"Inconsistency" - Europe Dithers Some More

The European Commission just released its “Follow-up study on the application of the Directive on the Enforcement of Intellectual Property Rights” (which you can find here: EC Study) (“EC Study”).  The Directive 2004/48/EC on the enforcement of intellectual property rights (“IPRED”) “established a framework of measures, procedures, and remedies for the civil enforcement of IP rights”.   

Among other reforms, it was intended to bring proportionality and balance to the consideration of when to grant an injunction in IP rights cases and “harmonise and ensure consistent protection of IP Rights” within the EU (see the EC Study Executive Summary). 

The EC Study finds that this goal has not been met and uses the word “inconsistent” over and over to describe the state of IP rights enforcement in the EU. Such a mild word - “inconsistent.”  It allows the EC Study drafters to propose equally mild and ineffective solutions. 

The problem though is that the IPRED is not being “inconsistently” followed, but rather willfully ignored by certain courts. As I previously said, it is not good governance to identify a serious problem but, if there is any disagreement over how to solve the problem, simply do not much of anything at all about it (see A Vote to Be Allowed to Vote). But that is exactly what the EC Study is proposing to do - not much of anything at all about the "priority" problems it identifies.

So once again Europe (or at least the European Commission) dithers while the U.S. aims for "global dominance" and China continues to be the only country with a coherent SEP policy. See Europe Dithers While the United States Aims for “Global Dominance” and China Cements Its Status as the Only Country with a Coherent SEP Policy. This post focuses on two of the "priority areas" identified in the EC Study: (1) proportionality and (2) transparency.

Proportionality

With respect to proportionality, the numbers remain shocking.  According to the EC Study, EU courts granted permanent injunctions in 94% of patent cases but only assessed whether the remedy of injunction was “effective, proportionate, and dissuasive” (i.e. satisfied the proportionality principle) in 0.6% of these cases.  But, according to the EC Study, this is not true in copyright cases, where proportionality is more frequently considered.

We all know what is driving this “inconsistency”: a willful refusal by certain judges and certain courts (i.e. German judges and German and UPC courts) to follow the proportionality principle in patent cases based on their own, biased views of patent rights.  In SEP cases, these very same judges boast that they are unwilling, and unable, to determine FRAND rates.  Nor do they make any attempt at all to determine if an injunction is a proportionate remedy in any of their cases, including FRAND committed SEP cases. 

These same courts have even attempted to prevent other courts from making FRAND determinations. They have issued anti-suit injunctions against companies seeking a FRAND determination in other courts.  See The FRAND Commitment and Courts That Just Don’t Get It.  They are attempting to impose their views on patent rights on all of Europe, and indeed now on the rest of the world.  See also, for example, European Courts Test Enforcement of United States Patents.

So no, this is not an "inconsistent" application of the IPRED. It is a willful refusal by certain courts to consider the proportionality principle because they do not believe in it. Nor do they believe in the need to apply fairness and non-discrimination in the context of FRAND committed SEPs.

Transparency

The EC Study also identifies as a "priority area" the inconsistency across Europe in “sharing of information.”  Again, what the EC Study really means is that Germany is not transparent.  “Stakeholders stressed the need for greater transparency in patent litigation data, particularly in jurisdictions such as Germany where court decisions are not systematically published. The Commissions 2017 guidelines already encouraged MS [Member States] to systematically publish judicial decisions in IP infringement proceedings, but implementation remains inconsistent.”  See EC Study at p.13.

I will note that the EU sued China in the World Trade Organization under the Trade-Related Aspects of Intellectual Property Rights “TRIPS” agreement (see The EU Complaint Against China - Update) in part because China failed to make decisions in all patent cases publicly available.  The EU won that part of its case: the panel found that TRIPS requires greater transparency to make patent decisions public. It is the height of hypocrisy to sue (and win) on the issue of transparency, which apparently TRIPS requires, and then say that the EU encourages, but does not require, equivalent measures from each European state.  It is far past time for the EU to join the modern world and require all EU countries and all EU courts to publish court decisions in an easy to access, online database.

Conclusion

While the EC Study is useful in identifying problems, it is useless in providing solutions to those problems.  Here is the milquetoast proposal to resolve the issues identified in the EC Study.

To ensure a more harmonised approach, the Commission should encourage judicial knowledge-sharing focused on the application of the proportionality principle. Additionally, the Commission should closely monitor whether these soft law measures effectively address current issues and concerns regarding the application of the proportionality principle, and if needed, follow-up with targeted legislative changes.

The problem with this approach is that soft law measures and “encouragement” already have failed.  The proportionality principle and “encouragement” of transparency has been in place for years.  German courts and the German-influenced UPC willfully refuse to consider proportionality and continue to fail the test of transparency based on their own view of what the law should be.

This EU Study also proposed this "solution" to the problems in the UPC: “before considering amendments to IPRED, it is recommended to observe and monitor the effects of UPC decisions, particularly regarding the application of the proportionality principle.” 

What more do we need to know, however, about UPC decisions and their application of the proportionality principle?  The UPC already has issued multiple injunctions without consideration of the proportionality principle. These have included multi-jurisdictional injunctions in SEP cases without any consideration of proportionality. See for example the Huawei v. Netgear matter which can be found here: 2024-01-18 LD Munich UPC_CFI_9-2023 App_595631-2023 ACT_4597712023 anonymized.pdf.  We do not need further studies to know that there is a problem and that monitoring the problem will not make it go away.

Europe needs to solve these “priority” problems, not just “observe and monitor” them.  On the SEP side, there already is a nearly fully vetted solution. A lot of stakeholders worked extremely hard over multiple years to develop the SEP Proposal. You would imagine that the EC Study might “encourage” the EC to end its battle with the European Parliament over the SEP Proposal and to let the SEP Proposal move forward.  See A Vote to Be Allowed to Vote.  Rather than “soft law measures” and a wait and see approach which already have failed, it is way past time to move forward with the SEP Proposal.