Due to the nature of “cloud” infrastructure, companies filing patents for cloud based innovations may not have the legal support they need to protect their perceived IP rights.

As discussed in a previous , the trend towards cloud computing has caused a frenzy of new entrants into the market delivering new and innovative solutions to meet consumer and business needs.  For example, Apple has filed for a that uses to let a user pause a song or video on one device and then resume it from that same place on another device. For consumers, the attraction to cloud-based services lies in the ability to remotely access storage space, software applications, or server content.  Moreover, it is a convenient, cost-effective way to share and manage documents and multimedia.

Simply put, cloud computing refers to the delivery of computing services by a provider, remotely over the internet, without ever having to install hardware at the user’s end.  However, defining the nature of the services, products and rights in cloud-based applications is a difficult task considering the complexity of organizing infrastructure and the number of parties involved.  Cloud computing service providers will often outsource server tasks to multiple players in several different locations, and therefore, the infrastructure may lie within several jurisdictions.  Because of the nature of “cloud computing” itself, the data is not tied to any one clear location.   While it is not necessary for the user of cloud-based technology to know where their data is, businesses, in particular those with a vested interest in the intellectual property of a cloud-based service, should be aware that their rights in the “cloud” could get lost in the haze.

Many have written about the multiplicity of legal issues inherent in “cloud” technology, some of which include .  In a recent international survey of current outsourcing practice and trends, the Norton Rose group examined whether the with cloud computing were a deterrent to its widespread use.

Like those issues, the , namely patents rights to technology, are complicated by the territorial nature of those rights and how the law in different jurisdictions will apply.  For example, unauthorized practice of a patented invention across national borders, is not actionable under the Canadian Patent Act.  A patent issued by the Canadian Intellectual Property Office does not grant the patentee the right to enforce their rights in other countries, posing difficulties for patent holders and licensees trying to assert their rights against alleged infringers.

Similarly, infringing activity is problematic for patent holders.  As mentioned above, the data and processing server may be situated in more than one location and are often outsourced to different parties.  As such, a patent holder never has access to an alleged infringer’s complete system, making reverse engineering to impossible.  Even when a patent holder does manage to detect infringing activity, determining what constitutes infringement must be considered under different patent law regimes.

Cloud computing is creating a in the way we access technology and services.  As such, it is likely that we will see an increase in the number of disputes surrounding intellectual property rights in cloud computing services in the future.  How will companies deal with the legal uncertainties that surround the already complex, time-consuming, cost-intensive and distracting litigation process?

One is to let these tech-savvy companies tackle their contract, patent and legal processes in the way they know best: design and develop cloud-based applications to solve their complex business problems.  However, intellectual property interests may be so deeply rooted or financially motivated that resolution of the dispute may not be achieved through settlement.  For example, failed attempts at negotiating a licensing agreement resulted in the launch of a recent against Apple and RIM by Openwave Systems for alleged infringement of five of its patents relating to mobile internet.

The general debate over the patent system necessity continues. Cloud computing is just another sub-category of subject matter over which parties are asking whether the patent system is necessary or beneficial, or whether it is a massive deterrent to innovation.  Some feel that the system should be .

For now, companies considering filing patents for cloud-based innovations must rely on the business and patent claim approaches proposed by the experts.

The post Stormy Weather Ahead: Enforcing Patent Rights In The “Cloud” appeared first on IPOsgoode.

Although the definition of cloud computing can be somewhat hazy, the growth and popularity of “clouds” is not.  In addition to being an integral tool for contemporary businesses, web-based cloud applications are giving consumers what they want: a convenient, reliable, and most importantly,  ���Ի��� way to share and manage their data or watch and listen to media.  In light of the CRTC’s recent decisions on usage-based billing (UBB), will consumers continue to look to the clouds for their entertainment and business needs?

Sony recently announced the Canadian  of its new video streaming application: “Video On Demand powered by Qriocity”.  The latest blockbusters from NBC, Paramount, Sony, Disney, Fox and Warner Bros. are available for rental at competitive prices. Sony also  a similar music streaming application: “Music Unlimited powered by Qriocity”.  This service, which is not available in Canada yet, offers millions of songs in its catalogue, including tracks from independent labels as well as giants such as Universal, Warner, and EMI.  The overwhelming success of the service in the U.K. and Ireland, which debuted in December 2010, has contributed to this rapid expansion.

More and more bandwidth-intensive services are being launched.  The increased demand has not been accompanied by the required  expansion.  This has led to heavy traffic on Internet Service Provider (ISP) wireline networks. These networks, which are owned and operated by the large ISPs such as Bell, Telus, Rogers, and Shaw, are then leased at wholesale rates to smaller ISPs.  The smaller ISPs compete by offering lower rates and typically do not cap their usage like their large counterparts.  By offering flat fees and unlimited usage, small ISPs have become the provider of choice for the movie watching, video-game playing, tune streaming, heavy-bandwidth user.

The trend towards cloud computing has caused a frenzy of new entrants into the market all looking to capture a piece of this expanding pie.  Even ISPs are finding ways to get a piece of this new business trend.  Bell Canada recently  the release of its new cloud-based application centre for small businesses.  Bell is offering innovative and cost-effective productivity applications similar to those offered by large players such as Google and Yahoo!  The Bell platform includes accounting, project management, collaboration, and customer relationship management applications.  Despite the potential technical issues inherent with any web-based application such as internet connection, speed, or security concerns, private consumers and small businesses are increasingly turning to cloud-based applications as a cost effective alternative to hardware intensive desktop software.

A disproportionate consumption of bandwidth can be attributed to a minority of internet users.  This disparity has put pressure on the CRTC.  Large ISPs are looking to the regulatory body to cultivate fair solutions to ensure that heavy users pay for their appropriate share of bandwidth.  The large ISPs are concerned with the heavy congestion on the networks caused by the smaller ISP’s high-usage clientele. They assert that conservative users should not have to subsidize the consumption of heavy users.  The CRTC came up with some controversial  allowing large ISPs to raise the wholesale price of bandwidth and implement usage-based billing on their wholesale customers (the small ISPs).

This decision will only directly affect the 5% of internet users who are served by these smaller ISPs.  However, the impact of these decisions would essentially eliminate the  internet marketplace the CRTC seeks to achieve.  It threatens the livelihood of the smaller ISPs who will undoubtedly be forced to increase their prices, adopt a UBB regime or implement bandwidth caps.  Some see this as a ploy by the large ISPs to  their smaller ISP competitors and indirectly disincentivize other innovative providers of cloud-based applications by curtailing internet usage.

Companies like , Inc., who offer unlimited  of movies and television shows for a flat monthly rate  that the decision to implement UBB on smaller ISPs will be bad for .  Having enjoyed much in the US and Canada, Netflix is concerned that the relatively small usage cap provided for by larger ISPs in Canada, and expensive overuse costs will deter customers from signing up for their service.

On February 3^rd, the federal broadcast regulator  that they will delay the UBB billing implementation by 60 days.  The CRTC will revisit the UBB decisions, with “fairness” to consumers and small ISPs at the top of its agenda.  The future of cloud-applications is not looking gloomy, so perhaps the most logical way to ease the congestion and market asymmetry is to let true market forces prevail, encourage consolidation of the small domestic ISPs or welcome foreign competitors with the capital to develop the infrastructure.  Either way, let’s increase the  of paths to the clouds!

The post Consumer: Time to get your Head out of the Clouds? appeared first on IPOsgoode.