NOVEMBER 2013

INTELLECTUAL PROPERTY & TECHNOLOGY

Beware Of Patent Trolls Page 1

LinkedIn to a Lawsuit? Page 3

Not as “Patently” Obvious as You Might Think Page 5

Assertion of Rights by IP Owners – Federal Court Procedures Page 6

Encouraging Innovation in Environmentally Friendly Technology Page 8

Intellectual Property & Technology LawyersLawyersBrian W. Borich 403-260-0346 ......................................................................................................................... bwb@bdplaw.comJacqueline Chernys (Patent Agent) 403-260-0149 .................................................................................................................. jchernys@bdplaw.comJohn Sanche 403-260-0310 ................................................................................................................... jsanche@bdplaw.comJames T. Swanson 403-260-5712 ............................................................................................................................ jts@bdplaw.comGeorge A. Wowk 403-260-0130 .....................................................................................................................gwowk@bdplaw.com

Intellectual Property & Technology and other issues of On Record are available on our web site www.bdplaw.com

Intellectual Property & Technology, Editors-in-ChiefJames T. Swansonjts@bdplaw.com403-260-5712Jacqueline Chernysjchernys@bdplaw.com403-260-0149

Intellectual Property & Technology, Managing EditorRhonda G. Wishartrwishart@bdplaw.com403-260-0268

Contributing Writers and Researchers:Jim Swanson, Jacqueline Chernys, Jon Ozirny and Alexandra Norris

ContactFor additional copies, address changes, or to suggest articles for future consideration, please contact the Managing Editor.

General NoticeOn Record is published by BD&P to provide our clients with timely information as a value-added service. The articles contained here should not be considered as legal advice due to their general nature. Please contact the authors, or other members of our Intellectual Property & Technology Team directly for more detailed information or specific professional advice.

If you would like any further information on any members of our team, such as a more detailed resume, please feel free to contact the team member or the Managing Editor. You may also refer to our website at www.bdplaw.com.

On Record Contents:

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BEWARE OF PATENT TROLLSBy Alexandra Norris, Student-At-Law And Jacqueline Chernys

IntroductionLet’s say you’ve just come up with a great idea for a new and improved widget. You’re quite proud of your invention and you get to work producing and selling it. Then one day someone contacts you, saying you can’t make your widgets anymore. This person — let’s call her Sally — informs you that she holds a patent for an item that is very similar to your widgets. Sally tells you that her patent rights are being infringed and you have to stop selling your widgets or pay her a hefty sum of money to continue.

You’re confused because you’ve never seen a product like your widgets in the marketplace. You do some research and learn that Sally’s business doesn’t actually provide any services or make any products. Instead it acquires patents from individuals and small businesses with the aim of turning that intellectual property into a stream of cash. This upsets you — why should Sally make money off a patent she had no hand in creating and isn’t even using?

Businesses like Sally’s are not uncommon. These “non-practicing entities,” commonly known as “patent trolls,” have found a unique way to make money from patents. Unlike typical patent holders, patent trolls don’t practice in the business covered by the patent. Interestedly, there is no requirement under patent law that a patent owner must practise the patented invention.

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Traditional Patent OwnersThe Patent Act gives inventors the exclusive right to make, use, and sell and invention in Canada for 20 years from the date the patent is filed.1 This exclusionary right is important because it grants patent owners the right to exclude others from practising the invention claimed in the patent for a set time period (typically 20 years from the filing date of the patent application). This in turn protects their investments and allows them the chance to profit from their ingenuity. In exchange for this exclusionary right, inventors make a full and complete disclosure of the invention to the patent office.2

Most inventors actively use their patented inventions, by producing and selling their product or service, minimizing the threat of competition. Other inventors may sit on their patent rights for some time, fine-tuning the commercial version of the invention and waiting for the right time to introduce it into the market. An inventor is not required by law to use the patented invention immediately, or even at all. A patent excludes everyone else from exploiting the invention for the duration of the patent. If an inventor discovers that his patent is being infringed upon, he can take action to enforce his patent rights, but there is no obligation under patent law that he must do so, nor are there many other positive obligations on the part of the patent owner (such as the obligation to practice the patented invention)

With a patent, inventors can gain a significant competitive advantage in the market. That is why securing a patent can be so beneficial, and why it is important to enforce the patent against those who infringe on it.

Non-Traditional Patent Owners – The “Patent Trolls”Sally could be described a non-traditional patent owner — someone who commercially exploits a patent through licensing and litigation rather than practicing the underlying invention. This represents a different type of business model, one that’s characteristic of a patent troll.

These non-traditional patent owners are known as non-practising entities, or by a more perjorative term, “patent troll”. Patent trolls typically purchase patents from inventors or companies for the purpose of licensing and enforcing them, rather than actually using the patented technology. Patent trolls will identify potential infringers, threaten litigation, and then either collect license fees from those entities or bring lawsuits against those who refuse to pay up.

Some have argued that the patent troll label is unduly harsh.3 After all, a patent holder is not required to practice the patented invention in order to enforce the patent. Others argue that these entities do not contribute any innovation to the marketplace. Instead they tie up public resources with a blitz of infringement actions because they’ve really got nothing to lose by suing. Moreover, these entities have generally not spent the big money on research and development of the patented invention and yet are trying to reap the benefits of it.

Regardless of the term used to describe these entities, they are becoming increasingly prevalent.

Patent Troll Activity In North AmericaPatent litigation can be quite profitable and so it is not surprising that some organizations have chosen to devote their energy to enforcing patents rather than actually using them. Acacia Research Corp. is a publicly traded patent company operating in the United States. It could be considered a patent troll because it uses the courts to enforce patents on inventions it had no hand in creating. Acacia’s business model has proven to be very successful, however, with more than $250-million in revenue reported in 2012.4

Here in Canada, a company called Dovden Investments has attempted to get in on the action. Dovden does not provide any services or make any products but its lawsuits account for more than a third of all patent litigation filed in Canada in the past year.5 Its aim is to secure licensing fees by threatening legal action with the hope that companies will settle up front to avoid the high cost of going to court. Unfortunately for Dovden, none of its infringement claims have yet been successful. Does this mean patent trolls have arrived in Canada? There does not appear to be any immediate cause for concern, although patent holders would do well to be on the lookout for frivolous infringement claims.

Concluding ThoughtsReturning to our example from the beginning, it is clear that Sally may validly enforce her patent even if she is not using the patented invention to produce anything. As a non-practicing entity — or patent troll, whichever term you prefer — she may commence an action to enforce her patent if she believes it is being infringed. However, one should consider the strength of her claim and the alleged infringement before agreeing to any sort of licensing arrangement. It is possible that Sally may be taking an overly broad approach to patent enforcement and may only be looking to secure a quick payout. The good news for Canadian patent owners is that such claims have not yet been successful in court.

Footnotes

1 Patent Act, RSC 1985, c P-4, s 42.2 “A Guide to Patents,” Canadian Intellectual Property Office, online:

<http://www.cipo.ic.gc.ca>3 Caroline Coker Coursey, “Battling the Patent Troll: Tips for Defending Patent

Infringement Claims by Non-Manufacturing Patentees” (2009) 33 American Journal of Trial Advocacy 237.

4 Acacia Research Corporation, Investment Profile October 2013, online: <http://acaciaresearch.com/investor-relations/>

5 Joe Castaldo, “Patent Trolls Invade Canada: Not the Kind of Visitor We Want,” Canadian Business (July 2013), online: <http://www.canadianbusiness.com/companies- and-industries/patent-trolls-invade-canada>

Patent trolls will identify potential infringers, threaten litigation, and then either collect license fees from those entities or bring lawsuits against those who refuse to pay up.

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If you are like most, you use LinkedIn, the social media networking site for business. LinkedIn is indeed a great online resource, but like other online resources, it has a potential dark side from a legal point of view.

As a general observation, and one that relates to many online activities besides the use of LinkedIn, the human brain appears to lack a circuit that warns us that clicking “post” or “send” actually can have consequences. It is amazing how people will say things via email or online that they would never say face to face, on the telephone or in a letter. Online actions may have legal consequences and postings online are indeed “in writing.”

As with all social media sites, what you post on LinkedIn may be ignored or it may be widely read. It may even “go viral”. This means you should think carefully about the potential consequences of content that is uploaded or posted. Once a posting is online, it can be impossible to ever take it back.

If the content you post contains false statements about somebody and places that person in a negative light, a lawsuit for defamation may follow. There has already been litigation related to allegedly defamatory contents in postings on LinkedIn.

Even photographs and images you post may pose a risk. Anyone who can right click on a mouse can copy the images and at least try to use them

as he/she wishes. The recent use by a dating website of a photograph of an underage girl who had committed suicide faced quite a backlash, but it illustrates the risks of images being used or misused without the consent or knowledge of the owner or of the subject of the images.

When you sign up for LinkedIn, you enter into a contract with LinkedIn, and likely do so for purposes related to your work or employment. However, as an employee, or even as an independent contractor, you likely already have contractual obligations to others, such as an employment contract with your employer. There may be conflicts between these two sets of legal obligations.

LinkedInto a Lawsuit?

By James T. Swanson

4 INTELLECTUAL PROPERTY & TECHNOLOGY

For example, if you use LinkedIn to solicit business for your part time job (you know, the one your current employer doesn’t know about because you didn’t want them to), or if you openly look for a new job (which LinkedIn is designed to help you do), or use LinkedIn to compete against your employer, or post content against your employer’s best interests, don’t be surprised if your employer takes issue with your conduct.

In fact, the contents of your LinkedIn account that you create while employed may belong to your employer. Anything you write in the course of your employment may be subject to copyright, and, under Canadian law, the first owner of that copyright may not be you, but your employer. This is particularly the case if you were hired to carry out online activities on behalf of your employer. The opposite applies to independent contractors, who will generally own copyright in their creative works, in the absence of a written agreement providing otherwise.

Colliding with those copyright principles is privacy law. Information about you is likely personal information, and you generally have control of that information, while copyright could apply to the manner in which you have expressed that information. So while you may have to rewrite your profile so as to not infringe your previous employer’s copyright; your employer may not be able to use your profile without your consent because your profile contains personal information about you.

Note that you may also find that at least portions of your LinkedIn profile may contain content that your employer may consider sensitive or confidential. Your employer may be happy to see that content online during your employment, but this may not be the case if you no longer work there.

LinkedIn allows you to upload your contacts from programs such as Outlook into LinkedIn. If you take advantage of that feature, you will be providing your login information to LinkedIn, not to mention whatever information may be in

your contacts. That could breach obligations to your employer, and potentially to some or all of your contacts, related to security, confidentiality and privacy.

In addition, once you have uploaded your contacts to LinkedIn, there may be an issue as to who “owns” those contacts? Your LinkedIn contacts may be, in whole or at least in part, a customer list or a list of suppliers or co-workers to which your employer may be able to claim ownership. Your employer may even be able to require you to delete the list when you change jobs. A British court did in fact order an employee to turn over all LinkedIn contacts to his employer.

After your employment has ended, if you then use LinkedIn to connect with your contacts who also happen to be customers of your former employer, you may be in breach of obligations of good faith, confidentiality, non-competition or non-solicitation under your contract with that former employer. To illustrate, a headhunter was sued by a former employer for using her LinkedIn contacts to solicit candidates on behalf of her new employer. Of course, this could conceivably apply to other online resources, such as Facebook friends if, for example, those friends are customers you met while employed.

LinkedIn permits users to endorse or recommend other users. The abundant use of this feature leads one to question whether much thought is given to the making of these endorsements. You may see individuals recommended or endorsed for skills they do not even have. If you recommend someone carelessly, or, worse yet, in a deliberately false manner, and someone else relies on your recommendation to their detriment or loss, you may find the person relying on the recommendation has a claim against you.

A specific problem may arise if you work in human resources or management, and recommend an employee for certain skills on LinkedIn, and then later want to, or have to, fire that same employee. Consider how

that recommendation might be used against your organization should that employee sue for wrongful dismissal. Here you are firing the individual about whom you were posting glowing recommendations and comments just a few months ago. Remember, it can be impossible to ever delete what you have posted.

On a different note, if you are claiming damages for injury in litigation resulting from a motor vehicle or other accident, don’t be surprised if your online postings of you bungee jumping or surfing at Malibu while you claim to be disabled surface (pun intended) to destroy your case. Canadian courts have regularly ordered disclosure and production of postings of that nature so that insurance companies could defend themselves against injury claims.

Of course, LinkedIn is not just for individuals — businesses are using social media more and more as a marketing tool. Canadian laws such as the Competition Act and privacy legislation (in Alberta, primarily the Personal Information Protection Act), apply to Canadian businesses in their online activities. A business needs to be aware of the requirements of the appropriate legislation.

Finally, users of LinkedIn enter into a contract with LinkedIn pursuant to its User Agreement and it would be wise for users to understand the terms of that contract. For instance, by those terms you grant a license to LinkedIn with respect to your profile, but the agreement goes on to say that, except for that profile, what you post is owned by LinkedIn (this may be contrary to your contract with your employer, who may already own those rights before you even try to transfer them to LinkedIn). You accept LinkedIn’s privacy policy, whether you like it or not. LinkedIn’s liability is limited to a maximum of $100.00. You indemnify LinkedIn for all damages, losses and costs, and there is no limitation on your side of the deal. You submit to the exclusive jurisdiction of Santa Clara County, California.

People can be quite careless about what they post. Think twice, post once.

You may see individuals recommended or endorsed for skills they do not even have. If you recommend someone carelessly, or, worse yet, in a deliberately false manner, and someone else relies on your recommendation to their detriment or loss, you may find the person relying on the recommendation has a claim against you.

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Common MisconceptionsFor an industry that has become both renowned for, and reliant upon, technological innovation, there are some surprising misconceptions surrounding patent strategies for industry players, including two key misconceptions:

• “ Oh, we don’t really have many day to day patent issues, so we don’t concern ourselves with patent strategies”; and

• “ We practice a patented technology, so we don’t think we could possibly infringe anybody else’s patents”.

The first misconception arises from a failure to appreciate that any product or process being developed or practiced by a company could infringe a third party’s patent, regardless of whether the practicing company considers the technology to be patentable, or whether the company has an active patenting strategy in place. The second misconception arises from a failure to appreciate that a patent is a negative right to exclude a technology, rather than a positive right to practice a technology. Both misconceptions can be very costly for energy industry participants. The good news is that avoiding these mistakes can be as basic as (i) appreciating the difference between patentability of an invention and infringement of a third party patent right, and (ii) understanding what a freedom-to-operate assessment (FTO Assessment) can (and in some cases cannot) accomplish.

Securing a patent does not provide assurance of “freedom to operate”. A patent examiner examines patent applications for patentability, not freedom to operate. The legal test for patentability is different than the legal test for infringement. Thus, however counterintuitive it seems, practicing within the confines of a patent is not necessarily a defense to patent infringement.

What Can A FTO Assessment Accomplish?“Freedom-to-operate” (FTO) essentially means the ability to practice a particular commercial activity (whether that commercial activity is commercializing a product, providing a service, performing a manufacturing process or performing a treatment or purification process) without infringing a third party’s valid patent rights. The purpose of a FTO Assessment is to identify who might have patent rights, assess the level of risk posed and decide how the risk can be managed. Why spend millions of dollars and years of time developing a process only to find out that the process infringes third parties’ patent rights? While it may be possible to avoid court proceedings by offering the third party a licensing arrangement, it will cost less and your bargaining power will be much greater if the risk is promptly identified and the contact made. A third party rights holder may be more willing to share technology early on, and be more willing to offer a reasonable royalty, when the commercial operation of a competitor is still is in the planning phases. It is important

Not as “Patently” Obvious as You Might ThinkBy Jacqueline Chernys

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that the patent searches on which a FTO Assessment is based be updated from time to time. This is because patent applications are not open to public inspection until 18 months after filing, and therefore, some patent applications of relevance may already be filed but not locatable in the initial patent search. As well, if changes are made to the particular technology for which the FTO Assessment was provided, the patent searches should be updated to capture any patent documents that are relevant to changed design.

FTO Assessments in Canada have traditionally been more common in sectors such as the pharmaceutical industry. Oil and gas sector players are often reluctant to perform such searches for a number of reasons:

• FTO searches are costly. However, if you consider the overall cost of a commercial endeavour such as a hydrocarbon purification facility, the cost of ensuring FTO or at least knowing the risks, is relatively small.

•Traditionally, much of the technology in the oil and gas sector has been protected by trade secrets. If nobody knows about your process, how could anyone assess infringement? However, with an increased number of players in the oil sands industry and with greater worker mobility, it is becoming increasingly difficult to keep a trade secret confidential.

• Many companies have taken the view that they are practicing “known technology”, or that their technology is truly innovative. Neither may be true. Most technology is built on the foundations of other technology. No matter how innovative that technology seems, it may have its basis in another field. For example, a conveyor belt and separation apparatus designed to separate rock particles from oil sand slurry could theoretically be designed based on an existing technology in the food industry for separating food particles of a certain weight and density from particles that do not meet the criteria for packaging. If there was a broadly claimed, unexpired patent for that food industry technology, the new oil sand conveyor could infringe on those patent rights. Also, even when a technology appears to be known, any improvements in that technology may already be patented by a third party.

What Do You Do with the Results of a FTO Assessment?If an energy company conducts an FTO Assessment, and certain existing third party patent rights are identified, what is an innovative energy company to do? The first question is whether those rights are valid and enforceable and whether taking a license from the identified rights holder is an option. Other strategies at this stage could include: cross-licensing (offering the patent owner your technology in exchange for theirs), designing

Intellectual property (IP) assets such as trademarks, copyright and patents are often the most valuable assets of a company, making the enforcement of these rights very important to IP owners. The Federal Court of Canada (“the Federal Court”) has extensive jurisdiction to resolve disputes over IP rights. The Federal Court is adapting procedures that allow IP owners to effectively assert their rights in an increasingly efficient manner.

Historically – Summary JudgmentThe Federal Court has long had a procedure available to litigants known as summary judgment. Summary judgment is a pre-trial court order determining that no factual issues remain to be tried and therefore permits a court to decide all or part of a case without a full trial. Typically, once a summary judgment order has been granted, evidence is presented orally by way of affidavit evidence and legal argument. The theory behind the summary judgment process is that it will provide a just, expeditious and inexpensive determination.

However, the use of the summary judgment has been limited. For example, in the recent case of Society of Composers, Authors and Music Publishers of Canada v. Maple Leaf Sports & Entertainment1 (“Maple Leaf”), the Federal Court refused to grant summary judgment. The test that was applied to determine whether the Defendant was entitled to summary judgment, included the question of whether the Plaintiff’s case was “so doubtful that it did not deserve consideration by the trier of fact at a future trial”2, a difficult test for a party to meet. The Maple Leaf decision was based on there being complex legal issues and difficult evidentiary determinations including issues of credibility of witnesses and is consistent with a number of other decisions which refused to grant a motion for summary judgment. Accordingly, despite the existence of the summary judgment procedure in the Federal Court Rules; in practice, the summary judgment procedure has not been widely successful in IP cases.

Summary Trial ProcedureIn 2009, the Federal Court Rules were amended to include a procedure for a summary trial, intended to be a more effective summary procedure. Even where the Court declines to grant summary judgment as there are issues to be tried, the Federal Court can still use the summary trial procedure. This does not involve the calling of witnesses as in a regular trial, but rather can proceed with Affidavits, Examination for Discovery transcripts and statements from witnesses. Applications for summary trial can be refused only if the issues are not suitable, if it would not assist the effective resolution of the matter or if it would be unjust to decide the matter by summary trial — regardless of the amounts involved, the complexities of the issues and the existence of conflicting evidence.

The recent case Louis Vuitton and Burberry v. Singga Enterprises3, (“Louis Vuitton”) involved the largest award of damages for an anti-counterfeiting case in Canada. It was a case of infringement by the Defendants, who had

Assertion of Rights by IP Owners – Federal Court ProceduresBy Jacqueline Chernys

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Assertion of Rights by IP Owners – Federal Court ProceduresBy Jacqueline Chernys

around infringement (for example, if the problematic patent uses hexane as a solvent, substitute pentane), waiting for the patent to expire, convincing the third party of non-infringement or potential invalidity, rendering the patent invalid by way of court proceedings and/or seeking re-examination of the patent in the patent office.

What a FTO Assessment May Not Be Able to Do and How to Deal with That In Canada, there is an 18-month confidentiality period before patent applications are open to public inspection. Where two companies are concurrently developing a similar technology, this confidentiality period can have profound consequences

Assume a company (let’s call it the operating company) has spent considerable resources developing a process only to find that a competitor applied for a patent on the same technology 18 months earlier? What could the operating company have done? Ideally, the operating company would have filed its own patent application as soon as the technology was to a point where this was feasible. Hopefully, this date was before the date of the competitor’s patent application filing, since Canada operates on a first-to file basis. If the operating company’s process was not finalized, a so-called “provisional patent application” could have been applied for as soon as there

was sufficient information to support the claimed subject matter. Within one year of that provisional filing, a regular application could be filed.

A second approach would have been for the operating company to publish a sufficiently detailed description of the product, device, and method or process in a trade journal or online, such that it would have become part of the public domain. Since the criteria for patentability include that an invention be novel (e.g. not previously known), then in theory, the defensive publication prevents others from obtaining their own patent on the technology. It should be noted, however, that there are disadvantages and pitfalls associated with this defensive publishing strategy. The most important disadvantage of the defensive publication approach is that the operating company would not possess exclusive rights in its published technology, and other parties could freely use whatever was published.

SummaryIn summary, if the operating company expeditiously pursued its own patent from the outset, it could be in the driver’s seat. A FTO Assessment allows a company to flush out potential patent issues before a large investment is made. While patenting is also not necessarily a defense to infringement, a valid patent could be used as leverage if FTO risks are identified, and could avoid the risks altogether if the patent is applied for early enough.

manufactured, imported and offered for sale various goods including handbags that bore the trademarks of Louis Vuitton and Burberry. It was also the first instance of the use of the summary trial procedure. In Louis Vuitton, the Federal Court held that if the judge can find the facts as he or she would do if there was a trial, he or she must grant judgment, regardless of the complexity of the issues or the existence of conflicting evidence. With the decision of Louis Vuitton illustrating the use of summary trial in the Federal Court, one can expect more IP owners to take advantage of this procedure in coming years.

Interlocutory InjunctionIn situations where summary trial is not appropriate, there are other mechanisms for expediting cases involving IP rights. For example, an interlocutory injunction is a powerful tool in IP litigation. The grant of an interlocutory injunction has the effect of stopping the alleged infringing activity until the final determination of a case, or until a

subsequent court order. This can be valuable where the continued infringement of IP rights could result in a permanent loss of market share for the IP owner. In addition, the grant of an interlocutory injunction may influence the future litigation of the case. For example, in a situation where the defendant is manufacturing or selling a product that is believed to infringe a patent, the grant of an interlocutory injunction may be sufficient to persuade the defendant to completely cease the manufacture and sale within Canada.

In practice, an interlocutory injunction is difficult to obtain. The plaintiff must show that (a) there is a serious issue to be tried; (b) the plaintiff will suffer irreparable harm if the injunction is refused; and (c) the balance of convenience favours the granting of an interlocutory injunction. It is very difficult to satisfy the second and third part of the test. To satisfy the second part of the test, the plaintiff must show that the damages cannot be measured by monetary compensation alone. To satisfy the third part of the test, the court

will be more likely to consider the balance of convenience to favour the granting of an interlocutory injunction if the plaintiff moves quickly. Of course, most IP rights owners wish to move quickly in any event.

Looking AheadRecent experience is that most cases proceed to trial in the Federal Court in less than two years, and that the duration of trials is decreasing. This trend towards faster trials in the Federal Court is a result of education of both the judges and the litigants to adapt procedures to ensure cases move forward on a set schedule. Accordingly, there are means for IP owners to enforce rights in the Federal Court of Canada more efficiently than has been the case in the past.

Footnotes

1 [2010] F.C.J. No. 8852 Ibid, Note 1 at para. 163 2011 FC 776.

Expediting Patents for Clean TechWith concern for our environment ever-increasing, the stakes for environmentally-friendly technology commonly referred to as “clean tech” have never been greater. In recent years, governments around the world have been looking for programs to encourage innovation in clean tech. An expedited patent application process or “fast track” for clean tech is one such program that is gaining popularity globally.

There are many advantages to fast tracking clean tech patent applications. The sooner a clean technology is patented, the sooner the owner of the clean technology can gain an exclusive market for the technology. Hopefully, the patented technology is adopted in the marketplace, which is the main objective of the fast track process. Fast tracking of patent applications also creates an incentive for investors in clean tech, since capital returns will be much quicker compared to a patent awaiting examination in the standard queue. Where additional capital is required to take the technology to market, a patent in-hand will assist innovators in attracting investment.

Fast tracking can also provide some insurance against obsolescence. A long wait in the patent queue could render some technology outdated. It may also allow the rest of the market to catch up in creating competing technologies. Both of these factors serve to reduce investment, and where investment decreases innovation also decreases.

Clean Tech in CanadaThe Canadian Intellectual Property Office’s (CIPO) initiative to expedite the examination of patent applications for clean tech came into force on March 3, 2011 in the form of an amendment to Section 28 of the Patent Rules1 which deals with the advanced examination of patent applications. The amendment allows the Commissioner of Patents, upon request, to advance examination of applications that are accompanied by a declaration stating that the application is for “technology, the commercialization of which would help to resolve or mitigate environmental impacts or to conserve the natural environment and resources.”2

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Encouraging Innovation IN ENVIRONMENTALLY FRIENDLY TECHNOLOGYBy Jon Ozirny, Student-at-Law and Jacqueline Chernys

This requirement is rather vague compared to other fast track programs. This allows for a broad range of innovations to qualify for the fast track and does not exclusively benefit innovators in restricted areas of environmental improvement. The drawback of such an inclusive definition, however, is that there is no mechanism for prioritizing technology that is certain to have immediate and significant impact to improvement of the environment ahead of technology that may have environmental efficiencies tangential to its main purpose.

Under the Canadian fast track process, CIPO will produce a “substantive office action” within two months of receiving an application. Two months is a significant improvement over the standard patent application queue which can involve wait times several times as long before a first office action is received. An office action includes any objections that a patent examiner may have to granting a patent. The applicant for the patent is given the opportunity to respond to the office action, with the overall objective of the patent owner gaining a patent sooner. Patent owners can generally bring the clean tech to market quicker.

Clean Tech InternationallyMany countries have adopted or experimented with fast track processes similar to Canada’s. The benefit to innovators of a global adoption of fast tracking is that it simplifies and accelerates the process of filing for patents in multiple jurisdictions. This is particularly true if a technology is successful in receiving a patent in a jurisdiction with strict requirements. The same application can then likely be used to apply in several less restrictive jurisdictions.

In the United Kingdom, a fast track patent process is available for applicants asserting that their technology will benefit the environment. Similarly, Australia has a fast track process for patents relating to “green technology”. Both programs are broad and inclusive, like Canada’s, and are in contrast with many other nations who have adopted more stringent qualifications.

On the narrower end of inclusivity, Korea has employed a fast track procedure for technologies which fall into a list of categories addressing such issues as water quality contamination, air pollution, waste disposal, recycling, and renewable energy, amongst others.3 Israel also grants fast tracking to technology falling into specified categories. Japan employs a fast track process aimed specifically at the reduction of energy consumption and carbon-dioxide emissions.4 The United States conducted a one-year pilot program that was initially restricted specific technology classes. The program was later expanded to be more inclusive but the program has since been eliminated.

Low Participation and Disincentive to Fast TrackA study conducted by the London School of Economic and Political Science recently found that a small percentage of clean tech patents were actually submitted to fast track programs — as low as 1% to 2% in Canada, Australia, Japan and Korea with the highest rate in the UK at 20%.5 With such great advantages, why is participation so low? The same study provides a few reasons that a clean tech innovator may wish to avoid fast tracking. First, while filing the application as soon as possible is usually in the best interests of the applicant since it establishes priority for the technology against subsequent applicants of similar technology, examination may not be. An applicant may want to take additional time to evaluate the market for the technology before incurring further costs. The applicant may also require additional time to fine-tune the technology and may desire filing a second patent application with the improvement. Generally, once an application is examined, the application is also open to public inspection, so filing a second patent application becomes difficult at that point. If the final innovation does not match the patent received, it can create problems of circumvention by competitors.

Concluding ThoughtsExpedited patent application and examination processes can provide a powerful incentive for innovators and investors in clean technology. There are both strategic and financial benefits to fast track processes. However, empirical data suggests that participation in such programs is low. Innovators should be aware that the expedited process exists and then proceed to evaluate their market and the pros and cons of the expedited processes before deciding how to proceed.

Footnotes

1 SOR/96-4232 Patent Rules, section 28(1) (b).3 Eric L Lane, “Building the Global Green Patent Highway: Harmonization of Green Technology

Fast Track Programs”, Berkeley Technology Law Journal, Vol. 27:1119 at 1138. 4 Ibid. 5 Antoine Dechezlepretre, “Fast-tracking Green Patent Applications: An Empirical Analysis”,

February 2013. International Centre for Trade and Sustainable Development, Issue Paper No. 37.

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Encouraging Innovation IN ENVIRONMENTALLY FRIENDLY TECHNOLOGYBy Jon Ozirny, Student-at-Law and Jacqueline Chernys

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