Companies & Industries

Patent Trolls Invade Canada

A business model common in the U.S. is making its way into Canada. What does this mean for entrepreneurs?

Written by Joe Castaldo for Canadian Business

Dovden Investments doesn’t provide any services or make any products, unless you count the manufacturing of lawsuits. Since setting up shop, this mysterious company has launched a blitz of patent litigation against Canadian companies, entrepreneurs and even a school for gifted children in Alberta. In fact, Dovden’s 35 lawsuits account for more than a third of patent litigation filed in Federal Court in the past year.

Dovden is known as a non-practising entity (NPE). A less kind way to describe its business is patent trolling. It’s a business model common in the U.S. but still relatively new here. Royalties are generally secured through legal threats; smaller companies sometimes settle up front to avoid the high cost of going to court.

Cease-and-desist letters from Dovden are common enough that Imagine Intellectual Property Law in Toronto set up a web page encouraging recipients to get in touch. (The firm is representing a few defendants against Dovden.)

Dovden’s patents relate to vehicle tracking. That’s why it’s suing Barum Rho, developer of a free app that displays arrival times of buses and streetcars in Toronto, and Larry Dunkelman, who created BusBuddy to view Ottawa transit information. Dunkelman declined to comment on the suit, but said that “BusBuddy is a free app for the benefit of the public and€¦has not derived any profits.”

Read How to Protect Your IP

Dovden appears to be registered in the United Kingdom. A lawyer for the firm, Bruce Lemer in Vancouver, explained in a letter that the company was formed to protect technology invented by Martin Kelly Jones, who attempted to commercialize his patents but was stymied by “unfavourable economic conditions in 2000 and 2001.” Since then, “many well funded corporations have used his patented technologies.” Jones’s exact whereabouts are unclear. A recent filing with the U.S. patent office puts him in Vancouver, while past filings have him residing in Florida.

Two other companies that own or license Jones’s patents, ArrivalStar and Melvino Technologies, have filed hundreds of lawsuits in the U.S. in recent years. Many municipal transit authorities have been sued, sparking the ire of the American Public Transit Association. To fight back, the APTA filed its own lawsuit in June, arguing public agencies are exempt from patent litigation.

Dovden is unlikely to file as many suits as its counterparts in the U.S. Aspects of Canada’s legal system tend to dissuade NPEs from launching widespread litigation. Still, Samuel Kazen, founder of Imagine IP, argues Dovden is taking an “overly broad” approach to enforcing its patents. “It’s really unfortunate that this company is proceeding as it does, because it’s a lot harder for plaintiffs that have genuine grievances,” he says. “Courts will sometimes assume smaller plaintiffs are trolls when, in fact, they’re not.”

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