Tuesday, September 06, 2005

Ottawa Business Journal on US patent reform

If it [H.R. 2795] becomes law in its present form, the Patent Reform Act should give Canadian companies equal reason for pause and reflection, says Ms. Markey. "But it's not worrying people the way it should," she says. <-- [Hmmm, it's worrying some people in the U.S.]

Curiously, the Canadian article first went to the inequitable conduct part of H.R. 2795.

-->The proposed law enhances a patent examiners' ability to decide whether an applicant has acted in good faith or, in the words of the act, fulfilled their "duty of candor." This duty includes telling the examiners about the most recent and relevant disclosures related to the company's invention. Previously determined by the court, the decision of whether the applicant acted in good faith would now fall on the patent examiner.

"So you could have a patent examiner search your website, find a white paper that you hadn't disclosed to them, and start the wheels in motion regarding the good faith issue," says Mr. Ledwell. "The act allows for penalties in the order of US$1 million for each separate act and US$5 million for particularly egregious misconduct."

Mr. Ledwell calls this "a scary provision," especially if your company files a large number of patent applications a year. <--

The article has mention of trolls:

-->When the Patent Reform Act was first introduced by Congressman Lamar Smith (R-TX) in June, Mr. Smith said the bill would "eliminate legal gamesmanship from the current system that rewards lawsuit abuses over creativity."

Yet Mr. Ledwell sees no hard evidence of the act protecting small Canadian companies against legal battles triggered by so-called "patent trolls."

Ms Markey defines a patent troll as a company that make an arguably illegitimate business of snapping up intellectual property – often from the ashes of failed companies – and making patent applications [?, more typically they take issued patents] without actually advancing the technology. Rather, the troll's sole purpose is to sue any infringers and reap the rewards of a settlement. [Was Kodak a troll as to Sun?]

Some argue that Waterloo-based Research In Motion Ltd. recently fell into this trap when it was sued by U.S.-based NTP Inc. RIM settled by agreeing to pay $450 million. Critics argue that NTP was a shell company that only existed in a filing cabinet. <--
[Merely for information, NTP's patents were by folks at NTP, not third parties.]

And, yes, there is mention of the opposition provision:

-->It appears that through the Patent Reform Act's new post-grant opposition system, an attempt was made by U.S. legislators to protect legitimate companies from patent trolling, says Mr. Ledwell.

A post-grant opposition occurs when a company disputes the granting of a patent to a competitor.

"But I can't see people exploiting that in a huge way because the downside is just too great," he says. "The bill in its original form says that if you ask for a post-grant opposition and you lose, then you can't take the same arguments to a court. You file (the post-grant opposition with the patent office), and you live and die by the (patent office's) decision. I can't see people wanting to go that route because it's not a flexible enough tool.The courts are still more flexible when trying to invalidate a patent. So the way you attack a patent troll won't change that much."

However, Max Wood, partner and patent agent at Ogilvy Renault's Ottawa office, says there are some provisions in the act that could "clip the wings" of alleged patent trolls such as Jerome Lemelson. [Note: Jerome Lemelson is dead.] The American's foundation is believed to have gleaned over US$1 billion in revenue through trolling while never introducing a single piece of technology to the market. <--


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