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The screen of a TV set connected to Bell's IPTV system, known as Fibe.

FERNANDO MORALES/The Globe and Mail

Two small technology companies have launched a legal action against Bell Canada and its sister firm Bell Aliant Inc., worth at least $350-million, for allegedly infringing on a patent when the telecoms launched new Internet-based TV services.

Toronto-based NorthVu Inc. and MediaTube Corp. allege they collaborated with Bell Canada over several years with an eye to commercializing their Internet protocol television (IPTV) system, which they say is covered by Canadian Patent No. 2,339,477 or the 477 Patent for short. The system is designed to deliver audio and video signals using telephone lines.

NorthVu is the owner of the patent in question, while MediaTube is a licensee in Ontario and Quebec, according to their statement of claim, filed with Federal Court earlier this week.

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The suit alleges that Bell Canada first approached the patent's inventor, Ross Jeffery, with an "unsolicited request to discuss his work" back in 1999. The telecom later began "confidential discussions" with NorthVu in early 2004 after it acquired the technology. (Bell latersigned a confidentiality agreement with another company that was working with NorthVu to commercialize IPTV; that company was acquired by MediaTube in 2009.)

Following those years of collaboration, which included the use of Bell's telephone lines for a prototype IPTV system in Ontario, the plaintiffs claim Bell Canada launched its own service marketed as Fibe in Ontario and Quebec starting in September, 2010, infringing on their patent.

None of the allegations has been proved in court.

"We are confident the claim is without merit and will strongly defend our position in court," said Bell Canada in an e-mailed statement on Wednesday. Bell Aliant issued a similar comment. "We believe the claim is without merit and intend to strongly defend that position."

Bell Aliant offers IPTV services in Newfoundland and Labrador, New Brunswick, Nova Scotia, Prince Edward Island and parts of northern Ontario. Since it uses equipment similar to Bell Canada's, the plaintiffs allege that it too is infringing certain claims of the 477 Patent. (Bell Canada's parent company, BCE Inc., owns a 44 per cent stake in Bell Aliant.)

Since the launch of Bell Fibe, "MediaTube's business prospects diminished considerably," reads the court filing. "MediaTube continued to seek capital to commercialize its IPTV service, but this effort has been impeded severely by the fact that Bell Canada is providing the same service in Ontario and Quebec (its licensed territory) in competition with MediaTube."

Lawyers for the two plaintiffs declined to provide comment on the case.

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NorthVu and MediaTube are seeking a minimum $350-million "royalty" for "past infringement" of the 477 Patent, plus other unspecified damages and costs and an injunction to prevent Bell and Bell Aliant from providing their IPTV services in Canada by using methods to redistribute audio and video signals that they claim are covered by the patent.

"The patent discloses a cost effective system to demodulate and deliver audio/video signals to homes and businesses while taking advantage of pre-existing 'twisted pair' telephone lines that run throughout the country," reads the statement of claim. "The patented system does not require all available audio/video content to be sent simultaneously to all communication interface devices (e.g. TV set-top boxes, receivers or computers) in users' premises. Instead, in the patented system, selections from the available audio/video content are redistributed, using the system, in response to user requests for specific content."

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