Patent war gives rise to niche industry of patent litigation

In the tech industry, patents equal profits. For some Canadian companies, as CBC’s Kate Porter finds out, defending patents has itself become a business.

Ottawa-based Chipworks, for example, is hired by patent holders around the world to investigate possible patent infringements.

“There’s a lot money at stake, a lot of market share, and you’ve got big players who are basically battling it out to protect themselves,” said Ian MacLean, vice president of intellectual property services at Chipworks.

While the contracting out of patent investigation is becoming increasingly popular, some patent owners are taking things into their own hands, collecting millions by getting those who infringed their patents to cough up licensing fees.

One of the biggest players, Ottawa-based Rockstar, is using Canadian inventions to do that.

The company was created out of the ashes of Nortel Networks, the once high-flying Canadian telecommunications company that filed for bankruptcy protection in 2009. Nortel’s patents turned out to be its most valuable assets.

“When we approach a prospect, we’ve done our homework so we can demonstrate … we are not litigious by nature in the sense that we don’t just start filing lawsuits left and right,” said Peter Lorenz, senior business analyst of Rockstar.

Despite that, Rockstar’s lawsuit against Google, Samsung, HTC and Huawei made headlines around the world after the company argued that those tech giants used protected Nortel technology.

This niche industry, however, is facing a backlash in the U.S., where lawmakers recently voted to clamp down on excessive patent litigation.

Critics say the money tech companies are spending on patent litigation could go toward RD instead. Some say consumers should be concerned too.

“The cost the businesses incurred in litigating these cases are passed on to consumers,” said Jeremy de Beer, a law professor at the University of Ottawa.

“And if the businesses lose these patent infringement cases, they can’t offer consumers all of the features that their competitors do.”

Watch CBC’s Kate Porter’s report on the niche industry of patent litigation.