.1177/1023263X18773966
AuthorKrista Rantasaari
SubjectArticles
Article
Growth companies
and procedural safeguards
in European patent litigation
Krista Rantasaari*
Abstract
The unitary patent system with the establishment of the Unified Patent Court will lead to unitary
patent protection covering most European Union countries. Moreover, it will lead to litigation
with the same geographical reach. One potential concern related to increasing litigation is the so-
called ‘patent trolls’ (non-practicing entities) that purchase patents for the purpose of portfolio
building or company financing. One of the key expressed justifications of the unitary patent
system was to support small- and medium-sized enterprises by securing them easier and wider
access to patents. The aim of this article is to examine procedural safeguards from the per-
spective of the start-up and growth companies. These safeguards protect start-up and growth
companies when acting as defendants. As a corollary, they weaken the enforcement mechanisms
fromtheperspectiveoftheplaintiff.Thesafeguardsaddressedinthisarticlearefeeshifting,
preliminary injunctions, and bifurcation. As the Unified Patent Court system is still evolving, the
current state of European patent litigation in key jurisdiction countries (Germany, the United
Kingdom and the Netherlands) is analysed. This article explores how these safeguards evolve in
the unitary patent regime and their potential to reduce uncertainty for start-up and growth
companies when acting as defendants.
Keywords
Unitary patent, patent enforcement, litigation, SME, start-up, growth companies
* Faculty of Law, University of Turku, Finland.
Corresponding author:
Krista Rantasaari, University of Turku, Turun Yliopisto, Calonia, Arcanuminkuja 4, Turku Fi-20014, Finland.
E-mail: krista.rantasaari@utu.fi
Maastricht Journal of European and
Comparative Law
2018, Vol. 25(2) 168–187
ªThe Author(s) 2018
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DOI: 10.1177/1023263X18773966
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1. Introduction
Small, innovative growth companies can easily adjust to the rapid changes of mo dern society.
They are often recognised as the drivers of economic growth in new, innovative and emerging
areas.
1
The protection of small- and medium-sized enterprises has been one of the key expressed
justifications of the unitary patent system.
2
The Unitary Patent will provide broad patent pro-
tection covering most European Union countries with a single application.
3
Patent trolls, also
known as non-practising entities (NPEs), exploit wider protection.
4
They are patent monetizing
entities, which purchase patents from others. Their operation might eventually lead to aggressive
patent litigation. Small companies might also be targets of patent suits as they may pay nuisance
settlements regardless of the merits of the case in fear of costly litigation. The patent industry and
legal scholars are concerned about the possibility of an increase in patent trolling.
5
However, the
1. OECD, ‘OECD Innovation Strategy 2015: An agenda policy for action’, OECD (2015), http://www.oecd.org/sti/OECD-
Innovation-Strategy-2015-CMIN2015-7.pdf, p. 8.
2. I.B. Sterjna, The Parliamentary History of the European ‘Unitary Patent’. Verbatim protocol of selected meetings in the
European Parliament and its Legal Affairs Committee (Tredition Gmbh, 2016). Besides start-up and growth companies,
the term ‘SME’ (Small and Medium Size Company) will also be used. SMEs are defined in Commission Recom-
mendation No. 2003/361/EC of 6 May 2003 concerning the definition of micro, small and medium-sized enterprises,
[2003] OJ L 124/36. The term start-up and growth companies is used as this research has focus on companies that are
relatively small and highly intensive in their innovation activities.
3. The new unitary patent system will be evaluated as it forms one of the core recent European developments in this area.
The unitary patent system consist of Regulation No. 1257/2012/EU of the European Parliament and of the Council of 17
December 2012 implementing enhanced cooperation in the area of the creation of unitary patent protection, [2012] OJ
L361/1 (Regulation No. 1257/2012/EU); Council Regulation No. 1260/2012/EU of 17 December 2012 implementing
enhanced cooperation in the area of creation unitary patent protection with regard to the applicable translation
arrangements, [2012] OJ L 361/89 and the Agreement on a Unified Patent Court, [2013] OJ C 175/1 (AUPC Agree-
ment). Of further relevance are the Rules of Procedure for the UPC (the RoP) the latest 18th version has been adopted by
the Preparatory Committee in March 2017 and the Rules on Court Fees and Recoverable Costs final draft has been
adopted by the Preparatory Committee in February 2016. See, Unified Patent Court, ‘Draft rules of Procedure – updated
March 2017’, UPC (2017), https://www.unified-patent-court.org/news/draft-rules-procedure-updated-march-2017
(UPC RoPs). The Unified Patent Court (UPC) will be a court common to the contracting MemberStates and thus, part of
their judicial system.
4. It is extremely difficult to define an NPE. The body of literature on the definition is rich and varied. For some brief
overviews on the matter, see, inter alia, T. Ewing and R. Feldman, ‘Giants Among Us’, 1 Stanford Technology Law
Review (2012); C. Helmers and L. McDonagh, ‘Trolls at the High Court’, Law, Society and Economy Working Papers
No. 13/2012 (2012), https://papers.ssrn.com/sol3/papers.cfm?abstract_id¼2154958; S. Fusco, ‘Markets and Patent
Enforcement: A Comparative Investigation of Non-Practicing Entities in the United States and Europe’, 20 Michigan
Telecommunications and Technology Review (2014).
5. IP2I is a coalition of innovative companies, who have directly experienced NPEs in the European environment. See IP2I,
‘Homepage’, IP2I (2018), http://www.ip2innovate.eu. For legal scholars see for example, D. Harhoff, ‘Economic Cost-
Benefit Analysis of a Unified and Integrated European Patent Litigation System’, Institute for Innovation Research,
Technology Management and Entrepreneurship (2009), http://ec.europa.eu/internal_market/indprop/docs/patent/stud
ies/litigation_system_en.pdf, p. 50; L. McDonagh, ‘Exploring Perspectives of the Unified Patent Court and Unitary
Patent Within the Business and Legal Communities’, UK Intellectual Property Office (2014), http://openaccess.city.ac.
uk/12605/, p. 26; M. de Heide et al., ‘Study on the Changing Role of Intellectual Property in the Semiconductor Industry
– Including Non-Practicing Entities’, European Commission (2014), https://ec.europa.eu/digital-single-market/en/news/
study-changing-role-intellectual-property-semiconductor-industry-including-non-practicing-0, p. 25; N. Thumm et al.,
‘Patent Assertion Entities in Europe. Their Impact on Innovation and Knowledge Transfer in ICT Markets’, JRC Science
Policy Report (2016), https://ec.europa.eu/jrc/en/publication/eur-scientific-and-technical-research-reports/patent-asser
tion-entities-europe-their-impact-innovation-and-knowledge-transfer-ict-markets, p. 55-56.
Rantasaari 169

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