In May 2016, the Allied Security Trust, a non-profit industry
group, announced the launch of the Industry Patent Purchase
Program, otherwise known as IP3. This new initiative
brings together technology industry leaders including Facebook,
IBM, Microsoft, and Adobe, to establish a patent marketplace in an
effort to create an opportunity for patent owners to both protect
their intellectual property, and acquire valuable patents.
The IP3 follows the footsteps of previous initiatives by tech
industry leaders, including an initiative spearheaded by Google
last year, the Patent Purchase Promotion Program, that invited
companies and start-ups to sell their patents to Google.
These recent initiatives are a backdrop to an increasingly
heated battle between innovators and patent trolls. The patent
trolls' business model is based on the aggressive enforcement
of their patents. Often, patent trolls do not practice their own
inventions, and they rather acquire them, or sometimes develop
them, for the primary purpose of using them as strategic weapons to
sue innovating companies. This growing phenomenon is more
pronounced in the U.S., but has become an increasing problem in
Canada over the past few years.
However, governments and industry are exploring various
strategies to solve the patent troll problem.
First, some countries have undertaken the legal reform of their
patent system. For instance, India passed the 2005 Patent Act,
which is credited for curbing the incidence of trolling activity.
Further, the Supreme Court of the United States held in Ebay v
Mercexchange, L.L.C.,2006 547 U.S. 388, that injunctions for patent
infringement should no longer be automatically granted, and that
plaintiffs had to prove that they would suffer harm if an
injunction is not granted. Then in 2014, the Supreme Court's
ruling in Alice Corp. Pty. Ltd. v. CLS Bank Int'l,134 S. Ct. 2347 (2014) that patents are not
available for implementing existing business methods onto a
computer had the effect of further stifling patent troll
Second, is a grassroots market response. As described in
previous blog posts (
here), the IP3 program, and Google's recent Patent Purchase
Promotion Program, illustrate that market responses designed to
curb trolling activity can be effective. In certain industries,
notably the tech industry, a single product can rely on a multitude
of patents. If a patent troll alleges that one of these underlying
patents is infringing, their lawsuit has the potential to shut down
the entire product. Programs such as IP3 and others attempt to
solve this issue, by preventing patent trolls from acquiring
critical patents. Moreover, these programs often explicitly require
companies to pledge not to sue each other, creating economic
disincentives to litigation. In addition, there are arrangements
where owners agree to license their patents to each other, or a
third-party sublicenses the pooled patents to others. These
programs provide economic incentives for collaboration and reward
innovation, making the resort to litigation less commercially
Market responses, together with legal responses, have the
ability to provide economic incentives and disincentives that may
result in behaviour modification and a decrease in trolling
Canadian governments have begun to see the potential of economic
incentives to encourage innovation. In Canada, the provincial
governments of Saskatchewan and Quebec have discussed the
possibility of implementing a "patent box" initiative. A
"patent box" program provides tax incentives that reward
companies for developing, owning, and exploiting their patents.
Cooperation between governments and innovators in promoting market
responses to trolling is the first step to solving this
A recent Saskatchewan Court of Queen's Bench decision allowed a court-appointed receiver to sell and transfer intellectual property rights free and clear of encumbrances, finding that a license to use improvements of an invention was a contractual interest and not a property interest.
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