Does Europe Have Patent Trolls?

There have been countless articles—including in the popular press—about the problems (or lack thereof) with "patent trolls" or "non-practicing entities" (NPEs) or "patent-assertion entities" (PAEs) in the United States. Are PAEs and NPEs a uniquely American phenomenon? Not exactly, says a new book chapter, Patent Assertion Entities in Europe, by Brian Love, Christian Helmers, Fabian Gaessler, and Max Ernicke.

They study all patent suits filed from 2000-2008 in Germany's three busiest courts and most cases filed from 2000-2013 in the UK. They find that PAEs (including failed product companies) account for about 9% of these suits and that NPEs (PAEs plus universities, pre-product startups, individuals, industry consortiums, and IP subsidiaries of product companies) account for about 19%. These are small numbers by U.S. standards, but still significant. Most European PAE suits involve computer and telecom technologies. Compared with the United States, more PAE suits are initiated by the alleged infringer, fewer suits involve validity challenges, fewer suits settle, and more suits involve patentee wins.

Many explanations have been offered for the comparative rarity of PAE suits in Europe, including higher barriers to patenting software, higher enforcement costs, cheaper defense costs, smaller damages awards, and more frequent attorney's fee awards. The authors think their "data suggests that each explanation plays a role," but that "the European practice of routinely awarding attorney's fees stands out the most as a key reason why PAEs tend to avoid Europe."