Welcome to Texas: Keep Your Powder Dry

A promising Canadian company is hit with a dubious software patent owned by a US competitor. The Canadian company is based in Ontario; the US patent-holder is headquartered in Washington, DC.  But the lawsuit takes place in the infamous Eastern District of Texas: the plaintiff-friendly outback of patent infringement litigation.  

Without commenting on the merits of the case, the recent decision in Blackboard Inc. vs. Desire2Learn Inc. illustrates the perils for Canadian businesses of facing a patent lawsuit in the US. The Canadian company lost last week and is now reviewing its options to appeal the $3.1 million ruling.  The lessons for business?

  • defensive patents may provide leverage for settlement or cross-licensing; 
  • a successful challenge to the vailidity of the plaintiff’s patent will deep-six the patent infringement claim; developments in US law are bringing clarity to the patentability of software and business-methods and the grounds for challenging such patents (See: Business Method Patents Under Review);
  • experienced patent litigation lawyers will review other options, including interim injunction orders which, if successful, can effectively put the defendant out of business.

Meanwhile, draft US patent reform legislation attempts to control forum-shopping, and may force litigants to commence their lawsuits in jurisdictions which are more closely connected to their headquarters or their actual place of business. In other words, Washington-based Blackboard Inc. would have to sue in Washington.  What a thought.  Until then, the patent battles will continue in Texas, and Canadian companies will have to keep their powder dry. 

Calgary – 9:45 MST

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