Patent infringement lawsuits filed by non-practicing entities, also known as pantent trolls, continue to rise in the U.S. Some argue that patent trolls wait until another party brings a product to market and then jump out from “under a bridge” to a demand a toll (a license fee or royalty).
According to Patent Freedom, the top five patent trolls are Intellectual Ventures, Interdigital, Round Rock Research LLC, Wisconsin Alumni Foundation and Rockstar Consortium LLC. Additionally, Apple, Samsung, Hewlett Packard, AT&T and Dell are listed as the top five most frequent targets of patent trolls. In fact, Apple reported that it was the target of 92 lawsuits by patent trolls in the U.S. over the last three years.
But the U.S. isn’t the only county patent trolls are affecting. Here is a rundown of patent troll activity in countries other than the U.S. and Europe, according to National Law Review.
These days, Australia has been experiencing some patent troll activity. Vringo Inc. sued the Australian arm of ZTE. Prior to this suit, Vringo sued a number of companies, including Google, AOL, Microsoft, for patent infringement in the U.S. There has been debate in Australia as to whether or not Vringo should be classified as a classic patent troll. A patent troll may not only lose a lawsuit for patent infringement, but it also risks having its patent invalidated and a significant award of costs made against it.
According to the Australian Patents Act (1990), a person unjustifiably threatened with infringement may apply to a court to restrain those threats and recover damages. If a court finds an unjustified threat it may award an injunction. Therefore, if a patent troll is found to have engaged in a threat, the only way it could defend itself against an injunction or an award of monetary damages would be to commence patent infringement proceedings.
Brazil does not have a big problem with patent trolls. One reason for this is the long period of time it takes for a patent owner to obtain a monetary award from an infringer. In Brazil, a patent owner has to litigate in three instances (originally in trial court, followed by an appeal to the appellate court, followed by a special appeal to the Superior Court of Justice), in order to confirm a finding of infringement. This process may take as long as 10 years before damages are awarded.
Canada has some patent troll activity as a few companies could be considered trolls, including Rockstar, Conversant Intellectual Property Management, Wi-Lan Inc. and Dovden Investments. While Conversant, Wi-Lan and Rockstar almost never litigate in Canada, Dovden has been responsible for 28 patent infringement actions within the last 18 months amounting to about 35 percent of the patent actions started during that period.
Many patent trolls do not litigate in Canada and prefer litigating in the U.S because, first, Canada really does not have a continuation and continuation-in-part practice comparable to the U.S., and divisional applications must be filed with caution. And, Canada’s Federal Court Rules can, require a Patentee to provide a security for costs before a patent infringement suit will proceed against an alleged infringer.
Typically, China does not have much troll activity, but several Chinese companies, such as Huawei Technologies Co. Ltd. and ZTE have been parties in patent infringement lawsuits brought by several large patent trolls. The major reason patent trolls have not filed patent infringement lawsuits in China is that the damages awarded in a patent infringement lawsuit are low compared to the damages in a U.S. patent infringement lawsuit.
In patent litigation in China the damages for patent infringement are calculated based on the loss of the patent owner or on the profits earned by the infringer. For a patent troll, calculation of damages is often difficult since these companies normally do not practice the invention covered by the patents being asserted. If it is difficult to determine actual loss or profits, damages may be awarded by reference to an appropriate multiple of the amount of the royalty fee for exploitation of the patent.
Patent trolls has been prevalent in India in the Information Technology and Communications sector prior to the enactment of the Patents (Amendment) Act, 2005 (2005 Act). But, after passage of the 2005 Act, a steep decline in the trolling activity has been observed.
While India’s patent laws do not prohibit the existence of patent trolls, these laws threaten their existence. For example, India’s patent laws require that a (granted) patent be worked or used in India. If a patent is not worked or used in the territory of India, compulsory licensing might be invoked. Also, the Indian Patents Act requires the mandatory filing of a statement of working of a patent at the end of each financial year. Patent holders who fail to file such a statement may be liable for a fine and/or imprisonment.
Japan does not have much patent troll activity, but Japanese companies such as Sony, Toshiba and Fujitsu have been parties in patent infringement lawsuits brought by patent trolls outside of Japan. Although the Japanese Patent Law allows any patentees to use their rights with few exceptions, the number of patent infringement lawsuits in Japan is only around 100 to 200 per year. In addition, the size of the damages awarded by Japanese courts is much smaller than that awarded by U.S. courts, so many lawsuits are settled in Japan and not published.
And finally, Russia has a significant amount of patent troll activity due to the existence of utility model patents which are patents issued without any formal examination. In Russia, it is possible for a party to file and obtain a utility model patent on a prior art device. In fact, under Russian Patent Law, a utility model patent owner enjoys the same scope of exclusive rights as the owner of a full patent. A patent owner has a right to use his invention or utility model by any means not contrary to the law, to assign the patent and to authorize third parties from using its patented invention or utility model.
A utility model application does not undergo substantive examination and it is granted by the Russian Patent Office once the formal requirements are met. In order to be patentable, a utility model must be novel and possess industrial applicability. With respect to enforcement, Russia has a bifurcated system for patent infringement, so in a patent infringement proceeding, a defendant cannot argue that the patent is invalid.
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