Patent Infringement Claimant: COVID-19 Research Facilitator, Patent Troll, or Both?

In response to the global outbreak of COVID-19, many countries have been racing to develop vaccines and test existing drugs to fight the pandemic. On March 9th, 2020, Labrador Diagnostics LLC (“Labrador”), an entity owned by Fortress Investment Group LLC (“Fortress”), which is funded by Softbank, filed a patent infringement lawsuit against BioFire Diagnostics LLC, a healthcare start-up based in Utah. Labrador also filed an injunction to stop BioFire from using the patents. Two days later, BioFire revealed that the use of the patents was connected to COVID-19 tests. In response, Labrador claims to have had no prior knowledge that any of the patent infringing activities were related to COVID-19 research, and that the lawsuit is directed towards BioFire’s activities (unrelated to COVID-19) in the past six years. On March 17th, 2020, Fortress issued a press release granting royalty-free licenses to third parties to use its patented technologies for COVID-19 testing:

“Labrador fully supports efforts to assess and ultimately end this pandemic and hopes that more tests will be created, disseminated, and used to quickly and effectively protect our communities through its offer of a royalty-free license during the current crisis.”

While Fortress’ royalty-free licenses to support COVID-19 tests can be considered as a step in the right direction, it is also worth noting that Fortress was sued by Apple and Intel last November for allegedly stockpiling patents for the sole purpose of litigation. In other words, Fortress’s actions in the past have resembled the actions of a “patent troll”. Fortress took ownership of the patents in question from Theranos, a blood-testing start-up that shut down and liquidated. The patents were used to secure the loan that Fortress made to Theranos and were taken upon default.

The United States Congress has repeatedly tried to pass legislation to target patent trolls. One of its failed attempts prompted Senator Patrick Leahy, the Chairman of the Senate Judiciary Committee at the time, to announce that the proposed legislation was to be withdrawn due to a failure to “combat the scourge of patent trolls on [the] economy without burdening the companies and universities who rely on the patent system every day”. However, in 2017, the U.S. Supreme Court held that patent suits can only be filed in courts of the jurisdiction where the targeted company is incorporated. In Canada, the federal government proposed a number of amendments to the Patent Act as part of the Budget Implementation Act, 2018, No.2. One of the main changes was meant to discourage bad faith allegations of patent infringement, including misuses arising from patent trolling. It involves implementing minimum requirements and standards (such as basic information that better enable recipients to evaluate the merits of the claim) for patent demand letters.

Apart from patent trolls, intellectual property rights, namely patents, are undoubtedly a key driver of pharmaceutical research and development, but the current pandemic has highlighted concerns surrounding the difficulties of balancing monopoly rights and access to medicines. One can take this opportunity to reflect on the other implications of the exclusivity afforded by intellectual property rights and how to address the urgent need for open access to research and developments to fight a pandemic.

Written by Felice Yeung, a second year JD Candidate at Osgoode Hall Law School. Felice is also a Clinic Fellow at the Osgoode Innovation Clinic.

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