Among the most consequential foreign policy developments is the European Union’s (EU’s) consideration of policies that could limit access to injunctive relief. Injunctions stop patent infringers from continuing to use protected technology without permission and have long been viewed as the most effective remedy for infringement, as monetary damages are often insufficient to compensate for the unique impact of losing exclusive rights.
U.S. leaders are increasingly recognizing the importance of injunctions to a functioning patent system, striving to correct course — including through bipartisan legislation like the RESTORE Patent Rights Act — from misguided court decisions that have eroded access to them in recent decades. EU policymakers should proceed cautiously and not risk repeating America’s missteps.
A recent study prepared for the European Commission on the Intellectual Property Rights Enforcement Directive (IPRED) — the EU’s framework for civil IP enforcement — raised concerns about whether widespread grants of injunctive relief may be unfair or harm innovation in Europe. Yet the most comprehensive evidence shows that injunctions are not only the fairest way to remedy infringement, but also essential to sustaining innovation and competition. The study ultimately advises against reopening IPRED — a conclusion we agree is the wisest course. However, several key assumptions and methodological limitations in the analysis warrant closer examination:
| Claim: Widespread grants of injunctive relief are unwarranted and are causing harm to innovation in Europe. |
| In reality: There is no evidence that this is the case. Injunctions have long been considered the fairest and most effective remedy for patent infringement for good reason: exclusive patent rights are invaluable to small inventors, who use them as a foundation to raise capital and compete in the marketplace. Monetary damages are insufficient to replace the unique value of a patent, and this imbalance makes infringement a logical strategy for large companies when injunctions are unavailable. Put simply, it is reasonable that courts would grant injunctions in most cases when they find patents to be infringed.
Additionally, the IPRED study does not identify systemic harms caused by the EU’s current approach, relying instead on unsupported assumptions. A primary assumption made by many who support altering the EU’s approach to injunctive relief is that “patent assertion entities” (PAEs), companies that acquire patents in order to be able to raise revenue through litigation, are empowered by the widespread availability of injunctive relief. However, the study even concludes that PAEs’ “presence in the EU remains small” and that there is “no clear evidence of an increase in PAE activity in recent years.” |
| Claim: Limiting courts’ ability to grant injunctions will reduce abuse and protect innovation. |
| In reality: As America’s experience illustrates, reducing access to injunctions will harm inventors without addressing purported patent abuses. Reduced access to injunctions in the United States in recent years stems from the Supreme Court’s 2006 ruling in eBay Inc. v. MercExchange, which courts have interpreted as requiring a strict four-factor test before a patent injunction can be granted. Like the proposed IPRED revisions, the eBay decision was motivated in part by concerns about alleged abuse of the patent system by PAEs.
Following eBay, grants of permanent injunctions dropped by over 90% for patent holders that do not manufacture their own products, including universities and research institutions, and by two-thirds for other patent holders. Yet this did not affect PAE activity. The primary effect of the eBay decision has been to make patent rights practically unenforceable for many small inventors, harming their ability to raise capital and invest in innovation. It also incentivizes “predatory infringement” tactics under which large companies infringe smaller innovators’ patents, knowing that the value of doing so will likely outweigh any damages they may have to pay. The IPRED study itself acknowledges many of the widely recorded problems stemming from eBay. |
Bottom Line: The study rightly advises against reopening IPRED in the end. But EU policymakers should still be mindful of its flaws in assumptions and methodology — and heed America’s experience when weighing any changes to injunction standards.