By Richard Stobbe

A recent Ontario court decision (Arctic Cat Inc. et al. v. Peter Watson, 2014 ONSC 6874 (CanLII)) dealt with a foreign letter of request, or “letter rogatory” in a cross-border patent infringement case involving the invention of snowmobile prototypes. This type of request is used where a foreign (usually an American) litigant wishes to compel evidence and testimony from a Canadian witness. In this case, the testimony of the Canadian inventor was needed in the US litigation, but the Canadian individual falls outside the jurisdiction of US courts. The letter of request bridges that gap by requesting a Canadian court to order the individual to be provide evidence.

These are the factors which guide the court in Canada on whether to enforce such letters of request:

1. the evidence sought must be relevant;
2. the evidence must be necessary for trial and will be adduced at trial, if admissible;
3. the evidence must not be otherwise obtainable;
4. the order sought is not contrary to public policy;
5. the documents are identified with reasonable specificity; and
6. the order sought is not unduly burdensome, bearing in mind what the witness would be required to do and produce if the lawsuit was in Canada. 

After reviewing these factors, the Ontario court granted the letter of request, compelling the inventor to provide testimony in the US patent litigation.

If you need assistance with enforcing letters of request in Alberta, contact our Intellectual Property & Technology Group.

Calgary – 07:00 MST

By Richard Stobbe

A recent report  shows interesting trends in US patent litigation:

• 5,002 patent infringement cases were filed in the US in 2014, up from 2,641 filed in 2010;
• Of those cases filed, the majority (61%) were commenced by NPEs (non-practicing entities), which is a neutral term to describe what are commonly referred to as ‘patent trolls’;
• Of those NPEs, the overwhelming majority (82%) are PAEs (patent assertion entities), which can be defined as “firms with a business model based primarily on buying patents and then attempting to generate revenue by asserting them against businesses that are already practicing the patented technologies;”
• Most of this activity (patent litigation by PAEs) took place in the high-tech sector; in that sector, 83% of the patent litigation was related to NPEs of one kind or another, and involved claims against large (non-SME) companies. This figure shows the extent to which IT and software patents have become a fixture in a kind of parallel patent infringement economy, in which patent battles are not fought between market competitors (such as Samsung and Apple) but are essentially rearguard actions by legitimate businesses against entities whose only function is to assert patent rights.

 

Calgary – 07:00 MST

By Richard Stobbe

Who can resist an announcement laced with nerdy acronyms? Last week, the Canadian Intellectual Property Office (CIPO) announced the launch of a Patent Prosecution Highway (PPH) pilot agreement with the European Patent Office (EPO). The initial pilot will run from January 6, 2015, to January 5, 2018.

Canadians can gain access to accelerated processing of patent applications, where the claims have been found to be patentable by either the EPO or CIPO, based on a WO-ISA (Written Opinion of the International Searching Authority) or a WO-IPEA (Written Opinion of the International Preliminary Examination Authority ) or even an IPRP (International Preliminary Report on Patentability). Applications filed after January 6, 2015 are eligible to participate in the pilot agreement.

Note that applicants should be prepared to move quickly, since the response periods are shortened and any requests for an extension of time can result in the application being shunted out of the PPH program, in which case the applicant is SOL.

If you want to participate in the CIPO-EPO PPH, contact our IP&T Group.

Calgary – 07:00 MST

By Richard Stobbe

In a recent interview with The Washington Post, Jay Walker, founder of Priceline.com, has proposed a kind of neutral private-sector utility for the licensing of patents.

He argues that “We have spent trillions of dollars inventing things and 95 to 98 percent of all patents have yet to make their first dollar of licensing revenue”.

Take a small or medium-sized business as an example, let’s call it SME Corp. SME Corp. would use this so-called patent utility to create a profile of the specifications of its own products and services. The utility would contain a complete database of the over 2 million active patents in the USPTO, and would then apply “Big Data algorithms” to measure the specifications of SME Corp.’s products and services against the patent database. This method (which would presumably be patented by Mr. Walker) would identify “statistical relevance” between the products and services of SME Corp. and the claims in the patent database. From Mr. Walker’s description, SME Corp. could learn about other relevant technologies, including potential joint venture partners. A patent holder could generate licensing revenue by charging SME Corp. a “relatively small amount” under a “no-fault” license for use of those patents which overlap with SME Corp.’s products and services. This royalty amount would presumably be more than the patent is currently earning outside the utility. By paying the licensing fee, SME Corp., for its part, would incur a lower cost relative to the costs of negotiating a formal patent license agreement outside the utility, while at the same time neutralizing the patent infringement risk.

Sound complicated? 

The idea is an interesting one. Of course there are inumerable legal pitfalls, but if nothing else it illustrates the need for a more practical application of the patent system for small and medium-sized business.

Related Article:  Our System Is So Broken, Almost No Patented Discoveries Ever Get Used

Related Site: The United States Patent Utility

Calgary – 07:00 MST

By Richard Stobbe

You may have read the recitals or introductory clauses in a license or an assignment agreement. In most cases, these clauses are just skimmed, if they are reviewed at all. In a recent decision of the US Federal Circuit Court of Appeals, the court reviewed the impact of the so-called “consideration” clause in an assignment. In patent law, an assignment is a contract transferring ownership of an invention by the inventors. This permits the assignee (the party getting the invention, such as an employer or a purchaser) to file a patent application as the applicant and owner of the invention. This assignment document is a contract, and so it must meet all the requirements of contract law. One of those requirements is that there must be adequate “consideration” – in other words, something of value that flows to each party. It can be money, or something else of value.

In MemoryLink Corp. v. Motorola Solutions. Inc., (Fed. Cir. Dec. 5, 2014)(No. 2014-1186, N.D. Ill.), the court looked at the consideration clause in the context of a patent infringement lawsuit. Memorylink sued Motorola for infringement of a certain patent. However, both Memorylink and Motorola were joint owners of the underlying inventions by virtue of an assignment which was signed by all the inventors. Memorylink attacked the validity of that assignment, arguing there was a lack of consideration.

In June 1998, all four designated inventors signed the assignment, transferring their rights to both Motorola and Memorylink. The assignment begins with this statement: “For and in consideration of the sum of One Dollar to us in hand paid, and other good and valuable consideration, the receipt of which is hereby acknowledged..”

There are variations of that clause – sometimes the sum of one dollar, sometimes five or ten dollars – but they are all designed for the same purpose: to remove the argument that the contract should fail for lack of consideration. In the context of the assignment and transfer of valuable patent rights, is one dollar truly sufficient to create a legally binding contract? 

Citing decisions that reach back to the 19th century, the US court said, yes, nominal consideration will suffice to support a contract, including an invention assignment. Courts will not inquire into whether or not the consideration listed in the agreement is adequate, unless the amount is “so grossly inadequate as to shock the conscience.” In this case, the amount of $1.00 did not shock the court’s conscience. The original 1998 assignment was valid, and Motorola was a joint owner of the patent. As a joint owner, Motorola could not be liable for infringement of the patent.

 

Calgary – 07:00 MST