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Why Ottawa should stand on guard in RIM case

The acronym IP means a variety of different things to different people. To computer scientists, IP refers to Internet Protocol, the technical standard that plays a key role in the network design of the Internet. To politicians, IP may be used as shorthand for Industrial Policy, while economists may think of Innovation Policy. Within the legal profession, IP is the acronym for Intellectual Property, which encompasses patent, copyright, and trademark law.


Earlier this month, all these "IP"s converged in a single development as the Canadian government filed a brief with a U.S. court supporting Research in Motion's appeal of a patent infringement decision involving wireless email. The decision to file the brief, which asks the U.S. court to reconsider its December 2004 ruling against RIM, demonstrates a maturation of Canadian intellectual property policy that recognizes the need to put the national interest first.


The RIM patent dispute has been brewing since 2001, when NTP, a U.S. company that holds a large patent portfolio, sued the Waterloo company for patent infringement in connection with its popular Blackberry device. A U.S. jury ruled in favour of NTP, awarding it $23 million (U.S.) in damages.


RIM appealed that decision, but in 2002 a U.S. federal court judge upped the damage award to $53.7 million. RIM appealed yet again, but last month a U.S. appellate court upheld most of the lower court's findings.


Determined to pursue every legal option, RIM recently asked the appellate court for an "en banc" review, which, if granted, would lead to a rehearing of the case. Should its application be denied (success in such a review is rare), an appeal to the U.S. Supreme Court seems likely.


Ottawa's decision to get involved in the case sparked both surprise and criticism. Since the federal government rarely intervenes in private litigation, the surprise is understandable. Critics suggested, however, that Ottawa should mind its own business and that RIM should be prepared to play by the legal rules in the U.S. Such criticism is patently absurd.


The U.S. appellate court, which was created in the 1980s specifically to address patent matters, adopted an exceptionally expansive approach to the scope of U.S. patent law in its decision. An important component of NTP's patent infringement claims involve RIM activities that occur solely within Canada. Under most of the world's patent doctrine, that would effectively limit claims against those alleged infringements to legal actions in Canada.


The U.S. court rejected an approach that stops U.S. patent law at the border, however, instead interpreting the law in a manner that gives it extra-territorial effect. As the Canadian government argues in its brief, the ruling runs contrary to basic principles of comity between nations (mutual recognition of others' laws), and negatively impacts the "integrity of the operation of Canadian intellectual property laws."


The government's concern is well-placed, since this decision could effectively force Canadian businesses operating in Canada to comply with two sets of patent rules — both the national Canadian rules as well as those exported from the United States.


Not only does the extra-territorial application of U.S. law undermine Canadian sovereignty, the particular approach the U.S. appellate court has taken to patent issues has generated concern on both sides of the border. Adam Jaffe and Josh Lerner, two leading U.S. experts on innovation policy, recently argued in their book Innovation and Its Discontents that the creation of this particular court has tilted the law toward patent holders. In doing so, it has "wreaked havoc on innovators, businesses, and economic prosperity."


In light of Jaffe and Lerner's concern that U.S. law stifles new innovation, the Canadian government naturally expresses fear in its brief that the detrimental consequences of the RIM decision would extend to all Canadian businesses, particularly those in the technology sector.


In fact, rather than criticizing the government for its involvement, a more appropriate response would be to ask what took it so long, since the U.S. has long adopted an aggressive extra-territorial approach to intellectual property policy.


In the area of domain names and trademarks, it enacted the Anti-cybersquatting Consumer Protection Act in the late 1990s. That statute grants U.S. courts the right to assert jurisdiction over domain name disputes even where the domain name registrant has no presence in the country. The extra-territorial effect was tested several years ago when a Canadian company hauled a Toronto teenager into U.S. court over a domain name registration.


On the copyright front, the U.S. Trade Representative releases an annual report in which it opines on the acceptability of foreign IP laws. Known as the Section 301 report, it criticizes many countries for failing to emulate the U.S. approach to intellectual property protection. For example, Canada finds itself in the report this year (alongside the European Union and dozens of countries in Asia and South America), as the U.S. continues to exert pressure over the federal government's "failure" to ratify the flawed World Intellectual Property Organization Internet treaties and to provide patent protection for higher life forms.


If Canada's decision to intervene in the RIM case foreshadows a greater willingness of leaders such as Industry Minister David Emerson to stand up for the national interest, the government should be congratulated.


Unfortunately, there remains doubt that Ottawa will practice what it preaches. In the face of intense lobbying by U.S. movie and music associations in Canadian camouflage, Canadian Heritage Minister Liza Frulla and her parliamentary secretary Toronto MP Sarmite Bulte have given every indication that they intend to pursue policies that prioritize U.S. interests.


For example, ratification of the WIPO treaties, a consistent theme of U.S. lobby efforts, would not only stifle Canadian innovation but would lead to transfer of millions of dollars in royalties to U.S. interests while generating virtually no new compensation back to their Canadian counterparts.


While many rightly criticize the U.S. for its aggressive approach to intellectual property policy, its leaders make no bones about the fact that the premise of their intellectual property policy is that the national interest comes first. Canada too must prioritize its own national interest by focusing on intellectual property policies that benefit Canadian businesses, schools, and culture. The unusual intervention in the RIM patent fight may signal the beginning of that recognition, demonstrating the potential for a new era in which Canadian IP will come to stand for Independent Policy.

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