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  • Celebrating youth innovation!

    This year’s World IP Day is upon us, with the theme “IP and Youth: Innovating for a Better Future”. In honor of this theme (and at the risk of making our adult readers feel a bit less accomplished), we thought it would be appropriate to highlight some of these wonderful inventions of young, innovative minds. US 8,371,246: Device for drying pets  In 2011, 9-year-old Marissa Streng invented a device to more effectively dry her pet dog Mojo after his baths. The product is now apparently sold under the brand Puff-N-Fluff. US 7,726,080: Under-floor storage   At the age of 14, Rebecca Hyndman patented an under-floor storage system intended for use in locations where tile floors are normally used, such as in kitchens and in bathrooms. As a result of this achievement, she was given the honor of introducing President Obama at the Thomas Jefferson High School for Science and Technology, immediately prior to his signing the America Invents Act into law. US 6,029,874: Article carrying device for attachment to a bicycle for carrying baseball bats, gloves and other sports equipment or objects   Biking to baseball practice can be quite the challenge when one has to carry both a bat and a glove simultaneously. From this problem sprang the “Glove and Battie Caddie”, invented by Austin Meggitt at the age of eleven. The Glove and Battie Caddie holds a baseball, bat, and glove on the front of a bike. US 7,374,228: Toy vehicle adapted for medical use   At the age of 8, young Spencer Whale invented a toy vehicle adapted for transporting a child and their required medical equipment. According to the patent, the toy allows children who are hooked up to medical equipment to move more freely around a hospital, with the intention of making their stay more enjoyable. US 5,231,733: Aid for grasping round knobs   One of the youngest people to obtain a patent was Sydney Dittman of Houston, Texas. In 1992, when Sydney was only 2 years old, she invented a tool out of parts of her toys in order to open kitchen drawers that her parents had told her to stay out of. Upon noticing that the device would be great for handicapped people to use, her father started the patenting process, and the resulting patent issued when Sydney was only 4 years old. Please join us to celebrate youth innovation on this World IP Day!

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  • Entrepreneurs and Intellectual Property: Avoid these 13 mistakes to protect yourself (Part 3 of 3)

    In the third and final entry of this three-part article series, we share with you the last set of intellectual property (IP)–related mistakes (mistakes #10 to #13) that we regularly see with startups. We hope you will find it useful for your business. Please be sure to read our first and second entries in this series, where we go over mistakes #1 to #5 and #6 to #9, respectively. Happy reading! Part 3 of 3 Mistake #10:       Assuming that your invention is unpatentable One common mistake we see business owners make is that they assume their technology is not patentable. This frequently applies to computer-related inventions, such as software. Even though there is no outright ban on patenting software in Canada, many inventors are under the impression that software is unpatentable. This is most likely due to the fact that many patent applications for computer-implemented inventions are initially refused because the Patent Office determines that the invention in question is merely a disembodied series of mental steps and/or a mathematical formula (both of which are not considered patentable subject matter). However, it is important to remember that, while certain types of subject matter are not patentable in Canada (e.g., disembodied mental steps and mathematical formulae, as mentioned above), that does not mean that technology involving such unpatentable subject matter (e.g., computer software) is completely void of patentability. Often, it simply means that another aspect of the technology should be the focus of the patent application. For example, with regard to computer-implemented inventions, one strategy to increase the likelihood of patentability is to draft the patent application in such a way so as to emphasize that the computer hardware is essential, or to draft the application in such a way that it is clear that the invention creates an output comprising discernible effects or changes (e.g.: this can be as simple as generating distinct groups in a classification method). It is also worth noting that many inventors are under the mistaken impression that a new piece of technology has to be all but revolutionary in order to be patentable. However, improvements over existing technology are also patentable as long as they are sufficiently new and inventive. Accordingly, it is important to speak to a patent agent to properly determine if and how your invention may be patented. Mistake #11:       Believing that your patent automatically gives you the right to use and/or commercialize your invention One common misconception regarding patents is that they give the owner thereof the right to use and/or commercialize the patented technology without fear of infringing third-party patents. However, what a patent actually does is allow its owner to exclude others from using and/or commercializing their patented technology. It is not a shield against potential infringement of third-party IP rights. For example, if you obtain a patent for a piece of technology you developed, that does not necessarily mean you have the right to use or commercialize that technology. Specifically, if your technology incorporates patented technology owned by another company, then that company can actually prevent you from using or commercializing your own invention. This is an important aspect of “patent protection” that all entrepreneurs should be aware of. Mistake #12:       Not informing yourself about the criteria for recognition as an inventor or owner of an invention, and not training your employees on these criteria Many types of intellectual property disputes can arise within a business. Most of the time, they are the result of misconceptions, such as: An employee believes they are the inventor of an invention, when they are not; An employee believes that as the inventor of an invention, they are necessarily entitled to consideration (monetary or otherwise); the invention belongs to them rather than to the company; they are free to use the invention, for example upon leaving the company to become a competitor; or An employer believes that their company can use the specific results of a researcher’s work obtained from a previous job. It’s easy to imagine how messy such issues can get! An ounce of prevention is certainly worth a pound of cure. Get informed! Also, clarify these issues with new employees as soon as you hire them, and set down in writing who will own the rights to intellectual property developed during the course of employment. A quick training session before such problems arise can set the record straight and avoid conflicts based on unrealistic expectations. Mistake #13:       Not having an intellectual property protection strategy After reading this three-part article, we hope you now have a better understanding of the importance of developing an intellectual property strategy for your company. While such strategies can be very complicated, we have provided three broad questions that you should consider at all times (not just when starting out).  What intellectual property is my company using? This first question tasks you with identifying intellectual property that your company uses. This would include any technology that you are using or selling; any brand names/logos; and any works you are currently using (e.g., logos, slogans, website layouts, website texts, pictures, brochures or computer programs). Is there a risk that I am infringing a third party’s IP? Once you have identified the above intellectual property, you should ask yourself if your activities might infringe a third party’s IP rights. Obtaining a response may involve the following: Hiring a patent agent to perform a freedom to operate search for any technology you plan on using. Hiring a lawyer specialized in IP to perform a trademark search and opinion for any brand names/logos you use, as well as to negotiate and prepare an assignment of IP rights. How can I expand my own IP portfolio? This question involves determining, for each piece of IP you have identified, if and how it can be protected. This can include asking yourself the following additional questions: Is any of the technology I use or commercialize worth protecting? If so, should I file a patent application or keep the technology a trade secret? In which countries do I want IP protection? Are any of my company’s brand names or logos worth protecting by filing a trademark application? What’s important is not necessarily that you protect each and every piece of intellectual property your company owns, but that you have properly evaluated your company’s IP and have come up with an effective strategy that suits your business. In order to properly optimize your company’s IP portfolio, we naturally recommend speaking with your IP professional, whether it be a patent agent, a trademark agent, or a lawyer. Conclusion Lavery’s intellectual property team would be happy to help you with any questions you may have regarding the above or any other IP issues. Why don’t you take a look at our Go Inc. start-up program? It aims to provide you with the legal tools you need as an entrepreneur so you can start your company on the right foot. Click on the following links to read the two previous parts. Part 1 | Part 2

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  • Entrepreneurs and Intellectual Property: Avoid These Thirteen Mistakes to Protect Yourself (Part 2 of 3)

    In the second entry of this three-part article series, we share with you the next set of intellectual property (IP)–related mistakes (mistakes #6 to #9) that we regularly see with startups. We hope you will find it useful for your business. Please be sure to read our first entry in this series, where we go over mistakes #1 to #5. Happy reading! Part 2 of 3: Mistakes concerning trademarks, industrial designs, copyrights, and trade secrets Mistake #6: Launching your product on the market without having verified the availability of your trademark Choosing a trademark can be a long and expensive process. People sometimes focus on the attractive qualities of a trademark, forgetting that its primary function is to distinguish a company’s products or services from those of others. To properly fulfil this function, the trademark must not be confusing with other trademarks, trade names, and domain names. In order to avoid conflicts with existing rights, an availability search should be conducted prior to a trademark’s adoption and the launch of a new product, service, or business. Furthermore, it may not be possible to register a trademark if it doesn’t have certain necessary intrinsic qualities, and a trademark may not be usable if it conflicts with the rights of third parties. A search will make it possible to determine where your desired trademark stands in terms of these two aspects; if necessary, a different mark may need to be adopted. Conducting a pre-adoption trademark search may prevent you from having to change trademarks after sales have begun or after the marketing development of your products or services is underway. Redesigning your advertising campaign; modifying your documentation, website, and packaging; and developing a new marketing strategy to transfer and retain the goodwill surrounding your initial trademark will be an expensive task, taking up time that could have been invested elsewhere. Such a process also carries the risk of tarnishing your reputation or losing your goodwill. Mistake #7: Not having your software or graphic designer sign a copyright assignment Many people think that a copyright is intended to protect a work with exceptional artistic qualities. However, such thinking is erroneous. As long as a text, drawing, graphic design or computer program is a creation that required a certain amount of effort and is not a copy of an existing work, it constitutes a “work” and is automatically protected by copyright. As a general rule, in Canada, the author is the first copyright owner; thus, just because the work was created in exchange for remuneration doesn’t mean that its copyright was transferred. For a startup business owner to ensure that they own a copyright, they should ask the artist or author to sign a written transfer of copyrights, thereby ensuring that the business can publish and use the work as it sees fit. It is also important to have the author of a work sign a waiver of moral rights or to outline the terms and conditions that will apply to the work’s authorship and integrity. If these steps are omitted, you’ll be limited in the use of such works. They won’t be part of your assets and will therefore not increase the value of your portfolio. In addition, you’ll be dependent on the consent of the actual holders of the rights to commence actions for infringement, should that ever be necessary. Mistake #8: Not having your employees, officers, and contractors sign confidentiality agreements (before entering into a business relationship) The sooner the better! Your company should see to having an agreement intended to preserve the confidentiality of its information signed by all those whom it mandates to perform work that is significant for its development, including its employees. The type of information that can be protected is virtually unlimited; at a minimum, it includes information related to R&D, market studies, prototypes, ongoing negotiations, marketing research of any kind, and lists of target customers. Ideally, in an employer-employee relationship, when an employee or officer leaves, a company should make sure to remind them of the confidentiality obligations that will continue to apply despite the end of the relationship. Applying these principles reduces the risk that an employee or partner will publicly share or independently use your strategic information at your company’s expense. Mistake #9: Not protecting your original products’ shapes and ornamentation within the prescribed time limit Many are unaware of the benefits of protecting an object’s shape, form, and ornamentation through the Industrial Design Act, or they learn of such benefits too late. In Canada, such protection has two key requirements: The industrial design must not have been published more than one year before the date on which an application for registration is filed; and The protection must be acquired by registration to exist. This type of protection is more effective than one might think and should not be overlooked. For example, a search of the industrial design register will reveal how many industrial designs tech giants have obtained. Some industrial designs have even been the subject of high-profile disputes, including one between Apple and Samsung over the shape of tablets. Apple Inc. uses such protection to prevent the presence of competing products that copy its designs on the market. As an example, in Canada, the shape of the headphones shown below was protected in 2021 and the shape of the phone shown below was protected in late 2020. For more detail on the protection of each of these articles, see Registration 190073 and Registration 188401. Conclusion Lavery’s intellectual property team would be happy to help you with any questions you may have regarding the above or any other IP issues. Why don’t you take a look at our Go Inc. start-up program? It aims to provide you with the legal tools you need as an entrepreneur so you can start your company on the right foot! Click on the following links to read the two previous parts. Part 1 | Part 3

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  • Entrepreneurs and Intellectual Property: Avoid These Thirteen Mistakes to Protect Yourself (Part 1 of 3)

    In this three-part article series, we will share with you the intellectual property (IP)–related mistakes that we regularly see with startups. We hope you will find it useful for your business. Happy reading! Part 1 of 3: Mistakes concerning IP in general Mistake #1:                 Believing that IP issues don’t affect you Some companies don’t put too much thought into intellectual property considerations, either because they feel they don’t have any intellectual property worth protecting, or because they simply don’t want to go through the trouble of obtaining such protection. While refraining from obtaining IP protection might, in rare instances, be a viable business decision, that does not mean that your company should ignore IP considerations altogether. This is because of the existence of third-party intellectual property rights. As an example, if your business sells or uses technology that has already been patented by a competitor, or your business uses a trademark that is confusingly similar to that of a competitor, then said competitor may be able to sue you for infringement, regardless of whether or not said infringement was deliberate. This is why it is always important to consider third-party IP rights, regardless of the nature of your business activities, and regardless of whether you intend on obtaining IP protection. Mistake #2:                 Believing that IP will cost you too much Many business owners think that intellectual property is too expensive to warrant spending money on when their company is just starting out.  However, while obtaining intellectual property rights can sometimes be an expensive process, it is important to remember that investing in your company’s IP rights is just that: an investment, one that can result in the creation of a valuable asset for your company. This can include a trademark registration for a brand that, over the years, will become incredibly popular, or a patent for a highly sought-after piece of technology. In fact, if properly protected, a company’s intellectual property assets can easily become more valuable than any physical asset. And just like any other valuable asset, it will increase your company’s worth and make your business all the more appealing for potential investors.   Mistake #3:                 Hoping for the intervention of the “IP police” Some entrepreneurs believe that once they have obtained an IP right, the government will be the one to enforce it with their competitors. This is unfortunately not the case. It is up to you, as an IP owner, to monitor the market and ensure that your competitors don’t infringe your rights. Should you fail to do so, you’ll be leaving the door wide open to those who would wish to imitate your products and services. In addition, you even risk losing some of your previously acquired rights. For example, your trademark could become non-distinctive—meaning you would no longer be able to protect it—if you were to fail to react and let a third party copy it. Reacting to every single situation isn’t necessarily called for, but each case should be examined in order to determine what consequences third-party use might have on your rights as a holder. Should you discover, in your market monitoring, that a third party is imitating your intellectual property, talk to your IP advisor or lawyer. They can help you decide on an effective first approach to take, either on your own or through them. Said approach might involve asking the third party to cease its activities, claiming compensation for prejudice caused, requiring that certain modifications be made to the use, and/or negotiating a coexistence agreement or a license with or without royalties. Mistake #4:                 Believing that you won’t be able to “defend your IP” We sometimes hear entrepreneurs say that securing IP rights isn’t worth their while, as they won’t be able to “defend their IP.” They essentially believe that the only purpose of holding IP rights is to sue competitors who imitate their products and services, which they necessarily believe is very expensive. The result is that they fail to protect their innovations and let their competitors appropriate their products and services. Without IP rights, it is true that they have little recourse. In reality, a lawsuit is usually the last option to use against competitors. Many other steps can be taken before resorting to a lawsuit. As is the case for other IP owners, holding IP rights may allow you to: -          Significantly discourage competitors from imitating your products and services by clearly indicating that you hold IP rights; and -          Negotiate agreements with your competitors who would like to imitate or who are already imitating your products and services. Remember that only a small minority of IP disputes are resolved in court; all other disputes are resolved out of court quickly and at relatively little cost. Mistake #5:                 Launching your product or service on the market and waiting to see if it will be a success before obtaining IP protection Some entrepreneurs, preoccupied with saving money, launch their new products or services on the market and wait to see if they are successful before protecting them with IP rights. This constitutes a serious mistake, because some IP rights may no longer be available. More specifically, once a product or service is launched, the possibility of protecting it by patent or industrial design is no more. Note that some exceptions apply, particularly in some jurisdictions that allow grace periods. If you are considering protecting one of your products or services by patent or industrial design, you should start the protection process before you launch your innovation on the market. However, said protection process doesn’t need to be completed in order to begin marketing your product or service. Conclusion Lavery’s intellectual property team would be happy to help you with any questions you may have regarding the above or any other IP issues. Why don’t you take a look at our Go Inc. start-up program? It aims to provide you with the legal tools you need as an entrepreneur so you can start your company on the right foot! Click on the following links to read the two previous parts. Part 2 | Part 3

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  • Product advertising in the time of COVID-19: Health Canada and the Competition Bureau are on the lookout for misleading claims

    It’s been more than a year since the COVID-19 pandemic began, and many companies are attempting to market products intended to help consumers deal with the risks associated with COVID-19. Some of the most common examples of such products include face masks, testing devices, hand sanitizers, and hard-surface disinfectants. However, while many of these products can be useful (such as by helping reduce the risk of infection), there remains the question of what COVID-19 related claims, if any, can be attributed to the product (e.g. on the product's packaging or in an advertisement). An inaccurate or inappropriate statement can garner the attention of both Health Canada and the Competition Bureau. In fact, since the start of the pandemic, the Competition Bureau has been issuing compliance warnings to businesses across Canada regarding potentially false or misleading claims that their products and services can prevent the disease and/or protect against the virus.1  Accordingly, we have written this newsletter to summarize what Health Canada and the Competition Bureau are looking for when assessing COVID-19-related claims. We also provide examples of the types of statements that have been considered “unacceptable,” as well as a brief description of the consequences of utilizing such unacceptable statements. Please note that the following does not address which licenses are necessary to sell specific products in Canada, nor does it address which legal requirements apply. For example, hand sanitizers, in order to be sold in Canada, must meet the requirements of the Natural Health Products Regulations (NHPR). The general principles of the Competition Act and the rules of the Canadian Competition Bureau With respect to both COVID-19-related claims and product claims in general, the Competition Act prohibits false or misleading claims about any product, service, or business interest. This applies to both the literal meaning of a statement and the general impression it creates. Furthermore, the Competition Act prohibits performance claims that are not backed up by adequate and proper testing. First, such testing must be performed prior to the claim being made and on the actual product being sold, as opposed to a comparable or similar product. Second, they must reflect the product's real-world usage—such as in-home use. Third, the results of the tests must support the general impression created by the claims.  Since as early as May 2020, the Competition Bureau has enforced the above guidelines by issuing direct compliance warnings to a variety of businesses across Canada to stop potentially deceptive claims, including warnings against: Making claims that certain products (including herbal remedies, bee-related products, vitamins, and vegetables) can prevent COVID-19 infections; and Making claims—without first conducting the testing required by law—that certain UV and ozone air sterilization systems, as well as certain air filters or air purifiers, will effectively kill or filter out the virus. Accordingly, the above rules should always be followed when making any COVID-19-related claim about a product. Examples of advertising incidents addressed by Health Canada Health Canada has provided a list of more than 400 advertising incidents related to COVID-19.2 The table provided in footnote 2 lists products and corresponding companies or advertising media found to engage in non-compliant marketing, which are currently under review or have been resolved. While many of these incidents have been resolved, it is unclear what resolution occurred. Was the claim modified or removed entirely? Did the company have to pay a fine? Did the company manage to convince Health Canada that their claim was acceptable as is? Nonetheless, it is clear that the statements were questionable enough that Health Canada found it necessary to intervene. The COVID-19-related claims found therein can thus serve as an effective guide of what claims not to use when advertising products. Along with many unauthorized general claims of “preventing” or “treating” coronavirus and/or COVID-19, some interesting examples of statements flagged by Health Canada include the following: “To protect against Coronavirus” – with respect to a “bandana and protection mask set.” “Flatten the curve with these on trend Fashion Masks” – with respect to a face mask. “Anti-Microbial Micropoly Fabric” – with respect to a face mask. “Ideal for Covid-19” – with respect to a face mask. “Anti-coronavirus, blocks pollution like: exhaust fume, smog, flu virus” – with respect to a face mask. “Effectively isolates saliva carrying coronavirus” – with respect to an “Anti-Dust And Anti-Fog Hat Anti Coronavirus Hat.” “The importance of boosting the immune system during the threat of COVID-19” – with respect to various natural health products. “Suitable in bathroom, living room, bedroom hotel, flu Covid-19” – with respect to a “UV Disinfection Lamp Steriliser.” “labeled ‘COVID-19’ under tab” – with respect to a face mask. As can be seen, some of the statements do not even directly mention COVID-19 or coronavirus, and instead reference concepts such as “flattening the curve” or make general representations about having “anti-microbial” properties. Moreover, many of the claims simply reference COVID-19, without making any representations about treating and/or preventing it. In addition to consulting the above guidelines and examples, it may be wise to seek out products that have been approved by Health Canada for use against COVID-19. Some examples of such products include the following: Disinfectants with evidence for use against COVID-19. Authorized medical testing devices for uses related to COVID-19. Authorized medical devices other than testing devices for uses related to COVID-19. Based on the above, products should only bear COVID-19-related claims if they have been approved for use against COVID-19 by Health Canada, and, even then, such claims should be limited to said use and to what the supporting evidence demonstrates. Some of the links above also contain information on how to obtain the aforementioned approval from Health Canada. Please note that, as of the date of this newsletter, no hand sanitizers have been approved in Canada with COVID-19-related claims.3 Consequently, although hand sanitizers can help reduce the risk of infection by, or spread of, microorganisms, COVID-19-related claims should not be used with such products. Even so, Health Canada has provided a list of hand sanitizers that they have authorized for sale in Canada. In general, a sound policy is to thoroughly review your marketing materials to identify any claims related to the prevention or treatment of COVID-19 that may be false, misleading, or unsubstantiated, and immediately modify or remove such claims accordingly. Penalties for false representations and misleading marketing practices The penalties for using COVID-19-related claims that do not comply with the law can be quite severe and can include fines and jail time.4 In fact, false or misleading representations and deceptive marketing practices, regardless of whether they involve COVID-19-related claims, can be prosecuted under civil law and/or criminal law. As an example, under civil law, the court may order a person to cease an activity, publish a notice and/or pay an administrative monetary penalty. On first occurrence, individuals are liable to penalties of up to $750,000, and corporations, up to $10,000,000. For subsequent occurrences, the penalties increase to a maximum of $1,000,000 for individuals and $15,000,000 for corporations. Under criminal law, a person is liable to a fine of up to $200,000 and/or imprisonment for up to one year. We thus strongly recommend avoiding making false or misleading COVID-19-related claims at all times.     We hope that our newsletter serves as a useful guide regarding what Health Canada and the Competition Bureau consider an “inaccurate” or “false” COVID-19-related claim, and that it has clearly laid out what the consequences of making such a claim in association with a given product can be. However, whether a COVID-19-related claim is appropriate will depend on many factors, such as the exact wording of the claim and the exact nature of the product. Our intellectual property team would be happy to help you with any questions you may have regarding what COVID-19-related claims, if any, you should use on your products, as well as any other legal requirements that must be met before a specific product can be sold in Canada. https://www.canada.ca/en/competition-bureau/news/2020/05/competition-bureau-cracking-down-on-deceptive-marketing-claims-about-covid-19-prevention-or-treatment.html https://www.canada.ca/en/health-canada/services/drugs-health-products/covid19-industry/health-product-advertising-incidents.html https://www.canada.ca/en/health-canada/services/drugs-health-products/disinfectants/covid-19.html https://www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/03133.html

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  • Ho-Ho Holiday Themed Patents

     At Lavery, we spend a lot of time searching patent databases on behalf of our clients. Occasionally, we come across certain patents/applications whose cleverness and creativity make a lasting impression. At this time of year, our attention is naturally drawn to those that are holiday themed. And so, in the spirit of the holidays, we thought it would be nice to share some of them with you. We hope that the following examples can help lift your spirits (or at least make you smile). CA 2500690 (application): Christmas tree watering system This setup is likely easier to use by those in the health-care sector. CA 2114854 (application): Santa claws No family member is left behind these holidays—here is a stocking to hang by the fireplace for Santa to leave some treats for your special pet.    US 20200329896 (application): Christmas tree with blades rotated by wind power This application is for a Christmas tree that has a “blade unit” that is mounted to a pole and is detachable. The blades are rotated around the pole by means of natural wind power, “thereby improving the fun of the Christmas tree.” US 6497071: Christmas tree self-watering system This patent is for an “improved watering system for a Christmas tree,” where the Christmas tree's watering basin can be refilled by filling up a nearby water-resistant container. The clever twist? The water-resistant container is disguised as a Christmas present.   US 7258592: Santa Claus visit kit This patent is for a kit for creating an illusion that suggests Santa Claus visited a home. The claimed kit includes items such as “a letter professing to be from Santa Claus” and the “means for making boot prints.” The patent even discloses a rather complicated set of instructions, with steps such as “removing a portion of the drink and/or snack” and, if your home has no chimney, “leaving a toy key outside.”    US 5523741: Santa Claus Detector This patent was for a “children's Christmas Stocking device useful for visually signalling the arrival of Santa Claus by illuminating an externally visible light source having power source located within said device.” Santa Claus is described as “a plump, white-bearded and red-suited gentleman who delivers presents to ‘good’ children at Christmas time.” US 3494235: Devices for dispensing tinsel and the like adaptable for decorating Christmas trees Faster decorating for sure—a gun-shaped device for dispensing tinsel.   All the best wishes for a patently wonderful holiday season!

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  • An introduction to Trade Secrets: What they are and why they matter to your business

    One of the most common questions we receive as intellectual property lawyers is “How can I prevent others from using technology that I have developed and that has significant value to my business?” That question can often be answered by advising clients to file a patent application. However, there exists another type of intellectual property protection, known as a “trade secret,” that may be more suitable for certain situations and technologies. This brings us to the main topic of this newsletter: the importance of trade secrets. Specifically, this newsletter will first provide a general definition of trade secrets, including examples thereof, followed by information regarding the various ways trade secrets can be effectively used and protected by a business. Brief overview of trade secrets The definition of a trade secret is incredibly broad; in fact, the term “trade secret” can include any valuable business information that derives its value from secrecy. This information can be, for example, financial, business, or scientific information, such as patterns, plans, compilations, formulas, programs, codes, prototypes, or techniques. As indicated by the Canadian Intellectual Property Office, to protect and benefit from trade secrets in Canada, a business must: Obtain value from the secret; Keep the information a secret; and Take all possible measures to ensure that the information remains a secret. Generally, if the above criteria are met, then the information in question can be considered a trade secret. Some of the most famous examples of trade secrets are for recipes (such as the Coca-ColaTM recipe or the KFC Original RecipeTM); chemical formulas (such as WD-40TM); and the client information of social media platforms and dating apps (such as FacebookTM or TinderTM). While the definition of a trade secret may seem quite broad, this breadth is precisely why trade secrets can be such a powerful tool: they can allow your company to monopolize information or technology that may not be protected using other means, such as patents. In addition, the protection granted by keeping valuable information secret can last indefinitely (or at least until the secret is revealed). The premise behind trade secrets is that, by keeping this valuable information secret, third parties are prevented from accessing and using the information in question, thereby giving your business an advantage over competitors. Accordingly, if your company has information from which it derives value (such as a newly developed piece of technology), trade secrets may be an appealing alternative to patents and other forms of IP protection. Best practices for businesses with respect to their trade secrets Having provided a brief overview of trade secrets, we will now focus on practical considerations, specifically with respect to helping ensure that trade secrets are kept confidential even when the information in question needs to be shared with an employee or a third party. Frequently, businesses will have to share their trade secrets with others. For example, specific employees of a company will often have access to some (or all) of that company’s trade secrets. Similarly, companies will often have to share their trade secrets with third parties; for example, a company that hires an external consultant may be required to furnish that consultant with trade secret information. Also, a company that has developed a new piece of technology it aims to keep secret may be required to divulge how to make said technology to a third-party manufacturer. In such situations, it is important to have certain measures in place that will better ensure that your trade secret remains a trade secret. Contractual obligations When employed correctly, the use of contractual clauses can provide ample protection with regard to a company’s trade secrets. Specifically, for any employee or third party that may gain access to trade secrets, it would be prudent to ensure that a robust written agreement is signed that stipulates what said employee’s or third party’s obligations are with respect to the trade secrets to which they gain access. Some examples of clauses pertaining to trade secrets that can be included in an employment contract or a contract with a third party include the following: Definition of "Confidential Information" or “Trade Secrets”: This clause would give a definition as to what information to be provided to the employee or third party is considered a trade secret. Obligation of non-disclosure and non-use: This clause would specify that the employee or third party in question is not allowed to use or disclose the confidential information they receive except in accordance with “permitted uses.” Definition of "permitted uses”: This clause would define the manner in which an employee or third party is allowed to use or disclose the confidential information they receive. Undertaking not to use/disclose/publish/reproduce confidential information of third parties (e.g., a former employer): This clause would remind an employee or third party that they are forbidden from using or disclosing confidential information they have received from a previous employer or contractor. Data destruction/return of documents: This clause would specify that the employee or third party is required to destroy and/or return all confidential information they have received to the company upon termination of their contract. Obligation to report if information was inadvertently transmitted: This clause would specify when and how an employee or third party must notify the company should any confidential information in their possession be disclosed or used in a manner that contravenes their contractual obligations. Penalty clause (articles 1622 and 1623 of the Civil Code of Quebec): This clause would specify that the employee or third party is obliged to pay the company a certain fee should any confidential information they receive be disclosed or used in a manner that contravenes their contractual obligations. The above clauses represent but a few examples of important clauses that can be included when drafting a written contract for any employee or third party that will be given access to a company’s trade secrets. However, it is not always feasible to draft a robust written agreement. Accordingly, there are other ways to implement the above clauses; for example, the above clauses can be defined in a company’s policy manual that would be provided to employees when they are being hired by the company. It is also important to remind employees or third parties of their obligations regarding your company’s trade secrets at the relevant times. For instance, when a contract with an employee or a third party is to be terminated, that might be an opportune moment to remind the employee or third party that they have a duty to return and/or destroy all confidential information and documents they have received from your company. This reminder can be made in an email, in a release to be signed by the employee, or even during an exit interview. Employee duty of loyalty It should be mentioned that, in Quebec, all employees have a duty of loyalty to their employers, due to article 2088 of the Civil Code of Quebec, which states inter alia that “The employee is bound […] to act faithfully and honestly and not use any confidential information he obtains in the performance or in the course of his work. These obligations continue for a reasonable time after the contract terminates […].” [emphasis added]. Accordingly, even without a written employment contract containing the above-discussed clauses, employees are still required to keep trade secrets confidential and to not appropriate the material or intellectual property of the employer. However, this protection is quite limited (for example, it only applies for a reasonable time once the employment contract is terminated), and so it is always more prudent to explicitly define an employee’s obligations regarding trade secrets in, for example, an employment contract or a company policy manual. It should also be mentioned that article 2088 of the Civil Code of Quebec concerns employees only, and does not apply to third parties who gain access to trade secrets. Remedies Even with the best of safeguards in place, a current or former employee or third party may nonetheless use or disclose your company’s trade secrets. While such a situation is unfortunate, there are a number of legal remedies that can allow you to mitigate the damage done, as well as to recover amounts from the rule-breaking parties. Specifically, it is generally possible to obtain injunctions or safeguard measures against parties that have misappropriated your company’s trade secrets. In addition, it is generally possible to recover damages from said parties. While the above remedies may seem relatively inconsequential, they can be quite severe under certain circumstances. One recent example is a lawsuit commenced in 2017 by Motorola Solutions against Hytera Communications in the United States. In their lawsuit, Motorola Solutions alleged inter alia that three former Motorola Solutions employees had gone to work for Hytera and taken Motorola trade secrets with them, after which Hytera used these trade secrets to develop its Digital Mobile Radio (DMR) products. Motorola was eventually awarded a jury verdict of $764.6 million earlier this year. The above example not only demonstrates how powerful legal remedies regarding trade secret protection can be, but it also demonstrates why it is important to respect the trade secrets of others. Otherwise, your company may find itself on the receiving end of a lawsuit similar to the one commenced by Motorola. It is also worth mentioning that, despite the lawsuit taking place in the United States, the injunction sought by Motorola (which has yet to be ruled upon) would forbid Hytera from selling any of the contested DMR products worldwide. In addition to civil remedies (such as the example provided above), there are also criminal ramifications for violating the trade secrets of others.  In Canada, the newly implemented Canada-United States-Mexico Agreement (CUSMA) has required Canada to implement criminal procedures and penalties specifically for trade secret theft. Said regulations no doubt serve as an additional incentive to respect the trade secrets of competitors. Conclusion We hope that the above has demonstrated the importance of trade secrets, both in terms of how they can be used and why the trade secrets of competitors should be respected. However, while the above guidelines may serve as a good starting point for protecting your company’s trade secrets, the best strategy (including whether or not trade secrets are preferable over, say, patents) will depend heavily on your business, the information/technology in question, and various other factors. Accordingly, our intellectual property team would be happy to help you with any questions you may have regarding how to best protect your business’ most valuable information and technology.  

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  • The United States–Mexico–Canada Agreement (USMCA): What this means for Canadian IP law

    As we reported on October 15, 2018, Canada, Mexico, and the United States were finally able to agree on the terms of the United States–Mexico–Canada Agreement (USMCA) on September 30, 2018. The USMCA is intended to replace the North American Free Trade Agreement (NAFTA), which has been in place for over 20 years. The USMCA comprises 34 Chapters, one of which is dedicated entirely to Intellectual Property. With such a focus on Intellectual Property, it is worth asking what changes this agreement will bring forth to current Canadian IP laws. While this Chapter may seem extensive, many of its provisions reflect what is already provided for under Canadian law. However, there are several changes worth noting, most of which will bring our IP regime closer to that of our US counterparts. What follows is a brief summary of the more significant changes the USMCA will bring to the fields of patents, trademarks, copyrights, industrial designs and border measures. Patents and Undisclosed Test or Other Data Patent term adjustment The USMCA will provide for a patent term adjustment for unreasonable delays in the issuance of patents. This means that the Canadian Intellectual Property Office (CIPO) will compensate for such delays by adjusting the terms of issued patents, similar in principle to the current system at the United States Patent and Trademark Office. These “unreasonable delays” will include delays where the issuance of a patent occurs more than five years after the filing date, or three years after a request for examination has been made, whichever is later. Canada will have 4.5 years to implement this change once the USMCA enters into force. Patent Law Treaty Under the USMCA, the parties shall give due consideration to ratifying or acceding to the Patent Law Treaty (PLT), or adopt or maintain procedural standards consistent with the objective of the PLT. The Canadian Patent Act has already been amended to this end, however the relevant provisions are not yet in force pending the preparation of amended Patent Rules to implement such changes. Extended data protection for biologics Another significant change concerns data protection for biologics (patented or not), which will be increased from 8 years to 10 years (still 2 years less than what is presently available in the US) from the date of first marketing approval. Canada will have 5 years to implement this change once the USMCA enters into force. Trademarks The USMCA describes a number of obligations related to Canadian trademarks. However, many of these obligations are already met or will soon be, once Canada implements the amendments to its trademark laws in 2019. This includes not denying registration to sound marks and making “best efforts” to register scent marks, as well as adopting the Madrid Protocol, the Singapore Treaty and a trademark classification system consistent with the Nice Agreement. It appears however that amendments may be required to include protection for “collective marks” (i.e. marks used by members of cooperative, association or other collective group or organization) and some changes may also be necessary with respect to geographical indications As for “well known-marks”, it is questionable whether additional statutory protection will be necessary to meet the requirements of the USMCA. Furthermore, the USMCA requires that Canada implement a system that provides for “pre-established damages” or “additional damages” in civil proceedings with respect to trademark counterfeiting, to deter infringement and fully compensate trademark owners. As “additional damages” seem to include exemplary or punitive damages, no change to the law would be required to meet USMCA requirements. The Canadian government could however seize this opportunity to incorporate the concept of “statutory damages”, as is the case under the Copyright Act. Under such a system, those alleging infringement could elect to obtain damages in an amount that is explicitly stated in law, rather than having to prove such damages based on the level of harm they have suffered. Copyrights Canadian copyrights will experience at least one significant change: an increase in the term of protection from 50 to 70 years after the author’s death. Once again, this change will further align our copyright law scheme with that of the US. It is also worth noting that the USMCA includes copyright provisions related to Internet Service Providers, including legal incentives for ISPs to cooperate with copyright holders, as well as limitations in the law that preclude monetary relief from copyright infringement that ISPs do not control, initiate, or direct. In order to benefit from this regime, ISPs will have to implement expeditious measures for removing access to infringing content and adopt a policy for terminating the accounts of repeat infringers. Industrial designs Consistent with the Hague Agreement, the USMCA notably sets forth a term of industrial design protection of a maximum of 15 years, which is 5 years longer than the current 10 year term under Canadian practice. Canada has already joined the Hague Agreement and is implementing its provisions, including the maximum 15 year term, which shall come into force on November 5, 2018. Border Measures A welcome change under USMCA will be the increased power for customs officials including the authority to initiate border measures against suspected counterfeits or pirated goods imported or destined for export. Such authority will extend to goods in transit or admitted into or exiting from a free trade zone or bonded warehouse. Summary While the final form of the USMCA remains to be seen (it still needs to be ratified by the three countries), the above changes point to a consistent trend: the strengthening of Canadian intellectual property rights. It remains to be seen how and when these provisions will be implemented into current Canadian laws, as well as how they will be enforced once adopted. The Agreement, in addition to the Chapter pertaining to IP law, can be accessed using the following links: USMCA and Chapter 20 (Intellectual Property).

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  • A picture is worth a thousand woes!

    A recent Federal Court decision 1 reiterates the importance of protecting the main design elements featured on products and packaging. This decision also recalls the dangers of too closely mimicking the appearance of a competitor’s products. Goudreau Gage Dubuc, one of the leading intellectual property firms in Canada, joins Lavery Lawyers. The two firms have integrated their operations in order to offer their clients a complete range of legal services. The integration consolidates Lavery’s multidisciplinary approach. As the largest independent law firm in Quebec, Lavery is continuing to grow by adding the expertise brought by lawyers, patent agents and trademark agents specializing in intellectual property law, who belong to one of the most respected teams in the country. To learn more, visit www.YourIPLawyers.ca. --> In its ruling, the Federal Court sided with Diageo Canada Inc. (“Diageo”) and ordered Heaven Hill Distilleries, Inc. (“Heaven Hill”) to cease the sale of its ADMIRAL NELSON’S rum. The Court came to this decision after concluding that the design elements of the ADMIRAL NELSON’S label caused confusion with the label of CAPTAIN MORGAN bottles of rum.   In addition to having to cease selling and promoting its product, Heaven Hill will have to comply with the following order from the Court (unless an appeal is filed): destroy the bottles and all material containing the image in question (including all packages, labels, and advertising material); pay damages to Diageo or pay to Diageo the profits made from the sale of its ADMIRAL NELSON’S rum. Here are some tips to remember in order to avoid conflicts and the drastic consequences that may follow: seek advice from experts before adopting visual elements similar to those of your competitors; carry out searches for the main design elements that you intend to use on your labels and packaging; protect the main design elements that distinguish your products to be in a strong position to act against competitors if need be. Prevention is better than cure! Diageo Canada Inc. v. Heaven Hill Distilleries Inc.and al 2017 FC 571

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  • Exemptions to infringement for research under Canadian law

    Various jurisdictions provide exemptions to patent infringement based on research or non-commercial activities.  Canada is no exception (pun intended) and provides both statutory and common law exemptions to patent infringement. Statutory Exemption The statutory exemption to infringement under Canadian law is based on section 55.2(1) of the Patent Act: It is not an infringement of a patent for any person to make, construct, use or sell the patented invention solely for uses reasonably related to the development and submission of information required under any law of Canada, a province or a country other than Canada that regulates the manufacture, construction, use or sale of any product. This section generally concerns activities related to the development and submission of information required by a regulatory body. In the US, the corresponding provision is sometimes referred to as the “Hatch-Waxman exemption”, “271(e)(1) exemption”, “Bolar exemption” or the “FDA safe harbor”.  While the Canadian provision relates to regulatory approval for inventions in any area of technology (i.e., is not limited to medicines), the cases that have come before the Canadian Courts are primarily in the pharmaceutical area, most often in the context of a generic manufacturer performing tests in respect of a patented drug. Further, this provision relates to information that may be required by a regulatory body anywhere (i.e., not just in Canada). Common Law Exemption The common law exemption is in addition to the statutory exemption.  The landmark case relating to the common law exemption is the Supreme Court decision in Micro Chemicals 1, where Micro Chemicals performed various experiments to establish that it was capable of producing a patented drug, for which they intended to obtain a compulsory license from the patentee. The Supreme Court found that Micro Chemicals’ activities in this regard did not constitute infringement, based in particular on the following criteria: the compound was produced in small amounts; the compound was kept by Micro Chemicals and never entered into commerce; the patentee suffered no damage based on these activities; Micro Chemicals made no profits based on these activities; and the activities were considered bona fide However, some passages of the Micro Chemicals decision suggested that the Court’s reasoning may have been influenced by the fact that these research activities occurred in the context of Canada’s earlier compulsory licensing regime for medicines, which has since been eliminated. Both the statutory and common law exemptions were revisited by the Federal Court of Appeal in the Merck v. Apotex, 2006 2 case. Merck v. Apotex, 2006 Regarding the statutory exemption, the Court adopted a broad interpretation of section 55.2(1), considering the test samples in question to be “reasonably related” to regulatory submission: Any samples which are reasonably related to the development and submission of information under legislation or regulations are exempt by the provision. It does not limit the exemption to information actually submitted.  Regarding the common law exemption, the Court disagreed with the Patentee’s arguments that the exemption defined in Micro Chemicals no longer applies in the absence of a compulsory licensing regime, commenting that: I reject this assertion that the Micro Chemicals exception is limited and only applies as an adjunct to the grant of compulsory licences … In my analysis, all that is required is that the infringing product was made merely by way of bona fide experiment, and not with the intention of selling and making use of the product in the commercial market. The Court did note, however, that: once the user had proceeded beyond the experimental and testing phase and has taken steps to manufacture, promote and sell the product, the fair dealing exception no longer applies. Thus it appears that activities which are limited to experimentation/testing, and do not advance to the stage of manufacture, promotion or sale, could fall under the common law exemption. Maintain good records! More recent decisions by the Courts have indicated that the use and status of such experimental samples should be carefully documented, in case it is necessary to establish that they were not destined for commerce. In Apotex v. Sanofi-Aventis 3,  failure to produce records that certain lots were destroyed led the Court to conclude that the experimental and regulatory use exemption did not apply to those lots. The importance of such record-keeping was confirmed in the Teva and Apotex v. Novartis 4 case, the Court noting that: Apotex bears the burden of demonstrating that the imatinib inventory was used for experimental or regulatory uses and that no portion of the inventory was or will be used commercially. The Court did find the inventory to be exempt from infringement, since Apotex was able to account for the inventory, and further assured that the inventory would not be used commercially and would be destroyed once it expires. Conclusions In practice, exemption issues are fact-specific and need to be assessed on a case by case basis. It appears that research activities purely relating to experimentation, in respect of samples which are never commercialized (with supporting documentation), are considered exempt from infringement in Canada. Please contact us should you require any information regarding Canadian intellectual property matters. Kindly note that the above commentary is general in nature and cannot be considered to replace legal advice in relation to specific matters. Micro Chemicals Ltd. V. Smith Kline & French Inter-American Corp. (1971), 2 C.P.R. (2d) 193 (SCC). Merck & Co. v. Apotex Inc., 2006 FCA 323. Apotex Inc. v. Sanofi-Aventis, 2013 FCA 141. Teva Canada Ltd. and Apotex Inc. v. Novartis AG, 2013 FC 141.

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  • Beware If You Compare: Data Protection May Stop Approval Of A New Drug Submission

    Sanofi-Aventis’s ELOXATIN® had been sold in Canada since 1999 under the Special Access Program (SAP) of Health Canada, which allows for sale of a drug in exceptional cases prior to receiving regular marketing approval, i.e. prior to the issuance of a Notice of Compliance (NOC).  The active ingredient is Oxaliplatin, an injectable medication for colorectal cancer chemotherapy and one of the best-selling cancer drugs in the world. On October 27, 2006, Hospira filed a new drug submission (NDS) in Canada for Oxaliplatin.  This was one month before Sanofi-Aventis filed their own NDS for ELOXATIN®. Hospira’s NDS encountered difficulties and was not approved during the usual time-frame of one to two years.  Meanwhile, Sanofi-Aventis leapfrogged Hospira’s application and was first to receive a NOC, in 2007.  Because it was first to obtain marketing approval, it was granted Innovative Drug status and data protection, expiring on December 15, 2015.  During that time, other applicants would not be allowed to refer to ELOXATIN®’s Innovative Drug data, including product monograph information or safety and efficacy data.    The data protection regime is established by the Food and Drug Regulations, more precisely section C.08.004.1. Usually, data protection cannot prevent issuance of a NOC to a sponsor that does not refer to a drug currently under data protection.  Thus, in most cases where an independent NDS is filed, data protection cannot be invoked. In this situation, Hospira corresponded with Health Canada for years before it finally qualified for a NOC in 2013. Hospira accomplished this by relying on new information related to Sanofi’s ELOXATIN®, including its Canadian product monograph. Unfortunately for Hospira, this attempt to move their application forward is ultimately what stopped it in its tracks.  In the fall of 2013, Health Canada refused to issue a NOC to Hospira because it had made a comparison to ELOXATIN®, which was still under data protection. Hospira applied to the Federal Court to overturn the decision.  On November 6, 2015, the Federal Court dismissed the case (Hospira Healthcare Corporation c. Canada (Health), 2015 FC 1205). The Court concluded that Health Canada was correct in finding that data protection applied even if the comparison to ELOXATIN® occurred as a post-filing amendment to an independent NDS. This decision demonstrates how cautious applicants must be when agreeing to make a direct or indirect comparison to a drug under data protection. Health Canada will not guide applicants through such aspects of the process, and so they may spend years breaking down a wooden door only to find a concrete wall on the other side.  Please contact Serge Shahinian for more details on these issues.

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