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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
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
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
The Canada-European Union Comprehensive Economic and Trade Agreement (CETA) is coming into force today!
It is today, September 21st 2017, that Bill C-30 1 comes into force. As a result of its provisions, several Canadian laws are amended in order to allow for implementation of the Canada–European Union Comprehensive Economic and Trade Agreement “CETA” 2. Chapter 20 of the CETA deals with the commitments made by signatories in relation to intellectual property rights. Here is a summary of the principal changes brought to the legislative schemes governing these rights: Trade-marks Expressions that depict the place of origin of goods are not registrable as trade-marks under the Trade-marks Act 3. Only the designation of wines and spirits by Geographical Indications “GIs” can be protected under this act 4. CETA broadens the protection to more than 170 GIs, which are listed under Annex 20-A of the agreement. From this day forward, in Canada, it is prohibited to use a GI in association with a product if it does not originate from the territory specified in Annex 20-A, or if it does originate from the specified territory but was not produced in accordance with the laws and regulations governing the specified territory. Subject to certain exceptions provided by law, the use of terms such as “kind”, “type”, “style” or “imitation” in combination with a listed GI is also prohibited. These prohibitions will undoubtedly prompt changes in advertising, packaging and procurement of food-related products sold in Canada. Therefore, agri-food companies can benefit from a better understanding of their rights in relation to the use of GIs and should consider taking concrete actions in response to imminent competition. Our previous newsletter provides a series of recommendations to that effect. Patents The legal regime governing patent protection of innovative drugs and marketing of generic equivalents has been considerably modified in order for Canada to meet its CETA undertakings. A more detailed analysis of the new provisions will be published shortly; however it is relevant to summarize their substance as follows: – Patent Term Extension In order to compensate for time spent in research and obtaining marketing authorization 5, that is, a Notice of Compliance “NOC”, Canada’s Minister of Health is now authorized to issue a certificate of supplementary protection “CSP” to patentees with patents relating to new human and veterinary drugs. The term “new” refers to a drug containing active ingredients that have not been previously approved in a NOC. A CSP confers the exclusive right to prevent the manufacture, use or sale of the patented drug. The CSP is also subject, like a patent, to a validity challenge. Capped at a maximum of 2 years, the precise term of a CSP is set to be the difference between the date of the filing of the patent application and the date of issuance of the authorization for sale (NOC), minus five years. The Minister of Health can reduce this calculated term taking into account delays caused by the NOC applicant. A single CSP may be requested for a product, even though the product may be protected by more than one patent. The term of protection takes effect upon the expiry of the basic patent and, in cases where several patentees hold a patent protecting their respective products, at the expiration of the patent of the holder who files the application for additional protection. Other conditions apply. – Equal Rights of Appeal and the End of “Dual Litigation” In Canada, the right of a pharmaceutical company to market a generic version of a patented drug product is conditional upon obtaining a NOC issued by Health Canada certifying the bioequivalence of the generic product. Before proceeding with the sale of a generic version of a brand name drug, the generic company must provide the manufacturer of the brand name drug with a notice of allegation indicating “NOA”: that it accepts that the generic product will not be sold before the patent expires, or that the patent is invalid, or that the generic company does not infringe any patent claim relating to the medicinal ingredient, the formulation, the dosage form or the use of the medicinal form. Until now, the brand manufacturer could respond to the NOA by initiating a summary court proceeding to obtain a prohibition order preventing Health Canada from issuing a NOC to the generic manufacturer. If the Court application was rejected, the brand manufacturer could theoretically appeal the decision to higher Court. However, the appeals were generally rejected as rendered moot by the issuance of a NOC by Health Canada immediately after the first Court decision. Although the allegations of patent invalidity and infringement were examined by the Court in the proceedings described above, the decisions on these matters were not final. Consequently, the same parties could engage in an infringement or invalidity action, in parallel or subsequently, to debate the allegations. By ratifying the CETA, Canada committed to ensuring that the pharmaceutical linkage mechanism provides all litigants with equivalent rights of appeal. Accordingly, the Patented Medicines (Notice of Compliance) Regulations 6 were amended to allow the Court to grant an injunction against a generic company to stop acts of counterfeiting. This remedy can now be ordered despite the issuance of a NOC by Health Canada. The amended Regulations also replace the summary procedure described above by a complete action enabling the Court to rule definitively on issues of invalidity and infringement. This new framework will limit the parties from engaging in parallel actions on the same issues, thus reducing the risk of conflicting judgments. Copyrights The Copyright Act 7 has been amended in 2012 to reflect the standards established by the World Intellectual Property Organization 8. No further modifications were required to ensure Canada’s compliance with the CETA’s requirements. Industrial Design Under the CETA, Canada has committed to make all reasonable efforts to accede to the Geneva Act of the Hague Agreement Concerning the International Registration of Industrial Designs. Although the Hague System is not yet in force in Canada, many amendments have already been made to the Industrial Design Act 9 and proposed industrial design regulations have been drafted 10 to facilitate Canada’s adherence to the Hague System. Plant Varieties By ratifying the CETA, Canada has committed to cooperating with the European Union countries to promote and strengthen plant variety protections on the basis of the 1991 Act of the International Convention for the Protection of New Varieties of Plants. Canadian legislation has not been affected by this commitment. Canada–European Union Comprehensive Economic and Trade Agreement Implementation Act, L.C. 2017, c. 6. The complete text of the CETA, online: http://www.international.gc.ca/trade-commerce/trade-agreements-accords-commerciaux/agr-acc/ceta-aecg/text-texte/toc-tdm.aspx?lang=eng. Trade-marks Act, R.S.C., 1985, c. T-13, section 12(1)b). Trade-marks Act, supra note 3, section 2. Government of Canada, « REGULATORY IMPACT ANALYSIS STATEMENT», Canada Gazette, Vol. 151, no 28, July 15, 2017, available online : http://www.gazette.gc.ca/rp-pr/p1/2017/2017-07-15/html/reg16-eng.php. DORS/93-133. R.S.C., 1985, c. C-42. WIPO Copyright Treaty; WIPO Performances and Phonograms Treaty. R.S.C., 1985, c. I-9 Government of Canada, «Proposed Industrial Design Regulations draft», online : http://www.ic.gc.ca/eic/site/cipointernet-internetopic.nsf/eng/wr04255.html.
Omnibus Bill C-43 – PLT and the Hague Agreement
Bill C-43 was introduced in the House of Commons of Canada on October 23rd, 2014. This omnibus budget bill, also referred to as the Economic Action Plan 2014 Act, No. 2, enacts and amends more than twenty (20) different statutes, including the Patent Act and the Industrial Design Act. Regarding the Patent Act, Bill C-43 adopts provisions consistent with the Patent Law Treaty to which Canada is a signatory. The amendments to the Patent Act include, among others: allowing the incorporation by reference in a patent application of subject matter contained in a previously filed application, providing safeguards against unintended losses of rights in respect of certain requirements, allowing the addition of matter in a patent application, under certain circumstances – in particular, when the additional matter was contained in a priority application, the filing date of the application may be maintained, and providing a possible two-month grace period after the usual twelve month priority period for filing a patent application claiming priority from a previously filed application, under limited circumstances. 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. --> The “Summary” of Bill C-43 also announces that the requirements for obtaining a filing date for a patent application are reduced. However, the details of such changes are not apparent from the Bill itself and will likely be clarified in future amendments to the Patent Rules. Bill C-43 also rewrites the Industrial Design Act to make it consistent with the Geneva (1999) Act of the Hague Agreement Concerning the International Registration of Industrial Designs. The amendments include provisions relating to the contents of an application for the registration of a design, requests for priority, and the term of an exclusive right for a design. Bill C-43 is in the first stage of the legislative process. It must be submitted to the usual parliamentary debates and committees over the next few months. Furthermore, new Patent Rules and Industrial Designs Rules ancillary to the amended statutes must be prepared and adopted when the amended statutes come into force. This is a link to the Parliament of Canada providing progress updates on Bill C-43.