Are patent assertion entities a threat to Europe?

Abstract

... Patent Assertion Entities (PAEs) are companies active in the acquisition and licensing of patents.1 However, they are frequently criticized and negatively referred to as ‘patent trolls’, harmful predators that engage in speculative and abusive patent litigation against manufacturing companies, demanding excessive licensing fees that do not reflect the proper value of the technology. PAEs supposedly exploit some characteristics of litigation, such as the high costs, the threat of injunctive relief, high damage awards, and the fact that they are immune from counter-suits because they do not produce patented products, to force companies into a settlement or licensing agreements for patents of questionable value.2 PAEs have been claimed to impose a ‘tax on innovation’,3 harming manufacturing companies and increasing prices for consumers. PAEs are largely active in the USA: according to some estimates during the period of 2012–2017 the majority of all US patent suits originated from PAEs.4 Although Europe has not witnessed comparable PAE activity, one recent study reported a 19 per cent annual growth rate of allegedly abusive PAE litigation in Europe,5 while one group warned against the harmful effects of PAEs on Europe’s innovativeness.6