The $4.5-billion sale of Nortel's patent portfolio - far surpassing the combined sale price of its business divisions - to a consortium that included BlackBerry maker Research In Motion.
Google's $12.5-billion acquisition of Motorola Mobility, largely spurred by the search engine giant's desire to strengthen its intellectual property holdings. Apple's highly publicized legal battles against Samsung, HTC and other competitors. These are among the high-profile events that have brought the value of patents to the forefront in recent months.
While patents themselves have been around since the time of Thomas Edison, the intellectual property field is attracting much more attention these days, especially as more companies seek new ways to maximize returns on their research and development efforts in a difficult economic environment.
And the stakes would appear to be higher than ever, if cases such as the $300-million win for small Toronto patent holder i4i against Microsoft are anything to go by.
Amid these circumstances, Ottawa has carved out a strong niche for itself, not only with the emergence of patent licensing firms Mosaid and WiLAN as two of the most valuable companies in the city, but also with one of the largest clusters of patent law experts and IP analysis specialists in the country.
The licensing leaders
No discussion of Ottawa's IP ecosystem would be complete without an examination of WiLAN and Mosaid and their ilk. The two patent licensing firms have impressive valuations: WiLAN currently has a market capitalization of more than $650 million, and Mosaid was recently taken over by private equity firm Sterling Partners, to the tune of $590 million.
Both firms primarily derive their revenues from arranging licensing agreements with companies using technology covered by the patents they own or control, and from the settlement of litigation in cases of patent infringement.
"It's a ‘freedom of operation' equation ... Companies using the property owned by the patent holders without a licence to do so are like trespassers. (We offer) the freedom to continue doing what they were already doing," explains Mosaid CEO John Lindgren.
Success stems from owning large patent portfolios covering various aspects of their areas of expertise, namely the telecom and semiconductor sectors for Mosaid, and wireless and television technologies for WiLAN.
"We have such a large number of patents that it can be a difficult situation for someone arguing they don't need a licence," says Mr. Lindgren. He notes that Mosaid has signed almost 100 per cent of the players that make dynamic random access memory chips to its portfolio of about 5,400 patents and applications.
The two companies operate in much the same way, says WiLAN chief executive Jim Skippen, who engineered the company's switch to the patent licensing model after working in a similar capacity at Mosaid. They aren't really competitors, though, since each patent is unique and gives the holder the monopoly on an invention. They might vie to acquire certain intellectual property, but they are peers in most cases, agrees Mr. Lindgren.
However, WiLAN is also working on a new business named Gladios IP, which will run licensing programs on behalf of patent holders, with revenues from successful agreements to be split between the patent holder and Gladios.
Mr. Skippen says Gladios is working on five to 10 opportunities in the Ottawa area, and estimates the division will double in revenues every year until it eventually makes up a quarter of WiLAN's total top-line sales. As well, Gladios has allowed the firm to diversify into non-core areas such as online gaming, TV or Internet access for hotels, or battery technology, without diluting its traditional strongholds.
"A lot of small companies have intellectual property and would like to find a way to get value with it - they would see us as a natural partner," says Mr. Skippen. "We would help them dress up their IP, so to speak, so it's clear to those using it why they need to take a licence."
Meanwhile, WiLAN sees great possibilities for expanding its core strengths to include the pharmaceutical, biotechnology and cloud computing industries, whether through its Gladios brand or its main business.
At the heart of these different patent licensing models is the work of evaluating the value and validity of a piece of intellectual property, most of which is done in-house at both WiLAN and Mosaid. However, the two firms often consult with other players in the IP ecosystem to strengthen their cases or to get a second opinion on a set of patents they're thinking of acquiring.
The legal eagles
From the beginning of a patent's life, to its acquisition, to the time when it becomes part of an infringement case, patent lawyers are usually involved. In Canada especially, patent agents are a key part of the IP equation, assisting companies in preparing, drafting and filing patent applications.
"If they can't get the patent, they can't generate wealth off it," says Natalie Raffoul, patent agent and managing partner at Clancy P.C. + Brion Raffoul. "We help companies draft applications as broadly as possible so competitors can't just design around the patent.
"A lot of the time, companies are just so focused on wanting to protect what they're doing, but we tell them, ‘No, we have to figure out what your competitors can do with it so they'll want to take a licence.'"
Ms. Raffoul, who notes her company's specialty is in dealing with startups, says patent agents provide expertise on what's actually patentable according to the law, and also on what's worth patenting if a firm has a tight budget.
As well, awarded patents are often quite different from what's set out in the initial application, with a lot of work going on in between the earliest filing and the eventual grant. That process, called patent prosecution, involves patent agents arguing with the examiners to preserve as much of the original essence of the filing as possible.
"(The examiners) are trying to limit your monopoly and you're trying to increase your monopoly," she explains. She adds she and her colleagues are usually also registered as U.S. patent agents and can leverage relationships with foreign associates to broaden the patent applications' reach geographically.
Mosaid's Mr. Lindgren notes that his firm also consults patent agents in the due diligence stage of purchasing an IP portfolio: "We'll do the patent mining of a portfolio, make the best selection, and then run it by a law firm for an independent view to justify or challenge the purchase."
Patent infringement litigation is another piece of the puzzle, although most of the action for high-tech cases is likely to take place in the United States, since the Canadian courts tend to move much more slowly, and suits are more likely to be resolved with out-of-court settlements.
Still, some local lawyers do have opportunities to fight IP cases, including Christopher Van Barr, who's co-leader of Gowlings's IP litigation national practice group. He acknowledges that Canada sees more litigation in areas for which it's known, such as cases involving machinery for the farming, oil extraction or paper industries, as well as in the pharmaceutical space, but notes he's worked on some suits of a more high-tech nature.
For example, Mr. Van Barr points to a patent infringement case fought in Canada between Swiss company ABB and Korea's Hyundai Heavy Industries, involving electrical switch gear.
"It has to be a unique set of circumstances where the amount of damages are big enough in Canada and there's a sizable industry here," he says. In such situations, though, it's likely that the court date would be in Ottawa or Toronto.
"There is really still a heart of IP in Ottawa, mostly because of the early work by Gowlings and Smart & Biggar; the (Canadian) patent office is here, and there's a critical mass of IP (law) firms here," adds Mr. Van Barr.
The analysis aces
While the public eye is often on the patent lawyers and licensing firms, the behind-the-scenes role of patent analysis and reverse engineering companies such as UBM TechInsights and Chipworks is no less critical to the IP landscape.
These companies take apart existing technology, map their components, processes and design and provide detailed analysis that clients can use to demonstrate how an invention is already being used in products on the market, or as evidence in a patent infringement case.
"We help companies manage and structure their patent portfolios, identify areas of value and understand whether the composition of their patent portfolio matches their business, applying both technical and business understanding to the situation," says Mike McLean, senior vice-president of intellectual property rights and professional services at UBM TechInsights.
Ms. Raffoul of Brion Raffoul says these companies offer a strategic complement to the legal services firms like hers provide. "They figure out ... where the big holes are in the patent system so that companies can plug up that hole."
The increasing complexity of technology today, along with the convergence of multiple high-tech fields in devices such as the smartphone, means there's a booming market for such firms.
"Every single (semiconductor) chip that's made today immediately infringes on hundreds, if not thousands, of patents ... and trying to figure out which patents and putting together a solid proof package means looking inside the chip," says Chipworks president Julia Elvidge.
Specialists are needed for the job, she says, especially as chips have evolved over the last 20 years from the equivalent of a three-storey building to a 100-storey monument.
Although Chipworks does most of its work abroad and has fewer relationships with IP companies here, the network in Ottawa does make for an exciting mix for UBM, says Mr. McLean.
"The lawyers are our clients in some cases and direct us in support of due diligence or a lawsuit, and in other cases we're partnering for a more complete solution," he says. "On the front end, we also work with companies looking to file new patents and wondering which inventions to protect ... It's an interesting ecosystem."