CHAPTER 5
INTELLECTUAL PROPERTIES
I. PATENTS
a.
b.
c.
d.
KEY QUESTIONS
IS IT PATENTABLE?
WHO OWNS IT?
PATENT INFRINGEMENT
(version
(version
(version
(version
2004 SWGoodwin)
2004 SWGoodwin)
1999 SWGoodwin)
2004 SWGoodwin)
The most substantive textual changes in the 2004 compared to the 1999 version are in
the tests for patentability:
• The subject matter of a patent application is now barred if the subject matter
“became available to the public in Canada or elsewhere” rather than being in
public use or on sale.
• An invention is judged as being novel as of the claim date and obvious as of the
publication date, the publication date being different for pre and post 1989
patents.
• Official Fees at the Patent Office
a. KEY QUESTIONS
i.
WHAT IS A PATENT?
ii. WHAT DO PATENTS PROTECT?
iii. WHAT ARE THE TESTS OF PATENTABILITY?
iv. HOW IS CANADIAN PATENT PROTECTION ACQUIRED?
v. WHAT IS A PATENT PENDING
vi. HOW LONG DO CANADIAN PATENTS LAST?
vii.
HOW ARE PATENT RIGHTS PROTECTED ONCE A PATENT IS GRANTED?
viii.
WHAT IS PATENT INFRINGEMENT?
ix. WHAT ARE THE REMEDIES FOR PATENT INFRINGEMENT?
x. ARE THERE FOREIGN RIGHTS GRANTED WITH A CANADIAN PATENT?
2
i. WHAT IS A PATENT?
A patent is a government-sanctioned form of limited monopoly or exclusivity. It is a legal means of
enforcing this exclusivity for preventing anyone from producing or copying an invention without the
permission of the owner. The Patent Act permits the patent holder to prevent third parties from
manufacturing, using or selling any product which uses the invention which is the subject of the patent. A
patent must be held in the country in which the patent holder wishes to enforce his patent rights. The
patent holder only obtains these rights in the country in which he obtains a patent. The patent system is
intended to encourage innovation and technological advancement by providing inventors wit hthe
exclusive right to commercially exploit the product for a time in exchange for making make public the
details of their work. In this way, society benefits from the increase in the level of technology and
information available to the public, and the inventor, in theory, benefits from the opportunity to produce
and sell products featuring new technology without having to compete with rival producers who would
otherwise profit from the introduction of new technology without having to spend the resources to create it.
ii. WHAT DO PATENTS PROTECT?
Patents protect “inventions”. Invention is defined in the Patent Act as “any new and useful art, process,
machine, manufacture or composition of matter, or any new and useful improvement in any art, process,
machine, manufacture or composition of matter”. Where a patent is granted for an invention, it protects
the entire invention and anything manufactured using the invention. Where a patent is granted for any new
and useful improvement to a process, machine or method of manufacture, the only part which may be
patented is the improvement or the new use, i.e., you may not obtain a patent on the entire process,
machine or method of manufacture. In addition, obtaining patent for the new use will not give you the right
to use the original invention. Therefore, if the original invention is still protected under a valid patent, the
inventor of the improvement may consider obtaining a licence from the owner of the base or pioneering
patent. This allows the inventor of the improvement the right to produce the new invention without
infringing the original patent. A wooden bench presents an easy way to illustrate this. Suppose that
someone had an idea for a bench with four legs. The first person with this idea could obtain a patent. The
patent would simply recite that the inventor claimed rights on a configuration containing a bench with four
legs used for sitting. Then, suppose someone else came along and put a back on that configuration. That
person could obtain a patent on a bench with four legs as modified by inclusion of the back. Someone else
might than add a padded cushion and so on. Each person improving the product would have to get a
licence from the other people whose patented subject matter was used in the improved bench. The
pioneering inventor who had the basic patents would obtain some benefit, through royalties, by allowing
people to improve the product and obtain a larger market for their four-legged bench. Further, by
obtaining a license from the inventor of the improvement (a cross-license), the pioneering inventor could
receive the right to use the improvement.
Patents do not apply to subjects covered by the Copyright Act (original literary, musical, dramatic, and
artistic works, including computer software), the Industrial Design Act (shapes, features or ornamentation
without functional or utilitarian purpose), or the Trade Mark Act (words, symbols or pictures, or
combinations thereof, which are used to distinguish the goods or services of one person or business from
another within the marketplace).
Patents are also not available for disembodied ideas (e.g., theorems, mathematical formulae, scientific
principles) or for methods of medical treatments such as surgical techniques and the administration of
vaccines.
On the other hand, a practical embodiment making use of a scientific principle is patentable. For example,
if a mining company developed a system to use sound waves to find different types of metals in the
ground, that would be patentable. But the mere principle that sound waves have such an application would
not be patentable. The principle of law denying patents for scientific principles and abstract theorems
found its origins in very old cases, and now with the advent of computer programs, the Patent Office has
been prompted to set guidelines which deny patents for unapplied math formulae and mere programs.
Genes and Genetic Information
Chapter 5 – Patents - Oct 2004 as amended, Sean Goodwin
Canada allows patents for modified human genes and cell lines.
See Cases:
Monsanto Canada Inc. v. Schmeiser. 2004 SCC 34.
Moore v. Regents of California. 249 Cal.Rep. 494 [1988],
Re Application of Abitibi Co. (1982), 62 C.P.R. (2d) 81
Lower Life Forms
Canada allows patents for single-celled organisms including but not limited to yeasts, bacteria, and
genetically modified crops.
In Re Application of Abitibi Co. the court specifically addressed which lower life forms were patentable. “…
this decision will extend to all micro-organisms, yeasts, moulds, fungi, bacteria, actinomycetes, unicellular
algae, cell lines, viruses or protozoa; in fact to all new life forms which are produced en masse as
chemical compounds are prepared, and are formed in such large numbers that any measurable quantity
will possess uniform properties and characteristics.”
See Cases:
Diamond v. Chakrabarty, 447 U.S. 303 (1980)
Continental Soya Co. v. J. R. Short Milling Co. (Canada) Ltd., [1942] S.C.R. 187.
Laboratoire Pentagone Ltée v. Parke, Davis & Co., [1968] S.C.R. 307.
Re Application of Abitibi Co. (1982), 62 C.P.R. (2d) 81.
Higher Life Forms
With Harvard College v. Canada (Commissioner of Patents) in 2002, Canada became the only
industrialized country to prohibit patents for higher life forms.
In this case, Harvard wanted to protect the process by which a genetically modified mouse is produced
and the mouse and offspring which contain the oncogene. The claims also extended to all non-human
mammals containing the oncogene.
Given the complex ethical and legal questions and the fact that the Patent Act is well over 100 years old,
the judges set aside the matter for debate by Parliament.
See Cases:
Harvard College v. Canada (Commissioner of Patents), [2002] 4 S.C.R. 45, 2002 SCC 76.
Pioneer Hi-Bred Ltd. v. Canada (Commissioner of Patents), [1989] 1 S.C.R. 1623, aff'g [1987] 3 F.C. 8,
aff'g (1986).
iii. WHAT ARE THE TESTS OF PATENTABILITY?
The Canadian Intellectual Property Office applies three general criteria when examining a patent
application. An invention must satisfy the tests of novelty, utility, and inventive ingenuity before it can be
the subject of a valid patent.
a. Novelty
Subject to limited exceptions, no invention which has been publicly disclosed anywhere in the world can
be the subject of patent in Canada. There is no all-inclusive definition of what constitutes “public
disclosure”. The subject matter of a patent application is barred if the subject matter became available to
the public in Canada or elsewhere. For example, publication of the subject matter of the patent in other
jurisdictions such as in patents, patent applications, publications in technical journals or periodicals, or
public sale or use of an invention which makes the invention available to the public would be considered
public disclosure, and thus prevent a successful patent application. One cannot patent a “neat” device
which the proposed applicant had seen in another country. The applicant themselves do get a one year
grace period in which to make application after their own disclosure.
Chapter 5 – Patents - Oct 2004 as amended, Sean Goodwin
The date at which an invention is judged as being novel is the claim date. Claim date is defined as the
date at which the application for a patent was filed in Canada or the date of an earlier filed application,
filed in some other qualifying country.
b. Utility
An invention must have utility in order to be the subject of a valid patent. For example, it must have a use.
Therefore, a perpetual motion machine would not be patentable since it has no function, however, a paper
clip would. Use can be interpreted as broadly as being something which gives the consumer a “choice.”
Whether or not an invention possesses utility is a question of fact which must be decided according to the
evidence of individuals having the technical skill and knowledge to allow them to understand the subject
for which the patent was granted.
c. Inventive Ingenuity (or non-obviousness)
To be patentable, an invention must be a development or an improvement that would not have been
obvious beforehand to workers of average skill in the technology involved. Oddly, the date at which an
invention is judged as obvious or not is the publication date. Publication date has been determined to be
either the issue date for pre-1989 patents (the first time the subject matter becomes published) or the laidopen date of post 1989 applications.
This requirement for inventive ingenuity is now expressly set forth in the Patent Act. Inventive ingenuity
has developed from case law dealing with the validity of patents. This is a very subjective area and to a
large extent depends on personal judgement. In other words, everything seems obvious in hindsight,
however inappropriate.
iv. HOW IS CANADIAN PATENT PROTECTION ACQUIRED?
The first step in the process of patent acquisition depends upon several factors including: pending
limitation dates, the client’s prior disclosure of the invention and cost. Options include:
1•
performing a patentability search,
2•
proceeding immediately to prepare and file a full-blown application, or
3•
filing an informal application, subject to uncertain validity in the future.
Ideally, the first step is to conduct a patent search. The purpose of the search is to attempt to determine if
there are any prior art; that is pre-existing patents, technical literature or disclosures describing the
invention, that would have the effect of invalidating any patent application.
The search might be skipped if the inventor is certain that no prior art exists (unlikely unless the inventor is
a world authority) or if the invention is so simple that the cost of preparing the application is only marginally
more that performing the search itself.
The method of search will vary depending upon the amount of time and money the applicant is prepared
to spend. Searches methods include a computer database search and manual searches. Computer
searches are the cheaper of the two but are less likely to be comprehensive and are substantially limited
to technological art which is fairly new so that is has been recorded digitally. Otherwise a more expensive
manual search is necessary. A manual search can be undertaken in person at the Canadian Intellectual
Property Office in Gatineau, Quebec (formerly Hull, QU – the name changed not the geographical
location). Here the searcher would have physical access to copies of over two million Canadian and nearly
seven million U.S. patents. Considerable time would be needed in order to acquire the research skills
necessary to do a proper search of this huge mass of information. One alternative to a personal search is
to hire a patent agent or professional “search-house” (see the Yellow Pages under “Searchers of Record”
or “Patent Searchers”) to conduct the search. The advantage to this search method is the technical
knowledge of the professional searcher, who should be able to accurately define the range of the search,
thus reducing the amount of time spent in the search process and increasing the probability of obtaining a
valid search result. The cost of hiring a professional will, however, be relatively high but is a form of
Chapter 5 – Patents - Oct 2004 as amended, Sean Goodwin
insurance against fruitless expenditure or costs for an application that will never be issued.
No matter what search method is pursued, it may not be possible to determine with absolute certainty that
an invention is unpatentable as a result of prior art. Even a comprehensive worldwide search of all
available patent registries and technical sources (which would be very expensive and time-consuming)
would not necessarily reveal the existence of prior inventions. Thus, the main purpose of the preliminary
research should be to canvas the likely sources from which information invalidating a proposed patent
would be found.
Once the patent search is complete, and assuming the results are favourable, the next step is the
preparation of the application itself.
As stated earlier, the application could be informal or formal, and can be submitted electronically or
delivered to the patent office in a variety of ways.
In an informal Canadian application, the Patent Office requires merely: an indication that a patent is
sought, the name and address of the application or agent, a document which “appears on its face” to
describe an invention, and the appropriate filing fee. The description may be merely a collection of the
inventor’s notes, thus saving the expensive preparation by a patent agent. While this sounds ideal for a
low cost entry to the patent system, in fact it is fraught with danger and commits the inventor into the
ongoing patenting process. More particularly, the initial informal application must contain the fully describe
the invention and all of its essential elements, despite the lack of formality in the structure of presentation.
If an essential element is omitted, then the application based thereon could be deemed invalid. If a faulty
informal application was made, and the invention was disclosed prior to filing of a regular formal
application, then a later application to the European Patent Office could be barred, and the earlier
application could possibly be used a prior art against the later regular application if not withdrawn. Note
that a “completed” or regular application (described below) must be filed within 15 months or 3 months
after notice by the Patent Office. More importantly, one still must file a regular application in foreign
countries within 12 months (per the Paris Convention) so the 15 months is usually a moot option.
The choice to proceed with an informal application is very case-specific and must be discussed with a
patent agent to avoid permanent loss of the rights usually afforded under the patent system by filing a
regular application.
A regular application consists of several components; the petition (usually a letter form); the technical
portion of the patent application comprising the disclosure, the claims, the abstract, and the drawings; as
well as the filing fees.
a. Petition
This document states that you made the invention, that you believe you are entitled to a patent for it,
whether you are a small entity (50 or fewer employees), and whether you have appointed an agent for the
prosecution of your application (mandatory if the applicant is not the inventor).
b. Abstract
This should be a brief description of the technical content of the disclosure, including the advance made
and the utility of the invention. In Canada, the abstract is not used to construe the scope of the invention
but acts merely as a guide.
c. Disclosure
In the specification, you must describe the prior technology or art, the invention and its solution over the
prior art. The method or best mode of making or carrying out the invention must be clearly described.
Basically, the disclosure must be enabling; like a recipe for carrying out or making the invention. There
should also be a brief description of each view of the drawings.
d. Claims
These should state exactly what you regard as new and in which you claim an exclusive property or
Chapter 5 – Patents - Oct 2004 as amended, Sean Goodwin
privilege. The claim is presented in a single sentence format.
e. Drawings
These must be included whenever the invention can be illustrated by a drawing. You must include
drawings in a form and style acceptable to the Intellectual Property Office showing all parts of the
invention.
Despite your or your agent’s best efforts, when the application is examined, the examiner will usually issue
one or more objections, requiring the inventor to clarify something or to substantiate the claims (i.e., the
examiner tries to narrow the claims, while the inventor tries to broaden the claims). When the objections
are resolved, a decision is made by the Commissioner of Patents and the patent is either granted or
denied. In the latter case, the decision of the Commissioner can be appealed to the Federal Court of
Canada.
The first to file a patent application is afforded the rights of patent protection (note that a person who
learned of an invention from others may not file for a patent without committing a fraud). Therefore, timing
is important. Filing after a second independent and legitimate inventor means you lose your patent rights,
even if you can prove that you were the first to conceive of the invention. Filing too early means some
features of the invention may not have been included in the application or sufficiently refined; this may
mean that you will have to abandon the original application, reapply and incur additional expense.
If the inventor or someone who learns of the invention from the inventor discloses the invention during the
year prior to filing, the inventor can still receive patent protection in Canada, the United States, perhaps
Australia, but the opportunity is lost in most other countries. If the invention is disclosed by others
(typically because another was developing a similar technology) then one can no longer make a valid
application for the invention.
v. WHAT IS PATENT PENDING?
“Patent pending” or “Patent Applied For” are markings which are sometimes used to give informal notice
that a filing of an application has been made. It does not indicate that any rights have been confirmed.
Marking is not mandatory.
Therefore, remedies for an infringement during the patent pending stage are weak; little prevents a
competitor from manufacturing and selling the product. Once a patent is granted, however, others would
not be able to make, use or sell the invention or be subject to remedies including injunctions, delivery up
of any infringing product and damages. Further, reasonable compensation can be sought back to the
date the application was laid open to inspection to the public. The invention should be marked with the
word “patented” in order to further enhance the patent holder’s rights.
It is prohibited to mark a product “Patented” if a patent hasn’t been granted. Likewise, it is also prohibited
to mark “Patent Pending” in the U.S. if you have not actually made such an application. Fines may be
imposed under the Patent Act for violation.
vi. HOW LONG DO CANADIAN PATENTS LAST?
Under the 1989 amendments to the Patent Act, the term of grant is 20 years (likewise, after June 1995 in
the U.S.). It should be noted, however, that the 20 year span begins upon filing the application, and that
patent rights are not granted until the patent application is allowed, which may be some months or years
after the date of filing. It is also important to note that Canadian applications are now made public 18
months after filing (laid open), and that no protection is given under the Act until the grant of patent issues
(although some retro-active remedies are available under the Act to the late open date).
vii. HOW ARE PATENT RIGHTS PROTECTED ONCE A PATENT IS GRANTED?
It is the responsibility of the patent holder to enforce his rights in the patent against persons who infringe
those rights. The Patent Act makes no provision for any participation by the Intellectual Property Office in
the detection or prevention of patent infringement. Actions for patent infringement are normally
commenced in the Federal Court of Canada, with appeals to the Federal Court of Appeal and the
Chapter 5 – Patents - Oct 2004 as amended, Sean Goodwin
Supreme Court of Canada available.
viii. WHAT IS PATENT INFRINGEMENT?
Infringement is any act which interferes with the exclusive rights of the patent holder without the consent
of the holder. Examples of infringement of a Canadian Patent include the unauthorized production, use or
sale of the patented invention within Canada during the term of the patent protection. Manufacture in a
foreign jurisdiction, import and sale in Canada is an infringement. Manufacture in Canada and sale
overseas is also infringement.
A patent holder who believes his patent has been infringed may initiate legal proceedings. In such an
action, defences include that there is no infringement, an allegation that the patent was invalid due to an
improper claim (once again the significance of a Patent Agent should be noted); the invention was not
proper subject matter.
ix. WHAT ARE THE REMEDIES FOR PATENT INFRINGEMENT?
Once an infringement has been established, the person who infringed upon the patent is liable to the
patent holder for damages sustained or an accounting for profits. While rare, an injunction may be granted
prior to trial. The patent holder may be entitled to an order requiring all infringing articles to be delivered to
the patent holder or for the infringing articles to be destroyed. The limitation period for bringing an action
for patent infringement is now six years.
x. ARE THERE FOREIGN RIGHTS GRANTED WITH A CANADIAN PATENT?
A Canadian patent protects the patent holder’s rights in Canada only. Generally, patent rights in other
countries must be applied for separately. Canada is a member of the Paris Union Convention which gives
the inventor one year to file in other convention countries from the date of original application and maintain
the original filing date. Canada is also a signatory to the Patent Co-operation Treaty (PCT). This is an
international agreement relating to the international filing of patent applications. Canada became a
signatory to the PCT in January, 1990, thus allowing Canadian nationals to participate in the PCT system
of registration. The PCT does not grant “international” patents. Each member country still maintains its
own patent system, and an application must still be filed in each country in which an inventor wishes to
acquire patent protection. The PCT does allow an inventor to make all of his foreign filings through one
agency, performs a search, can perform an international examination, and does give the inventor more
time (up to 30 months from the date of filing in the jurisdiction of origin) to file in other jurisdictions without
losing priority of registration. This allows the inventor to fully explore the desirability of making multiple
foreign applications without losing the opportunity to make those filings because of missed limitation
deadlines. A PCT application also forestalls the cost of making multiple individual applications in each of
the foreign countries and paying each of their fees.
xi.
CHANGES TO PATENT LEGISLATION AS A RESULT OF THE WORLD TRADE
ORGANIZATION AGREEMENT
The term “country” now includes members of the WTO. The effect of this amendment allows for
convention priority claims from WTO members who are not members of the Paris Convention. Another
amendment restricts the compulsory use by federal and provincial governments of semi-conductor
technology to public non-commercial use.
Additional Changes
In a response to mounting international pressure to respond to the AIDS crisis in the 3rd world, Parliament
introduced Bill C-9: An Act To Amend The Patent Act And The Food And Drugs Act on February 12, 2004.
The act was given royal assent on May 14, 2004. The act will facilitate access to pharmaceutical products
in the developing world, in order to address public health problems, especially those resulting from
HIV/AIDS, tuberculosis, malaria and other epidemics.
b.
IS IT PATENTABLE?
Chapter 5 – Patents - Oct 2004 as amended, Sean Goodwin
i.
General Information
Example Problem
Mary has developed a new type of “environmentally friendly carrying bag” which she would like to patent.
She believes the device will lead to a number of inventions which she is currently working on. She would
like information about patenting her invention. She also wonders whether conversations she has had with
Adidas about the bag affect her chances of obtaining a patent.
Required: Outline for Mary the requirements of patentability, the basics of the registration process, and
the potential costs, how long it will take and how to apply for more than one patent.
Solution: Prerequisites to Patentability of an Invention. There are several prerequisites to an invention
being patentable. They are:
1.
Novelty
In order to determine whether the first requirement is met, that is, whether the invention is novel, a
search should be undertaken provided the initial requirements of utility and inventive ingenuity are
satisfied. The patent legislation itself requires that, in order for a patent to be granted, the
invention must be “new” and no one else can have already filed an application for a patent for the
same invention. For an invention to be novel, it cannot have been anticipated. Anticipation is a
narrow concept and requires that each and every element or step of the invention be already
disclosed in a single previous reference or disclosure. A search can also tell you whether there is
any pre-existing technical literature or granted patents describing the invention, in which case an
application may be rejected on grounds of previous disclosure (as described below, under (5.) No
Prior Disclosure).
2.
Utility
A patent will not be granted where the invention is not useful. Therefore, it must be established
that the invention has some utility. This is a question of fact, and any utility at all will satisfy the
requirement. Clearly, the bag you have described has a purpose and will meet the criteria.
3.
Inventive Ingenuity
The invention must not be the next obvious step in the development of a technology that a person
skilled in the field would take in developing that technology. To put it another way, the invention
must be non-obvious to a person skilled in the area. This is usually the most difficult prerequisite
to overcome. To cite a very simple example, if the bag was an existing invention, and it was
made of leather, and someone came along and decided to make one out of nylon or some other
material, that would probably be seen as an obvious improvement to a bag maker developing the
idea of a bag. It would, therefore, fail the inventive ingenuity requirement.
4.
Proper Subject Matter
The invention must be something for which a patent, as opposed to copyright or trademark would
be appropriate as a means of protection. Essentially, for the purposes of your situation, the
invention must be a new and useful composition of matter, or an improvement to a composition of
matter. I think it is beyond doubt that, in your case, you are dealing with a composition of matter,
but this decision is for you and the person you retain to assist you in preparing a patent, if any.
5.
No Prior Disclosure
There are two ways to run afoul of the requirement that there be no prior disclosure of the
invention. First, the invention cannot have been disclosed by you (the inventor) to anyone, or by
someone to whom you disclosed the invention, such that it became available to the public more
than one year before the date of the application for the patent. As an example, if you told
somebody about it such that it became available to the public on January 15, 1995, then you
Chapter 5 – Patents - Oct 2004 as amended, Sean Goodwin
would have to apply for a patent in Canada on or before January 15, 1996, or the application
would be rejected on the ground that there has been prior disclosure. You will, therefore, have to
consider whether the disclosure that you made to Adidas was such that it became available to the
public. If you disclosed the invention to someone with Adidas, and they were in a relationship of
confidentiality with you, then there is probably no public disclosure of the invention. If you
disclosed it and received no guarantee or pledge of confidentiality, then the invention may already
have been made available to the public. It should be noted this one-year grace is limited to
Canada and the U.S., but no grace period is permitted under the domestic legislation of many
countries, including the legislation of most EEC members.
Second, the invention cannot have been disclosed by anyone other than you or someone you told
about it, such that it became available to the public, before the application for the patent is filed.
For example, if someone independently came up with the same invention and made it public
(whether or not they applied for a patent) before your application, the application would be
rejected on the ground of prior disclosure.
If these five requirements are met, then the invention is patentable. This, in itself, does not,
however, ensure that you will get a patent. A complex series of procedures must be followed and
fees must be paid, as outlined above. Also, ownership of the invention may be an issue.
The Patent Application
Once the application is received by the Intellectual Property Office, the applicant has a maximum of 5
years to request that the application be examined, and pay an examination fee. An applicant may choose
to wait before requesting examination to delay the cost of prosecuting the application. Because of the
backlog of applications, applicants can expect to wait upwards of three years before an application is
finally approved or refused. Thus, annual maintenance fees must be paid by the applicant on the second
anniversary and annually thereafter. Failure to pay the maintenance fee results in the abandonment of the
application.
Once a request for examination is made, an examiner will examine the application. The examiner will
normally issue one or more objections, with a view towards making the applicant refine or clarify his
claims or description of the invention. These are referred to as “an office action”. The process of
examination concludes when either a final rejection of the application is made or the application is allowed
(“Notice of Allowance”) and the final fee is paid, after which the grant of patent issues. An appeal system
is available in the event that an application is finally rejected.
It is almost essential that an inventor acquire the services of a registered patent agent if he wants to have
his patent application put together and prosecuted quickly and efficiently. An inventor can file and
prosecute an application for himself. However, the contents of an application are extremely technical and
detailed. Certain elements must be present and others will make the application more likely to succeed or
proceed more smoothly. A patent agent knows how to conduct a search, how to structure the application,
and how to keep it progressing smoothly through the Intellectual Property Office system.
One lawyer described filing for your own patent application as being akin to removing your own appendix;
painful, messy, and rarely successful.
Costs of Applying for a Patent
For simple cases, fees charged by a patent agent or patent lawyer for preparation of an application can
range from $4000 - 30,000. Obviously each case needs to be evaluated on its own merits.
As to the costs of prosecuting an application, there are set government fees. On filing an application, a fee
of $150 is required if you qualify as a small entity (50 or fewer employees). Fees are double for a large
entity. Within 5 years, you must also request that the application be examined by the Commissioner of
Patents. This request must be accompanied by a further fee of $200. As the patent application goes
through the process of filing, examinations, and ultimately being granted a patent, there are also
maintenance fees for every year.0
0
The first year costs nothing. For the second, third, and fourth years, the fee is $50 per year (quoted for
Chapter 5 – Patents - Oct 2004 as amended, Sean Goodwin
Note that these fees are application and prosecution fees for a Canadian patent only. The total cost of
applying for a Canadian patent would include legal fees, patent agent’s fees, and filing fees, to the point of
filing the application. After filing, the cost of prosecuting the application, dealing with objection,
maintenance fees, granting fees, etc. may involve substantial legal fees depending on the time involved.
How Long It Will Be
The whole process (in Canada) can be expected to take abut 2 ½ to 3 years from the time your completed
application is filed and the filing fee is paid until the patent is actually granted or denied. You can get the
Intellectual Property Office to do an expedited review of an application, by applying and paying a fee. This
is useful in several instances such as (1) where a third party is infringing the rights of the inventor and a
patent is needed to succeed in a legal action to stop or recover damages for the infringement, or (2)
where someone wants to buy the invention and it is a term of the transaction that the patent be granted.
Applications for Multiple Inventions
Section 36 of the Patent Act outlines the process for what are called “divisional applications” meaning
applications where the inventor claims a right to a patent for more than one invention, within the same
original application (i.e. a new downhole drilling tool and an improved drilling rig used to lift the new tool
and other tools as well). In your case, you can file one application for all of the inventions, and get patent
protection for any one of them in one patent. Or you may limit your claims to one invention only and file
separate divisional applications for the other inventions. This must be done before the issue of a patent on
the original application. These applications are separate applications for the purposes of the patent
legislation, and, therefore, separate filings, maintenance, examination, and granting fees must be paid for
each. You should also note that while it is generally up to you to decide whether to file a single application
or divisional applications for a series of inventions, the Commissioner of Patents can direct you to restrict
the original application to one invention and to submit separate applications for the others.
In either of these ways, you can get patent protection for all aspects of an invention that is actually made
up of several inventions.
c.
WHO OWNS IT?
i.
Employees
Example Problem
Cynthia has been working on a new type of door hinge during her lunch breaks and after work. She has
almost completed it. Since she works at a small tool and die company where she makes similar products,
she is concerned about her rights to a patent.
Required: Advise Cynthia about whether she has the right to patent on the invention.
Solution: Dear Cynthia: In the absence of any agreement, where an invention is made by an inventor
who is an employee, the invention will belong to the employee if it does not arise directly out of the work
assigned to the employee. For example, in your case, if your duties were to invent generally or to develop
the invention that you have developed, then the invention could belong to the employer. However, where
the invention did not arise directly out of the work assigned to you and there is no assignment of the
invention to the employer (like an employment agreement), the invention is probably yours.
You indicated that the invention was created using the facilities at your workplace but not during the
course of your employment there.
Obviously, the subjectivity inherent in all of this plus the likelihood that the precise facts (Did the invention
small entities – double these figures for Large Entity). This yearly fee increases as time goes on, to the
point where during the nineteenth year, the maintenance fee is $225. If a patent is finally granted, there is
a further fee of $150, plus $4 for every page of specifications and drawings in excess of 100 pages. There
are also many other fees that may have to be paid, depending on the circumstances of the application.
Chapter 5 – Patents - Oct 2004 as amended, Sean Goodwin
occur during company time? on company property? Was it the kind of thing you were hired to do?) are
less than 100% clear. Nonetheless it appears that the invention would be yours except for the problem of
the employment agreement which you signed. It is typical of those agreements that most companies
require you to transfer and assign all rights to inventions to your employer. Your employment agreement
provides as follows:
1.
The employee will assign to the company all rights to any invention made during the
course of employment.
2.
The employee will prosecute or assist in the prosecution of any patent application.
3.
If any patents are issued, the employee will assign them to the company.
Thus, notwithstanding that this invention was arguably not made in the course of your employment as part
of your assigned duties, you will not be able to claim the patent rights because of the employment
agreement which YOU signed, assigning all patent rights to inventions to your employer. A term like this
may be negotiated, or it may unfortunately be a condition for obtaining the job.
ii.
Co-Ownership/Improvements
Example Problem:
John, Mark and Greg had been working on a leg brace for amputees in their spare time. One weekend
John came up with an idea for a hinge that would connect the brace to the foot and later a running shoe
attachment. He would like to patent his invention.
Required: Advise John on who may have rights to the invention and what John’s personal rights are.
Solution: The first question to consider here is whether the relationship between you and the others who
had a hand in the invention is one of co-inventors or whether it is a case of them developing the base
invention and you coming up with a separate invention that can be considered an improvement to the
base.
When the first question is resolved, the following should be considered:
a)
If the relationship among the parties is that of co-inventors of the whole device, all of the
inventors must join in applying for the patent and the patent will be granted to them jointly.
Note that this will also apply to the running shoe invention.
b)
After preparation of an application, one may refer to the now-refined claims of the
invention. The true inventors are those whose embodied ideas survived the process and
appear in the claims.
c)
If the relationship is such that the others created the base invention and you alone
created the improvement, different considerations come into play:
(i)
Where the base is patented, an inventor who makes an improvement may obtain
a patent for the improvement (subject to the general requirements as set out
above). The Patent Act specifically provides for the patenting of improvements by
including ‘improvement’ in the definition of ‘invention’. The inventor of the
improvement must get a licence from the holder of the patent for the base if he
wishes to produce or sell the improvement in combination with the base.
(ii)
Where the base is not patented, the inventor of the improvement can get a patent
for the improvement and use the base without permission from the inventor of the
base. Upon receiving a patent for the improvement, the inventor of the
improvement will be able to manufacture and sell the entire device (base plus
improvement), but will have exclusive rights to the improvement only. The
inventor of the improvement who did not invent the base cannot get a patent for
the base, nor can he prevent others from manufacturing the base.
Chapter 5 – Patents - Oct 2004 as amended, Sean Goodwin
d.
PATENT INFRINGEMENT
i.
General Information
Example Problem
Terra ‘s business idea may involve producing and/or selling an article that has been patented without
obtaining permission from the owner of the patent.
Required: Outline for Terra the scope of protection a patent provides its owner, the risks she faces if her
product does infringe on a patent, and any defences she may claim.
Solution: If the article has been patented in Canada, the owner of the patent has an exclusive right (for
20 years) to prevent others from infringing the patent. Patent infringement is the unauthorized production,
use or sale of a patented invention. The Intellectual Property Office does not prosecute others for
infringing a patent; this is the responsibility of the owner of the patent.
If the owner of the patent discovers you are producing a product that they think infringes on his patent,
they may demand you stop or obtain a license, and if you do not the owner may seek an injunction
preventing further sales, sue you for damages in the appropriate court, demand an accounting of profits
and demand the infringing goods. You can defend your actions on various grounds.
A first defence would be to argue that your actions do not amount to infringement. This will be determined
in reference to what was claimed in the patent. There will be no infringement if what you are making does
not fall within the language of the claims of the patent.
Another ground is to challenge the validity of the patent. This would involve attacking the patent on the
basis that what was patented was not new, useful and unobvious.
It is no defence to a patent infringement action to argue that you did not know of the patent. Additionally,
failure by the owner to mark his product as ‘patented” has never been successfully used as a defence.
During or after a lawsuit, the Court may grant an injunction against you to restrain you from further
manufacturing, selling or using your product. The Court may also make an order for an inspection and
accounting for profits. In an accounting for profits, the profit you have made will be taken away and given
to the patent owner. You may have to pay damages to the patent owner for the loss of royalties he would
have received had you legally used his patent through licensing.
ii.
Infringement without a Patent
Example Problem
Martin, a poor inventor, has an invention for which, in his opinion, patent protection is not economical.
Blueprints of the invention have been notarized. If, after manufacturing the invention, a competitor copies
the invention and attempts to obtain a patent for it, can that competitor then force Martin to stop
production of his invention?
Required: Advise Martin whether his manufacturing business can be forced to stop production under
these circumstances.
Solution: Dear Martin: Basically the answer to your question is no. A Canadian patent can only be
obtained by the original inventor or by someone to whom the inventor has assigned his rights to the
invention; the competitor was neither. To be patented an invention must be not have been previously
made available to the public before the invention was made. In other words, your competitor could not
obtain a patent because you had already produced and sold your invention. You should be aware that
amendments in 1989 to the Patent Act changed the Canadian system with regard to patent registration. It
used to be that where two inventors independently came up with the same invention, and both applied for
a patent, the patent would be granted to the inventor who invented it first (still the case in the US). Now,
Chapter 5 – Patents - Oct 2004 as amended, Sean Goodwin
as a result of the amendments, the patent goes to the one who first files their application for a patent. The
result is that if inventor A invents something before inventor B invents the same thing, inventor B can still
get the patent if he files his application first. In your case, this won’t matter since the product or invention
has been previously sold which will prevent anyone from patenting the invention. You should also be
aware that if you do not obtain a patent for your invention, you cannot prevent someone else from copying
and producing the invention. Nor can you prevent someone else from patenting and marketing an
improvement on your un-patented invention. (If the competitor copies the blueprints then copyright could
have been infringed)
iii.
Improvements or Modifications
Example Problem
Jordan has developed a storage container with unique features which will protect model dinosaurs made
of animal hides. The container is similar to a patented invention, but Jordan feels enough modifications
and additions have been made to make his container unique. He would like to begin manufacturing the
container.
Required: Advise Jordan about whether an improvement or modification will protect him from an
infringement action.
Solution: Improvement by Modification to a Patented Invention.
The basic issue in deciding whether a slight improvement by way of modification to an already patented
invention infringes that patent is whether the improved device is a new invention or not. If it is not a new
invention, then you may be infringing the patent by making or selling the improved device. If it is a new
invention, then the improvement itself will not infringe the earlier patent. However, if the improvement
necessarily requires the use of the patented invention, you are infringing if you manufacture and sell the
invention with your improvement without the consent of the patent holder.
a)
Claims and Specifications
The important question that arises is how to decide whether you are dealing with a new invention
or just a variation of an old one that is considered to be the same invention. This question is
determined by looking at the claims and specifications of the patent that already exists. The
claims are a very detailed part of the patent, and they state exactly what the inventor regards as
new and in which he claims exclusive property or privilege. The specifications describe the
invention, its best mode, its intended use, as well as the method of making the invention. The
claims set out the breadth of that to which the patent holder has exclusive rights (for instance,
whether the container, the hinge, the lid, or the combination is protected). The specification acts
to assist in interpretation where the claims are not plain and clear.
b)
What is Infringement?
Infringement of a patent occurs whenever a person, without licence from the patent holder, either
direct or indirectly makes, uses, or puts into practice the invention, or any part of it that is
embraced by the claims. To apply this to your situation, if the claims in the existing patent are
very narrow, a slight but significant modification to the invention may take the new device out of
the protection of the patent. In other words, we are then talking about a separate invention - so
there would be no restriction on your manufacturing and selling of it.
If, on the other hand, the claims are sufficiently broad to include the device you have created,
then you are still dealing with the patented invention, that is, the original invention and the device
you have created (with modifications) are treated for the purposes of the patent law as the same
invention. There are no differences between the two in the eyes of the law, so your manufacturing
and selling of the improved invention would amount to an infringement of the existing patent.
There are decided cases that say a patent is infringed where a person takes the substance of an
idea which is the subject matter of an invention and simply alters the details (such as merely
substituted a coil spring for an elastic band). There can be infringement even where the modified
Chapter 5 – Patents - Oct 2004 as amended, Sean Goodwin
invention is not strictly within the claims of the patent. The infringing apparatus may be found to
be substantially the same (the missing or changed element being non-essential or a mere
equivalent) as the apparatus said to have been infringed.
Chapter 5 – Patents - Oct 2004 as amended, Sean Goodwin
e.
CONSIDERATIONS IN LICENSING
Example Problem
Chris and Don have developed a new technology which involves a rubber composite. It has many
potential applications. The two are without cash. They have been approached by a major window
manufacturer, APEX who would like to acquire rights in the new composite to be used in designing
window frames. Chris and Don have not yet applied for a patent. They are very interested in entering a
deal with the manufacturer but have plans of their own for other applications of the rubber composite. As a
result they are unsure whether to allow the window company to apply for the patent in its own name or to
retain rights themselves.
Required: Outline for Chris and Don some of the factors they should consider in their negotiations with
the window manufacturer.
Solution: There are a number of factors to be considered, both with respect to the patent application and
its protection.
1.
What is to be sold or licenced?
(i)
General: An assignment of patent rights is a “sale” of the patent because all rights
attached to the patent are given by the vendor to the purchaser. If only a part of these
rights are given, it is a partial assignment of patent rights. A licence, on the other hand,
merely allows APEX to use the patent rights under the terms in the licence agreement in
return for the payment of a royalty. The royalty can be based on gross sales, net sales,
gross income, net income or otherwise as the parties desire.
(ii)
Specific: In your situation it is essential to determine exactly what is to be given up and
what is to be kept. Of particular concern will be whether you wish to retain the technology
which may be the subject of a patent. If so, any patent issued must be in your name.
By having the patent in your name, you will be able to use the technology for other
products, etc. (whether under licence or for your own account) without obtaining the
permission of or paying a royalty to a patent holder.
Given that the patent application will be expensive and you have no cash, there are two
alternatives which you might consider:
•
If APEX and you are joint patent holders or owners, you might have them enter
into an ownership agreement which ensures that you alone can employ the
technology for other products, etc. This would avoid the difficulty of having to
obtain permission or pay royalties for such use (which would otherwise be the
case or would be the case if APEX held the patent in its own name). The down
side is that the patent rights could not be licensed without the agreement of both
you and APEX. Even this problem might be avoided by a term in the ownership
agreement forcing them to sell/assign their rights to you for a price. You could in
turn resell to whomever you desired.
•
If APEX is the sole owner of the patent, you could enter into a licence agreement
with them which would ensure transfer all licence rights and ensure your ability to
utilize the technology for other products, etc. You would in turn sub-licence the
right to use the technology for the limited purposes for which they request. The
royalty arrangement would be two-part: a payment by you to them for the
overriding licence, and from them to you for the sub-licence. The same problems
discussed above with respect to any subsequent sale of the technology would
arise.
In each of these alternatives it will be essential to have the ownership/licencing
agreements drawn very carefully to ensure that you are able to pursue the other
aspects of your venture by retaining all necessary rights.
2.
Who would pursue the patent?
The advantage to having APEX make and prosecute the patent applications (on your behalf and
in your name or jointly) include the following:
(i)
they are a larger company with sufficient cash flow/assets to ensure that the best
available patent agents or lawyers can be retained;
(ii)
they will presumably have gone through the patent process already such that they have
experience in dealing with the selected patent agents or lawyers
(iii)
If the patent is issued in their name alone or in joint names, their name may act as a
deterrent to those who would attempt to get around the patent and rely on your inability to
enforce;
(iv)
a licence arrangement with third parties may provide that they are either entitled or
obligated to enforce the patent against subsequent potential infringement. Again, their
expertise and ability to retain counsel may deter any such potential infringers.
3.
Terms in the Licence Agreement
(i)
the parties
•
•
(ii)
what is to be licenced?
•
•
•
•
(iii)
life of patent or less will there be provision for early termination of the agreement
and how will this operate
royalty arrangement
•
•
•
•
•
(vi)
as discussed above if no patent is to be obtained, is the right to make a patent
application retained or transferred
how long is the licence to last
•
(v)
as discussed above, the legal ownership of the technology must be determined
and this will determine what is to be licenced
the exact scope of what will be transferred and retained must be determined
will the transfer cover the right to make components or replacement parts
will the transfer allow a sub-licence by any party without consent and royalty
payment
who is to obtain any patents and by what date?
•
(iv)
only those parties who are named in the agreement will be bound by its terms
essential to obtain the consent of all necessary parties (eg, subsidiaries, affiliates,
etc.)
what will be the measuring basis
what is the royalty amount
how will the licensor - vendor ensure honesty
will there be a royalty floor and over what period will it be calculated
how often will the royalty be payable
restrictions on each party
•
•
how exclusive will the licence be
will there be a right of first refusal on any subsequent employment of the
technology
•
•
(vii)
will there be an obligation to enforce any patent
will the rights under the licence be transferable
geographical scope
•
will APEX the licensee-purchaser have exclusive geographical rights (e.g. right to
distribute throughout the U.S. or just in certain states? If just in certain states,
how will the U.S. anti-trust laws be circumvented and, if not effectively
circumvented such that the licence is invalid, how will the parties “wind-up” their
arrangement?)
Sample Agreement for An Exclusive Licence
AGREEMENT FOR EXCLUSIVE PATENT LICENCE
THIS AGREEMENT is made this 30th day of June, 19## between Ajax Developments Ltd. (the “Licensor”)
and Gigantic Industries Inc., an Alberta corporation (the “Licensee”) with reference to the following facts:
A.
Letters Patent of the United States, Nos. 5,###,###, and 5,###,### for improvements (the
“Patented Improvements”) in widgets (the “Licensed Device”) were issued to the Licensor on
January 1, 1996; and
B.
The Licensee desires to manufacture, use, and sell Licensed Device containing such Patented
Improvements.
IT IS THEREFORE AGREED:
1.
EXCLUSIVE LICENSE
The Licensor hereby grants to the Licensee the exclusive right and license in the United States of
America, its territories and dependencies to manufacture, use, and sell Licensed Devices containing the
Patented Improvements.
2.
ROYALTIES
The Licensee shall pay to the Licensor a royalty of one dollar ($1.00) for every Licensed Device
manufactured by the Licensee containing such Patented Improvements. The Licensee shall keep an
accurate account of the operations coming under the scope of its license and shall render a statement in
writing to the Licensor within thirty days after each quarterly period of each calendar year during the term
of this Agreement, and at the same time shall pay to the Licensor the amount of earned royalties accrued
during the corresponding quarterly period. The Licensor shall have the right, at his own expense and not
more often than once in each quarterly period, to examine the books of the Licensee to verify the royalty
statements of the operations coming under the scope of this Agreement.
3.
TERM
The term of this Agreement shall be to the end of the term for which the Letters Patent were granted, but
subject to the following:
(a)
If the Licensee fails to render statements or to make payment of royalties as herein provided, the
Licensor may on five days’ written notice to the Licensee terminate this Agreement. If such default
is not cured within such five days, this Agreement shall terminate upon the date set in such notice
without prejudice, however, to the money due to the Licensor hereunder.
(b)
If the Licensee shall abandon the exploitation of the Patented Improvements by failing for a period
of one year to manufacture the Licensed Device the Licensor may on thirty days’ written notice to
the Licensee terminate this Agreement without prejudice, however, to the moneys due to the
Licensor hereunder.
4.
INDEMNITY
The Licensor shall indemnify the Licensee against all damages, costs and expenses as a result of
infringement actions brought against it on account of the manufacture and sale of the Licensed Device
containing the Patented Improvements covered by this Agreement. This indemnity shall survive the
termination of this Agreement.
5.
NOTICE
Any notice to be given pursuant to the terms of this Agreement shall be addressed as follows:
If to the Licensor:
Ajax Developments Ltd.,
123 Invention Avenue S.W.
Calgary, Alberta
T21 0V0
If to the Licensee:
Gigantic Industries Inc.
#1 Production Parkway S.E.
Calgary, Alberta
A1B 2B3
EXECUTED this __day of _________________, 19__
____________________________________________
per Ajax Developments Ltd.
___________________________________________
per Gigantic Industries Inc.
e.
Patents and the International Scene
Example Problem
Jan has received the assignment rights of a Swedish Patent from the manufacturers in Sweden. The
invention was patented in Sweden in 1984. She would like to know if she can register the Swedish Patent
in Canada. Additionally she would like to know whether, her newly acquired Canadian patent “Parkscape”
can be protected in the U.S. and elsewhere.
Required: Advise Jan about patent procedures in Canada and whether she can protect her patent outside
Canada.
Solution:
a)
Patenting the Swedish Invention in Canada
Only an inventor may obtain a patent. You are not the inventor, you have merely been assigned
licensing rights. Sometimes the inventor will assign rights to apply for a patent but that is not the
case here. One of the other requirements of obtaining a patent in Canada is absolute novelty.
Therefore if the invention is disclosed or has become available to the public, the test will not have
been met. Clearly this patent has been in the public realm since it was patented in Sweden in
1984 and will also fail the required novelty test.
In some cases the Patent Cooperation Treaty will operate to extend the time required before filing
the national patent applications in other countries which are signatures to the Convention. The
treaty operates to establish an international filing date and requires the filing of a petition for an
international application. Once filed the applicant has approximately two and one half years before
having to process the applications in various designated countries. Clearly you are out of time
under the treaty as well.
b)
Patent Protection Outside of Canada
You have also asked about protecting your Canadian patent outside Canada. Patent protection
can be obtained outside of Canada, in virtually any country you want. However, there is no way to
get a single worldwide patent; in order to get protection in a particular country, you must apply for
a patent for the country. You should also know that some countries’ patent legislation requires
absolute novelty, that is they will refuse a patent on the grounds of prior disclosure if the inventor
has told one person about it, or used it in public.
Canada is a member of the Paris Union Convention along with over 90 other countries. The key
aspect of this convention is that an inventor can file an application in any of the convention
countries and will then have one year to file applications in the other convention countries and
these applications will have the date of the original application. If you applied in Canada in June
1995, you would be able to apply in other convention countries up to June 1996, and these
applications will be treated for priority purposes as if filed in June 1995. If someone else applied
for a patent for the same invention in a convention country in December 1995, your application in
that country, though actually filed later, would be treated as the earlier of the two.
Where an inventor seeks U.S. and Canadian patents, some agents prefer to file in Canada first,
and then in the U.S. within one year. Others prefer to file in the opposite order. Regardless of the
order filed, a Canadian application must be on file within one year of public disclosure. This is
another decision that only you and your patent agent can make. However you should know that if
you apply in a country other than Canada first, the disclosure requirements for the Canadian
application are slightly different than those outlined above:
1.
there cannot have been an application for the same invention filed in Canada before the
priority date you have obtained, and
2.
there cannot have been a foreign application for a patent for the same invention so that
the priority date of that application for Canada precedes your priority date.
If you apply in one of the U.S. or Canada, then the cost of applying in the other will be lower,
because much of the agent’s work will already have been done in making the first application. In
other words, you may only be required to pay the governmental fees in each country in which you
file the application.
You should note that you will have to apply separately in each country if you choose to use this
method of obtaining foreign protection.
If you want patent protection in several countries, another option to consider is using the Patent
Cooperation Treaty application.
Canada is a signatory to this treaty, which became effective in January 1990. Under the PCT
application procedure, you can file one application in English and get patent pending status in
almost 100 countries. It is true that this status gives you no legal protection or rights, but it is
valuable in negotiating a deal to assign the rights to your invention. If you want patents in only one
or two countries, it is usually more economical to apply in each separately. But if you seek patents
in three or more countries, it may be less expensive to use the single PCT application. You
designate each country on the application. The government filing fees alone for an application for
all countries is approximately $8,000, or just about doubling the cost of having prepared separate
Canadian and U.S. applications done by the same patent agent.
If a PCT application is your first application and then you apply for a patent in a country that is not
part of PCT but is part of the Paris Union, the PCT date will be your priority date for the latter
application. You then have one year from the PCT date to file in the Paris Union country without
losing your priority (or vice versa)
Given the different ways that an inventor can acquire foreign patent protection, it is important to
carefully consider what countries you want protection in. The primary consideration is where you
think there will be a market that you can exploit, or if you intend to sell the rights to the invention,
what countries would put you in the best position to negotiate a selling price. You should realize
that once you file an application or publish the invention anywhere, the clock begins to run, so to
speak and you have a limited time to file applications in other countries. So if you file in Canada
and then wait a year before beginning negotiations, the rights to the invention may be worth much
less than if you file a PCT application designating 44 countries, or than if you filed no application
at all (assuming the invention has not been published). Regardless of what type of foreign
protection you chose, you must not disclose the invention or use it in public before applying, or
you will be prevented in some countries from acquiring a patent. Each country has its own rules
on the issue of prior disclosure.
Patent Conventions:
a)
The Signatories of the Paris Union Convention:
The countries of the union are Algeria, Argentina, Australia, including Nauru and Norfolk Island,
Austria, Bahamas, Belgium, Benin, Brazil, Bulgaria, Burundi, Cameroon, Canada, Central African
Republic, Congo, Cuba, Cyprus, Czechoslovakia, Denmark including Faeroe Islands, Dominican
Republic, Egypt, Finland, France including Overseas Department and Territories, Gabon, German
Democratic Republic, Federal Republic of Germany, Ghana, Greece, Haiti, Hong Kong, Hungary,
Iceland, Indonesia, Iran, Iraq, Ireland, Israel, Italy, Ivory Coast, Japan, Jordan, Kenya, North
Korea, Lebanon, Libya, Liechtenstein, Luxembourg, Madagascar, Malawi, Mauritania, Mauritius,
Mexico, Monaco, Morocco, Netherlands, Antilles, New Zealand, Niger, Nigeria, Norway,
Philippines, Poland, Portugal including Azores and Madeira, Zimbabwe, Romania, San Marino,
Senegal, Republic of South Africa, Spain including Overseas Departments, Sri Lanka, Surinam,
Sweden, Switzerland, Syria, Tanzania, Chad, Togo, Trinidad and Tobago, Tunisia, Turkey,
Uganda, Union of Soviet Socialist Republics, United Kingdom, United States of America including
Territories of Puerto Rico, Virgin Islands, Samoa and Guam, Upper Volta, Uruguay, Vatican City,
Viet Nam, Mugoslavia, Zaire and Zambia.
b)
The Signatories of the Patent Co-Operation Treaty (104 as of July 15, 1999):
Regional Patents: ARIPO (Ghana, Gambia, Kenya, Lesotho, Malawi, Sudan, Swaziland, Uganda,
Zimbabwe), Eurasian Patent (Armenia, Azerbaijan, Belarus, Kyrgyzstn, Kazakhstan, Republic or
Moldova, Russian Federation, Tajikstan, Turkmenistan), European Patent (Austria, Belgium,
Switzerland and Liechtenstein, Germany, Greece, Denmark, Spain, Finland, France, United
`Kingdom, Greece, Ireland, Italy, Luxembourg, Monaco, Netherlands, Portugal, Sweden), OAPI
(Burkina Faso, Benin, Central African Republic, Congo, Cote d’Ivoire, Cameroon, Gabon,
Guinea, Mali, Mauritania, Niger, Senegal, Chad, Togo), and individually
National Patents: Albania, Armenia. Australia, Austria, Azerbaijan, Bosnia and Herzegovina,
Barbados, Brazil, Bulgaria, Belarus, Switzerland, Canada, China, Cuba, Czech Republic, Costa
Rica, Cyprus, Dominica, Grenada, Germany, Denmark, Estonia, Spain, Finland, France, United
Kingdom, Georgia, Ghana, Gambia, Croatia, Hungary, Indonesia, Ireland, Israel, Iceland, Italy,
Japan, Kenya, Kyrgyzstan, Democratic People’s Republic of Korea, Republic of Korea,
Kazakhstan, Saint Lucia, Liechtenstein, Sri Lanka, Liberia, Lesotho, Lithuania, Luxembourg,
Latvia, Republic of Mali, Moldova, Monaco, Morocco, Madagascar, The former Yugoslav Republic
of Macedonia, Mongolia, Malawi, Mexico, Norway, New Zealand, Poland, Romania, Russian
Federation, Sudan, Sweden, Singapore, Slovenia, Slovakia, Sierra Leone, United Republic of
Tanzania, Tajikstan, Turkmenistan, Turkey, Trinidad and Tobago, Ukraine, Uganda, United States
of America, Uzbekistan, Viet Nam, Yugoslavia, Zimbabwe.
c)
The Signatories of the World Trade Agreement Are:
Angola, Algeria, Antigua and Barbuda, Argentina, Australia, Austria, Bahrain, Bangladesh,
Barbados, Belgium, Belize, Benin, Bolivia, Botswana, Brazil, Brunei Darussalam, Burundi,
Cameroon, Canada, Central African Rep. Chile, Columbia, Congo, Costa Rica, Cote d’Ivoire,
Cuba, Cyprus, Czech Republic, Denmark, Dominican Republic, Denmark, Dominican Rep.,
Egypt, El Salvador, European Communities, Fiji, Finland, France, Gabon, Germany, Ghana,
Greece, Guatemala, Guinea Bissau, Honduras, Hong Kong, Hungary, Iceland, India, Indonesia,
Ireland, Israel, Italy, Jamaica, Japan, Kenya, Korea, Rep. of, Kuwait, Liechtenstein, Luxembourg,
Macau, Madagascar, Malawi, Malaysia, Mali, Malta, Mauritius, Mexico, Morocco, Mozambique,
Myanmar, Namibia, Netherlands, New Zealand, Nicaragua, Niger, Nigeria, Norway, Pakistan,
Paraguay, Peru, Philippines, Poland, Portugal, Qatar, Romania, Saint Lucia, Senegal, Singapore,
Slovak Republic, South Africa, Spain, Sri Lanka, Surinam, Sweden, Switzerland, Tanzania,
Thailand, Trinidad and Tobago, Tunisia, Turkey, Uganda, United Arab Emirates, United Kingdom,
United States, Uruguay, Venezuela, Zaire, Zambia, Zimbabwe.
The WTO Agreement also has implications with respect to other intellectual property areas
(copyright, trademark, industrial design).
INTELLECTUAL PROPERTIES
II. Industrial Design
a.
KEY QUESTIONS
i.
WHAT IS AN INDUSTRIAL DESIGN?
ii.
HOW IS INDUSTRIAL DESIGN PROTECTED?
iii.
WHAT IS THE PROCEDURE FOR REGISTERING AN INDUSTRIAL DESIGN?
iv.
ARE CANADIAN INDUSTRIAL DESIGNS VALID IN OTHER COUNTRIES?
v.
HOW LONG DOES INDUSTRIAL DESIGN PROTECTION LAST?
vi.
WHAT CONSTITUTES INFRINGEMENT OF AN INDUSTRIAL DESIGN?
vii.
IS IT POSSIBLE FOR A PROPRIETOR TO ASSIGN HIS RIGHTS TO AN INDUSTRIAL
DESIGN?
I.
INTRODUCTION
i.
WHAT IS AN INDUSTRIAL DESIGN?
An industrial design is any original shape, pattern or ornamentation applied to an article of manufacture,
such as the shape of a table, the pattern of a fabric or the decoration on the handle of a spoon. The article
must be made by an industrial process.
ii.
HOW IS INDUSTRIAL DESIGN PROTECTION CREATED?
An industrial design is only protected when that industrial design is registered with the Intellectual Property
Office.
Where there has been publication of the design in Canada, an application must be filed within 12 months
of the publication date. For this purpose, publication means the offering or making available of the design.
The public are those who are apt to be interested in the design or its availability. Thus a sale of an article
to which the design has been applied would be considered publication whether the sale is by the applicant,
or third parties. However showing sketches to someone for the purpose of having samples prepared or
manufacturing several prototypes which are installed only in the business premises of the applicant would
not normally be considered publication. After registration, each article must bear the name of the
proprietor, the letters “Rd.” and the year of registration if complete protection of rights under the Act is to
be maintained. The mark may be put upon the item itself, or on an attached label. When the above
requirements have been compiled with, an exclusive right for the industrial design is acquired.
iii.
WHAT IS THE PROCEDURE FOR REGISTERING AN INDUSTRIAL DESIGN?
The author of the design is the only person who may register it unless it was created in the course of
employment for someone else who is then entitled to register the design. The applications are examined
on a “first come, first served” basis. Drawings of the design as well as a written description of the original
features of the design must be sent in. In addition, the applicant must sign a statement that he is the
owner of the design and that, to his knowledge, no one else was using the design when he adopted it.
The written description does not need to include a detailed word picture of every particular of the design,
but it must indicate with reasonable certainty what the design is and what the applicant believes to be its
original visual features. The description should relate only to the ornamental features of shape, pattern or
ornamentation applied to a particular article and may not include any reference to the function the article
performs or how it is constructed. Geometric terms can be used to describe the design. Normally, the
Industrial Design Office examines new applications in order of filing date within 10 to 11 months. If the
application is examined and found to be acceptable, the design will then be registered. However, if
changes are required to the description or drawings the design cannot be registered until the changes
have been made by the applicant.
Drawings - The number of views required will depend on what is necessary to present the design clearly.
Copies should be either 22 cm x 28 cm (8.5" X 11") or 20 cm x 33 cm (8" X 13") in size with a clear margin
of at least 2.5 cm (1") on the left hand side; or in A4 format with a clear margin of the size stated above.
The drawings shall be printed on sheets of good quality white paper. All views must be clearly drawn in
permanent, black lines and on a sufficiently large scale to be easily read, and easily reproduced with
photocopying equipment. They should be sent flat (not rolled) and be protected by a heavy sheet of
cardboard.
Photographs - A photograph included in an application must be black & white, of the same size specified
for the submission of drawings, and also easily reproduced by photocopy equipment. The views of the
article must show the design features clearly and accurately, show the article to which the design is
applied, show the article in isolation, and be on a sufficiently-large scale as to be clear and apparent. The
photograph must also stand alone against a neutral background.
iv.
ARE CANADIAN INDUSTRIAL DESIGNS VALID IN OTHER COUNTRIES?
Protection in foreign countries can only be obtained by filing in each country. Signatories to the Paris
Convention are also able to invoke “Convention Priority”. This provides a priority period of six months
once a design has been registered in one Convention country to apply in the others. In addition, the WTO
Agreement amends the Industrial Design Act to allow for convention priority claims from WTO members
who are not members of the Paris Convention.
v.
HOW LONG DOES INDUSTRIAL DESIGN PROTECTION LAST?
An industrial design registration lasts for a period of ten years from the date of registration (section 10 of
the Industrial Design Act).
The payment of maintenance fees to maintain registration must be made before the expiry of five years
from the date of registration. If the design was registered prior to January l, 1994, registration is for a fiveyear term that is renewable for a further five years.
After the expiration of either of these terms, anyone is free to make, use, rent or sell the design in Canada.
vi.
WHAT CONSTITUTES INFRINGEMENT OF AN INDUSTRIAL DESIGN?
Infringement occurs where, during the term of registration a person makes, imports for the purpose of
trade or business, sells, rents, or offers or exposes for sale or rent, any article in respect of which the
design is registered, and to which the design or a design not differing substantially therefrom has been
applied, without the licence of the proprietor of the design (section 11 of the Industrial Design Act). Where
a person does infringe an industrial design, the court has power to grant relief in the form of civil remedies,
including relief by way of injunction, recovery of damages or profits, for punitive damages, and for the
disposal of any infringing article or kit (section 15.1 of the Act). The Act also provides that the proprietor of
the design shall be or be made a party to any action for infringement of an exclusive right (section 15 (2)).
vii.
IS IT POSSIBLE FOR A PROPRIETOR TO ASSIGN HIS RIGHTS TO AN INDUSTRIAL
DESIGN?
Any industrial design can be assigned, either in whole or in any undivided part of the whole. Such an
assignment must be in writing and registered with the Intellectual Property Office. With an assignment, the
proprietor permanently gives up all or part of his interest in the design to someone else.
The proprietor may grant a licence, rather than an assignment. With a licence, the proprietor temporarily
permits someone to make, use and sell the design. He should specify where in Canada this is to be done
and for what period of time. The proprietor may also allow that person to permit a third person to make,
use and sell the design. A licence must be registered in the same manner as an assignment.
b.
WILL AN INDUSTRIAL DESIGN REGISTRATION PROVIDE ADEQUATE PROTECTION?
Example Problem
Lolly Franks has developed a space ship design bicycle carrier for children which is currently in the first
stage prototype. She would probably not be able to obtain patent protection for her design and in any
event does not want to incur the expense or spend the time required to obtain a patent. She wonders
whether industrial design registration would provide protection for her design and prevent others from
copying it.
Required: Generally outline for Lolly the purpose of the Industrial Design Act and whether she can use it
to register and protect her bicycle carrier design.
Solution: “Industrial design” is defined in the Industrial Design Act as “features of shape, configuration,
pattern or ornament and any combination of those features that, in a finished article, appeal to and are
judged solely by the eye”.
1.
Generally “a design to be registerable must therefore by some conception or suggestion
as to shape, pattern or ornament applied to any article and is judged solely by the eye,
and does not include any mode or principle of construction”.
2.
Industrial design only protects the visual or artistic shape or pattern of the article. Its utility
will not disentitle the owner to registration but its lack of ornamentation will. If the
ornamentation is part of the function of the article both patent and industrial design
registration may be necessary.
3.
Registration of a design for a particular shape of an article does not give protection to the
article itself. If the shape possesses no features beyond what is necessary for the article
to fulfill its function, it is not registerable. It is only when the design gives a distinctive or
individual appearance contracted and capable of being distinguished from the general
form that a design is registerable.
4.
What is protected by registration is the actual details, not the general idea of the design.
The colour and artistic merit are immaterial but the design must be original in its
application to the article or device.
5.
Filing for registration must take place within one year of publication. Publication means
the date on which the article was first offered or made available to the public.
6.
Registration gives the owner of the industrial design the exclusive right to prevent others
from making, using or selling the design for 10 years. This protection only applies in
Canada; a separate application must be made in every country where protection is
desired.
7.
In addition after registration, the name of the owner shall appear on the article to which
the design applies with the letter “Rd.” and the year of registration. e.g “Rd. 1990, Jane
Doe”. Failure to do this may invalidate the registration.
8.
It is the responsibility of the owner of the Industrial Design to enforce his rights within 3
years of an infringement.
9.
There are three tests for infringement which must be taken cumulatively:
design?
a)
b)
would one design be confused with another?
would the defendant’s design have had any existence but for the plaintiff’s
c)
is the defendant’s design nearer to the plaintiff’s than that of any of the other prior
designs?
Industrial design infringement is different from patent infringement or passing-off actions
because it does not protect the principle of construction of the article nor consider the
purpose for imitation.
l0.
c.
Infringement is to be judged by the eye and a certificate of registration as issued under s.
7 of the Industrial Design Act is prima facie evidence of the facts. Only the owner, not a
licensee can sue for infringement. The owner can sue for an injunction to prohibit further
infringement and damages. The basis upon which damages will be awarded will be the
profit that the owner of the design would have made if he had granted a licence for the
sale or had himself sold the copies wrongfully made and sold by the infringer.
CAN IT BE REGISTERED?
Industrial design registration is available where two criteria are met. First, the object to be registered must
be an original shape, pattern or ornamentation; second, application for registration must occur within 12
months of publication. These criteria are frequently not met by new inventors.
i.
Example Problem
Stephen has designed a new octagon-shaped tray which will float in a Jacuzzi tub despite the heavy
currents.
Required: Advise Stephen whether the tray can be protected by Industrial Design registration?
Solution: From the description of the tray, it would appear that you might be able to protect the shape of
the tray by Industrial Design registration. The Industrial Design Act defines industrial design as:
“features of shape, configuration, pattern, or ornament and any combination of those
features that, in a finished article, appeal to and are judged solely by the eye.”
A design may not be registerable if the shape is dictated solely by the function or use of the article.
However, it is not always clear when shape is dictated solely by the function of the article. It is probably
worthwhile to try and register your design. If the function is unique, it may also be patentable.
ii.
Example Problem
John has conceived of a new design for neoprene fishing waders. There is already such a product on the
market but of different design.
Required: Advise John whether his design can be registered.
Solution: The design of an item of clothing may be suitable for industrial design registration.
However, a design must be original. To meet this test, the design must be substantially different from a
competitor’s designs, even if the competitor has not registered his own design. In short, before registering
a design, you must seriously consider how different the design really is.
You may also want to conduct a search for other similar designs. If so, you should contact the Intellectual
Property Office. Unfortunately a search may cost as much as having an agent prepare and file an
registration application , and would usually be skipped.
iii.
Example Problem
Greg has designed a new lay-about chair which consists of a series of oddly shaped styrofoam cushions
which can be assembled into dozens of different sitting positions. In order to test its marketability Greg
showed the “chair” at a home fair trade show about eight months ago. It was wildly successful and Greg
would like to apply for an Industrial Design Registration.
Required: Indicate to Greg whether he may still apply under the Industrial Design Act.
Solution: An industrial design must be applied for within 12 months of publication. Publication includes
disclosing the details of the idea or design to someone who is not bound to keep the idea confidential. If
that was the first instance of publication, you have 12 months from that date in which to apply for an
industrial design.
III. TRADEMARK
a.
KEY QUESTIONS
i.
WHAT IS A TRADEMARK?
ii.
HOW ARE TRADEMARKS CREATED?
iii.
WHAT IS NOT REGISTERABLE AS A TRADEMARK?
iv.
ARE CANADIAN TRADEMARKS VALID IN OTHER COUNTRIES?
v.
WHAT CONSTITUTES TRADEMARK INFRINGEMENT?
vi.
HOW LONG DOES TRADEMARK PROTECTION LAST?
vii.
HOW LONG ARE UNREGISTERED TRADEMARKS PROTECTED?
viii.
CHANGES TO TRADEMARK LEGISLATION AS A RESULT OF THE WTO
AGREEMENT
i.
WHAT IS A TRADE MARK?
A trade mark is a word, symbol or design, or a combination of these used to distinguish the goods or
services of a person or organization from the goods or services of others in the marketplace, for example
“Coca Cola”.
ii.
HOW ARE TRADE MARKS CREATED?
The basis of trade mark creation is the use of the mark in conjunction with certain wares and services. By
registration of the trade mark, the owner obtains the exclusive right to use the marks throughout Canada.
Valid registration requires that one of the following be established:
•
•
•
•
the mark is in use in Canada,
the mark has been made known in Canada (ie., a foreign trade mark and advertising in
Canada),
the mark has been registered in a foreign jurisdiction and there has been actual use in
some jurisdiction (Canada or elsewhere),
the mark has been proposed for use in Canada and there is actual use of it before
registration is completed.
“Use”, then, is clearly an important concept. The type of use which qualifies as legal “use” of a mark will
depend on whether the mark is with respect to wares or services. In the case of wares, use means “use in
transactions in the normal course of trade”. This is bona fide use and sales between friends for the
purpose of obtaining or keeping registration will not qualify. In the case of services, the “use” requirement
may also be met if the trademark is “used or displayed in the performance of advertising of those
services”.
“Use” is necessary to keep the registration of a trade mark. Anyone may make a written request to ask the
Registrar of Trade Marks to require a trade mark owner to prove by way of affidavit or statutory
declaration, use of the mark in Canada. The request may be made any time after three years from the
date of registration of the trademark. The trademark owner will have to establish that the trademark was in
use in Canada during the three-year period immediately preceding the date of the notice and if not, what
date it was last in use and the reasons for the absence of such use since that date. If the owner cannot
prove use, the mark can be expunged from the Register, or amended.
iii.
WHAT IS NOT REGISTERABLE AS A TRADE MARK?
Section 9 prohibits Flags, Crests, Royal Arms and other insignia of various jurisdictions (i.e. countries,
provinces, territories and international agencies) or anything resembling these various insignia, from being
adopted in connection with a business. It also prohibits the protection of any obscene or immoral words or
devices, matters that falsely suggest a connection with any living individual, and the portrait or signature of
any individual who is living or has died within the preceding thirty years.
A trademark is registerable so long as it is not:
a)
a word that is merely the name or surname of an individual who is living or has died within the
past thirty years:
b)
depicted, written or sounded in such a way as to describe the character or quality of the wares or
services (eg: “Pet Store” for the operation of a pet shop);
c)
words that describe the place of origin of the wares or services;
d)
the name in any language corresponding with the use or proposed use of the wares or services
(eg: “White Vinegar” would not be a registerable trade mark for vinegar);
e)
confusing with a registered trademark;
f)
a mark prohibited by section 9 (discussed above);
g)
a denomination used to designate a plant variety under the Plant Breeder’s Act;
h)
a circumstances where the trade mark is in part or in whole a protected geographical indication,
where the trademark is to be registered in association with a wine or spirit that does not originate
in that territory.
One should note, however, that a trade mark unregisterable under a) or b) will be registerable if it can be
established that it has become distinctive at the date of filing an application for its registration.
iv.
ARE CANADIAN TRADE MARKS VALID IN OTHER COUNTRIES?
No. A registered trade mark gives its owner the exclusive rights to its use in Canada. If the products or
services are sold in other countries, registration of the trade mark in those countries where your products
or services are used should be considered.
v.
WHAT CONSTITUTES TRADE MARK INFRINGEMENT?
By registering a trade mark one can prohibit all others in Canada from use of the same trade mark on the
goods and services for which it is registered. It also has the effect of precluding the use of a “confusing”
trade mark.
Under the Trade Marks Act, trade marks are deemed to be confusing if the use of both trade marks in the
same area would likely lead to the inference that the goods or services associated with such trade marks
are manufactured, sold, leased, or performed by the same person. The Registrar will look at a number of
factors in determining whether this test is met in a particular case:
a)
b)
c)
d)
e)
the inherent distinctiveness of the trademarks;
the extent to which the trademarks are known;
the length of time the trademarks have been in use;
the nature of the business, goods or services associated with the trademark; and
the similarity in appearance, sound or ideas between the trademarks in question.
Generally, when a trader distributes or advertises wares or services in association with a confusing trade
mark or trade name, he or she will be infringing the registered owner’s right to exclusive use. The Trade
Marks Act does, however, carve out a number of limited exceptions and consequently a registered owner
cannot prevent another person from making
a)
bona fide use of his personal name as a trade mark, or
b)
bona fide use, other than as a trade mark,
1.
of the geographical name of his place of business, or
2.
of any accurate description of the character or quality of his wares or services,
in such manner as is not likely to have the effect of depreciating the value of the goodwill attaching to the
trade mark.
vi.
HOW LONG DOES TRADE MARK PROTECTION LAST?
A trade mark is registered for a period of 15 years from the date of registration and may be renewed every
15 years without limitation upon payment of a renewal fee.
vii.
HOW ARE UNREGISTERED TRADE MARKS PROTECTED?
An unregistered trade mark may be enforced through the common law action of passing off. This right
exists independently from the trademark legislation, and allows a trader to prevent another form
misrepresenting the trader’s wares, business or services as his/her own. Traditionally, four elements were
required to make out a passing off action:
a)
the plaintiffs wares or services already enjoy a reputation;
b)
the defendant misrepresented its wares or services as those of the plaintiffs;
c)
there is actual confusion or a likelihood of confusion in the public’s mind between the wares or
services of the plaintiff and those of the defendant; and
d)
the plaintiff has suffered actual damages as a result of the defendant’s infringement.
viii.
WHAT IS A TRADE NAME?
A trade name is a name under which a particular business is carried on by an individual, partnership, or
company. The Trade Marks Act (Canada) does not provide for registration of a trade name. The only
registration that is required for a trade name is pursuant to provincial legislation. This will vary from
province to province. In Alberta for example the Partnership Act provides that a person engaged in
business and using as his business name some name or designation other than his own, or his own name
with the addition of “and company” or some other word indicating a plurality of members in the firm shall
sign and file at Corporate Registry a declaration in writing. The declaration must be filed within 6 months
of the time when the business name is first used. Failure to file or filing beyond the 6 month time limit
constitutes an offence and such person is liable to a fine of not more than $500.
ix.
CHANGES TO TRADEMARK LEGISLATION AS A RESULT OF THE WORLD TRADE
ORGANIZATION WTO AGREEMENT
The WTO extends to WTO members those benefits which are given members of the Paris Convention
(i.e. convention priority, and protection of flags and emblems). As well, protection is no longer afforded to
a trademark after three consecutive years of non-use. (The old provision stated that protection would no
longer be afforded after two years of non-use.)
There are also a number of amendments made with respect to trade-mark protection for wines and spirits.
These restrict the rights to identify products as originating in a territory of a WTO member, or a region or
locality of that territory, “where a quality, reputation, or other characteristic of the wine or spirit is
essentially attributable to its geographical origin, and identity is protected by the laws applicable to that
WTO member. This amendment was targeted at, for example, calling anything Champagne if it did not
originate in the Champagne region in France.
b.
TO REGISTER OR NOT TO REGISTER?
Example Problem
Mark is considering going into full scale production with his wife’s brownies. She has been selling them for
some years to local restaurants and coffee shops as well as to neighbours and friends under the name
“Irene’s Brownies”. Mark and Irene would like to know what protection they would have with a registered
trademark and whether they have any rights without registration.
Required: Outline for Mark and Irene the rights they have with respect to the name “Irene’s Brownies”
with and without trademark registration.
Solution: A trade mark is a word, symbol or design, or a combination of these, used to distinguish your
product or service from others in the marketplace. A trade mark exists without registration, but certain
advantages are gained through registration. Your trade mark is more easily protected once it is registered
and is prima facie proof that you own that mark. Individuals, companies, partnerships among others may
register their trade mark providing they meet the requirements of the Trade Marks Act.
If you choose not to register, you have what is known as an unregistered trade mark. Your rights may still
be protected under Common Law.
The common law protects the goodwill which has been built up in the trademark. This may be reputation
and connection gained by work of the expenditure of money, leading to the probability that customers will
return and repurchase the same goods and services. In order to acquire goodwill the trade mark must
have been used for a sufficient length of time to have established a reputation. To extend this goodwill to
an area outside of the immediate locality, it is necessary to have traded in that area and established a
reputation there. In other words, if the product associated with your trademark has only been sold within
Ontario the common law would give no protection if someone else began to use the name in
Newfoundland. Likewise, sending yourself a registered letter stating that you intended to use this name
would afford no common law protection as it is necessary to establish a reputation by trading your
product. This reputation must be established through use of the product.
In action to protect an unregistered trademark would be that of ‘passing off ‘. In order to be successful in
this action, it must be shown that the trademark is distinctive and another trader has misrepresented his
wares and used a trademark confusing with that of the original trademark and caused damage to the
business or goodwill of the trademark owner. You may choose to register at any time providing you meet
the requirements of the Trade Marks Act. As noted, the big disadvantage to an unregistered trade mark is
that it only offers protection in the area that you conduct your business in, whereas a registered trade
mark is protected throughout Canada.
Registered Trademarks
There are several benefits to the registration or a trademark although it is not necessary to register.
Registration in Canada is notice to the world of the owner’s rights to the trademark in Canada.
Registration permits the licensing of a registered trademark within the Trade Marks Act. Registration
grants the exclusive right to use the mark and a presumption of distinctiveness and goodwill. Registration
grants the exclusive right throughout Canada and therefore an action for infringement would lie even if the
trademark owner had never used the trademark or made it known in that area. It would merely need to be
shown that, were the trademark to be used in the same area, there would be confusion. It may be
necessary to register in other jurisdictions if the product is marketed outside Alberta.
Once a trademark is registered it will last for 15 years, at which time it may be renewed. The name
chosen should be distinctive rather than descriptive, often making it more effective. There is no
requirement to put a trademark on the product but common sense would say that you should. A registered
trademark is marked with the symbol R. An unregistered trademark is identified with TM. An unregistered
trademark may be registered at any time as long as it meets the requirements of the Trade Marks Act.
Entitlement to Register
The first person to adopt a trade mark has priority with respect to the entitlement to register. A trade mark
is considered to be adopted at the earliest of three events. The first is when a person has commenced the
“use” of the trade mark in Canada. “Use” is shown by using the trade mark in the normal course of
business (token sales or deliveries are not acceptable) or displaying the trade mark in the performance or
advertising of a service. The second is when a person has commenced to make a trade mark known in
Canada. This occurs when a trade mark has been used in a foreign country and it becomes well known in
Canada by the distribution of the wares. The third event for determining priority is the first person to have
filed an application for registration of that trademark. Remember, it is the earliest of these three events
which determines priority. Also worth noting is that the incorporation of a company with a trade name will
not be considered when determining priority.
In order to register a trade mark you must submit an application following the Trade Mark Rules in the
illustrated format. The fees for filing an application following the Trade Mark Rules in the illustrated format.
The fees for filing an application for a trade mark are $150.00 and then $200.00 upon issuance of a
certificate of registration. Payment of additional fees could be required. A copy of the Trademarks Act and
Rules can be purchased from Supply and Services Canada, Publishing Centre, Ottawa, K1A 059.
If your trade mark is anything other than a word mark, that is, a mark containing only words, shown in
capital letters, then four drawings of the design must be filed with the application. The four normal
drawings should be no larger than 2 3/4" by 2 3/4" (7 cm X 7 cm) and be in black and white.
Trade Mark Searches
Trade mark searches should be conducted as thoroughly as is practical and reasonable. Searches should
include: telephone directories (at least in all major Canadian cities); trade directories of Canadian and
foreign businesses: computer data bases of advertisements, manufacturers and products; competitor’s
price lists and catalogues. It is prudent to have a search conducted at the Intellectual Property Office by
an experienced searcher.
Although no search or searches are guaranteed, they do minimize the risk involved.
c.
CAN IT BE REGISTERED?
i)
Is it distinctive?
Example Problem
Paula has been operating a catering and desert service for 2 years. She has labelled all her delivery
boxes with the name “Chocolate and Cream” and attached a logo to these words. She would like to
protect this name with a registered trademark.
Required: Advise Paula about whether her name “Chocolate and Cream” can be registered under the
Trade Mark Act.
Solution: A trademark is created by the use of the mark in conjunction with certain goods and services.
By registration of the trade mark, the owner obtains the exclusive right to use the mark throughout
Canada. A valid registration requires that one of the following be shown:
•
•
the mark is used in Canada,
the mark has been proposed for use in Canada and there is actual use of it before
registration is complete.
“Use” is an important requirement in trade mark law. The type of “use” contemplated by the Trade Mark
Act is use in transactions in the normal course of business. In your particular case, “use” would include
the sale of goods with the trade mark printed on the goods themselves or on the packages in which the
goods are sold.
Distinctiveness is another requirement in trade mark law. Distinctiveness is the essence of a trade mark
and hence to be registered a trade mark- must be distinctive. For a trade mark to be distinctive, a mark
and a product or service has to be associated by the consumer and this association must enable the
consumer to distinguish the product from that of others. For example, the mark “Crunchy Granola” was
found not to be registerable as a trade mark because the mark would describe to the average consumer a
granola-type cereal which is crunchy such that the trade mark would not distinguish the applicants cereals
from those of others.
Your proposed trade mark is “Chocolate & Cream” and Logo Design. The words “chocolate” and “cream”
are non-distinctive because they are common words. Since the words are non-distinctive on application,
you will probably have to disclaim exclusive use to them. However, your trade mark taken as a whole -the
words and the design- may be distinctive and therefore registerable as a trade mark. Legal authority
indicates that the proper approach in determining distinctiveness is not to break the trade mark up into its
elements but to view the trade mark as a whole.
ii)
Trade Marks and Trade Name
Example Problem
Martha Crumpett has been churning her own lemon butter for some years. The recipe was her mother’s
and it has been sold since 1970 in local supermarkets under the family’s business name “Campbell’s
Butter”. Martha would like to know if she can register the name under the Trade Mark Act and what the
difference is between that and a trade name.
Required: Outline for Martha the registration requirements under the Trade Marks Act and how this differs
from registering a trade name.
Solution: A trade mark is a mark used to distinguish goods or services of a certain person from those of
others. A trade mark can either be a word or series of words, or it can be a design or symbol used to
distinguish a certain person’s goods or services. A trade mark is protected under the goodwill arising from
the use of the trade mark not the actual trade mark itself. It is important to note that a trade mark may be
protected whether or not it is registered or registerable. Common law trade mark is created through use of
a given trade mark in a locality. This kind of trade mark depends on the name becoming known in a given
locality and rights exist in the trade mark only as long as it is being used. Common law trade mark gives
the owner the right to prevent another person from making use of a confusing trade mark only in the same
locality. Registration gives you the right to use the trade mark throughout Canada. It also gives you the
right to prohibit others from using your mark or a mark confusing to yours. Registration also helps in a
court action because once it is registered the trade mark is presumed to be valid. The onus would,
therefore, be on your competitor to show your trade mark is invalid.
The Trade Mark Act sets out the standards for registrability of a trade mark. For your purposes, it is
important to note that a trade mark cannot be a word that is primarily the name or surname of a living
person or one who has died within the last thirty years. This means registerable. There is no prohibition
against given names being registerable as a trade mark unless they are more common as a surname. An
invented name is generally registerable unless it is found to be a surname.
If a word is clearly descriptive or deceptively misdescriptive of the character or quality of the goods or
services it cannot be registered.
If a chosen trade mark is not registerable because it is a surname of a person dead less than thirty years
or a descriptive or misdescriptive word, it can still be registered if it has been used in Canada for such a
lengthy period of time so as to become synonymous with the product. In order to meet the standard
recognition. This requires time and thus it is better to acquire a distinctive mark and register it
immediately. It is important to keep in mind that even if the trade mark has passed on the tests for
registrability, it cannot be registered if it is confusing with a previously registered trade mark. “Confusion”
in terms of trade mark law is defined as the use of a trade mark in the same area as an existing trade
mark so that the consumer would likely infer that the goods and services associated with both trade marks
were made and sold by the same person. Please note that I have included the tests for registrability as
guidelines you may want to consider as you pursue an application for trade mark registration. You would
still have to rely on the advice of a trade mark agent and lawyer as to the likelihood of registrability of your
proposed trade mark.
A trade name is a name under which any business is carried on whether it is the name of a corporation, a
partnership or an individual. This name identifies the business, not the goods which that business sells. A
trade name can be registered under the Trade Marks Act only if it is also used as a trademark. A trade
name does not protect a trade mark.
If you were to use the trade name “Campbell,” for example, in relation to your corporation as well as using
it as a trade mark you would be able to register that trade name under the Trade Marks Act. This
assumes, of course, that the name is not already a registered trade mark in use by someone else. An
unregistered trade mark that has become recognized in Canada through ordinary and bona fide
commercial usage cannot be adopted by you as a trade mark in association with goods of the same
general class.
Individuals are required to sign and file a declaration in writing at the Central Registry if you use a trade
name as your business name, providing you are engaged in business for trading, manufacturing or
contracting purposes and you are not associated in a partnership with any other person. The declaration
must contain your name, occupation, residence, and trade name. As well, you must state that you are not
associated with anyone else in partnership. The Partnership Act requires that this filing be completed
within six months of the time when the business name is first used.
To change the name of your corporation, you must conduct a private name search of the proposed name
to see if it is available (you would want to do this before amending your articles). If it is available, you may
file the name change with Corporate Registry. You must also send the articles of amendment to the
Registrar of Corporations.
IV. COPYRIGHT
a.
i.
KEY QUESTIONS
i.
WHAT IS COPYRIGHT?
ii.
HOW IS COPYRIGHT PROTECTED?
iii.
TERM OF COPYRIGHT.
iv.
ADVANTAGES OF COPYRIGHT REGISTRATION IN CANADA.
v.
REQUIREMENTS FOR AN APPLICATION TO REGISTER COPYRIGHT
vi.
COPYRIGHT ASSIGNMENT
vii.
VOLUNTARY LICENSING
viii.
INFRINGEMENT
ix.
LAWFUL USE
x.
PENALTIES FOR INFRINGEMENT
xi.
WHO ENJOYS COPYRIGHT PROTECTION
xii.
INTERNATIONAL COPYRIGHT
xiii.
COPYRIGHT OR INDUSTRIAL DESIGN REGISTRATION?
xiv.
CHANGES TO THE COPYRIGHT ACT AS A RESULT OF THE WTO AGREEMENT
WHAT IS COPYRIGHT?
Copyright is most often thought of as the content of books, plays, songs or drawings. In fact it has a much
broader application. Copyright provides the owner with the exclusive right to copy an original literary,
dramatic, musical or artistic work and includes the exclusive right to produce, reproduce, perform, publish,
translate, convert, adapt, publicly present, record or broadcast the work or any substantial part of it.
Copyright also provides the author with moral rights with respect to the integrity of the work and protects
against acts with respect to the work which would prejudice the honour or reputation of the author.
Copyright may be claimed for “original” work, that is any work which the author did not copy. Almost
anything is capable of copyright protection, although it has been broadly stated that “what is worth copying
is prima facie worth protection”.
The following definitions are provided in the Copyright Act:
“architectural work” means any building, structure or model of a building or structure;
“artistic work” includes paintings, drawings, maps, charts, plans, photographs,
engravings, sculptures, works of artistic craftsmanship, architectural works, and
compilations of artistic works;
“dramatic work” includes any piece for recitation, choreographic work or mime, the
scenic arrangement or acting form of which is fixed in writing or otherwise, any
cinematographic work, and any compilation of dramatic works;
“literary work” includes tables, computer programs, and compilations of literary works;
“every original literary, dramatic, musical and artistic work” includes every original
production in the literary, scientific, or artistic domain, whatever may be the mode or form
of its expression, such as compilations, books, pamphlets and other writings, lectures,
dramatic or dramatic musical works, musical works, translations, illustrations, sketches
and plastic works relative to geography, topography, architecture or science;
“book” means a volume, part or division of a volume, in printed form, but does not
include a pamphlet, newpaper, review, magazine, or a map, chart, plan or sheet music
where they are separately published.
As can be seen the scope of copyright protection is very extensive.
In Canada, copyright arises automatically for works capable of protection provided that the author, when
the work was made, was a Canadian citizen or citizen of a qualifying country, and if the work has been
published, first publication took place in Canada or a qualifying country.
ii.
HOW IS COPYRIGHT PROTECTED?
Because copyright arises automatically in Canada, nothing need be done to obtain protection in Canada.
However, registration of the copyright is desirable. To obtain copyright protection in the United States
without registering in the United States, an acceptable Universal Copyright Convention notice should
appear on every copy of a published work:
e.g.: © John Smith 1996-1999
This notice is satisfactory in all countries subscribing to the Universal Copyright Convention (including
Canada). In the foregoing example, © designates the copyright symbol,John Smith is the name of the
copyright holder, and 1996 is the year of first publication. The range of dates 1996-1999 indicates that
significant changes were made to the work in each of the three years, each of which is subject to
copyright.
iii.
TERM OF COPYRIGHT
Generally, copyright exists for the life of the author, the remainder of the calendar year in which the author
dies plus the next 50 years following his death.
However, if the author is unknown, copyright subsists for 50 years following the end of the calendar year in
which the work was first published. If the unknown author’s work was not published, then copyright will
subsist for seventy-five years following the end of the calendar year in which the work was made. In the
event the author’s identity later becomes commonly known, then the general provision applies, thereby
allowing copyright to subsist for 50 years following the death of the author or 50 years following its
publication, whichever is later.
If the work consists of a joint authorship, copyright will exist during the life of the author who dies last and
50 years from his death.
In the case of photographs, including the making of negatives, the term of copyright subsists for fifty years
following the end of the calendar year in which the initial plate or photograph was made. The term is the
same for records, perforated rolls and other contrivances by means of which sounds may be mechanically
reproduced.
iv.
ADVANTAGES OF COPYRIGHT REGISTRATION IN CANADA
a)
Registration in Canada provides the registered owner with a Certificate of Copyright Registration
and confers on the registered owner the presumption that copyright subsists in the work and that
the person registered is the owner of the copyright.
b)
A copyright registration can be a successful tool in negotiations involving the sale or licensing of
rights in the copyrighted work.
c)
The copyright registration remains on record and available for public inspection at the Intellectual
Property Office.
d)
In an action for an infringement of copyright, if the defendant proves that he was not aware, and
had no reasonable grounds for suspecting that copyright subsisted in the work, then the plaintiff is
entitled to an injunction, but not to damages. However, if copyright in the work was registered at
the time of the infringement, then the defendant cannot claim that he had no reasonable ground
for suspecting that copyright existed in the work.
v.
REQUIREMENTS FOR AN APPLICATION TO REGISTER COPYRIGHT
To prepare a Canadian copyright application, the following information is required:
•
the full name and address of the copyright owner and complete information on how
ownership was acquired;
•
the full name, address and citizenship of the author
•
the title of the work
•
a description of the type of work: namely, artistic, literary, musical, dramatic or any
combination thereof
•
the date and place of first publication of the work (ie., the date and place at which copies
of the work were first distributed to the public) or a statement that the work has not been
published.
Copies of the work are not required and will not be accepted by the Intellectual Property Office. However,
it is advisable for the copyright claimant to keep a copy of the work, or to mail a registered letter to him or
herself containing the work and leave it unopened to prove the content of the work as of that date.
If substantial revisions have been made to the work, notice should be sent to the Intellectual Property
Office. However, minor changes to the work do not require any further action to be taken. Again, a
registered letter sent by the claimant to him or her containing the work can be sent to provide additional
protection.
vi.
COPYRIGHT ASSIGNMENT
A copyright owner may assign his or her ownership interest in copyright to another party. The assignment
may be in whole or in part of the copyright and for the whole or part of the term of the copyright. An
assignment must be in writing and signed by the owner of the copyright or his authorized agent. An
assignment should be registered immediately.
The term of an assignment is operative only for the life of the author and 25 years after his death. After
this period, the copyright will revert back to the estate of the author notwithstanding any agreement to the
contrary.
vii.
VOLUNTARY LICENCING
A copyright owner may also grant to another person a licence to reproduce the work in exchange for the
payment of royalties to the copyright owner. The grant of a licence is unlike an assignment because it
does not involve a transfer of ownership. Instead, it simply provides permission to use or reproduce the
copyrighted materials. The licence agreement must be in writing and signed by the author or his
authorized agent. A licence should be registered immediately. The duration of the licence will depend
upon the terms of the agreement.
viii.
INFRINGEMENT OF COPYRIGHT
Infringement is defined as the doing of any act that only the owner of the copyright has the right to do,
without the consent of the owner. The basic rights of the owner of the copyright are the right to produce or
reproduce the work, or any substantial part and the right to publish an unpublished work.
Where there has been an infringement of copyright the copying must be substantial. The whole or a
substantial part of the work must have been copied. The simpler a copyrighted work is, the more obvious
the copying must be. In the absence of proof of copying, the court will examine the original and copied
work, and determine whether or not there was infringement. Mere similarity is insufficient to conclude that
a work has been copied from another.
The holder of the copyright must police the copyright and the onus is on him to sue for any infringement.
Where a court finds that a copyright has been infringed, it may grant an injunction which would result in all
the infringing material being removed from sale. Under damages, the owner is entitled to any loss he may
have suffered, any profits made by the infringement, plus all infringing copies and all the materials used in
the production of those copies.
ix.
LAWFUL USE
Certain acts are exempted by the Copyright Act from constituting infringement of copyright. The
exemptions constitute what is called “fair dealing.” For example, fair use of any copyrighted work for the
purpose of private study, research, criticism, review or newspaper summary will not constitute
infringement if the use does not comprise the entire reproduction of the work, and if the source and name
of the author is mentioned. If any work protected by copyright is reproduced in its entirety, without the
owner’s consent, infringement would result. Additional fair dealing exceptions may be found in ss. 29 and
30 of the Copyright Act.
X.
PENALTIES FOR COPYRIGHT INFRINGEMENT
a)
Civil Remedies
A copyright owner who has established that his work has been infringed is entitled to an injunction
(preventing the continued infringement), damages, an accounting of profits and the recovery of
possession of all infringing copies.
b)
Criminal Penalties
Any person who knowingly makes an infringing work to sell or rent or attempts to or actually sells
or rents any infringing copy is guilty of an offence. Additionally, anyone who distributes infringing
copies or imports for sale or rental into Canada any infringing copy of a work which is copyrighted,
is also guilty of an offence. These offenses may either proceed summarily or by indictment in
either provincial court or the Federal Court of Canada. Summary prosecution is subject to fines of
up to $25,000, or a jail term of up to six months, or both. Indictment prosecution is subject to fines
of up to $1,000,000, or a jail term of up to five years, or both. The seriousness of the infringement
will dictate the level of prosecution.
xi.
WHO ENJOYS COPYRIGHT PROTECTION?
The author or creator of the work owns the copyright in that work. However, a further distinction is
made between published and unpublished works. The author of an unpublished work will enjoy
copyright protection in Canada if he is:
a.
b.
c.
a Canadian Citizen or a British Subject; or
a resident of a Commonwealth country; or
a Citizen or subject of a treaty country;
on substantially the same basis as its own citizens in copyright matters.
The author of a published work enjoys copyright protection in that work if the work was first
published in:
a.
b.
c.
Canada; or
a Commonwealth country; or
a treaty country
on substantially the same basis as its own citizens in copyright matters.
A “treaty country” is defined as a Berne Convention Country, Universal Copyright Convention
Country (UCC), or World Trade Organization (WTO) member.
xii.
INTERNATIONAL COPYRIGHT
Canada is a member to both the Berne Convention, the Universal Copyright Convention, and the
World Trade Organization. Thus, a Canadian author with copyright enjoys the same protection in
those foreign countries which belong to one of the conventions and vice versa.
xiii.
COPYRIGHT OR INDUSTRIAL DESIGN REGISTRATION?
Considerable confusion has existed as to when the Copyright Act (Canada) ceases to provide
protection of copyright, and where registration must then occur pursuant to the Industrial Design
Act (Canada). In 1988, amendments were made to the Copyright Act to alleviate this confusion.
However, confusion still exists and it is an area which will require further clarification by the courts.
As discussed, ‘artistic works’ are protected under copyright laws. However, artistic works intended
to be used as models or patterns to be reproduced in numbers greater than 50, by an industrial
process, may not be protected by copyright but may be registered as “Industrial Designs.” A
danger exists that one may not have contemplated that greater than 50 copies would be made
and Industrial Design registration is only available if you meet the prior disclosure requirements
(file within one year from first public disclosure). The Copyright Act does not apply to designs
capable of being registered under the Industrial Design Act. A registerable industrial design is any
original shape, pattern or ornamentation applied to an article of manufacture. To be registerable, a
design must have features which are intended to make a visual appeal. Industrial designs that
pertain solely to functional features of an article in which no visual appeal is intended are not
registerable.
The Industrial Design Act provides that the creator of the design may within one year from the first
publication of that design, make application for registration of the design thereby obtaining
exclusive rights to its use in Canada for a period of ten years. Therefore, the Industrial Design Act
provides a maximum 10 year monopoly in a design as compared to the lifetime plus 50 years
provided under the Copyright Act. “Publication” occurs when the design is first exhibited, offered
or otherwise made available to the public in some commercial manner. Where two or more
persons create a design, they are joint proprietors and would file a joint application.
Exemptions from the 50 copies rule are provided, so that it remains an infringement of copyright
notwithstanding that an artistic work is reproduced more than 50 times under certain
circumstances. One exemption is if the work is a photographic or graphic representation that is
applied to the face of an article (ie.) original designs applied to a T-shirt. Protection for the design
would remain under the Copyright Act, and reproduction of another’s design would constitute
copyright infringement.
xiv.
CHANGES TO THE COPYRIGHT ACT AS THE RESULT OF THE WTO AGREEMENT
As stated above, the members of the WTO are extended copyright protection, in addition to those
countries who are signatory to the Berne Convention and the Universal Copyright Convention.
There are also changes to the Act made with respect to performers rights. Thus, the Act now
provides one definition for “performance” and another definition for a “performer’s performance.”
“Performer’s performance” refers to live performances of artistic, dramatic, musical, or literary
works. The amendments grant to the performer the sole right to fix, record, reproduce or
communicate to the public by telecommunication their live performance, or to authorize any of
these acts. These rights of the performer subsist for the remainder of the calendar year, plus a
further 50 years. Their performer may assign or licence their rights in the manner prescribed by
the Act. There are some fair dealing exemptions to performers’ rights (s. 29) and stiff criminal
sanctions against those who violate performers’ rights (s.42) as well as civil remedies (s. 34).
In addition to changes that have been adopted as a result of the WTO agreement, further
amendments were proclaimed into force on September 1, 1997. These include:
an expansion of the category of persons who will receive royalty payments from the use of a work
(presently, artists and producers who perform the lyrical and musical works written by others do
not receive royalties for their performance; only the original artists is currently entitled to receive
royalty payments) [did this happen? check]
a “blank tape levy” which is to be paid by anyone who manufactures or imports blank audio
recording media (s.92)
a “fair dealing exemption” which allows individuals with disabilities to reproduce a copyrighted
work (single copy) in alternate formats (i.e. braille or electronic voice) so long as the alternative
format is already not commercially available (s.32.2)
b.
WHO OWNS COPYRIGHT
A question that is commonly asked is who owns the copyright? It may arise in a variety of situations
ranging from work performed by employees, independent contractors or indeed students.
i.
Example Problem
Irwin and Stan are employed by a large oil and gas company and as part of their employment duties they
are involved in the development of computer software. To date the software has been used exclusively for
internal purposes. Irwin and Stan would like to sell the program to other companies since they worked so
hard on it and feel it is very good.
Required: Advise Irwin and Stan on who owns the computer program.
Solution: A computer program is a work within the meaning of the Copyright Act. Furthermore s. 13 (3) of
the Act provides that where the author of a work is employed, and the work is made in the course of his
employment, then the employer shall, in the absence of any agreement to the contrary, be the first owner
of the copyright.
As a result, Irwin and Stan own no interest in the copyright of the programs which they have been working
on for their employer and must be careful not to copy such programs or redesign programs that will result
in infringement of their employer’s copyright in the original program. Moral rights however cannot be
assigned but can be wiaved. The employer is well advised to obtain a waiver of Irwin and Stan’s moral
rights if they anticipate modifying the program or its intended application.
ii.
Example Problem
Phil and Mike have decided to start a partnership in a marketing business. They located a graphic artist in
the phone book to design a “spiffy” new logo for their partnership. They are concerned about whether the
artist can use this logo for other clients.
Required: Advise Phil and Mike about who owns the logo and any other steps that they should take to
secure its protection.
Solution: While case law suggests that you may have an implied license to use the logo, a review of the
Copyright Act indicates that the copyright in your intended logo rests with the graphic artist you paid to
produce it. This would not be the case if you produced the basic design and simply gave it to him
complete. However, he produced the design for you. You should therefore obtain an assignment of the
copyright from him plus a waiver of his moral rights in the copyright.
Copyright gives the owner the right to multiply copies of a published work or to make a work public and
still retain the beneficial interest in it. Moral rights give the author of a work the right:
a)
b)
c)
To prevent the work from being distorted or mutilated,
To prevent the work from being used in association with a product, service, cause or
institution, and
To be associated with the work as author by name or pseudonym, or to remain
anonymous.
The copyright will then have to be registered to record the assignment and waivers. Registration fees are
currently $65.00 and the term of the copyright will be for the life of the author (graphic artist) plus 25 years
(due to the reversionary interest granted under s. 14(1) of the Act).
In addition, you may also wish to register your logo as a trademark. According to the Trade Marks Act, it
appears that registration will give you, as owner, the exclusive right to use your logo with the products or
services for which it was registered throughout Canada, and to institute court proceedings to prevent
others from using a similar and confusing trademark. It appears to provide Canada-wide protection for
your goodwill and reputation for a period of 15 years with indefinite renewals available of 15 years each.
The fees are currently $150.00 on application plus a further $200.00 on issuance of a certificate of
registration. Additional fees, such as maintenance and completion fees, may also be applicable.
iii.
Example Problem
Cathy is a graduate student. She has raised the question as to whether her supervisor could write and
publish a paper based on her (Cathy’s) Ph.D. thesis without Cathy’s consent.
Required: Outline for Cathy any rights she may have under the Copyright Act and any other protection
which may be available.
Solution: Under the Copyright Act of Canada, the author of an original literary work has copyright in their
work upon its creation. Copyright includes the sole right to publish, produce and reproduce the work.
These rights last for the life of the author plus fifty years. It is not necessary to register a copyright under
the Copyright Act for the copyright to exist; however, there are advantages to registration, in that it can be
used in court to establish ownership of the copyright.
Infringement of copyright is defined as doing any act that only the owner of the copyright has the right to
do, without the consent of the owner of the copyright. Copyright is infringed if someone publishes,
produces or reproduces that work or any substantial part of the work in the material form, without the
author’s consent. Infringement requires copying of the way the ideas are expressed; copyright does not
protect the ideas themselves. Copyright is not infringed by mere reference to another work or by quoting
insubstantial parts of the work.
Certain acts are also exempted from being considered to be infringement of copyright by the Copyright
Act. Thus, copyright is not infringed by any fair dealing with any work for the purposes of private study,
research, criticism, review or newspaper summary.
To determine whether a particular paper written using a thesis as its basis infringes copyright in the thesis,
it would be necessary to compare them in detail. This is because it would be necessary to show, as
outlined above, that at least a substantial part of the thesis was copied in the paper, and that the
exceptions to infringement in the Copyright Act were not available. Thus, it is not possible to determine
thesis.
Fiduciary Obligations
A thesis supervisor may also be in a fiduciary relationship with a student. A fiduciary relationship is one in
which one party is placed in a position of trust, because there is unequal footing between the parties. A
fiduciary may not use his or her position for personal gain particularly if it is at the other’s expense. Breach
of this duty is constructive fraud, founded on principles of public policy to prevent the fiduciary from taking
advantage of the confidence which the relationship naturally creates. A fiduciary relationship applies in
every case where one can obtain considerable influence over another. A graduate student’s supervisor
may be considered a fiduciary. Where a fiduciary violates his duty there are a number of legal remedies
available. However within a university environment the first step would be to take the matter to the
university’s ethics Committee.
c.
IS IT COPYRIGHTABLE? INFRINGEMENT AND OTHER ISSUES
i.
Example Problem
Marilyn is considering starting a business where she would create slogans which would be printed on
t-shirts, posters and stickers, as well as graphic and photographic representations. She has indicated
three issues that she is concerned with: firstly, whether she could acquire copyright protection on the
slogans that she created: secondly, whether she must register under the Industrial Design Act: thirdly,
how she could avoid unintentionally infringing on any existing intellectual property rights.
Required: Advise Marilyn about her three concerns.
Solution: Copyright applies to various categories of creations including: literary works (including computer
programs pursuant to the 1988 amendments), artistic works, dramatic works, and musical works.
For a particular work to be protected under the Copyright Act it must be:
a) original (ie. it cannot be copied); and
b) the product of labour, skill and judgment (ie. it must be creative).
Slogans and short phrases would only be copyright protected if they were the result of creative
authorship. Therefore, phrases in common usage would not meet this requirement nor the originality
requirement.
An industrial design (ie. an original design or pattern which is to be reproduced in a quantity greater than
50, but excluding a graphic representation that is applied to the face of an article) may receive protection
by registration under the Industrial Design Act (Canada). Registration of an industrial design is
compulsory if protection from copying is to be obtained. The industrial design must be registered within 12
months from the date the design is first published. The registration lasts for 10 years. An industrial design
will not be protected under the Copyright Act.
Since the 1988 amendments exclude from the 50 copy rule graphic or photographic representations that
are applied to the face of an article, original designs applied to t-shirts would be protected under the
Copyright Act rather than the Industrial Design Act.
Preventing Unintentional Infringement
You may prevent the unintentional infringement of another person’s copyrighted material by searching the
records of the Intellectual Property Office; however, as noted above slogans are generally not able to be
protected by copyright.
You are much more likely to infringe on another person’s trade mark. A trade mark is a word, symbol or
design used to distinguish the goods or services of a particular person. You can search the trade Marks
Records at the Intellectual Property Office to determine if the phrase you are using is a registered trade
mark. This will not be complete assurance that you are not infringing on a trade mark since trade marks
need not be registered.
ii.
Example Problem
June is working on a book on learning strategies. Many of the ideas used in the book were expressed to
her by third parties. She is concerned about whether she is infringing their copyright in these ideas.
Required: Advise June about any copyright the third parties may hold.
Solution: The authorship of your learning strategies book is to be based largely on ideas contributed by
third parties. If someone has an idea regarding a learning strategy, that idea as such does not have a
copyright attached. For example, if someone found that memorizing the first letter of each word of a
phrase aids in the memorization of that phrase, then that is a mere idea and has no copyright attached.
Copyright lies in the unique format or structure of a product. The uniqueness, upon creation, carries a
copyright interest and must be properly acknowledged in your book. Therefore, if you quote from an
already published book or other copyrighted material you must acknowledge that author’s copyright.
Copyright attaches automatically upon creation of the product; registration of the copyright is evidence of
a proprietary interest but is not necessary. However, if your book includes ideas only but not materials
already produced, there is no copyright in any third parties.
iii.
Example Problem
Peter’s proposed venture involves the manufacture of computer software. He is also considering a
program which would essentially reproduce a business directory which has been published. Peter would
like to know if copyright protection is available for his new programs and whether he can reproduce the
business directory in a software package.
Required: Advise Peter about these copyright issues.
Solution: As of June 1988, the Copyright Act was amended to extend copyright protection to computer
programs. A “computer program” is defined to mean “a set of instructions or statements expressed, fixed,
embodied or stored in any manner, that is to be used directly or indirectly in a computer in order to bring
about a specific result”. Copyright exists in a computer program at the time of its creation. However for
ease in protecting copyright it may be advisable to register the copyright of your work. You plan to copy
already published data into your business database. This type of data is known as a “compilation” in the
Copyright Act and is protected by the Act under the rubric of “literary works”. A compilation can consist of
matters and of facts taken from the public domain. The law does not prohibit the making of similar
compilations, provided they are the result of the labour and skill of the author and not a copy of those that
are protected. It is the original work of the author that is protected and not that which he has taken from
common sources in the public domain. For example, the way in which the information is presented and
the arrangement of the information on the page would be protected.
The complete copying of data would amount to infringement of the author’s copyright. Copyright in work is
deemed to be infringed by any person who, without the consent of the owner of the copyright, produces or
reproduces the work or “any substantial part thereof in any material from whatever”. If a substantial part of
the business directory is copied, there is infringement. However it is always a question of fact whether that
part taken is substantial or not. In determining what is a substantial part a variety of circumstances must
be considered - the value of the part appropriated; its relative value to each work; the purpose it serves in
each; and how far the pirated matter will tend to supersede the original or interfere with its sale.
If the above factors were applied to your proposal, I think that it could be shown that a database using
information substantially obtained from a publication, is presented in the same format, is indeed an
infringement of the author’s copyright.
The best course of action is to obtain a licence from the copyright holder. According to section 13(4) of the
Copyright Act, a licence must be given in writing. Correspondence indicating a willingness to enter into a
licence arrangement does not constitute a licence or permission to use copyright. Therefore be sure that
you do have written licence agreement before you proceed.
d.
COPYRIGHT IN THE INTERNATIONAL MARKETPLACE
i.
Example Problem
Wayne is the author of and the registered owner of the copyright in the book titled “Canadian and English
Synonyms”.
He is interested in exploring the international market and in furtherance of this objective, replied to an
advertisement in the December 1990 issue of “Book Exports”. The advertisement was placed by a
publishing company in Sweden expressing interest in buying publishing rights to, among other materials,
English as a second language materials.
Wayne has not received any response so the possible terms and conditions of any potential agreement
with this company are unknown.
Required: Advise Wayne on the following matters:
a)
What is copyright? What rights are protected? What is the scope of protection?
b)
What alternatives are there in granting such rights?
Solution: Rights in Copyright and Scope of Protection
The author of an original literary work has copyright in the work upon its creation. Copyright gives the
owner of the copyright the exclusive right to produce, reproduce, perform, publish, translate, convert,
adapt, publicly present, and record or broadcast the work. This is not an exhaustive list. These rights last
for the life of the author plus fifty years.
If another party does something which only the owner of the copyright has the sole right to do, without the
consent of the owner, it will constitute an infringement of the copyright. It should also be mentioned that
since Canada is a member of both the Berne Convention, the Universal Copyright Convention, and the
World Trade Organization a Canadian author with copyright enjoys the same protection in those foreign
countries which belong to one of the conventions. Sweden is such a country. Under the Berne Convention
the protection arises automatically upon registration. Under the Universal Copyright Convention however
a notice must be prominently be displayed on the work consisting of:
a)
b)
c)
©
name of copyright holder
year of publication
The final notice should appear as follows: © Sean Goodwin 1999
e.
Alternatives In Granting Rights
Since we don’t know the possible terms and conditions of any potential agreement you may enter into, I
propose to deal with this area in general. It should be mentioned however that most publishers have their
own form of contract and it may or may not be possible to negotiate with them on changes.
There are two possible ways of dealing with the copyright. If can be assigned (sold) or a licence can he
granted.
a)
Assignment
An assignment of copyright is a “sale” of the ownership of the copyright. It entirely depends upon
the terms of the assignment agreement. Thus an assignment may be for the whole or part of the
term of the copyright and it may be for all of the rights mentioned or only parts of the right. For
example, the owner can sell movie rights to the book only but no other rights.
b)
Licence
A licence does not involve the transfer of ownership to another party. Instead by granting a
licence, the owner of the copyright allows another party a privilege or use of the copyrighted
work usually in exchange for a fee or royalty. The use or privilege depends upon the terms of the
licence. For example the owner may grant a licence to publish in a certain magazine.
As is apparent, what is sold or licensed will depend on what the parties agree to sell or license. For
example, worldwide rights don’t have to be given, rather the rights given can be restricted to a certain
geographical area. What is following is a list of considerations to be taken into account when considering
negotiations of a sale or licence of copyright. Again this list is not exhaustive:
a)
Sale or licence?
b)
How long is the licence to last?
c)
What rights are to be given up and what rights are to be kept? Here consideration must
be given to the exclusive rights the owner of the copyright has.
d)
Royalty Agreement
1.
f.
how it will be measured, (for example, on sales or on the number published)
2.
what amount (for example 10%)
3.
will there be a minimum
4.
will there be an accounting (for the owner’s protection, he may want to inspect records)
5.
how often will the royalty be payable
e)
Other considerations - will the rights be transferable (for example if a licence is given for
5 years what if the publisher wants to give the licence to someone else?
f)
Geographical Scope of the Rights
CHOOSING THE RIGHT SYSTEM
In many cases more than one intellectual property system may apply. It will be necessary to carefully
consider the various avenues available including both formal registration and nondisclosure agreements.
Example Problem
Gary is in the process of developing a strategy game for possible commercial distribution.
The game is similar in concept to “Cosmic Encounters,” a game which is already in production. However
Gary feels the differences between “Cosmic Encounters” and the game which he is developing are
significant enough that no copyright infringement would arise.
He is still some months away from producing a prototype or pre-production version of the game, thus
there are as yet no final versions of rules, game counters, or a game board. He is becoming increasingly
anxious about how to protect his entertainment concept.
Required: Advise Gary how to best protect his new game. Also comment on any potential infringement
problems
Solution: A combination of copyright registration (in respect of the rules, game counters and title) and
industrial design registration (for the game board itself) would be the most appropriate form of protection.
Patent registration is generally reserved for new inventions or improvements on existing inventions of an
industrial nature. Games have been patented; “Monopoly” for example was granted a patent in respect of
its then unique system, involving a variety of game counters representing the various hotels, houses,
utilities, etc. In general, however, patenting is not used to protect the intellectual property in games. The
patenting process is long, complex and expensive; once a patent is granted, its protection extends for up
to 20 years. In comparison, a copyright attaches automatically to any published or unpublished written
work. Registration of a copyright under the Copyright Act provides additional protection to the author and
is relatively simple to achieve in comparison to the patenting process. Also the time period during which
copyright protection endures is considerably longer than provided through patenting; a copyright
continues for a lifetime of the author plus 50 years.
Copyright Infringement
Since your game is not yet in its final design form, it is not possible as yet to comment on whether or not
your game infringes on the copyright of “Cosmic Encounters” or other similar games. A brief examination
of the relevant case law indicates that, generally speaking, copyright infringement involves out-right
copying, “substantial use,” or other similar acts of plagiarism. Thus, as long as your game does not bear
any substantial resemblance to “Cosmic Encounters” or any other game, no copyright infringement
problem should arise. Please note however, that a completely accurate opinion cannot be rendered until
your game is in its final form (ie., ready for production).
Industrial Designs for Game Boards
Game boards cannot be protected by copyright once more than 50 copies are produced. Instead, game
boards are protected through the registration of an industrial design under the federal Industrial Design
Act.
Summary
a)
Intellectual property of the type involved in a game is protected by a copyright, as provided for in
the Copyright Act, a federal statute.
b)
There is no registration requirement; copyright attached automatically. Registration is
recommended, however, as the registration process strengthens the legal rights of the copyright
holder.
c)
Copyright cannot be used to protect the board portion of a game once the game is mass
produced. The board must be protected through the registration of an industrial design.
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V. TRADE SECRETS & CONFIDENTIALITY AGREEMENTS
The economic requirement for confidentiality arises in any situation where there may be a transfer of
information, for example disclosure made to induce someone to enter into a joint venture or a takeover, or
a disclosure to a banker or a potential investor. Confidentiality is also essential in the development and
marketing of various forms of technology.
Canadian law recognizes the economic importance of innovative products, processes and ideas.
Protection of such products, processes and ideas is afforded primarily by the law of contract and equity.
The law also realizes that protection must be limited so as to not severely infringe other important public
interests, such as the free flow of information. This material will focus on the area of protection afforded by
the law of contract, however, equity and tort law will also be discussed because both sometime offers
protection in this area whether or not the parties have entered into a contract addressing confidentiality.
a.
i.
KEY QUESTIONS
i.
WHAT IS A CONFIDENTIALITY AGREEMENT?
ii.
WHY HAVE A CONFIDENTIALITY AGREEMENT?
iii.
WHAT ELEMENTS SHOULD BE INCLUDED IN A CONFIDENTIALITY AGREEMENT?
iv.
WHAT ARE THE REMEDIES AVAILABLE FOR BREACH OF A CONFIDENTIALITY
AGREEMENT?
WHAT IS CONFIDENTIALITY AGREEMENT?
A confidentiality agreement is a contract designed to protect confidential information by requiring a
recipient to keep confidential and not disclose or use the confider’s confidential information or trade
secrets.
The agreement can be used to cover any information which is used in a business, which gives a
commercial advantage, and which is not generally known. This would include, for example, trade secrets,
secret formulas or other processes for manufacturing. It is not however, limited to those things. A
customer list, a mailing list, a list of qualified vendors, and a list of customers who pay their bills as
opposed to those who do not all provide extremely valuable information. Financial information can also be
valuable. For example, prices paid for components, the wages paid to employees, the total cost of each
product, overhead expenses, and capital resources are all things which competitors might like to know. In
summary, “confidential” information is any information which is-not freely available to those people,
however small in number, who might want it.
ii.
WHY HAVE A CONFIDENTIALITY AGREEMENT?
Confidential information is often protected by the law of equity (or fairness) under the inherent jurisdiction
of the court. For example, abuses of confidential information are subject to legal sanction where a
previous relationship (but no contract) existed between the parties. Equity provides the courts with 2
doctrines upon which such protection could be based: one is the doctrine of breach of confidence, the
other is breach of fiduciary duty. The Supreme Court of Canada recently addressed these doctrines in
LAC Minerals Ltd. v. International Corona Resources Ltd. (S.C.C.). La Forest J., in the principal judgment,
held that all the requirements necessary to support a claim of misuse of information were present. These
requirements are:
a)
The information must have the element of confidentiality;
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b)
There must be a communication made under the conditions of confidentiality; and
c)
There must be a misuse of the confidential information by disclosure.
With respect to the third requirement, the courts will infer misuse and the burden shifts to the recipient to
establish that the use was not prohibited.
In that case, the plaintiff company owned mining rights on certain land, on which it was drilling exploratory
holes. The defendant company approached the plaintiff company with a view to a possible partnership or
a joint venture. The plaintiff revealed the results of the drilling, from which it was clear that an adjacent
property was likely to include mineral bearing deposits. The plaintiff attempted to acquire the mining rights
in the adjacent property, but the defendant put in a successful competing bid, and developed the mine on
its own account.
The S.C.C. found an industry practice that imposed an obligation on parties seriously negotiating a joint
venture not to act to the detriment of each other. Since the information given to the defendant was
confidential, and revealed only for the purpose of a possible joint business venture, the defendant was in
breach of its duty of confidence in acquiring the adjacent property. As a result the court held that the
defendant held the property on trust for the plaintiff.
It is interesting that the S.C.C. decision was based only on misuse of confidential information. Only 2 of
the 5 judges held that there was also a breach of fiduciary duty by LAC. In order for a fiduciary obligation
to arise, an element of trust or promise must be created and an unequal relationship must exist between
the parties. Three justices in the Corona case held that there was not an unequal relationship present,
despite the fact that one party was a junior mining company and the other a senior mining company.
Equity may also apply even where the parties have entered into a binding contract, but have not
specifically addressed an obligation of confidence. The courts are sometimes willing to imply such an
obligation in the contract to protect the confider. If confidential information is protected by equity as well as
by contract, why would one enter into a confidentiality agreement (contract) to protect confidential
information? There are a number of good reasons. First, in trade secret litigation, the central issue is often
whether the information was confidential. Assessing whether information is confidential or not can be an
exceedingly difficult task for a judge particularly when the information concerns an unfamiliar and complex
technology. A confidentiality agreement, containing a specific definition of what is considered confidential
information by the parties for the purposes of that agreement, provides guidance to the judge. The
agreement may also extend the definition of confidential information to include information which is not
technically a trade secret.
Secondly, there is the possibility that where the parties have entered into a binding contract governing
many areas of the relationship, but fail to deal with confidentiality, a court may construe the contract as
constituting the entire agreement between the parties and conclude that they intended not to treat any
information as confidential. As a result, spelling out confidential obligations is often a good idea.
In addition, signature by a recipient on a confidentiality agreement indicates that the recipient has been put
on notice that he has become privy to trade secrets and that he occupies a position of trust and
confidence with respect to that information.
Finally, injunctive relief (a common remedy for breach of confidence) is more likely where the parties have
entered into a confidentiality agreement. Where such relief is granted an injunction is issued by the courts
to prevent the offending party from continuing to use the confidential information.
iii.
WHAT ELEMENTS SHOULD BE INCLUDED IN A CONFIDENTIALITY OR DISCLOSURE
AGREEMENT?
A sample confidentiality agreement is contained in Appendix I. In general the agreement should address
the following elements,
a)
Consideration
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Contract law requires that the confider give consideration (some form of payment to the recipient or
detriment to the confider) in order to form a valid confidentiality agreement. In the case of an employee,
consideration will likely be the promises of the overall employment agreement. In other situations,
consideration may be the terms of the contract or the right of the recipient to examine the confidential
information, thus enabling the recipient to make an informed decision as to whether or not to enter into a
contract or make a bid. The consideration of the confidentiality agreement should be stated clearly, so as
to prevent a later agreement that there was a lack of consideration.
b)
Confidential Information
Every confidentiality agreement should contain a definition of “confidential information”. If the definition is
too broad, it could be found void for restraint of trade. Thus, the client should carefully assess what
information it really would be harmful to disclose. All such information should be included in the definition
of “confidential information”, but care should be taken to ensure that the definition is not over broad.
The definition should specifically exclude: information which is in the public domain, information already
known to the recipient, information already known in the trade, as well as information that subsequently
becomes known in the trade, general skill and knowledge: and information subsequently disclosed by a
third party without obligation of confidence.
c)
Onus of Proof
A clause which shifts the onus of proof may be inserted so that the recipient has the burden of proving that
information was not confidential.
d)
Use
It is important to specify the uses to which the recipient may put the confidential information. This use is
likely the consideration, or part of the consideration, given by the confider.
e)
Permitted Disclosures
Many agreements strictly prohibit any disclosure of the confidential information. The parties may prefer to
insert a clause allowing disclosure in certain circumstances (e.g. legal proceedings).
f)
Clarifying What is Confidential
The recipient may desire a clause requiring that all confidential information be marked “confidential.”
g)
Protective Measures
A clause requiring the recipient to take reasonable measures to keep the information confidential should
be included. This may include a list of the specific steps to be taken by the recipient.
h)
Duration of the Obligation
Although a clause stating the time limit during which confidentiality must be maintained may be included,
such a clause is not required. An obligation of confidence may terminate by an agreement for
consideration; the express or implied consent of the confider; or expiration of the confidentiality of the
information.
i)
Boilerplate
As with any contract, the parties may wish to include some boilerplate provisions: severance of wholly or
partially unenforceable provisions from the rest of the agreement; a limitation period shorter than the
normal six year period; a statement of absence of duress and full understanding of the contents of the
agreement; signature of a witness to the agreement.
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j)
Restraint of Trade
As previously mentioned, protection afforded by a confidentiality agreement should not be over broad. A
confidentiality agreement is a form of restrictive covenant. All provisions must be considered to make sure
that they will not be void as unreasonable restraints of trade.
iv.
WHAT REMEDIES ARE AVAILABLE FOR BREACH OF A CONFIDENTIALITY AGREEMENT?
Breach of a confidentiality agreement is a breach of contract. Thus, remedies available for breach of
contract would be available to a confider where the recipient of confidential information breached the
confidentiality agreement. Also, because breach of confidence is an equitable doctrine, remedies available
in equity may also be available to the confider. Remedies for breach include: damages, an injunction, an
accounting of profits, a constructive trust (as in Corona), and, before trial, an interlocutory injunction to
prevent further use of the information.
v.
LIMITATIONS OF CONFIDENTIALITY AGREEMENTS
A confidentiality agreement does not give perfect protection to the owner of a trade secret or other
confidential information. It is important to understand the limitations involved in one.
The major limitations are:
a)
The agreement will only apply to the parties named in the contract. It is therefore important to
ensure that the person or organization to whom the information is to be disclosed is properly
named.
b)
Another limitation which is common to all types of protection that a creator might use to ensure
they will obtain the benefit from exploitation is that the agreement is only as effective as the
creator is able to enforce it. It is difficult and may be costly to prove that a party has breached their
duty of confidentiality and that the creator has suffered injury as a result. Both of these questions
must be proved before any remedy is available. Should the circumstances be appropriate, the
creator may ask that a criminal charge be laid for theft of property as there is some authority in
Canada which suggests that taking confidential information may be the subject of theft charge.
Where this is not appropriate, the creator of a trade secret should be aware that no independent
organization will enforce the agreement on his behalf.
c)
A very important limitation to the use of a confidentiality agreement relates to the nature of
confidential information itself. If there has been “publication” of the information which comprises
the trade secret, then it will be quite easy for the other party under a confidentiality agreement to
argue that the creator did not intend strict confidentiality was necessary. Cases decided under
industrial design and patent legislation suggest that publication of a product, process or idea will
occur if it is disclosed without confidentiality to even one person. Clearly, the need for a disclosure
agreement will arise at the earliest stage of a creator’s work on the product, process or idea.
b.
PROBLEMS OF DISCLOSURE
For many people with new ideas or unpatented inventions, determining a method of disclosing without
having them taken without authorization or worse, payment, will be a major concern. Some steps can be
taken to protect the new discovery.
i.
Example Problem
Kathy is considering presenting her ideas for a television series to various businesses. She is concerned
that given the novelty and simplicity of her proposed series that it will be snatched up instantly and-she
will not be paid for her ideas. She would like to know how she can present her concepts and still protect
them from “would-be” idea thieves.
Required: Outline for Kathy the information she needs to take steps to protect the series before she
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discloses it.
Solution: One way of presenting your concepts and protecting them at the same time is through a
“confidentiality agreement” (see III(i)). This would be presented to and signed by the interested party
before any disclosure of your ideas. Once signed, this would constitute a binding agreement on the
parties whereby the person signing the agreement could not use your information without your written
consent.
The type of document defines the scope of the confidential information and acknowledges that such
information is your sole property. It also creates an obligation for the signing party to use reasonable
efforts to protect the confidential information from disclosure except as authorized by you. The agreement
gives you the right to demand in writing the return of any confidential information at any time during the
agreement or upon the termination of the agreement.
The agreement requires thereby a notice conspicuously placed on each copy of the confidential
information basically stating that the material is confidential. It also recognizes that you acknowledge that
the signing party may already have similar ideas from other sources, but they must promptly advise you of
this in writing. By signing the agreement, the party undertakes that unless you give express written
authorization, they may not disclose your confidential information or use it for their own purposes during
the period when the information is confidential, or two years after first seeing the information, whichever is
longer. As well, the signing party must take all reasonable precautions to ensure the confidentiality is
maintained.
The document specifies that if the signing party breaches the agreement accidentally or intentionally, you
will have suffered irreparable harm and are entitled to an injunction as well as other remedies available at
law or equity. An injunction is a remedy granted by a court requiring the person to whom it is directed to
do or refrain from doing a particular thing. If you fail to enforce provisions of this agreement, you will not
be prevented from enforcing subsequent violations of the agreement.
All of the previous information assumes that the people you are approaching will sign a confidentiality
agreement. Unfortunately this type of document will not be signed as these parties wish to protect
themselves as much as you do.
Another route you may consider in presenting your television series would be to send a letter setting out
your project and outlining its value. You may want to consider the amount of information you wish to
disclose in this letter. You can express your ability to complete this project without their help, if that is the
case, and propose their potential involvement. There is nothing specific in this method which protects your
ideas per se, but it is a clear declaration of the concept as your own. It is essential that you impress upon
the parties the value of the information to you. This documentation is evidence that the concept was
developed by you and presented as your idea.
Your work may also be protected by copyright. Copyright exists from the moment an original work is
created. An essential characteristic of copyright is that it does not extend to ideas, schemes or methods.
Rather, copyright covers the arrangement and expression of the ideas (ie., the written work that contains
the idea). By merely placing the small letter “c” with a circle around it, the year and the author, prominently
on the work you are giving notice to whoever sees that information that the person named is the author.
(This formality is set forth in the Universal Copyright Convention.) For example, (c) 1990 Kathy.
ii.
Example Problem
Alex has invented a new hose nozzle which he claims will revolutionize the use of water hoses in “crowd
control situations”. He plans to approach manufacturers in Alberta and B.C. first (for summer concert use),
then hit the U.S. and finally troubled third world countries. He has no patent and would like to know how to
protect his invention.
Required: Advise Alex of any steps he might take to protect his new hose concept.
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Solution: If possible a confidentiality agreement should be signed before you disclose the invention. The
essence of such an agreement is that the person signing agrees to keep your idea confidential; that the
idea is your property; and, that they will not use your idea for their own benefit without negotiating a
licence or other agreement with you. The fact that someone does sign such an agreement is no guarantee
that they will not break the contract. In that event, you can then sue for damages and an injunction.
However, when you are dealing with someone in another jurisdiction or country, who has no assets in
your jurisdiction, you will have to sue them in that other jurisdiction; the costs of which might be
prohibitive. In other words, when dealing with someone in another country, make sure that you are dealing
with a reputable party.
If you do disclose the invention in detail to a manufacturer without a confidentiality agreement in place,
then you have no protection at all. He has the blueprints and he knows how to copy the invention. He has
not promised not to copy the invention or not to disclose it to others. You have no proof that you sent him
the idea. If you have documentation to show that as of a certain date, you had the idea, that is some proof
that you invented it first. Otherwise there is no proof that the manufacturer did not invent it himself.
Some manufacturers will not sign such an agreement (ie) they will require a proof of patent registration or
some other registerable document before they will even look at the invention. They will do this in order to
protect themselves from any claims by you that they stole your idea when it was already one they were
working on themselves. If you have not registered your invention they may require that you sign one of
their documents. Such a document provided by a manufacturer might be expressed as follows:
Thank you for offering to show us your idea. As I am sure you must realize, our company receives many
suggestions, and in most cases, the idea has already been considered by us. Accordingly, we are unable
to accept your proposal unless you are willing to agree to the following conditions:
1.
2.
3.
Samples cannot be returned to the submitter.
Compensation will be paid only if the company in its sole discretion, deems it appropriate, and
only then in such amounts as the company, in its sole discretion, deems appropriate.
The Company accepts no responsibility for holding any information in confidence.
Whether you choose to disclose under these circumstances is a matter of personal judgement.
iii.
Example Problem
Chris Ever has just completed her design for a new tennis racket. She has found someone who will do a
prototype of it, and a tennis racket manufacturer who, sight unseen, has requested first rights to license
the design if, as promised, it is used at Wimbledon this year. Chris is very excited about the venture but
would like to find some way of protecting the design before she releases it to the manufacturer.
Required: Advise Chris about-how she might protect her new tennis racket. What relief would be
available if her idea was stolen?
Solution: Disclosure Agreements
If you found a manufacturer to produce a model of the product or if you issued a licence to produce and
sell the racket, you could protect your design under a disclosure or confidentiality agreement with the
manufacturer. The express terms of the agreement will govern the protection of the confidential
information. If there are no express terms regarding the confidential information the court may under the
appropriate circumstances to protect you imply them. It is well settled law that when confidential
information is disclosed to another party, that party is obliged not to take unfair advantage of the
disclosure and should not make use of it to the detriment of the one who disclosed it without getting his
consent. In one case confidential information about an idea for a stair carpet fixing device was disclosed
during negotiations for a contract to manufacture another carpet fixing device. When negotiations for the
manufacturer of the first device fell through, the defendants subsequently manufactured a device very
similar to the second device. The plaintiff was awarded damages and action for the misuse of confidential
information.
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To bring this type of action it would be necessary to prove that the information was indeed confidential,
that the relationship was based on confidence and that confidence was breached by improper use of the
information or its disclosure without consent.
In summary, since there is no legal definition of “confidential information” the definition of ‘’confidential
information” in your agreement will govern. However if there wasn’t one or it was vague the court may look
at a number of factors to determine whether:
a)
b)
c)
the information was given for a limited purpose,
the recipient knew the information belonged to you, and
the recipient knew the information was not public knowledge,
to determine whether it was confidential.
The relief that will be granted if the confidentiality is breached depends on circumstances and may consist
of an injunction to restrain the misuse of the confidential information, damages or an accounting for profits,
or a combination of these.
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c.
CONFIDENTIALITY SAMPLE AGREEMENTS
I.
You are granting another company access to Confidential Information.
THIS AGREEMENT is made as of day of _____________, 199_
BETWEEN:
________________________________
_, of the City of Calgary in the Province
of Alberta (hereinafter referred to as “X’)
OF THE FIRST PART
- and
________________________________,
of the City of Calgary in the Province of
Alberta (hereinafter referred to as “Y’)
OF THE SECOND PART
CONFIDENTIAL AGREEMENT
WHEREAS X has conceived, developed and owns certain new and useful ideas which X believes to be
commercially viable relating to _______________(the “trade secrets”):
AND WHEREAS Y believes that the trade secrets may be of interest to it and has requested X to make
disclosure to it upon a confidential basis;
AND WHEREAS the disclosure by X to Y may involve certain confidential Information (as hereinafter
defined) such that Y will be exposed to and will have the opportunity to use the valuable technical and
nontechnical Confidential Information which X desires to protect either by patent, industrial design
registration, copyright, trademark or by keeping such information secret and confidential;
AND WHEREAS Y undertakes to make no use of the trade secrets without the prior written consent and
agreement of X;
NOW THEREFORE in consideration of the payment of one dollar ($1.00) from Y to X, and other good and
valuable consideration, the receipt of which X acknowledges and accepts, and in consideration of the
disclosure of the Confidential Information by X to Y and the mutual covenants and undertakings
hereinafter set forth the parties hereto agree as follows:
1.
Scope of Confidential Information The term “Confidential Information” shall have the meaning
set forth in Schedule “A” to this Agreement
2.
Confidential Relationship The parties hereby acknowledge and agree that upon execution of
this Agreement a confidential relationship and a duty of confidentiality exists between X and Y with
respect to the Confidential Information.
3.
Sole and Exclusive Property Whereby Y acknowledges and agrees that the Confidential
Information is the sole and exclusive property of X and that the Confidential Information shall remain the
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sole and exclusive property of X throughout the term of this Agreement regardless of whether such
Confidential Information is generated by Y or others.
4.
Trust Obligation Y hereby acknowledges and agrees that the Confidential Information is
disclosed to Y in trust for the benefit of X only* and that Y is thereby obligated under such
obligation of trust to use his best efforts and to exercise all reasonable diligence to protect and
guard the Confidential Information except as authorized during the term of this Agreement.
5.
Return of Confidential Information Upon termination of this Agreement or at any time during
the term of this agreement upon receipt of written demand of X all such tangible parts of the
Confidential Information which are in the possession of control of Y shall be returned forthwith by
Y to X. Any copies may be retained by Y only with the express authorization of X and such
copies, if any, shall be considered part of the Confidential Information and shall be subject to the
terms and conditions of this Agreement.
* In many cases the confidential information is disclosed for the benefit of Y as well as X. Where such is
the case, it should be reflected in this clause - for example: “is disclosed to Y solely to assist Y in
determining whether or not to place a bid on the said confidential information and the amount to bid for the
said confidential information.
Each such copy must have the following notice conspicuously place thereon:
CONFIDENTIAL
“This material is composed of valuable technical and non-technical information which is owned by
_____________-and which is protected by keeping the information secret and confidential. The Owner will
allow you to review this material only on the understanding that subsequent disclosure of the information
by you to any third party whatsoever, without the Owner’s prior express authorization, is strictly prohibited.”
6.
Previous Knowledge of Trade Secrets X acknowledges that Y may already be working on the
trade secrets, or may already know of such ideas from other sources, in which case Y shall
promptly advise of this in writing and shall provide evidence of this prior knowledge to the
satisfaction of X.
7.
Non-Disclosure Y hereby undertakes and agrees that, unless the express written authorization of
X is obtained beforehand, he shall not directly or indirectly during the period in which the
Confidential Information or any part thereof is proprietary or confidential, or for a period of two (2)
years subsequent to the first examination of any part of the Confidential Information, which ever is
the longer:
a)
disclose to any other person, firm or corporation other than such person, firms or
corporations as become contractually bound to terms and conditions approximating those
in this Agreement; or
b)
make use of for their own account or the account of any of their associates, whether
persons, firms or corporations;
the Confidential Information each part of which shall be deemed to be of a confidential nature and
held by Y in trust for the benefit of X only.
8.
Reasonable Precautions Y shall take all reasonable precautions to ensure that the confidentiality
of the disclosure herein referred to in Clause 7(a) of this Agreement, if any be maintained.
9. *
Irreparable Harm Y hereby expressly acknowledges and agrees that breach by him of any of the
terms of this Agreement, whether accidental or intentional, shall result in irreparable harm to X
such that X shall be entitled to an immediate injunction and shall not in any way limit or restrict any
other remedies available to X at law or equity.
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10.
Subsequent Violations The failure of X to seek redress for violation of or to insist upon the strict
performance of any provision of this Agreement shall not prevent X from treating and enforcing
any subsequent act, which originally would have constituted a violation, as a violation.
11.
Amendment This Agreement may be specifically amended only in writing executed by the parties
hereto.
12.
Enurement This Agreement shall be binding upon and-enure to the benefit of the
successors, heirs, administrators, assigns, associates-or affiliates of X and Y.
13.
Counterpart This Agreement may be executed in counterpart.
14.
Severability Every part of this agreement is intended to be severable. If any term is illegal or
invalid for any reason whatsoever, such illegality or invalidity shall not affect the validity of the
remainder of the Agreement.
15.
Governing Law This Agreement shall be governed by and interpreted in accordance with the
laws of the Province of Alberta and Recipient hereby expressly attorns to the jurisdiction of the
courts of Alberta for enforcement thereof.
IN WITNESS WHEREOF the parties have executed these presents as of the day and year first above
written.
X
__________________________,
______________________________
Y
_________________________,
_____________________________
[An additional clause could be inserted stating that “In the event that a dispute should arise as to whether
or not certain information is ‘confidential information’ Y shall have the burden of proving that such
information is not confidential”.]
SCHEDULE “A” to the CONFIDENTIALITY AGREEMENT between
____________________________________________and
____________________________________________
made as of the
__________________day of 199________.
In this Agreement, the term “Confidential Information” shall mean
i)
any data of information, whether patentable or not, related directly or indirectly to research,
production, design or; marketing of the trade secrets as herein defined and whether relating to
product, equipment, inventions, ideas, designs, processes, research or otherwise;
ii)
any of X’s technical or scientific know-how relating to the said trade secrets;
iii)
drawings, blueprints, manuals, notebooks, reports and all other material written or otherwise
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relating to the said trade secrets whether eligible for copyright or not; and
iv)
any information related to the said trade secrets or the business affairs of X provided to or
received by Y from X on a confidential basis;
however, the term “Confidential Information” shall not be extended to cover any part of the above
which
v)
is available to members of the public or becomes publicly known following the date of disclosure
hereunder through no unauthorized act by Y;
vi)
is described in paragraph 6 of this Agreement; or
vii)
is subsequently given to Y by any third party having a right to do so.
ii)
When Your Corporation Is Acquiring Confidential Information
If a corporation is acquiring confidential information from an invention or another corporation it will want to
restrict the scope of the responsibility it is assuming to the specific confidential information under
discussion. In order to ensure this, an agreement is sometimes entered into outlining the parameters of
the information be transferred, the obligations being assumed with respect to that information and the
length of time it is to remaining confidential. Such a sample agreement follows;
This agreement shall evidence the terms and conditions on which Brown Co. shall be granted access to
certain proprietary information of Hewlett Packard Inc.
Purpose: Set out basic purpose of transaction. It will provide a frame work within which to resolve future
disputes.
Definition of Information: When receiving information, make sure your obligations are undertaken only
with respect to clear, identified and labelled information.
1.
Identify specific documents or files by name and label each piece of information.
2.
If meetings are involved, specify the meeting and who was there, etc.
3.
Try not to put a catch all clause in this form.
Obligation of Our Corporation
For a period of_____________from this date____________we will refrain from using your information in
connection with the manufacture or sale of products or services, and we will exercise the same degree of
care for your information as we use for our own similar information. However, you agree that we will not be
liable for any unauthorized disclosure which may occur in spite of such care.
Public Information
We will have no obligation with respect to any information (1) known by us prior to receipt from you, or (2)
generally known in the industry prior to such receipt, or (3) independently developed by us, or (4) after
substantially the same information is published or becomes available to others through no act or failure to
act on our part, or is received by us from a third party having no obligation to you with respect to the
information.
Manner of Disclosure
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Information subject to this agreement shall be disclosed to us in written form and marked with the legend
“Hewlett Packard proprietary information”. We will have no obligation with respect to any written material
which is not so labelled, or any information disclosed orally unless a written summary of such oral
disclosure is delivered to us within 14 days of the oral disclosure specifically identifying the items
considered proprietary.
Duration
This agreement shall expire but may be terminated prior to expiration by either party giving 30 days prior
written notice to the other party; provided, however, the obligations to protect proprietary information in
accordance with this agreement shall survive such termination.
Additional Rights
No rights or obligations other than those expressly recited here are to be implied from this Agreement.
iii.
Employee Confidentiality Agreement
Businesses often require that their employees enter a confidentiality agreement. The following provides
one example,
Our companies’ success and your career opportunities are based on our ability to protect the information
we develop out of research, development, production, marketing and management. All of us have a
common interest in ensuring this information is not siphoned off and used by businesses other than ours.
To help protect against this possibility this Employee Agreement has been prepared for your signature. (be
it voluntary or otherwise)
1.
2.
I will not during or at any time after the termination of my employment
with____________________, use for myself or others or divulge or convey to others any secret of
confidential information, knowledge or data of or that of third parties obtained by me during the
period of my employment with and such information, knowledge or data includes but is not limited
to secret or confidential matters,
a)
of a technical nature such as but not limited to methods, know-how, formulae,
compositions, processes, discoveries, machines, inventions, computer programs and
similar items or research projects.
b)
of a business nature such as but not limited to information about cost, purchasing, profits,
market, sales or lists of customers, and
c)
pertaining to future developments such as but not limited to research and development or
future marketing or merchandising.
Upon termination of my employment with or at any other time at_______________’s request. I
agree to deliver promptly to____________ all drawings, blueprints, manuals, letters, notes,
notebooks, reports, sketches, formulae, computer programs and similar items, memoranda,
customer’s lists and all other materials and all copies thereof relating in any way to business and
in any way obtained by me during the period of my employment with _____________ which are in
my possession or under my control.
I further agree that I will not make or retain any copies of any of the foregoing and will so
represent to the company upon termination of my employment.
3.
I agree that I will not acquire or hold any interest as a shareholder, partner, owner director, agent
or otherwise in any business in competition with without the written consent of
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________________, and shall not engage in any business competing with that of
_________________________________-.
4.
____________________may notify* anyone employing me or evidencing an intention to employ
me as to the existence and provisions of this Agreement.
5.
The validity or unenforceability of any provision of this Agreement as applied to a particular
occurrence or circumstance or otherwise shall not affect the validity and enforceability or
applicability of any other provision of this Agreement.
6.
This Agreement shall enure to the benefit of and may be enforced by its successors or assigns
and shall be binding upon me, my executors, administrators, legatees, distributees and other
successors in interest and may not be changed in whole or in part except in a writing signed by an
authorized officer of _________________and myself.
Where appropriate, the employment agreement might also provide for a positive obligation on each
employee to disclose “inventions” to the employer and to assign all rights in these to the employer.
Cathy Brown\685 - Business Clinical\MATERIAL\685 - Chapter 4 .WPD