[INTERVIEW] At Least 10 Things That Should Keep A Patent Attorney Up At Night

TH Tim Haidar, Editor-In-Chief, Oil & Gas IQ

PM Paul Matthews, Principal, Intellectual Property, Cenovus Energy Inc.

TH Hello and welcome, this is Tim Haidar, and today I am speaking with Paul Matthews, who is the principal for intellectual property at Cenovus Energy. We’re speaking today ahead of the Oil and Gas IP Summit North America, which will be taking place from the 17th to the 19th November, 2014 in Alberta, Canada.

Paul, thank you so much for joining us today.

PM Hi Tim, pleasure to talk to you.

TH Paul, as an IP expert with more than ten years of industry experience, from your perspective what are the key considerations when it comes to IP in the Canadian oil and gas sector?

PM My perspective, Tim, rests in the oil sands scope, and that is still very much an evolving industry. You may imagine, it’s a very dynamic intellectual property landscape – it’s still early days – while the mining side of the industry has been operating since 1967, the SAGD, or Steam Assisted Gravity Drainage or In-Situ technology is barely 10 years old.

So we have a number of emerging themes that I’m keeping my eye on. An easy place to start is the agenda recently tabled by our Federal Minister of Industry for consultation on IP.

One of the front-and-centre themes of that consultation was non-practising entities (NPEs). These are individuals or organisations that actually don’t exploit the technology that is the subject of a patent, but rather use the legal system to enforce patent rights as a means of generating revenue. Whether Canada should contemplate an adverse impact on commerce/industry as we’ve seen in the US is one of the key questions tabled.

We’ve seen NPE activity in Canada lately. One took a run at a producer recently on the eve of a significant corporate transaction. We’re just in the introductory chapter to that story, so we’re all watching to see how it’s going to play out.

Another is something that IPIC (the Intellectual Property Institute of Canada) the body that, among other things, governs the professional standards for patent agents in our Canadian system, is highlighting for our federal government as a significant competitive disadvantage. Specifically, when comparing the treatment of communications of Canadian patent agents with clients to the protections afforded those communications in other jurisdictions Canadian patent agent communications are not protected against disclosure in the event of a legal action (privileged) – the concern being that this places participants in the Canadian patent system at a potential global disadvantage.

In my view, another pressing topic is the broad patent scope being sought by industry service providers, vendors or suppliers to operators. Not only has the pace of that activity picked up, but from what I can tell, the scope of what is being pursuing has become much broader and more aggressive.

Take a typical service or equipment supplier for example, the industry is seeing instances where such suppliers are now seeking to assert patent rights beyond just the scope of the service or widget,. Rather, we are seeing patents directed ‘over the fence’ into the facility application of that service/widget. That strikes to the core of our freedom to run our operations.

Another topic might include the uncertainty engendered by the peculiar 18-month after filing ‘blind spot’ that exists in both the Canadian and US systems. Despite the planning and due diligence that we do, there’s an 18-month pipeline of patent applications resting in the patent office that we can’t see, and yet we have technology investment and directional research and development decisions that have to be made...some of which may some of which may be caught in an application that publishes 18 months after we make that decision.

Of course, I keep an eye on the pace of application filing. From a producer’s perspective, generally we do not view patents as competitive, as being necessary for our competitiveness like a technology-focused service company would; rather, a producer might tend to view patents as strategic assets. So, looking at the sharp increase in patent filing over recent years, the question presents itself: what does this signal for the industry?

In contemplating this question, it seems reasonable to ask if there are analogies from other industries that may inform us. As organisations invest money in these assets, can we look to, say, the smartphone industry where, significant increases in patent filings creating large patent portfolios, we see a follow-on increase in litigation. I’m not saying that that’s where the Oil Sands industry is heading, but it does beg the question?

The last topic that I would call out is the changing role of the industry regulator. We’ve seen the regulator take steps to actively direct industry environmental performance (one example, is with respect to tailings on the mining side of the industry). From there, it’s a small step to actually directing the adoption of certain technologies as innovations emerge in response to those directives, perhaps under some form of compulsory licensing scheme.

TH I’d like to ask you the question about North America in comparison to the rest of the world with regards to IP strategy. I’ve heard from several North American IP practitioners that the North American sector lags behind the rest of the world with regards to the protections of IP. Would you agree with that, and what can be done to redress the balance?

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PM Well, I’ll first acknowledge that that’s certainly the position the Intellectual Property Institute of Canada (IPIC) has presented to our Federal legislators. Many Canadian IP owners agree with IPIC that there are a number of factors that have placed Canada at a global competitive disadvantage.

TH Paul, you’ve delineated the kinds of factors that you see as the most important, and you’ve gone into detail about the North American markets. What do you see as the evolving global IP challenges, for example, in the emerging markets?

PM We work in an emerging industry, where the primary technology deployed in in-situ oil sands is SAGD, that’s steam-assisted gravity drainage, and that technology has only been in commercial operation for a little over ten years. Frankly, we’re still in the process of commercialising it and have tremendous opportunities for innovation.

What keeps me awake at night when I think about global IP is the level of activity in these emerging markets, and the question of how we can ensure that as we put our strategies together and file and prosecute our patent applications, how can we practically and effectively address the potential prior art in those markets.

You know, the global prior art data set is just overwhelming. Just consider the competing factors such as cost, timeliness and the difficulty of having to get into these patent offices, and obtain translations so that we can perform some minimal level of assessment... it’s a daunting prospect.

TH The other thing that I wanted to cover was this concept of collaborative innovation and the meaning behind the buzzwords. From your perspective, what is collaborative innovation, and how can it tangibly be achieved?

PM The oil and gas industry in North America has long recognised that collaboration is an effective way to crack common technical challenges. Collaboration is not new to the industry. There’s something we call a JIP or a joint-industry project that’s been a vehicle used by the oil and gas industry for many, many years.

In a typical JIP companies that have particular competencies and expertise come together to address a specific technical challenge. The step change for industry has really come in the environmental space, as evidenced by the Canadian Oil Sands Innovation Alliance (COSIA) where 13 producers have come together in four different environmental priority areas to collaborate in pursuit of some really big goals.

You asked the question: what does collaborative innovation mean? I guess my answer is that it’s one of a number of models by which the industry members seek to create a technical solution in furtherance of one or more industry objectives including environmental performance.

There are a lot of talented people in this industry that are committed to both doing the right thing for society and future generations and to demonstrating the very ideal.

TH So the proof really will be in the pudding that these organisations that have been locking horns for decades will actually come to the same table and be collaborative instead of confrontational.

PM Yes, that’s really the challenge. While there is dialogue, and we are having the right conversations, grounded in facts as opposed to emotion and agendas we have yet to deliver. We have a lot of work to do, and I for one look forward to our journey moving in a positive, fact based, and mutually respectful direction.

TH Now, the last question that I wanted to ask, is from your perspective as somebody that’s been working in the industry for a decade and more, how have things changed for the IP sector, and have they changed for better or for worse?

PM Oh, that’s a great question and it’s certainly a favourite of mine. First off, I think it all turns on the increase in technical activity and patent-filing activity over the past couple of years, and where we go as an industry from here.

For example, are we going to fall into a model where we have these large intellectual property assets which have created investor expectations for value creation, leading to litigation as a means to value creation? Or are we going to come together as an industry and create patent-pooling models with cross-licensing, creating value in that fashion? For me, that’s the big question.

Second, we see service providers responding, likely to increased competitiveness in this space, by becoming, more aggressive seeking to capture patents with scope not just, encompassing their services or apparatus, but also how those are applied in the field. That’s a real alarm bell for producers. Vendors would then have the ability to exclude producers from running our own operations.

Third, with the increased pressure on the patent office to handle this flood of applications, the offices are challenged to do everything they can to ensure that quality patents issue and nuisance patents don’t?

In my view we simply don’t have an effective means of intervening or participating in patent prosecution to ensure that when the application issues as a patent it’s not going to lead to commercial uncertainty for industry and the decisions that we need to make in operating and growing our enterprise.

In Canada we have an administrative avenue called a protest, which has not been particularly effective and could likely be improved. We really need to have a transparent mechanism for ensuring the proper art and proper review is both before the examiner and actually taken into account by the examiner.

TH Okay, great. That’s really all I wanted to ask from my side. Paul, thank you very much for your time today.

PM Well, thanks for your time, Tim. It’s been a lot of fun.

Tim Haðdar is the Editor In Chief at Oil & Gas IQ. Reach Him At Twitter Or OGIQ

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