Jennifer Webb is a JD candidate at Osgoode Hall Law School and is enrolled in Professor Mgbeoji’s Patents class in Fall 2011. As part of the course requirements, students are asked to write a blog on a topic of their choice.

Due to the nature of “cloud” infrastructure, companies filing patents for cloud based innovations may not have the legal support they need to protect their perceived IP rights.

As discussed in a previous blog post, the trend towards cloud computing has caused a frenzy of new entrants into the market delivering new and innovative solutions to meet consumer and business needs.  For example, Apple has filed for a patent that uses cloud syncing to let a user pause a song or video on one device and then resume it from that same place on another device. For consumers, the attraction to cloud-based services lies in the ability to remotely access storage space, software applications, or server content.  Moreover, it is a convenient, cost-effective way to share and manage documents and multimedia.

Simply put, cloud computing refers to the delivery of computing services by a provider, remotely over the internet, without ever having to install hardware at the user’s end.  However, defining the nature of the services, products and rights in cloud-based applications is a difficult task considering the complexity of organizing infrastructure and the number of parties involved.  Cloud computing service providers will often outsource server tasks to multiple players in several different locations, and therefore, the infrastructure may lie within several jurisdictions.  Because of the nature of “cloud computing” itself, the data is not tied to any one clear location.   While it is not necessary for the user of cloud-based technology to know where their data is, businesses, in particular those with a vested interest in the intellectual property of a cloud-based service, should be aware that their rights in the “cloud” could get lost in the haze.

Many have written about the multiplicity of legal issues inherent in “cloud” technology, some of which include privacy and data protection.  In a recent international survey of current outsourcing practice and trends, the Norton Rose group examined whether the risks associated with cloud computing were a deterrent to its widespread use.

Like those issues, the intellectual property issues, namely patents rights to technology, are complicated by the territorial nature of those rights and how the law in different jurisdictions will apply.  For example, unauthorized practice of a patented invention across national borders, is not actionable under the Canadian Patent Act.  A patent issued by the Canadian Intellectual Property Office does not grant the patentee the right to enforce their rights in other countries, posing difficulties for patent holders and licensees trying to assert their rights against alleged infringers.

Similarly, detecting infringing activity is problematic for patent holders.  As mentioned above, the data and processing server may be situated in more than one location and are often outsourced to different parties.  As such, a patent holder never has access to an alleged infringer’s complete system, making reverse engineering to detect infringement impossible.  Even when a patent holder does manage to detect infringing activity, determining what constitutes infringement must be considered under different patent law regimes.

Cloud computing is creating a paradigm shift in the way we access technology and services.  As such, it is likely that we will see an increase in the number of disputes surrounding intellectual property rights in cloud computing services in the future.  How will companies deal with the legal uncertainties that surround the already complex, time-consuming, cost-intensive and distracting litigation process?

One solution is to let these tech-savvy companies tackle their contract, patent and legal processes in the way they know best: design and develop cloud-based applications to solve their complex business problems.  However, intellectual property interests may be so deeply rooted or financially motivated that resolution of the dispute may not be achieved through settlement.  For example, failed attempts at negotiating a licensing agreement resulted in the launch of a recent suit against Apple and RIM by Openwave Systems for alleged infringement of five of its patents relating to mobile internet.

The general debate over the patent system necessity continues. Cloud computing is just another sub-category of subject matter over which parties are asking whether the patent system is necessary or beneficial, or whether it is a massive deterrent to innovation.  Some feel that the system should be reformed or else removed.

For now, companies considering filing patents for cloud-based innovations must rely on the strategic business and patent claim drafting approaches proposed by the experts.

Posted in Cloud Services, Cross Border Issues, Electronic Processes, Infringement, Patents, Patents Course Topic