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The Non-Practicing Entities and Innovation in Europe (NPEIE) is a project funded by the French National Research Agency (ANR). Its principal objective is to constitute the first systematic and extensive research programme aiming at punctually qualifying and quantifying the phenomenon of Non-Practicing Entities (NPEs) entering and affecting the market for technologies and innovation in Europe.

The Context

During the last two decades, increased opportunities for patent monetization have resulted in the rise of institutions facilitating the sale of patents (Hagiu and Yoffie, 2013).  New intermediaries, such as patent aggregators and, more generally, non-practicing entities (NPEs) have become quite influential and controversial in the industries they touch, sparking heated debates, especially in the US, about the economic role they play in the patent market and their effects on innovation dynamics. As a special category of NPEs, PAEs mostly seek licensing revenues through litigation or threat of litigation – sometimes imposing costs that are not proportionate to the value of the patented technology -, while at the same time not producing any invention nor output. 

In part reflecting the debate on PAEs, the US Congress introduced several bills proposing to finely regulate the process of patent licensing and assertion. Until now, scholars have considered PAEs as almost exclusively confined within US borders. Conventional wisdom holds that patent monetization is pursued less often in Europe, due to some combination of higher cost of enforcement and smaller damages awards. However, some recent papers have shown that NPEs are hardly a uniquely American phenomenon (Fusco, 2014). Indeed, recent figures demonstrate that their presence in European courts is not negligible. A recent study of Darts-IP (2018) shows that during the period 2007-2016 litigations involving NPEs in Europe has grown about 19% per year. In this regard, it is not surprising that a coalition of companies (IP2Innovate) including Adidas, Daimler, Intel, Google, SAP and Spotify has recently urged the European Commission (Reuters, Apr 5, 2017) to take action against the explosion of lawsuits brought in Europe by PAEs and has promoted initiatives and debates at the European Parliament.

What we do

The NPEIE project would constitute the first systematic and extensive research programme aiming at punctually qualifying and quantifying the phenomenon of NPEs entering and affecting – with specific business models and strategic behaviours – the market for technologies at the European level. To quantify the presence of NPEs in Europe, we will follow an original strategy, which is based on the NPE’s patent acquisitions at the European Patent Office (EPO) and national patent offices. 

In this venue, we will contribute the literature by answering the following questions:

Is the market for patent intermediation in Europe dominated by foreign NPEs? To which extent NPEs are active players on the market for technology, as both buyers and sellers? When NPEs buy, who they buy from, and which kind of technologies do they target? What are the impacts of NPEs on innovation dynamics and technology transfer? If negative, which are the possible solutions to remedy these inefficiencies? 

This project relies on the expertise of its members, who are experts on the issue of patenting and technology transfer. They are spread over five sites, but many of them have already collaborated in the past. New collaborations will also be undertaken, by matching, in this project, expertise on IP law, professional practices, applied micro-econometrics, and different data collection methods. The project should significantly contribute to building a strong European research base on NPEs, in connection with policy makers and practitioners.  Implications and policy conclusions that we aim to provide will be thus relevant for innovation purposes, development and growth, even more in the very actual phase of restructuration and redefinition of the entire European patent legal-system, with the creation of a new supra-national entity (the Unified Patent Court).