Law Times

Law Times • sepTember 28, 2015 Page 11 www.lawtimesnews.com Are patent trolls on the prowl in Canada? Some lawyers concerned about barriers to genuine claims BY YAMRI TADDESE Law Times U nscrupulous lawyers are using laws that are in place to guard against patent trolls to keep legitimate claimants out of Canadian courts, one intellectual property lawyer says. When plaintiffs outside of Canada bring genuine claims about patent infringement, they have to cough up security for costs or risk having their case dismissed, says Toronto lawyer Samuel Kazen. When the court dismisses their case, it ironically orders costs against them, he notes. In Canada, the issue of compa- nies that buy patents for the sole purpose of launching litigation for infringing them is "not a big deal, to be frank," says Kazen. Patent trolls are "mostly com- panies from countries other than Canada who don't really know our local laws and how hard it is for a patent troll to make money here," he adds. Security for costs is the main tool used against patent trolls. The defendants in such cases typically bring a motion to demand that the plaintiff provide money up front as security in case they're successful and may not be able to enforce costs against the out-of- country litigant. "That's all fine and good, ex- cept it's being used by unscrupu- lous lawyers to force poor litigants out," says Kazen. "I've been on both sides of this and I've seen it abused. To my mind, there are better mecha- nisms to keep out the patent trolls than the security for costs mech- anism and unfortunately the courts have not been very sympa- thetic to this," he adds. Kazen says the tactic creates a major access to justice obstacle to legitimate claimants. But intellectual property lawyer Christopher Heer has doubts about whether the se- curity for costs regime is a big obstacle to access to justice. If a foreign plaintiff 's counsel wrote to a court and said the amount of security requested is too oner- ous, "I'd be surprised to see a Canadian judge say, 'If you don't put up the money, we're not going to hear your case,'" says Heer. "I'm sure there would be some attempt to accommodate and make the amount smaller. I think justice would come before the costs issue." While patent trolls have gained a reputation for being a thorn in the side of U.S. compa- nies, the phenomenon is much less common in Canada where damages for infringement aren't as high as they are south of the border, says Heer. "What these so-called pat- ent trolls are looking for are big paydays. If the Canadian market is smaller . . . those might not be there." While a requirement for secu- rity up front may ensure the de- fendant can enforce cost awards later, it may not always deter patent trolls, according to Heer. Often, if patent trolls have experi- ence with a lot of litigation, they can easily meet the security for cost requirement, he says. The biggest issue with so- called patent trolls is the fact that they don't use their patent to sell a product. "That's why a lot of people have some objec- tions and call a lot of these com- panies trolls because they're not in the market selling a product. They're just trying to monetize a patent," says Heer. But for Heer, that on its own isn't a problem. "They paid for the rights and the rights were fairly obtained, so I don't particularly have a problem with that," he says. "My personal view on the topic is a lot of these companies maybe shouldn't be called trolls." Often, those who invented a technology can't bring it to mar- ket themselves because of certain factors in the industry such as barriers to getting a share of the marketplace, according to Heer. That person would then sell the patent to another company, something that's legitimate, he notes. "That [second] company . . . may be in the business of trying to get licensing revenues from people that already have custom- ers and sell a product like that and so maybe they try to license it or maybe they find out one of the big companies is already us- ing the technology." In the latter case, seeking a licensing fee and starting litiga- tion if that fails is the only op- tion, says Heer. The concern, he suggests, arises when these companies take an inexplicably broad definition of their patent and send letters to those who may not be infringing it. "I guess when they get into the area of sending so many of these cease-and-desist letters out to people who might not really infringe [the patent] as a way to just try to boost the rev- enue from it, that's the question- able conduct," he says. Often, patent trolls don't want to go to a trial and would much rather take a payout. "If you're a small company and you get one of these letters, you're going to have to go to a lawyer and pay for some kind of analysis. And often in these let- ters, they strategically ask for an amount that will sort of make sense. It'd be a preferable option to litigation." LT FOCUS 'My personal view on the topic is a lot of these companies maybe shouldn't be called trolls,' says Christopher Heer. Benefi t from focused discussion on the new standard for summary judgment in Ontario Summary Judgment in Ontario: Rule 20 Post-Hryniak is the fi rst resource available that uniquely prepares you for seeking summary judgment motions in Ontario with a clear explanation of the new rules. Get clear direction from a longtime litigator on developing and strategizing your case under the new Ontario standard, with: • Detailed discussion of the changes to Rule 20 of the Ontario Rules of Civil Procedure • The full text of Hryniak v. 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