In Canada, patent prosecution takes years, but a new court ruling may make applicants feel more urgent.
Rovi Guides, Inc. v. Bell Canada was decided by the Federal Court on November 25. Rovi sued Bell and TELUS for infringing on its proprietary technology and wanted an accounting of earnings and an injunction against their usage. Rovi was refused because the plaintiff failed to prosecute its inventions “diligently.”
Defendants started using Rovi in 2010.
Bell and TELUS started integrating Microsoft Mediaroom, which incorporated Rovi technology, in their interactive TV program guides in 2010. In 2013, Mediaroom was sold to Ericsson without Rovi licenses.
Rovi tried to negotiate portfolio licenses and better license terms with Ericsson, Bell, and TELUS while its patents were pending. Rovi’s suit followed Bell and TELUS’s use of Mediaroom and profit.
The Federal Court invalidated Rovi’s patents because they were neither fresh or creative when filed. In obiter, the Court criticized Rovi’s patent prosecution and contract negotiating delays.
“Clear pattern of delay”
Rovi delayed patent prosecutions to alter patent claims while negotiating new contracts with Bell and TELUS. One Rovi patent took 17.5 years to issue.
The Court determined this provided Rovi an undue advantage because the allegedly infringed patents had not been granted during contract discussions with Bell and TELUS.
“When considered as a whole, the clear pattern of delay and the late amendments to some [Rovi’s] patents leads inexorably to the conclusion that delay in prosecution of the patents was a deliberate and integral part of Rovi’s business strategy,” the Court stated.
The Court also found that Rovi did not notify Bell and TELUS of some patents it had applied for, leaving the defendants unaware they may be accused of infringing them.
“Rovi’s delay in issuing the patents and its sly conduct during negotiations allowed Bell and TELUS to fully integrate the allegedly patented technology into their IPTV systems, and gain millions of customers, before many of the asserted claims existed, let alone before the patents were issued,” the Court found.
Mr. Armaly testified that he is not an expert on Canadian patent prosecution, yet the Court found Rovi delaying. Canada often delays requesting inspection and responding to Examiner’s Reports until deadlines. For efficiency and expense, Canadian patent agents wait until the U.S. application is allowed before seeking examination in Canada. The Court was apparently unaware that patent agents and examiners have many applications and must balance responding quickly with conflicting deadlines.
The CIPO, not Rovi, caused most of the delay. Rovi delayed Canadian patent 2336870 by 6.9 years, but the patent office delayed it by 9.7 years. This figure includes the 5-year examination request period. Rovi took 2 years, excluding the request for inspection.
“Patent holdup”
The Court called this the “patent holdup” problem, in which a patent owner “takes advantage of the potential infringer’s reduced flexibility after they have launched a product and opportunistically tries to extract a larger unreasonable licensing fee.”
The Court highlighted that granting Rovi an accounting of earnings or an injunction would condone Rovi’s business methods and may encourage other patent owners to follow suit.
“Engaging in patent holdup is a business practice this Court should not condone and the Canadian patent system should not be creating incentives for such unfair practices,” the Court ruled.
Rovi’s business methods are typical in the Canadian patent system, notwithstanding the Court’s disapproval of the “patent holdup” issue. This judgement may deter patent applicants employing similar strategies.
