In light of the quote above, the thought of demonic robot trolls may scare people into not reading the rest of this article as “ignorance is bliss”. However, it is not the fantastical, cave-dwelling version of a troll that this article sets out to discuss, but rather it is the familiar, to some “cave-dwelling”, non-practicing entity (NPE) that the patent community has come to know as a patent troll.

Although this introduction of NPEs may seem harsh, and I do not mean to offend anyone by it, NPEs have become such a frustration to other companies that the title has stuck. In fact, a study has shown that about two-thirds of all patent lawsuits in 2015 were filed by NPEs.[1] Furthermore, NPEs have become such a burden for businesses, the Supreme Court of the United States was inclined to step in and attempt to reduce the strength of NPEs.[2]

However, I would suggest that the issues surrounding NPEs and the magnitude of their burden may only be at an infant stage. When one considers the potential of artificial intelligence (AI) and the role it might play as an inventor, one may begin to realize why future NPEs could be far more obstructive than current ones.

For example, we can consider “Chef” IBM Watson to help us understand why we could be staring in the face of an NPE crisis. In 2014, IBM researchers teamed up with the Institute of Culinary Education in New 91��ɫ to use AI to create new recipes.[3] The idea behind this experiment was that Watson could determine novel food parings and recipes as it is capable of processing every possible combination of food whereas chefs have limited creativity and time. The researchers at IBM were correct and Chef IMB Watson was able to create new dishes, for example, Swiss-Thai asparagus quiche and Australian chocolate burritos.[4] These dishes being just two of what researchers think will be millions of more ideas that Watson will discover.[5]

Knowing that recipes are patentable subject matter, I hope that the issues that AI in combination with a NPE could cause are becoming clear.[6] If a NPE could obtain a program such as Watson, they could potentially be in possession of millions of patents to licence or litigate. Moreover, the entity does not need to be a NPE for this to be an issue; if AI is creating millions of “recipes,” there would necessarily be patented, or at least patentable, subject matter not being used by the practicing business.

This conclusion does however beg the question: “would the NPE be entitled to the patents generated by the inventive content created by the AI?” A question which has not yet been answered by the courts or through legislation. Although some have suggested that “a computer’s owner should be the default assignee of any invention”, this finding was not made with regards to an artificially intelligent empowered NPE.[7]

Therefore, I cannot say that “a computer’s owner should be the default assignee of an invention” or that this opinion is wrong in light of the concerns raised above. However, I can echo the quote above and say that, when it comes to AI, there needs to be regulatory oversight. In other words, NPEs are already negatively affecting the economy and innovation, and if you do not want to imagine a future where NPEs are armed with artificially intelligent patent generators, we will need new and proper regulation.

Denver Bandstra is a JD Candidate at Osgoode Hall Law School and was enrolled in Osgoode’s Intellectual Property Law Intensive Program. As part of the program requirements, students were asked to write a blog on a topic of their choice.

[1] Joe Mullin, “Patent troll lawsuits head toward all-time high” Ars Technica (7 October 2015) online: <https://arstechnica.com/tech-policy/2015/07/patent-troll-lawsuits-head-towards-all-time-high/>.

[2] The Supreme Court of the United States ruled in TC Heartland that that a patent infringement case must be brought where the infringement occurred and not necessarily in the Eastern District of Texas. TC Heartland LLC v Kraft foods Group Brands LLC, 581 US __ (2017); Mike Montgomery “SCOTUS Smacks Down Patent Trolls” Forbes (2 June 2017) online: <https://www.forbes.com/sites/mikemontgomery/2017/06/02/scotus-smack-down-patent-trolls/#6215dc75ae4b>.

[3] Maanvi Singh, “Our Supercomputer Overlord Is Now Running A Food Truck” National Public Radio (4 March 2014) online: <http://www.npr.org/sections/thesalt/2014/03/03/285326611/our-supercomputer-overlord-is-now-running-a-food-truck>.

[4] Ibid.

[5] Ibid.

[6] Larry Tarazano, “Can Recipes Be Patented?” Inventors Eye (June 2013) online: < https://www.uspto.gov/custom-page/inventors-eye-advice-1>.

[7] Ryan Abbott, “I Think, Therefore I Invent: Creative Computers and the Future of Patent Law” 57 BLC Rev 1079 (September 2016) at 2.

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brought its claim after the Canadian courts revoked two of the company’s patents on the basis that these patents lacked utility. The courts applied “” to invalidate the patents on the basis that the patents lack . In ISA,   argued that the Canadian test for utility of the patent is arbitrary “judge-made law” and thus constitutes a violation of Canada’s international obligations under NAFTA. The company advanced its challenge against Canada on two accounts. First, Eli Lilly claimed that the judicial interpretation of utility in Canada (the so-called “promise doctrine”) contradicts the meaning “capable of industrial application” under NAFTA, Chapter 17. Second, the company alleged that Canada’s utility standard has abruptly changed over the years. According to Eli Lilly, such “dramatic” change in the judicial interpretation of the utility standard is problematic because it violates Chapter 11 of NAFTA. Both arguments questioned the traditional role of the domestic courts in interpreting and applying the patentability criteria. Ultimately, Eli Lilly’s argument failed in ISA. In short, the ISA arbitrators concluded that failed to produce sufficient evidence to support its allegations.

For the Government of Canada, however, it may be too early to celebrate this victory. The reasons become evident after appreciating the context of the Eli Lilly’s claim. First, the Eli Lilly’s dispute lasted more than five years. NAFTA does not provide parties to a dispute with procedural mechanisms to dismiss the claims early, akin to the summary judgment or a failure to state a claim provisions in common law jurisdictions. Accordingly, NAFTA permits claims that may eventually lack any legal or factual foundations without providing an opportunity to  curb such claims early to minimize the costs. Second, the tribunal did not explicitly address whether a change in the judicial interpretation of the state’s patent law can potentially violate this state’s international legal obligations, including those under IIAs. In practice, it means that the doors for claims similar to Eli Lilly’s remain open. The consequences are significant for states parties to ISAs. to defend the investment claims average at US 5 million dollars per one dispute. Losing such a claim is an even more expensive option for states for two reasons. First, the monetary costs may be substantial. For example, Eli Lilly demanded in damages. Second, losing a claim may result in reputational harm for a state as a potential destination for foreign investment. As a result, some states prefer a settlement of the dispute over facing a foreign investor in the ISA process.

These factors combined create a structure that encourages foreign investors to bring IP claims in ISA against states in hope to achieve a favourable settlement in a fashion similar to the “patent trolls”.  The claims similar to Eli Lilly’s can become a tool for speculation. In particular,  the claimants can allege that the states’ patent laws dramatically change and such change constitutes a violation of an applicable IIA. If an effective mechanism for the early dismissal is not available, a state has to defend its claim for a prolonged period of time and face substantial costs. Some states, however, lack financial or expert capacity to uphold such defence. From a policy perspective, the concern the Eli Lilly’s type claims may inspire foreign investors to file claims against states not to vindicate their property rights, but rather to use such claims as a bargaining chip to achieve profitable settlements. Such procedural use of IP rights (and particularly patents) fundamentally contradicts the purpose of the national IP systems that  grant IP rights for the benefit of society and not merely “”.

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On September 24, 2013, US District Judge Rodney Gilstrap of East Texas ����������’s , filed two years ago in 2011, as a defendant-intervener in the action against Apple’s app developers for alleged patent infringement. In the , Lodsys claimed that small-time iOS app developers were infringing the firm’s patents by using technology such as in-app purchasing and feedbacks surveys, without paying a licensing fee. In other words, Lodsys contended that it underlying some of the most basic app functions across mobile operating systems, namely iOS and Android.

Apple’s motion to intervene was recently dismissed on the grounds that the developers had already with Lodsys and as such, Apple’s arguments were moot. However, the arguments may still be made in a subsequent action, should the occasion arise. Apple had also filed an opposition to Lodsys’ motion to dismiss, which can be read .

The motion to intervene was right at the heels of Lodsys’ suit, back in 2011, against the app developers, who were understandably relieved to have Apple's support in the litigation. Prior to Apple’s attempt at intervening, Senior Vice President and General Counsel Bruce Sewell sent an usually detailed to the CEO of Lodsys, Mark Small, outlining the lack of merit in the latter’s claims against Apple. While the letter did not prevent Lodsys from commencing litigation, it clearly expresses the tech industry's position with respect to patent infringement litigation commenced solely for pecuniary ends.

It is not surprising that Sewell might have wanted to say a little more than required to Lodsys in his letter. Lodsys is based in East Texas, which is a jurisdiction now infamous for rulings friendly to “.” These shell-companies do not create any products. They exist solely to threaten patent litigation in hopes of a quick and relatively low settlement by targeting companies that will pay out to avoid protracted litigation. In addition to Apple, Lodsys has also brought patent infringement actions against , , and most recently, (“Martha Stewart Living”), amongst . Patent trolling has become an effective means to a fast settlement.

In Canada, patent trolls are few and far between, but (“Dovden”) is already a name that might make a developer shudder. Dovden has filed 32 lawsuits in Canada just this year. Recently, Dovden withdrew a suit against a bus app developer originally filed at the Federal Court demanding $10,000 in licensing fees. Perhaps the Federal Court has less of a stomach for such claims. In the United States, Vermont has enacted legislation to address the issue of patent trolling - Bad Faith Assertions of Patent Infringment. (For more information on this patent trolling legislation, see my article .) In Canada, however, no legislation yet exists to address this emerging issue, although sanctions do exist for bringing meritless claims.

While Apple is temporarily out of the arena, Martha Stewart Living, as mentioned above, has joined the fight against Lodsys, which claims that the Martha Stewart Weddings iPad app infringes its patents. Martha Stewart Living has filed a   and will be taking the battle home to East Texas, where it all began. Furthermore, Lodsys’ bark might be worse than its bite. When faced with the possibility of real litigation on potentially meritless claims, Lodsys opted to  in the suit against Kaspersky Lab.

Ying Cheng is an IPilogue Editor and is in the BCL/LLB program at the McGill Faculty of Law in Montreal, Canada.

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