Will Europe Become the Center of the Patent World? Not Yet

EU Flags

Commentators dismayed by what they see as the erosion of the U.S. patent system suggest that more patentee-friendly Europe will become the new patent-and-innovation epicenter. But the verdict is still out. 

Those advocating this view point to developments such as the Supreme Court’s Alice decision and the continuing push for patent reform. Such changes, they claim, are weakening patent rights to the point of undermining longstanding incentives that have driven U.S. innovation. 

By contrast, the upcoming launch of the European unitary patent and Unified Patent Court has led some of the same commentators to suggest that Europe is becoming the preferred venue for enforcement. 

The comparisons are particularly interesting due to market size and potential. The new European patent regime will cover a population of over 500 million people versus 318 million in the United States—although per capita Gross Domestic Product (GDP) is higher in the U.S. than in the EU ($54,600 compared to $36,400 in 2014). 

At a San Francisco conference last week on the new European patent regime hosted by Intellectual Asset Management, a bimonthly magazine that focuses on IP from a business perspective, several practitioners made comparisons between the two patent regimes. 

For example, while prevailing plaintiffs in Europe will automatically be entitled to injunctions against infringing defendants, their U.S. counterparts may only get injunctions if they satisfy the four-factor test used in eBay v. MercExchange.

Skeptics of the U.S. system also point to the uncertainty surrounding the patentability of software and business methods. While the Alice decision has made it much more difficult to get such patents, the European Patent Office, which is already applying the substantive law that the unitary patent will be based on, is seen to have a much more permissive and consistent approach to these types of filings. 

However, the shift to Europe isn’t here yet—nor does it appear inevitable. 

Luke McLeroy, director of licensing, IP rights and licensing, for Ericsson, the Swedish communications technology and services multinational, says the U.S. system still offers unique advantages for patent holders, particularly in damages, which are still generally much larger than in any other jurisdiction. Furthermore, McLeroy points out that injunctive relief is still available and a useful remedy in the U.S., despite the fact that it’s no longer granted as a matter of right. 

And more than one conference speaker spoke of uncertainties surrounding the UPC and unitary patent, though some uncertainties are inevitable with reforms of that magnitude. 

Some numbers provided by Roland Kuppers, partner at the international law firm Taylor Wessing, further illustrate the continuing importance of the U.S. for patent holders. Consider the fact that Germany led Europe with about 1,000 patent cases filed in 2014. France was second--with about 350 cases. But those figures are dwarfed by the nearly 6,000 cases filed that same year in the U.S. 

The numbers are not directly comparable. For one, Kuppers points out that the European figures involve parallel cases filed in multiple countries enforcing patents on the same technology. Also, litigation is a much different creature in Europe. While about 35% of German and French patent cases go to trial, only 3% make it that far in the U.S. 

Given everything, while reforms in Europe continue to attract attention, the U.S. remains the premiere venue for patent enforcement. At least for now.