I was hoping somebody would follow up on that.
It's rather difficult to define patent trolls. The broad definition of a troll is that it's a non-practising entity, that is, somebody who doesn't actually commercialize and implement the invention, but who instead has licensed it for excessive fees.
The reason it's difficult to define a troll is that trolling is an exaggerated form of behaviour that's common to many legitimate patentees, if I might put it that way.
What can we not do? I was reading the Canadian International Council report and listening to the testimony of Ms. Mazurkewich on Tuesday, and I must say that their chapter 4 sounds to me as if they want to set up a government-funded patent troll, which seems to be quite a bad idea. They say their fund wants, rather than to exclude terms, to see broader access, with large companies paying market rates—big fund managers—with a sliding scale.
Trolls don't want to exclude any firms. Real inventors, real innovators, do exclude other firms, because they're actually commercializing their innovation themselves. If trolls exclude somebody, that somebody is not paying them rent.
Sure they charge a sliding scale, because they charge what the market will bear. They say the fund could salvage IT when tech firms go bankrupt and provide equity to cash-strapped entrepreneurs who have licensing rights to trade. That's where trolls get their patents. They get them from bankrupt firms and then assert them against other practising entities. I don't want to take up the entire answer by going into these details.
Maybe there is something I am missing here, but from everything I read in the report and everything I heard on Tuesday, it sounds to me as though she is proposing setting up a government-funded patent troll. Are you going to troll Canadian companies? That's a bad idea. Are you going to troll U.S. companies? That sounds to me like a bad idea.
That's what we shouldn't do. What should we do to address trolls?
In the short term, much of the patent trolling comes from somebody out to shut down a company.
I'll try to give a quick explanation. Let's say you're going to retire and you are going to sell your tiny condo in Vancouver and take the $3 million you get for it and buy a beautiful dream property in a remote area. You find a property that looks great, but you need to access it across somebody else's property. You would negotiate the access right then to go through the back entrance of their lot with a $10,000 licence. Now instead of negotiating the licence, let's say you build your million-dollar dream home and then you go to the neighbour and say that you need access across his property. Well, you are not going to get it for $10,000. It may be $100,000. What are you going to pay? Your house is there.
That's what trolls do. They don't license at the outset. They license once the business is set up and then they pop out of the woodwork. The patentee has a hard time finding them, because they're not out there practising.
That's what happened to RIM. Somebody popped up. Sure, the idea was good, and there's no suggestion that RIM actually took the idea from NTP or the patentee that NTP acquired it from. This is an aspect of the patent system. Independent creation is not a defence. RIM comes up with this idea. They take the idea, which is valuable in itself, and they put a fortune into commercializing it. They grow a big company, and then somebody says that they need access.
There are reasons why sometimes this happens: you tried to commercialize and weren't able to, or maybe somebody stole your idea. The aspects of the patent system that allow you to do this aren't bad. They're good in the right context, but they can be abused, so patents are dangerous in this respect.
The most straightforward response that we've seen in the U.S., which I think is appropriate in Canada, is to say to the troll that it cannot get an injunction, that it cannot stop the person from running their business. RIM had $25 million in damages awarded against it. That's the value of the patent. They had settled for $623 million. That's the value of their business. To say that you can't shut down a business and that all you get is your $23 million in damages is a step in the right direction.
I think I am over time, so I'll stop there.