White Paper: Hidden Costs of Automatic Injunctions in Standard-Essential Patent Cases
Alex Moss| July 1, 2025
In the high-stakes world of patent litigation, a single court order can ripple through economies, disrupt industries, and jeopardize thousands of jobs. A study by Copenhagen Economics, commissioned by the Public Interest Patent Law Institute (PIPLI), reveals the staggering economic consequences of injunctions in patent cases—court orders that halt sales of products accused of infringement—in Europe. By analyzing two important cases, the report underscores how these injunctions threaten financial burdens hundreds of times greater than the royalties sought by patent holders, harming innovation, employment, and global supply chains.
Injunctions in patent cases are court orders that prohibit companies from making, using, or selling products that are found to infringe a patent. As a result, injunctions affect many people and companies beyond the particular parties in a case, especially employees, suppliers, and customers of the company found to infringe. Because of their impact on third parties, courts in the U.S. do not order injunctions automatically. First, they have to consider a number of factors, including the public’s interest, and can only order an injunction if the consequences to the patent owner justify the potential harm to the public. In some jurisdictions in Europe, however, injunctions are often granted automatically upon a finding of patent infringement, with little consideration of broader social or economic impacts. This practice gives patent holders outsized leverage in negotiations, forcing companies to choose between costly settlements or devastating operational shutdowns.
The study focuses on Standard Essential Patents (SEPs)—patents essential to using standardized technologies that enable interoperability, like 4G or WiFi. SEP holders are typically required to license these patents on Fair, Reasonable, and Non-Discriminatory (FRAND) terms. Yet, injunctions in SEP cases give patent holders outsized leverage that is anything but fair or reasonable, allowing them to disrupt critical industries, as these technologies underpin everything from smartphones to connected cars and medical devices.
Case Study: Ford vs IP Bridge – A 6.6 Billion Euro Near-Miss
The case studies highlighted in the report highlight the disproportionate leverage that injunctions give SEP holders. For example, in 2021, IP Bridge sued Ford in Germany, alleging infringement of a 4G/LTE patent used in Ford’s connectivity modules. A Munich court ordered an injunction, which would have banned Ford from selling affected cars in Germany and forced recalls. Days later, Ford joined the Avanci patent pool (which includes IP Bridge), averting disaster. But the study calculates the hypothetical one-year impact:
Revenue Loss: €6.6 billion from halted sales of connected vehicles.
Supply Chain Domino Effect:
Tier 1 Suppliers: €1.05 billion loss.
Tier 2 Suppliers: €812 million loss.
Tier 3 Suppliers: €987 million loss.
Employment: 7,659 full-time positions at risk.
The study uses the concept of an “effective royalty” to compare injunction-driven losses to licensing costs. For Ford, the injunction’s burden (€482 million) dwarfed Avanci’s fee (€2.4 million, yielding an effective royalty rate that amounted to 7.33% of Ford’s revenue—200 times higher than the €13.90-per-vehicle license fee that the Avanci pool sought.
Broader Implications: Global Supply Chains and Employment
The fallout extends beyond targeted companies. Modern supply chains are interconnected: a German injunction against Ford impacts suppliers around the globe, including the U.S. and Mexico. For example, in the Ford case, the injunction would have had a cascading impact on multiple tiers of suppliers, from component makers that interact directly with Ford to raw material suppliers who do not, amounting to nearly €3 billion in total losses. While court jurisdictions have territorial limits, the impact of injunctions in patent cases do not. The stakes are high for people working on affected companies, too. The report estimates that an injunction would have affected 7,659 full time positions within Ford, but does not account for positions that would be lost throughout the supply chain as a result of €3 billion in lost business. With the rise of IoT—a sector reliant on heavily patented standards—the stakes for suppliers and employees around the world will only grow.
A Call for Evidence-Based Reform
Copenhagen Economics’ findings underscore a critical gap in patent policy: the lack of empirical research on injunctions’ real-world impacts. By quantifying losses to revenue, jobs, and suppliers, the study makes a compelling case for reform:
Proportionality Matters: Courts should weigh public interest and economic harm before granting injunctions.
Injunctions ¹ FRAND: Injunctions threaten harm that drastically outweighs even the sums SEP owners seek in litigation, allowing them to seek and obtain licenses that are anything but FRAND.
Global Coordination: Policymakers must address the cross-border ripple effects of national injunctions.
Conclusion
Automatic injunctions are a blunt instrument in a hyperconnected world. While patents incentivize innovation, their enforcement must balance rights with economic reality. As the report warns, failing to reform injunction practices risks stifling competition, destabilizing supply chains, and imposing costs that far exceed the value of the patents themselves. For policymakers, the message is clear: proportionality isn’t just a legal principle—it’s an economic imperative.