Doing Business in Canada Presentation to TechTown Partners Agenda Invest In Canada NAFTA – How to Use it to your Advantage An Exporting Plan Industries and Opportunities in the Windsor-Essex Area Facilitating Commerce in Windsor Comparing the Canadian and US Legal Systems NAFTA’s Legal Aspects Copyright Issues Trademark Issues Patent Issues NAFTA Bridging Michigan & Ontario Overview Trilateral Agreement formed in 1994 Daily Trilateral Trade = $1.9 billion Population = 450 million consumers Designed to Promote Economic Growth o Trade Liberalization o Spurring Competition o Creates Economic Confidence & Stability o Promotes FDI Benefits Benefits Increase Brand Recognition Elimination of Tariffs Proximity Boosting Innovation Reduction of Technical Barriers Access to Materials, Technologies, Investment Capital & Talent ToolsFor ForSuccess Success Tools NAFTA Institutional Support Dispute Resolution Mechanisms Intellectual Property Protections Mutual Recognition Agreements Pre-clearance Systems Security & Environmental Initiatives Take Advantage Over 75 land ports along the US – Canada border Canadian production hubs closer to many US target markets Smart Border Creation New Infrastructure Freight Quotes Exchange Rates Top 25 US International Gateways US Bureau of Transportation Statistics, 2002 SBDCGLOBAL.COM Free Online Trade Platform Operating between US, Mexico & Columbia – Canada is considering Buy and Sell Orders Trade Information Business Directories Training “Connecting Small Businesses to the World” Importing/Exporting Basics Research o US Department of Commerce o Canada Border Services Agency NAFTA Certificate of Origin Automated Export System International Classification System Filing Timeframes o www.census.gov & www.export.gov Imagine Success Caterpillar Inc. Champion Enterprises Azure Dynamics Corporation Research in Motion Peerless Clothing QUESTIONS? An Exporting Plan Exporting…Is It For You? Benefits of Exporting are increased sales Higher profits Economies of scale Reduced vulnerability Increases Competitiveness (Globally and Locally) Factors To Consider Increased Cost Level of Commitment Staying for the long-run Cultural Differences Paperwork Competition Accessibility Your Expectations and Intentions Matter Are your objectives clear and foreseeable? Do you have a realistic idea of what exporting entails? Do you have an openness to new ways of doing business? An understanding of what is required to succeed in an international market? Myth Busters “ I’m too small to be an exporter” • No you are not! To succeed in the international market you do not have to be a large firm with all the plush resources. Thousands of firms and small businesses make majority of there revenue from exporting, and you can too. Checklist DO YOU HAVE… o The Human Resource Capacity o Committed Management o An efficient way of handling inquiries o A way to deal with the language barriers o Enough capital o Ways to get capital funding o People who can advise you about capital funding o Market research o Market entry plan of action o Viable products for the market Looking at your exporting potential Customer profile Who uses the product Is it popular among a certain age? What are the ages of the market you are looking at? What is the climate and geographic factors that affect the use of the product or service? Product modification Do you need to modify the product to appeal to foreign markets? What is the shelf life? Will transportation reduce the life? Does it require specific skills or labour? Is after sale service needed? What is unique about the product you are offering? Export Quiz…Are you ready? 1) Is your product or service already available? • A) currently in production or being developed • B) at the prototype stage • C) at the idea stage 2) Is your product or service selling in the Canadian market • A) selling and market is growing • B) selling but market share is low • C) selling only in Canada Export Quiz…Are you ready? 3)Do you have the surplus production capacity or available specialists to meet increased demand for your product? o Yes/no 4) Do you have the financing required to adapt your product to service to suit your target market and to promote it o Yes/no Export Quiz…Are you ready? 5)Is your management committed to sustaining your export efforts Yes/no 6) Does your firm have a good track record of meeting deadlines yes/no 7) Does your management have experience in the export market Yes/no Export Quiz…Are you ready? 8)Does your product or service have a distinct competitive advantage? Price/quality/innovation? • Yes/no 9)Have you adapted your packaging to suit target market? • Yes/no 10) Do you have the capacity and resources to provide after-sales support and services in your target market? • Yes/no Export Quiz…Are you ready? 11) Do you have a free on board, insurance and freight price list for your product or rate list for your service. • Yes/no 12)Have you undertaken foreign market research? o A) completed primary and secondary; included a visit to target market o B) completed some primary and secondary research o C) no research Export Quiz…Are you ready? 13) Is your promotional material available in languages of your target market? • Yes/no 14) Have you started marketing your product or service in your target market? • Yes/no Export Quiz…Are you ready? 15) Have you engaged in getting distribution channels in the local market? • Yes/no 16) Have you hired a freight forwarder or customs broker? • Yes/no The Score… If you selected A's or answers “yes” to 12-16 of questions. You understand the commitments, and strategies and resources needed to be a successful exporter 7-11. Not bad. But there are weakness you need to consider and seek advice on Less than 7. You may have the heart but you need to do a lot more homework Developing Your Plan Planning is the best thing any business can do before entering into the deep waters You will have a better chance of doing well if you plan your strategy You will go no where without an export plan Your business plan is the foundation of your exporting plan The Market in Canada Canada is one of the World’s most diverse nations and has several benefits: • Cost and transportation benefits • Operation expansion and financial assistance The Concept of globalization is personified in Canada’s market place Windsor-Essex & Chatham-Kent Windsor-Essex is made up of a variety of areas with their own specialties Each place has its own unique sector, which creates so many open doors in a small geographic region Disposable income in Southern Ontario Disposable Income Southern Ontario Techumseh Lasalle 90000 80000 Essex 70000 60000 Lakeshore Kingsville Leamington Windsor 50000 40000 30000 20000 10000 0 Statistics Canada 2009 Windsor and surrounding places do have disposable income INDUSTRIES IN WINDSOR-ESSEX AND SURROUNDING AREAS Windsor 14 12 10 8 6 4 2 0 Windsor Essex 16 14 12 10 8 6 4 2 0 Essex Tecumseh 18 16 14 12 10 8 6 4 2 0 Techumseh Lasalle 20 18 16 14 12 10 8 6 4 2 0 Lasalle Kingsville 25 20 15 10 5 0 Kingsville Lakeshore 18 16 14 12 10 8 6 4 2 0 Lakeshore Draw Conclusions What are the characteristics of your target market? How do competitors approach the market? What is the best promotional strategy to use? Myth Busters Exporting is too complicated o Exporting can seems that way, but remember you don’t have to do it all by yourself. • Several countries appreciate foreign investors and will help you to get established o Building business relationships in foreign markets is best done face to face. • Phone calls, emails and BBM is best used for follow-up. Increasing Export Relations QUESTIONS? Facilitating Commerce in Windsor Windsor-Essex Economic Development Corporation Supporting Windsor-Essex Region Businesses Connect businesses and government bodies Assisting Windsor-Essex Region Companies to Expand Locally and Internationally • Facilitate strategic relationships with government and foreign offices • Identify and match export/import opportunities with local and foreign companies Windsor-Essex Economic Development Corporation Delivering Business Investment Services Provide information for industrial and commercial land development Providing Regional economic data • Provide up-to-date information on the Windsor-Essex Region's key sectors http://www.choosewindsoressex.com/ Windsor Chamber of Commerce Group Health Benefits Office Supply Program Home & Auto Insurance Payroll Services http://www.windsorchamber.org/ Windsor-Essex Small Business Centre Complimentary Small Business Information Consultations Business Plan Support Access to Professionals Business Resource Centre Research Assistance Workshops/Seminars and Networking Opportunities http://www.windsoressexsmallbusiness.com/ Ministry of Economic Development and Trade The Goal: To grow our economy for the benefit of all Ontarians To do this, they: Encourage and support businesses of all sizes Help businesses innovate Attract new growth and investment Ministry of Economic Development and Trade Small and Medium Enterprises Division: Evaluate your business ideas Business plan Access Financing Registering your business name Government forms Information on hiring, training and marketing http://www.ontariocanada.com/ontcan/1medt/ en/home_en.jsp QUESTIONS? Canadian & U.S. Legal Systems Doing Business Across the Border Canadian Legal System Legislative power is divided between the federal government and the provincial governments. A third level of government, municipal or local government, has only the powers granted to it by the applicable provincial government. The federal and the provincial governments have exclusive jurisdiction and legislative powers over specified matters Federal Government Federal government: o Residual jurisdiction over matters not specifically assigned to the provinces o Control over matters of national interest such as: • • • • • • • • • Trade and commerce Transportation and communication Banking Currency Customs and excise External relations Patents and copyright Defence Criminal law Provincial Government The provincial governments have power over matters of a local nature such as: o Property and civil rights within the province o Municipal institutions o Education o Health and welfare o Administration of justice Cross-border transactions Key issues of Americans doing business in Canada: o Legal regimes governing contractual transactions of goods o Forums available to the contracting parties o The importance of choice of law Canadian Legal System Contractual transactions in the Canadian legal system are governed by both statute and the common law The applicable statute in Ontario is called the Ontario Sale of Goods Act (OSGA) The common law is a body of case law made by judges over the years o Whenever an issue is not addressed by the OSGA, we look to the common law for the answer o Whenever an issue is addressed by the OSGA but further explanation is needed, we look to the common law to see how courts have dealt with this issue in previous matters U.S. Legal System Contractual transactions in the U.S. legal systems are governed by statute Each state has its own statutes on transactions These statutes are much more comprehensive than the OSGA o State common law will still supplement the statute, but it is a much less common occurrence than in Ontario When does each regime apply? The OSGA applies to domestic transactions in Ontario o Includes: • Commercial transactions • Consumer sales o Does not include: • Leases • Services When does each regime apply? The Uniform Commercial Code (UCC) applies to domestic transactions within the U.S. o Includes: • Commercial transactions • Consumer sales o Does not include: • • • • Leases Security interests Intellectual property Services What about international transactions? The United Nations Convention on Contracts for the International Sale of Goods (CISG) will apply to transactions within its coverage by default o Includes: commercial transactions o Does not include: consumer sales & services When does the CISG apply? The CISG will automatically apply to any transaction including two contracting states where the choice of governing law is either: o U.S. federal law; o U.S. state law; or o The OSGA Both Canada and the U.S. are contracting states o A contracting state is determined by where a party’s primary place of business is located Considerations In order for the CISG not to apply to a transaction, it must be specifically excluded in the contract Parties can choose the CISG to apply to its contract, but can agree to modify some of its provisions Consider whether the forum you choose has a sufficient body of case law addressing the CISG: o Applied more often in the U.S. o Rarely applied in Canada so the case law is not as dependable/predictable Choice of Law Parties to a contract may choose what type of law will govern a contract This is an important term in any contract, international or otherwise, because different state laws could result in a different outcome in the event of a dispute Choice of Forum Parties must choose where the dispute will be resolved Courts will expect for there to be some sort of connection to its forum such as: o Citizenship o Business location o Dispute location o Court is familiar with choice of law, etc. Your contract Every issue addressed in these regimes should be addressed in your contract. These regimes provide default rules or gap fillers o Any issue not addressed or any forgotten term will be supplemented by a contract’s governing regime Parties may prefer the way their choice of law deals with a matter and refer to it rather than create their own provision Working in Canada Business people include certain people entering Canada under the following free trade agreements: o NAFTA o General Agreement on Trade in Services (GATS) o Other international free trade agreements Taking your first steps… This is a just a brief exploration of international contract law Because of the nature and the complexity of this area of law - a lawyer will be able to help you take the next steps in drafting an international contract Focus: NAFTA An international treaty which is applicable to citizens of Canada, the United States, and Mexico. Allows for admission of citizens of the member nations for the purposes of foreign employment o Admission only if individuals meet the requirements of such provisions Working in Canada under NAFTA Chapter 16 of NAFTA: o Citizens of Canada, the United States and Mexico can gain quicker and easier temporary entry into the three countries to conduct business or investment activities. Business People under NAFTA Business people covered by NAFTA do not need a labour market opinion from Human Resources and Social Development of Canada (HRSDC) o Canadian employers do not need to have a job offer approved by HRSDC to employ a U.S. or Mexican business person o These business people still must comply with the general provisions on temporary entry to Canada Business people covered by NAFTA Business visitors Professionals Intra-company transferees Traders and investors Business Visitors A foreign national who plans to visit Canada temporarily to: o Look for new business opportunities o Invest o Advance existing business relationships To be a business visitor in Canada you must show that: You plan to stay for less than 6 months and do not plan to enter the Canadian labour market; Your main place of business and source of income is located outside of Canada; Profits from your business will accrue outside Canada; You must provide documents that support your application; and You meet Canada’s basic entry requirements Canada’s basic entry requirements: You have a valid travel document, such as a passport; You have enough money for your stay and to return home; You plan to leave Canada at the end of your visit; and You do not pose criminal, security, or health risks to Canadians Cross-border business visitor activities: Buying Canadian goods or services for a foreign business or government; Taking orders for goods or services; Attending meetings, conferences, conventions, trade fairs; Providing after-sales service (mainly supervision, not handson labour); Being trained by a Canadian parent company you work for outside Canada; Training employees of a Canadian subsidiary of a foreign company; or Being trained by a Canadian company that has sold you equipment or services Longer stays If you plan to stay longer than 6 months or intend to work in Canada, you may be considered a temporary worker Temporary works must apply for a work permit Professionals A professional must: o Be qualified to work in 1 of the 60 professions listed in Appendix 1603.D.1 of Chapter 16 of NAFTA; and • Includes: accountant, computer systems analyst, engineer, management consultant, technical publications writer o Have a pre-arranged employment with a Canadian enterprise in an occupation that matches the qualification Intra-company Transferee An intra-company transferee must: o Have worked continuously for at least 1 year in the preceding 3 years for the same or affiliated employer in the U.S. or Mexico; o Be transferred to Canada to work temporarily for the same or an affiliated employer; and o Work in a capacity that is managerial, executive, or that involves specialized knowledge Trader or Investor A trader or an investor must: o Be seeking to carry out substantial trade in goods or services mainly between Canada and his/her country of citizenship, or conduct substantial investment activities in Canada, in a supervisory or an executive capacity, or in a capacity that involves essential skills; o Meet additional requirements under NAFTA; and o Have a work permit Conclusion NATFA is beneficial for citizens of member nations o Facilitates the movement of people from Canada and the US (and vice versa) for the purposes of employment o Less documentation is required compared to non-member nation citizens o Business Visitor category under NAFTA allows for easiest access because it does not require a work permit More Information For more information go to: o Foreign Worker Manual • On the Citizenship and Immigration Canada Website http://www.cic.gc.ca/english/resources/manuals/fw/f w01-eng.pdf o Chapter 16 of NAFTA • On the NAFTA Secretariat Website http://www.nafta-secalena.org/en/view.aspx?conID=590&mtpiID=147 QUESTIONS? CANADIAN COPYRIGHT SOURCES OF LAW Berne Convention WTO TRIPS Copyright Act Bill C-32 WIPO Copyright Treaty What is Copyright? Protection from unauthorized copying Literary Dramatic Musical Artistic What Can Be Copyrighted? Books, plays, songs, performances Software Web pages Marketing plans Training manuals and materials Flyers and promotional materials The Fundamentals Automatic Right Expression, not ideas Originality: o Originates from the author o Demonstrates the exercise of skill and judgment o No expectation of quality “What is worth copying is worth protecting” Peterson J. - Protect Your Copyright General Rule of Ownership Author/creator retains copyright for Life + 50 years Exceptions: 1. Employment 2. Sub-contracted work Protect Your Copyright Self-policing infringement Looking out for: Competitors Former employees Business partners Permitted Use Fair Dealing o Research or private study o Criticism or Review o News Reporting The Copyright Act and Beyond Berne Convention for the Protection of Literary and Artistic Works WTO – Trade Related Aspects of Intellectual Property Rights (TRIPS) WIPO Copyright Treaty 1996 International Conventions Uniform and consistent rules Cross-border protection Adapting to new economic, social, cultural and technological developments Bill C-32 Modernizing Canadian Copyright Law Ratifying WIPO Copyright Treaty 1996 o File Sharing o Format and Time Shifting o Digital Locks: the copyright holder’s trump card o Limited ISP liability Bottom Line & Best Practices Canada’s extensive participation in international copyright treaties helps ensure Canada’s role as a viable commercial partner and place of business. Consult an expert in establishing sound business practices Know your rights www.cipo.ic.gc.ca QUESTIONS? Trademarks What is a Trademark? A trademark is a mark and/or symbol used to identify and distinguish one’s goods or services on the market. - Governed by the Trade-marks Act Three types of trademarks: • An ordinary mark, • A certification mark, and • A distinguishing guise. Distinctiveness is key! What is Not a Trademark? Corporate Names: • Only a trademark if “used” as a trademark • Registering a corporate name does not grant trademark rights Domain Names: • Only a trademark if “used” as a trademark • If not, it’s just an address What are some common trademarks that you can think of? How to Acquire Trademark Rights 1. 2. 3. 4. “Use” in Canada “Making Known” in Canada Proposed Use (registration) in Canada Registration in Canada of trademarks already registered and used abroad 1. “Use” According to the Trademarks Act You must show you’ve begun using the TM for the wares or services claimed ‘Use’ in association with wares: At the point of sale, the TM must be marked: (1) on the wares themselves, (2) on their package; or (3) the TM is associated with the wares such that notice of the association is given to the person to whom the property or possession is transferred ‘Use’ in association with services Must be used or displayed in the performance or advertising of those services Proper Use of Your Trademark 1. Never deviate from the registered form and spelling 2. Never use the trademark as a noun or verb 3. Never pluralize a trademark -Proper: Oreo cookies are delicious. -Improper: Oreos are delicious. 2. Proposed Use Provides the ability to register based on intention to use trademark Must use the trademark within three years after filing application Certificate of Registration will then be provided by the Registrar Retroactive to the date of filing 3. Making the Trademark Known in Canada Trademark rights may be acquired by a foreign trademark holder where: A foreign trademark is advertised in association with the goods/services in print or TV/radio broadcasts ordinarily received in Canada AND the trademark has become wellknown in Canada by reason of the distribution or advertising. 4. Marks Registered & Used Abroad Can register a trademark in Canada simply if the mark is registered in another country in the union Concession to international agreements Americans can register a TM in Canada without use or proposed use. Registered vs. Unregistered Trademarks UNREGISTERED TM Acquires rights only in the geographic areas where it has become known. Limited Protection REGISTERED TM Canada-wide rights Protection lasts 15 years, and it is renewable every 15 years after that Why Register? Proof of ownership Prevents others from using a confusingly similar trademark. Ability to challenge a potential infringement under the Trade-marks Act Exclusive right to use across Canada for 15 years and may be renewed indefinitely Helps facilitate licensing of your trademark Licensing A license is a contract between a trademark owner and a licensee for the use of this intellectual property. • Ownership of the trademark does not pass • You must monitor use of the trademark by the licensee to ensure the mark does not lose its distinctiveness! Trademarks You Cannot Register 1. Names and surnames of individuals (living or have died within preceding 30 years) 2. Clearly descriptive marks 3. “Deceptively misdescriptive” marks 4. Words that denote a geographical location commonly known to be the place of origin of such goods or services 5. The name, in any language, of the goods/services 6. Words or designs that are considered confusing with a previously registered trademark or pending trademark 7. Words or designs that are, or closely resemble, a prohibited mark. Examples What you may register “North Pole” ice cream “Venus” ice cream “Scrumptillus” ice cream “True Blue” ice cream What you may not register “Extra Creamy” ice cream “Windsor” ice cream “La Reine Laitière” ice cream “RCMP’s Choice” ice cream EXAMPLE: TARGET Registering Your Trademark? Registering Your Trademark? 4. Wait for the examination of your TM by the Trademarks office 5. Your TM application is published in the Trademarks Journal – 2 months to file opposition. 6. If no opposition, allowance of application for registration 7. Registration fee - $200 per TM paid within 6 months of the notice of allowance Registration Resources? For more information (including a list of Canadian registered Trademark agents, Trademark application forms, and the Trademark database): www.cipo.ic.gc.ca When Expanding into Canada, Remember… Key to trademarks is distinctiveness Use (and proper use) of a trademark is critical American trademarks may be able to acquire rights in Canada by “making it known” in Canada or simply by being registered in the US Registration is strongly recommended When in doubt, consult a lawyer! QUESTIONS? PATENTS What is a Patent? A patent is a property right just like any other property right except that the “property” is “intellectual” . As with other property rights, the owner of a patent has an exclusive right to use the property – in other words, the patent owner can exclude others from practicing the invention. What is a Patent? A patent does NOT give the patent holder the right to use the patented invention, it only gives the patent holder the right to exclude others from using the invention. This is true of all property rights. If you own a piece of land you can exclude others from using the land, but your use may be limited by zoning, environmental or other restrictive laws. The same is true of a patent, the patent owner may not be able to practice the invention if doing so would infringe on the rights of others or violate some law. Who Owns the ‘Invention’? Who Can Apply for a Patent? In Canada, it is the creators of the invention, the inventors, who are entitled to apply for a patent, unless the inventors have assigned to a third party, such as the company they work for, a university, or any other natural or legal entity with which they have made a legal agreement transferring ownership of the invention. In the US, however, only the inventors can make application for a patent. Who Owns the ‘Invention’? Who Can Apply for a Patent? In most countries of the world, including Canada, the first person to file an application is entitled to obtain the patent for the invention. In other words, if two separate applications are filed for the same invention, the applicant having the earlier filing date is the one that will get the patent. [First-to-File] Currently in the US, the person(s) entitled to obtain a patent on an invention is/are the person(s) who first made the invention, regardless of who was first to file. [First-toInvent] Requirements for a Patent An invention must be: Novel : The invention MUST be new. Inventive: The invention MUST involve an inventive step, in other words must be non-obvious. it Useful in industry: The invention MUST have industrial applicability (called utility in the US and Canada) Requirements for a Patent - Novelty The standards of novelty differ by country, but generally speaking: 1. Absolute Novelty: not known to the public anywhere in the world by any means prior to the date of the patent application (i.e. Europe & Japan) 2. Grace Period: date of application must be filed within a specified period (1 year) from disclosure by the inventor. What is ‘Patentable’? NO PATENT FOR MERE ‘IDEAS’, ABSTRACT METHODS, MATHEMATICAL FORMULAS, ETC. Must be a practical, art, process, machine, manufacture or composition of matter What is ‘Patentable’? The inventor must disclose how to make and use the invention in sufficient detail that one of ordinary skill in the art can reproduce and use the invention using solely the description in the patent. This is known as an enabling disclosure. Do you have a working prototype??? Quick Review……. 1. An invention that meets local patentable subject matter. 2. An invention that is novel, inventive and industrially applicable as of the date of filing (or priority date). 3. An invention that has been fully disclosed such that one of ordinary skill in the art is enabled to make and use the invention. Priority Applications An individual can file a patent in the U.S., and can file a corresponding Canadian application claiming priority to the U.S. application Generally speaking, deadline is 1 year from U.S. application IMPORTANT!! Keep in mind prior disclosures!! Why Canada?? Canada may not be a target market, but….. Keep in mind the problem of importation!! Tackling Some Common Patent Issues… Non-Disclosure Agreements Non-Disclosure Agreements sometimes are necessary, however…. they don’t replace a patent application, and, it is only a contract (i.e. it has to be enforced) Tackling Some Common Patent Issues… Provisional Patent Applications Can be a useful and cost-effective tool, however… they must be properly drafted, they are NOT a full application, and must be followed up within 1 year with a full application Beware of disclosures, and international filing deadlines QUESTIONS?