Stefania Fusco and Valerio Sterzi have posted a paper on ssrn titled Patent Injunctions: The Case for an eBay Echo, 72 Wayne L. Rev. __ (forthcoming 2027). Here is a link to the paper, and here is the abstract:
The Unified Patent Court (UPC) opened its doors on June 1, 2023. After three years of operation, data show that nearly fifty percent of the UPC plaintiffs are entities based in the United States. Thus, interest in how this Court operates is growing exponentially on both sides of the Atlantic. This Article examines whether the availability of near-automatic injunctive relief in patent litigation at the UPC is justified in an era of cumulative innovation, patent-thick products, and increasingly complex technological markets. Two decades ago, an identical debate gained great prominence in the United States, resulting in court rulings and legislative actions that significantly shifted the balance of power between patent holders and infringers. This Article discusses what can be learned from the United States’ experience on injunctions in patent law that can shed light on the direction that the newly created UPC should take in this context. Moreover, this Article uses empirical evidence from European patent litigation to better inform this debate vis-à-vis the United States’ experience and, in this way, help answer the many questions that patent holders involved in litigation before the UPC currently have.
While patent law traditionally relies on injunctions to protect inventors from under-compensation and deter free riding, modern innovation ecosystems challenge the assumption that these remedies invariably promote technological progress. Indeed, in industries characterized by interoperability, high switching costs, and cumulative innovation, injunctions may confer bargaining power to patent holders that substantially exceeds the economic value of the patented invention.
To investigate these concerns, this Article analyzed patent infringement actions initiated between 2010 and 2019 in five major European jurisdictions - France, Germany, Italy, the Netherlands, and the United Kingdom - involving at least one patent granted by the European Patent Office. Using firms’ industry classifications and business descriptions processed through BERT-based textual analysis, the study measures the degree of competition between litigants and identifies the characteristics of disputes involving competitors and non-competitors.
The empirical evidence shows that only 32.8% of litigation case–claimant–defendant relationships involve parties operating in the same main industry. Cross-industry enforcement is particularly prevalent in complex technological fields, including telecommunications and other ICT technologies. A complementary measure based on the similarity of firms’ business activities confirms substantial variation in the competitive proximity of litigating parties. The regression analysis further shows that patents with larger families and standard-essential patents tend to be asserted between firms with greater competitive proximity, whereas technologically broader patents are associated with litigation between more economically distant firms. The Article therefore contributes to the ongoing debate regarding enforcement practices at the UPC and argues in favor of an “eBay echo” based on the United States Supreme Court’s decision in eBay Inc. v. MercExchange, L.L.C.. While the Article does not recommend a wholesale transplant of the U.S. four-factor test into the UPC system, it provides compelling evidence for the adoption by the Court of a more individualized inquiry into whether injunctive relief is truly appropriate in every case.
The authors’ descriptive statistics and empirical analysis (Part III) are illuminating, and their policy recommendation (Part IV) that the UPC take various factors into consideration before granting injunctive relief (among them, “the competitive relationship between the parties, the importance of the patented technology to the infringing product, the availability and adequacy of monetary compensation, the consequences of exclusion for the defendant and third parties, and whether the bargaining leverage generated by an injunction would be disproportionate to the patented invention’s economic contribution”) seems sensible to me. An important contribution to the growing literature on whether European courts should deny (or stay) permanent injunctions in a greater number of cases.
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