Research project

Investigator:
Matteo Dragoni

Abstract:
Not even a decade ago, the acronyms “PAE” and “NPE”, which stand respectively for “Patent Assertions Entity” and “Non-Practicing Entity” were virtually unknown in Europe. Even the informal, often over simplistic, term “patent troll”, was almost unique to the American context and its terminology. It was highly unusual for a company’s core business to consist of using the threat of legal action to force others to license patents, and such companies operated almost exclusively in the US. Scholars have investigated, and continue to debate, why the US proved to be particularly fertile ground for patent trolls. However, the US’s friendliness to such activity is decreasing. US law concerning patent venue, bare bone acts, and related anti-trolling reforms, have been modified, are facing proposed modification, or have been introduced, as the legislatures attempt to prevent non-generative enforcement of patents.

Recent scholarship shows that just as PAE litigation is facing increased obstacles in the US, it is occurring in Europe, though on a different scale. While the US has historically had many cases involving NPEs, in Europe such litigation remains limited. It is, for now, concentrated in two countries, the UK and Germany, two of Europe’s most wealthy and dynamic economies. While activity may be limited, it is increasing rapidly as there has been a recent surge in the number of cases involving PAEs asserting their patents in Europe. In a few EU States, and particularly in Italy, PAEs have started to act frequently and aggressively, exploiting the dangerous combination of EU Regulations regarding custom surveillance of counterfeited goods, and national criminal laws. This combination allows PAEs to act quickly and cost-effectively, seriously harming the alleged infringer by using the spectre of protracted litigation to force the payment of license fees. In the US, the ITC is empowered with investigative and quasi-judicial authority over goods that cross US borders. Many cases of enforcement of patents through the ITC are on record, and alleged infringers sometimes find themselves with little or no opportunity to challenge the validity of the asserted patent(s).

This paper aims at investigating the above-described phenomenon further in Europe, and seeks to explore whether something similar is happening in the US, through the ITC or other governmental authority. It further proposes solutions to any abusive practices that it reveals. Both EU Regulation 608/2013, and the US norms that regulate the functioning of the ITC, were designed also to help IP owners defend themselves against counterfeiting. While avoiding IP piracy is a noble aim, these laws must be revisited to ensure that they provide a balanced framework in which PAEs can aggressively assert their legitimate rights, yet be held accountable for any meritless trolling activities.