Patent Litigation in Europe: a portrait of the recent past

ZEW Discussion Paper No. 13-072, Patent Litigation in Europe, is now available online -- you can click here to access the 67-page pdf. The authors of this paper, which is packed with solid data, are the formidable team of Katrin Cremers, Max Ernicke, Fabian Gaessler, Dietmar Harhoff, Christian Helmers, Luke McDonagh, Paula Schliessler and Nicolas van Zeebroeck.

In the abstract, the authors write:

"We compare patent litigation cases across four European jurisdictions – Germany, France, the Netherlands, and the UK – covering cases filed during the period 2000- 2008. For our analysis, we assemble a new dataset that contains detailed information at the case, litigant, and patent level for patent cases filed at the major courts in the four jurisdictions. We find substantial differences across jurisdictions in terms of case loads. Courts in Germany hear by far the largest number of cases in absolute terms, but also when taking country size into account. We also find important between country differences in terms of outcomes, the share of cases that is appealed, as well as the characteristics of litigants and litigated patents. A considerable number of patents are litigated in multiple jurisdictions, but the majority of patents are subject to litigation only in one of the four jurisdictions".

Two of the authors -- Christian Helmers and Luke McDonagh -- are also the authors of "Patent litigation in the UK: an empirical survey 2000–2008", which is now available online to subscribers to the Journal of Intellectual Property Law & Practice (JIPLP): click here for the abstract.

This blogger is always excited to see the results of research conducted on real data rather than mere speculation.  His only regret is that we have had to wait until the tail-end of 2013 for this helpful analysis of the world of European patent litigation up to five years ago.  The major and highly successful reforms of the Patents County Court for England and Wales in October 2010 all happened far too late for inclusion. Let's hope that the authors of Patent Litigation in Europe are given the funds and the support to produce a sequel.

Proposed Troll-Fighting Reforms Would Pick Up Where AIA Left Off

This week, U.S. Representative Bob Goodlatte (R-Va) floated a discussion draft of a bill that would amend the U.S. Patent Act to make it more difficult for some NPEs (aka “patent trolls”) to use infringement litigation to terrorize companies. 

In 2011, Leahy-Smith American Invents Act (“AIA”) introduced some reforms, including tightened joinder rules and post-grant administrative patent challenges. Goodlatte’s proposed bill would make other, more far-reaching changes. Highlights include:

• A party asserting a claim for patent infringement would be required to plead the claim in exacting detail, including identifying each patent infringed, each claim infringed, the exact product or activity alleged to infringe each claim, the factual and legal basis for the allegation that each limitation of each claim is infringed by each product or process, the basis for any allegation of indirect infringement, a list of all lawsuits asserting each patent, and other information. In essence, the bill would require each pleading to contain a detailed claim chart for each claim and accused product or process. This would be an enormous change from current practice, which requires only notice pleading. See K-Tech Telecoms., Inc. v. DirecTV, 714 F.3d 1277, 1283-84 (Fed. Cir. 2013). The plaintiff also would be required to disclose in a filing with the USPTO all assignees, licensees, or entities with a financial interest in each patent.
• A defendant could request the court to add any “interested party” to the action by showing that the named claimant “has no substantial interest in the patent or patents at issue other than asserting” the patent in the lawsuit. An interested party could include any entity with a “direct financial interest” in an asserted patent, including a right to share in a damage recovery, but would not include law firms operating under a reasonable contingency fee arrangement.
• A fee-shifting provision would require the court to award a victorious party its costs and attorneys’ fees unless the court ruled that “the position of the nonprevailing party or parties was substantially justified or that special circumstances make an award unjust.” If a losing plaintiff could not pay such an award, the court could order an “interested party” to pay.
• Generally, discovery would be bifurcated, with discovery limited to claim construction issues until the district court issued a claim construction order.
• In some circumstances, an action alleging infringement against a customer using an accused product or process would be stayed to allow claims against the supplier of the accused products to proceed first.
• The bill would aim to implement practices developed by the Judicial Conference of the U.S. to control discovery costs, including procedures for controlling costs of e-discovery.
• Finally, the bill would make other changes to the Patent Act, including eliminating civil actions to obtain patents under 35 U.S.C. § 145, expanding the estoppel arising from post-grant review proceedings, and expanding the Covered Business Method Patent Review procedures.

A copy of the discussion draft, posted by the Electronic Frontier Foundation (which supports patent reform legislation) is HERE.

Standard setting organizations and F/RAND: 'if it ain't broke, don't fix it'. Or should you?

As of late, the role of standard setting organizations (SSOs) in preventing hold-up has been the focus of a lively debate. The IPR policies of SSOs commonly require members to disclose any standard essential patents they hold, and to commit to licensing them on fair, reasonable and non-discriminatory terms. The F/RAND commitment, however, is frequently described as vague and uncertain, and may be weakened by the SEP holder's recourse to injunctive relief against a willing licensee, during negotiations. The resolution of the uncertainty surrounding F/RAND usually requires a judicial determination, and a long and complex trial, while a preliminary injunction against a third party that is willing to enter into a licensing agreement may yield anti-competitive effects, or be incompatible with the F/RAND commitment.

Joshua Wright (left) at the FTC's swearing-in ceremony

To address both issues, three leading US and EU economists recently suggested that SSOs should introduce new provisions in their IPR policies, (i) implementing a fast and low-cost process to adjudicate F/RAND disputes (arbitration or another ADR mechanism), (ii) requiring SEP holders to specify an acceptable cash price for their essential technologies, and (iii) restricting the use of injunctions and exclusion orders. The use of IPR policies to prevent hold-up had already been advocated in previous studies (here and here), both to attain a better definition of F/RAND commitments (including their transferability in case of sale of a SEP), and to ensure a comprehensive and timely disclosure of essential technologies.

In a speech delivered on September 12, at the Center for the Protection of IP (George Mason University), FTC's Commissioner Joshua Wright discussed the opportunity of modifying the current IPR policies of standard setting organizations, but observed that there is no economical theory or empirical evidence that suggests that introducing stricter terms, or excluding the availability of injunctive relief, effectively prevents hold-up. To the contrary, these modifications could deter participation in SSOs, and possibly result in reverse hold-up. The Commissioner explained that:

Much of the call for SSO contract reform - whether under the guise of possible antitrust enforcement or friendly advice on contract drafting - is based upon the notion that SSOs bear a special responsibility for constraining the market power of SEP holders. Indeed, the possibility of SSOs constraining the exercise of SEP holders’ market power is purported to be the primary benefit of filling gaps in SSO contracts. However, it is unlikely SSO contract reform can bear the burden its proponents place upon it. [...] It is important to recognize that SSOs are not necessarily in a position to constrain license terms for SEPs at will. SSOs compete to attract key players to join and contribute their technology to the standard and can be at the mercy of certain members with essential technologies. However, even assuming arguendo SSO contract terms can constrain market power newly created by adoption of the standard, that situation is clearly not always the case. For some SEPs, the relevant market power will be inherent in the underlying technology and the patents themselves, rather than conferred upon the SEP holder by the SSO as the result of the standard-setting process.

Evaluating the potential consequences of the use of the IPR policies of SSOs to restrict the use of injunctive relief or provide a more accurate delimitation of F/RAND commitments, Wright added that:

Requiring stricter SSO terms might make it less attractive for IPR holders to join the SSO process. The social costs associated with deterring participation in SSOs can outweigh any potential benefits associated with decreasing the probability of hold-up. This would lead to, in the short-term, SSOs more frequently selecting an inferior technology; it could also lead to a dichotomy between competing technologies, which would defeat the purpose of SSOs and deprive consumers of the well-understood benefits of standardization. Over the long-run, these reforms could undermine the very desirable purpose of SSOs, which among other things, facilitate compatibility and interoperability, reduce consumer costs, and advance innovation.

Interestingly, the Commissioner argued that the use of 'less precise contract terms' is fundamental to guarantee the flexibility needed to adapt to quickly changing market conditions, and that the availability and threat of injunctions prevents reverse hold-up and is 'a very important part of the bargaining process and [...] likely part of the benefit of the bargain conceived of by a contributing member of the SSO at the time it decided to participate in the standard'. The Commissioner observed that (i) although rates negotiated under the threat of injunctions are likely to be higher than rates negotiated without the threat of injunction, it does not follow that the former is above F/RAND', (ii) property rights allow the owner to exclude all others, and (iii) no maxim of contract interpretation justifies the idea that, by accepting the F/RAND commitment, SEP holders acknowledged that damages are adequate compensation for infringement. These conclusions unexpectedly conflict with those of several courts and authorities around the world, including the FTC itself. To name just a few:

• the US Department of Justice and US Patent and Trademark Office's Policy Statement of 8 January 2013 ('[a] patent owner’s voluntary F/RAND commitments may also affect the appropriate choice of remedy for infringement of a valid and enforceable standards-essential patent. In some circumstances, the remedy of an injunction or exclusion order may be inconsistent with the public interest');
• the FTC's Statement on the Public Interest of 6 June 2012 ('a royalty negotiation that occurs under the threat of an exclusion order may be weighted heavily in favor of the patentee in a way that is in tension with the RAND commitment');
• the EU Commission's perspective, as expressed in Google/Motorola, and in the recent Statements of Objections notified to Samsung and Motorola (according to Commission Vice President Almunia, '[w]hen companies have contributed their patents to an industry standard and have made a commitment to license the patents in return for fair remuneration, then the use of injunctions against willing licensees can be anti-competitive');
• several US cases, including Apple v Motorola, Microsoft v Motorola, and Realtek Semiconductor v LSI (a F/RAND commitment 'implies a promise not to seek injunctive relief either domestically [...] or abroad').

In particular, the Commissioner's view rejects Judge Posner's persuasive statement in Apple v Motorola:

I don’t see how, given FRAND, I would be justified in enjoining Apple from infringing the ‘898 unless Apple refuses to pay a royalty that meets the FRAND requirement. By committing to license its patents on FRAND terms, Motorola committed to license the ‘898 to anyone willing to pay a FRAND royalty and thus implicitly acknowledged that a royalty is adequate compensation for a license to use that patent. How could it do otherwise? How could it be permitted to enjoin Apple from using an invention that it contends Apple must use if it wants to make a cell phone with UMTS telecommunications capability - without which it would not be a cell phone. 

Although Wright rightfully highlighted that there is no guarantee that improving IPR policies could provide beneficial effects, his reasoning on imprecise, but flexible F/RAND commitments, and on the importance of injunctions in the bargaining process, is likely to prove controversial (see Professor Cotter here). It is reasonable to think, however, that even Commissioner Wright would welcome the introduction of a fast and low-cost process to adjudicate F/RAND disputes, as suggested by US and EU economists, a solution that could protect the interests of both SEP holders and licensees. What do readers think? What is the best way to strengthen F/RAND commitments, while preserving the parties' freedom to negotiate?

New Documents in Nullity Appeal Instance - BGH Mischerbefestigung X ZR 36/12

After receipt of a negative preliminary opinion (§ 83 par. 1 PatG) of the senate, he plaintiff in the nullity suit 4 Ni 13/10 had extended the subject-matter under dispute and filed new documents D1  - D5 to support the alleged lack of patentability.

At trial, the senate disagreed with the interpretation of one of the documents (D1) and maintained the patent in the amended form as defended by the plaintiff.

A further  document D7 was submitted by the plaintiff in the appeal instance in order to provide further evidece for what was originally intended to be proven by the document D1 .

The new document was not admitted to the procedure by the BGH. The question arises whether the Bundespatengericht should have issued a further preliminary opinion under § 83 par. 1 PatG in order to give the plaintiff the possibility to suitably react on the adverse interpretation of the Bundespatentgericht and to eventually file the document in the 1st instance.

The BGH found that - under these circumstances - no procedural violation (§ 531 (2) Nr. 2 ZPO) justifying the submission of new evidence was comitted by not issuing a new communication with a written preliminary opinion on the (already late filed) documents D1 - D5 and that the mere adverse finding of the senate in the 1st instance does not as such justify the admission of new means of attack in the appeal instance. 

The decision emphasizes once more the importance to file the complete case at the onset in order to avoid the rejection of evidence as being late filed.

The full text decision (in German) can be accessed here. The 1st instance decision here.

Study Shows US Patent Cases Increasingly Concentrated In Just Two Courts

For some time, attorneys filing patent cases have opted to file their actions in a relatively limited subset of U.S. district courts. These filing decisions reflect a number of practical and tactical issues, including jurisdiction and venue requirements, convenience, anticipated success rate, and time to trial. For a discussion of some of these factors, see Mark Lemley’s excellent article, “Where to File Your Patent Case.”

It now appears, however, that the trend is becoming more acute. A new analysis of filing trends for 2013 shows that case filings are being concentrated in just two courts with alarming frequency. A report by James Pistorino at Perkins Coie compiling case filing statistics through September 10 shows that 45 percent of cases filed this year have been launched in the District of Delaware and the Eastern District of Texas. This appears to be a marked increase in the concentration of cases in those two courts, since from 2007 through 2010 those courts accounted for no more than 20 percent of all cases filed. The full Perkins Coie report is available here.

This trend will undoubtedly trigger concerns that because they will be deciding almost half of all U.S. patent cases at the trial court level, the ED Texas and Delaware may be able to exert a disproportional influence on the development of patent law in coming years. At least one commentator has expressed concern that this trend will benefit patentees, since it is also “subtly tilting the patent system against defendants, by giving some of the nation's most plaintiff-friendly judges a disproportionate role in deciding patent disputes.” See WaPo Comment HERE.

Patent litigation and stock market reactions: evidence from a recent study

© Rob Tannenbaum/Nasdaq

'Certain patents' is the title of an interesting article, published in the Yale Journal of Law & Technology and now available on SSRN, in which Alan C. Marco and Saurabh Vishnubhakat estimated and compared the market reactions to patent litigation decisions and to patent grants, analysing litigation data for the period 1977-1997. According to the abstract:

These estimates reveal that the resolution of legal uncertainty over patent validity and patent infringement is, on average, worth as much to a firm as is the initial grant of the patent right. Each is worth about 1.0-1.5% excess returns on investment. There are significant differences between such market reactions before and after the establishment in 1982 of the United States Court of Appeals for the Federal Circuit. There are also significant differences among the reactions of patent holders to resolved uncertainty depending on their litigation posture as plaintiffs or defendants. Interestingly, there is no similar effect for appellate decisions relative to trial decisions. The normative implications of these findings proceed, not from the magnitude of the quantitative results — which are statistically meaningful but modest — but rather from our illustration that uncertainty in the value of patent rights is quantifiable and so can be correlated with patentee and litigant behavior in developing patent policy.

The article provides one of the first comprehensive reviews of the effects of patent litigation on stock market valuations in the US. The data collected by the researchers corroborate the idea that the evaluation of plausible market reactions may play a significant role in determining the strategic choices made by firms involved in patent litigation. In this perspective, the authors noted that '[i]f valuable patents are subject to uncertainty about validity and infringement, then resolving that uncertainty is important to patent holders, and leaving such uncertainty unresolved reduces patent value as well as rewards to innovation'. These findings appear to lend weight to the hypothesis that agreements which seek to avoid or delay the resolution of legal uncertainty normally concern weak or less valuable patents. Although this correlation should be tested on a case by case basis, as taught by the US Supreme Court in the recent case of Federal Trade Commission v Actavis Inc. et Al., estimated stock market reactions could provide another useful factor to understand the objective, and assess the lawfulness, of such agreements.

The study still leaves many questions unanswered, in particular concerning the market reactions to settlements and non-final decisions, and the proportionality between market reactions and actual gains or losses determined by the outcome of litigation. Further, although other researches analysed some of these issues, there appears to be no comprehensive study of how market reactions evolved in the past few years. Recent evidence suggests that the sensitivity of the stock market to patent litigation may have significantly increased; correspondingly, the effects of market reactions on the firms' strategic choices may be higher than in the past. A recent example of this phenomenon is the market reaction to the presidential disapproval, on 3 August 2013, of the exclusion order issued by the ITC against several products manufactured by Apple, for infringement of a patent held by Samsung (see here and here): according to The Wall Street Journal, '[m]ore than $1 billion was wiped off Samsung's market value on Monday after the surprise veto' (approximately 0.6% of its current market cap). Similarly extreme market reactions may indeed play an increasingly important role in shaping the firms' behavior in patent litigation.

More on this topic? See the following studies:

- T.S. Raghu and others, 'Market reaction to patent infringement litigations in the information technology industry'

- M. Henry, 'The Market Effects of Patent Litigation'

- P. Schliessler, 'The Effect of Patent Litigation on Firm Performance – Evidence for Germany'

Provisional protection for patent applications: is it time to revisit this topic?

This morning's IPKat post, "New improved Dyson sucks up German infringements from London" (here), reflects on the fickle nature of litigants' attitudes towards bringing patent infringement proceedings in on jurisdiction in preference to another. In the case in point, Sir James Dyson appears to have opted to sue in England and Wales, whose courts he has previously subjected to scathing criticism. In this case it is may be that Sir James was motivated more by necessity than by a change of opinion -- but his decision has in any event generated some thought-provoking comments.

Two of the anonymous commentators raised the issue of provisional protection of rights in as-yet ungranted patents. This is an area in which there is no apparent harmonisation, yet it is also a topic concerning which it may be difficult to justify anything other than a single, blanket rule to cover the entire territory of the European Union.

What do readers think?

Accenture v Guidewire : another chapter in the saga of eligible subject matter

Following in the footsteps of Bilski, CLS Bank, and Ultramercial, another case on subject matter eligibility was decided by the US Court of Appeals for the Federal Circuit last Thursday. The court's opinion, delivered by Judge Lourie, and the dissenting opinion, filed by Chief Judge Rader, show that there is still significant disagreement on the rules to be applied when evaluating abstractness in light of the substantial limitations embedded in claims.

In 2007, Accenture sued Guidewire alleging infringement of US Patent 7,013,284, which describes a computer program for handling insurance related tasks, comprising several software components for storing and manipulating data, enabling their transmission and receipt, and managing program events. In particular, claim 1 discloses a system for generating and assigning the tasks to be performed in an insurance organisation when a specific event happens, and claim 8 describes a method that has the same objective and employs many of the same software components.

The defendant argued that Accenture's patent embodied abstract ideas which failed the machine-or-transformation test. The District Court for the District of Delaware agreed, finding that the patent was 'directed to concepts for organizing data rather than to specific devices or systems, and [that] limiting the claims to the insurance industry does not specify the claims sufficiently to allow for their survival'. The court found that method claim 8 was patent-ineligible, as the limitations contained therein did not restrict it to a concrete application of the abstract idea. Consequently, it held that system claim 1, which closely resembled claim 8, was equally patent-ineligible.

On appeal, Accenture challenged the District Court's conclusions on system claims 1-7, but did not appeal the findings concerning claim 8 and the related method claims. The Federal Circuit affirmed the District Court's decision. 

The majority first noted that, in order to evaluate abstractness, it is necessary to determine whether a claim preempts an abstract idea. To this aim, under Ultramercial's two-step process, the court should identify the fundamental concept wrapped up in the claim, and assess whether there are substantive limitations which restrict it to an application, in such a way that it does not cover the full abstract idea. 

The court recalled CLS Bank, explaining that '[a]lthough CLS Bank issued as a plurality opinion, in that case a majority of the court held that system claims that closely track method claims and are grounded by the same meaningful limitations will generally rise and fall together'. The judges analysed the limitations contained in system claim 1 and method claim 8, finding that they required performance of the same basic process, and contained only minor differences in terminology, to the effect that both claims 'should rise or fall together'. Accordingly, in light of the District Court's unchallenged findings of invalidity on method claim 8, the court affirmed the patent-ineligibility of all system claims. 

The decision also found that the system claims were ineligible for patenting irrespective of the status of the method claims. The majority argued that system claim 1 referred to an abstract concept ('generating tasks [based on] rules...to be completed upon the occurrence of an event'), providing only two limitations: its application in a computer environment and within the insurance industry. These limitations, according to the court, were insufficient to avoid preempting the abstract idea of system claim 1. Citing Bancorp, the judgment clarified that 'the complexity of the implementing software or the level of detail in the specification does not transform a claim reciting only an abstract concept into a patent-eligible system or method'.

In his dissenting opinion, Judge Rader questioned the majority's reliance on CLS Bank ('no part of CLS Bank, including the plurality opinion, carries the weight of precedent'), and contested its application, noting that both CLS Bank and Ultramercial actually endorsed the evaluation of eligible subject matter on a claim-by-claim basis. Further, Judge Rader argued that the system described in the patent 'does not preempt anything beyond the specific claims, let alone a broad and undefined concept', observing that it would be possible to rely on various non-infringing methods to generate tasks based on rules to be completed upon the occurrence of an event. Concluding his dissenting opinion, the judge touched the heart of the issue that the Federal Circuit hasn't still settled:

In conclusion, I note that prior to granting en banc review in CLS Bank, this court commented: “no one understands what makes an idea abstract.” [CLS Bank Int’l v. Alice Corp.] After CLS Bank, nothing has changed. “Our opinions spend page after page revisiting our cases and those of the Supreme Court, and still we continue to disagree vigorously over what is or is not patentable subject matter.” [MySpace, Inc. v. GraphOn Corp.] Indeed, deciding what makes an idea “abstract” is “reminiscent of the oenologists trying to describe a new wine.” [MySpace, Inc. v. GraphOn Corp.] 

Draft Rules of Procedure for UPC: a helpful publication

Unified Patent Court - Draft Rules of Procedure is a 306-page handbook, which includes the Agreement in the three official languages of English, French and German.

The Rules in question are those found in the (original English language) 15th Draft of the Rules of Procedure, an unofficial French version of which has been prepared by Véron & Associés and is available at www.upc.documents.eu.com

The recent Commission’s proposal for a Regulation amending Regulation 1215/2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (Brussels I) 26.7.2013, COM(2013) 554 final 2013/0268 (COD) is also available on this website.

For a direct link to the handbook, click here.

A German version of the Draft Rules is being prepared by the law firm Reimann Osterrieth Köhler Haft and should be available in October. A third firm, the UK's Powell Gilbert, is also named in this venture. Pierre Véron adds that the firms are still working to facilitate simpler navigation in the document through the use of bookmarks, hyperlinks, etc., and that improved versions will be posted from time to time on www.upc.documents.eu.com.

When a party is unrepresented at a hearing and witnesses don't appear

Coupling Technology Ltd v Coupling Solutions LLC BL O/342/13, a 23 August 2013 decision of Mr A. C. Howard in the UK Intellectual Property Office, takes a look at the problem of dealing with evidence in a dispute relating to entitlement to two patent applications for couplings for the use in connecting pipes, where the defendant stated that it would not be represented at the oral hearing, nor would it be bringing its witnesses for cross-examination.

There was no obligation on the part of the hearing officer to strike out the defendant's evidence, but what should he do?  He reasoned as follows.  Since the defendant had chosen not to avail himself of the opportunity to cross-examine the claimant's witnesses, the evidence of those witnesses would be treated as uncontested.  In contrast, while the evidence of the defendant's witnesses would not be disregarded, it would be given little weight. Where there existed any conflict between the defendant's and the claimant’s evidence, the latter would be allowed to prevail unless this course led to the hearing officer reaching an absurd or totally implausible conclusion.

Patent litigation and implications of EU federalisation: more study needed

"The European Unified Patent Court: Assessment and Implications of the Federalisation of the Patent System in Europe" is the title of an article by Dimitris Xenos (Lecturer in Public Law and Intellectual Property Law, School of Law and Social Sciences, University of East London), which has just been published in the latest issue of the excellent online peer-reviewed IP/IT journal SCRIPTed.

The subject of the article is easily guessed from its descriptive title, which indicates that it will be of great interest to readers of this weblog -- but its content is not, with the author calling for far more rigorous and methodologically sound studies on the likely impact of the new system, given that the issues involved are so complex and cannot easily be understood by non-experts, nor even by the patent profession itself. It's worth taking a look at the author' conclusions, quoted in relevant part here:

"... Unlike the federal model of the US which the UPC tries to imitate, the European states do not form a federation. As a result, there cannot be a uniform economic policy that will influence the setting of the legal standards of patents, because the economic and technological needs and capacities of the European countries vary considerably. Another important difference is that the UPC will create a centralised institution that escapes the democratic control of the people on whom the legal standards will be imposed. Indeed, a new form of monopolistic source of legal power will be established that has no precedent in the world’s democratic political history.

... To the extent that the UPC replaces the national courts in the legal disputes relating to patents with unitary effect, the determination of patents as objects of property and the distribution of justice will mainly be made by this new source of legal power. ...[C]rucial issues of property rights and the underlying economic sustainability policies on which the future and well-being of a country depends will be decided by a body of foreign judges.

... For the large body of SMEs which do not have patents, or patents of strong market relevance, the situation can be illustrated as follows: Under the current regime when a foreign company sues a SME that is based in the UK, the case will be tried in the UK courts and in the English language. Under the UPC, the UK SME might stand as a defendant in a litigation that takes place abroad, in another language and in various judicial forums. The same applies to the majority of SMEs in other EU countries. More seriously, the legal principles against which the case will be examined will no longer by influenced by the adjusting ability of national courts.

In short, the issue of surrendering an important element of national sovereignty that concerns vital economic policies and property rights requires a comprehensive economic study about the effect that the UPC will have on local business and economy. Irrespective of whether or not the UPC is challenged in national courts (e.g. the state’s sovereign ability to determine property rights; the right to fair trial regarding the language issue in patent litigation, etc), or there is a constitutional obligation for a referendum (e.g. Ireland, Denmark), non-expert politicians and lay people cannot rely solely on an outdated study which was of limited scope that the EU Commission has presented to the states nor can they rely solely on the advice of the patent profession which benefits most from the considerable expansion of its business activities. Since the very important issue of national sovereignty in the context of patents is at stake, comprehensive and thorough national economic studies must be prepared in order for the decision-makers to make an informed choice, and the people, who will ultimately come to evaluate this choice, to be able to understand the various parameters involved".