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Lesson 3: Intellectual Property 101

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Lesson 3: Intellectual Property

So here we are again… Strap in, this is a good one!

Topic 1: What’s Intellectual Property?

Using broad strokes, “Intellectual property” (IP) is a general term referring to creative assets that are intangible. IP is all around us: 

  • Brand names

  • Logos

  • Slogans

  • Domain names (website addresses)

  • New products

  • Inventions

  • Designs and illustrations

  • Software and formulae

  • Customer lists and data

  • Website content

Most entrepreneurs will identify multiple IP categories that apply to them and their business. Some businesses might even revolve entirely around their IP, but regardless of if your company is totally IP-based or if it's tangential, it will impact your company. Learning how to leverage IP Law early will benefit your business in the long term and help you increase your company’s value.

Think About Your IP

Our keen readers from Lesson 1 will know the importance of identifying and addressing legal matters early. For readers who have skipped ahead, the message we are preaching comes down to one basic principle: the quicker you address your legal needs, the less stress, expense, and headache you’ll face down the road.

Like we learned in Lesson 1, leveraging the law will help you run a healthy and prosperous business — getting effective legal help doesn’t have to be a sunk cost. Like with business law matters, it is imperative that any intellectual property issues be recognized and accounted for at the outset of your business. While it’s not always easy to identify every single piece of IP you’ll need to protect (and leverage) from day 1, hitting the ground running is always beneficial. We’ll get into the specific categories of intellectual property law and protections, but first we’ll provide a quick example to help you recognize how pervasive IP is, even for the most run-of-the-mill small business.

In our previous installments, we introduced a new ice cream business to demonstrate some common business structures; let’s imagine that our entrepreneurs decided to incorporate under the name “Ice Cream Co”. To make sure that no one is taking the goodwill and reputation of Ice Cream Co for their own purposes, they would want to protect their brand (name, logo, slogans, etc.) through the use of trademarks. Our entrepreneurs will also want to protect the secret recipes for the ice cream itself as a trade secret, so they’ll use a variety of contractual agreements to keep it safe. If they build a website and use it to sell their products online, their website and software will have to be protected through copyright, and if they invent some groundbreaking way of scooping and packaging ice cream, they will need to file a patent.

Even with a physically based goods and services business, so-called intangible intellectual property will be popping up around every corner along the way. Best to address these matters early to set your business up for success in the long run.

Having a Lawyer is Important

If you’ve heard of the term intellectual property before, chances are you have some kind of idea what it’s all about, but with a feeling that it’s ultimately reserved for specialists and experts. Frankly, it’s not an incorrect assumption; IP law is one of the most confusing and commonly misunderstood areas of the law. Combining how critical your IP can be with how nuanced the area of IP law is, it might be the most beneficial area for you to hire a lawyer.

While extremely basic legal situations may work with a template agreement, Intellectual Property requires the rigour and keen eye of trusted professionals. If the crux of your business is built on things you and your employees have created, having an IP Agreement fail in court or be considered unenforceable has the potential to upend your entire business.

The entire prerogative of Goodlawyer and the legal education we’re preaching, is that good lawyers and effective legal mechanisms will help your business. Being able to rely on timely and understanding counsel transforms your legal expenses from sunk costs into undeniable value for your overall business.

Topic 2: Trademarks

The Golden Arches, the Swoosh, and a half-bitten Macintosh. Without even writing out the names of the businesses, you probably know exactly which brands we’re talking about. In essence, that is what a trademark is meant to protect: unique identifiers that are associated with a particular company.

Trademarks are defined as words, designs, packaging, moving images, flavours, sounds, scents, or any combination of these, used to distinguish the goods and/or services of one person or organization from others in the market.

Why Trademarks Are Important

What’s in a name? A well-respected business can owe much of its success to the effective use of marketing and branding. Obviously, you need to have an amazing product to sell, but generally speaking, “brand awareness” is your reputation. It helps drive growth and build the future fortunes of your company.

When your company successfully registers a unique trademark, that effectively prohibits any other player in the market from using it. They act as a deterrent to any copycats from piggybacking on the goodwill you’ve developed with consumers who are loyal to your brand. By legally securing your brand assets, you gain the ability to exclusively control and capitalize on the reputation your business has built. If your trademark “Ice Cream Co.” brand is a hit for your consumers, they’ll continue to make those positive associations when they come across your new products.

Infringement

Trademark infringement can take form in a couple different ways, both from the perspective of getting your own infringed, and infringing on another individual’s trademark. The most egregious and clear-cut example is what comes to mind first: you have a trademark for “Ice Cream Co.” and when you’re walking down the grocery aisle one day you see “Ice Kream Co.” branded ice cream. An obvious rip-off of your beloved and reputable brand, and to make matters worse, the ice cream is extremely low quality. Not only is your hard work building trust with consumers being taken advantage of by Ice Kream Co., but the casual customer might also come to associate the negative imposter brand with yours.

That’s an obvious example, but there are much more subtle ways, even innocent mistakes, that might infringe on a trademark. When it comes to the “use” of a trademark, there is an actual legal definition that governs Canadian trademark law. We won’t bore you with the painstaking details, but it is important to be aware of how “use” plays a role in trademark infringement.

Here’s the key piece: the use of a trademark has to be in direct association with the transfer of goods or services. In other words, the “Ice Cream Co” trademark has to have been a visible and influencing factor on the customer’s decision to buy that certain type of ice cream. That makes sense intuitively, but it has some interesting applications when it comes to advertising specifically.

One form of advertising for products is through comparison. If you were to display a competitor’s brand on the packaging of your ice cream comparing the flavour profiles, you would be deemed to have used the other trademark without permission: it’s on your packaging and you’re using their trademark to associate with that particular good in an effort to bolster your own.

Does that situation mean you can’t use any competing trademarks in any way whatsoever? Not quite; the legal definition of “use” for a trademark necessitates that the trademark be used at the time of the transfer of the trademarked ice cream. This means that simply advertising a trademark brand against your own, without the possibility of your product being sold at that precise time of advertisement should be permissible. Pamphlets, commercials, radio ads, etc. would fit this category, so long as the use of the other trademark is not flagrant or damages the reputation of that other company. Regardless, it’s still a difficult line to toe and it’s a better practice (both in business and legally) to let the quality of your brand and product speak for itself.

Get a Lawyer!

In trademark law, and in the broader IP context, this is just one example of the ways in which failing to know your legal boundaries could put your business into hot water, and you don’t want your ice cream to melt. It really is unfortunate, and though the scheme of trademark law may be complicated and feel like a barrier to business, it makes having a knowledgeable and experienced lawyer on your side that much more important.


Having a lawyer help get your trademark off the ground is particularly important. There are rules for what you can actually trademark, how to register it with the proper powers, what should or shouldn’t be included in your application, and heaven forbid what the legal steps actually are if you see your trademark getting infringed. Plus, having a trusted professional draft and manage your trademark application can save you the hassle of getting your application rejected and dealing with the trademark office, especially when you consider that the average trademark in Canada takes 12-18 months to receive approval (or rejection).

Topic 3: Copyrights

Copyrights are a bit easier. Basically, copyright provides an author or owner of the copyright the ability to dictate and control how their work is used. Although the extent that copyright will affect your business depends greatly on the industry you’re in, every business will have some form of copyright consideration to deal with.

Copyrights are defined as the exclusive legal right to produce, reproduce, publish, or perform an original literary, artistic, dramatic, or musical work. While it may look like copyrights are purely in the realm of “creative art”, copyright can extend to other assets that are created like computer software and data reports too.

The key differentiator with copyright IP, is that it arises automatically when a work meets the criteria laid out in the Copyright Act. There is a formal registration process that an individual can go through to gain “formal” registered protection, but upon simply developing a work, you as the owner automatically have a copyright ownership in it.

Why Copyrights Are Important

You don’t have to be a legal expert to know that copycats ripping off someone else’s work is against the law. Copyright provides a line of defence against those who are looking to unjustly enrich themselves off of your creativity. Even though it may not stop those folks in their tracks, copyright will retroactively provide a clear method in how you can get the law on your side and get the retribution you are justly entitled to.

Copyright allows you to control where, when, and how your copyrighted property is used — these are called “moral” rights. Let’s say Ice Cream Co hires an artist to create an illustrated poster for their upcoming ice cream festival. They like most of the illustration, but they make a few tweaks that change the interpretation of the art. In this scenario, the original artist of the poster would still retain the moral rights to their art and could legally demand the artwork be reverted to the original design or taken down, whether the copyright of the work is contractually owned by Ice Cream Co, or merely licensed to them by the artist.

Additionally, as copyright is a “property right”, agreements and contracts can be built off the fact that you are the copyright owner. You can establish royalty and licensing agreements where you retain your ownership of the copyrighted work, but others can use it for their own purposes (within your agreement).

If the ownership of a copyright is ever contested, it all comes down to who created it first. Because copyright exists as soon as an original work is created, if you can prove that you made it first, it’s yours. So it’s critical to ensure you have accurate timestamps of your copyrighted work.

Infringement

Copyright infringement is the act of importing, making your own, or otherwise using a copyrighted work without the express permission of the copyright owner. As an aside, there is the concept of “Fair Dealing” which allows copyrighted works to be used free and clear of any permission provided that the reason in which you are using them fits within a specific purpose (e.g. research, education, etc). Although “commercial” uses of copyrighted works can fall within fair dealing, they are generally limited to very niche instances and a lawyer should be consulted.

Infringement generally occurs in two ways. The first is the obvious one; copyright infringement occurs when you blatantly rip off of an already existing work and try to receive benefits from it or pretend that it is yours. Again, you probably don’t need a lawyer to tell you that!

The second infringement act is more subtle and difficult to identify. Copyright laws indicate that individuals may not copy substantial parts of the already existing copyrighted work. The “substantial parts” is where things get a bit fuzzy and there isn’t a clear legal definition. Copyright law protects your creativity, it does not grant monopolies or economic advantages on ideas, merely the expression of an idea. Being inspired by other people’s work and ideas is natural, but crossing the line from inspiration to plagiarism could have serious consequences. Ultimately, it would be up to the judge to decide if “substantial parts” of a copyrighted work have been used.

Get a Lawyer!

Even though copyright arises automatically, there are a variety of instruments that deal with copyrights after the fact. If your business’ primary form of revenue derives from intellectual property and licensing copyright, those agreements you have in place with your suppliers and vendors are crucial to the foundations of your company. Additionally, the scope of protection afforded with copyright can vary depending on what is set out in your contracts, and it’s important to govern what your counterparts can and cannot do with your copyrighted work.

On the flip side, it is important that you don’t infringe on others’ copyright yourself. As mentioned, copyright doesn’t exist to stifle creativity — many artists and creatives derive inspiration from already existing copyright. An objective and well-written legal opinion on if the work you are developing will “substantially” infringe on another’s copyright is critical at the start of the process, lest you sink time into a project that would be subject to an infringement action.

Lastly, formally registering your copyright for undeniable ownership, although a relatively simple process, still requires some legal knowhow to prepare the application and submit it to the governing body. While many people handle this task themselves, there are many who prefer having the help of a good lawyer.

Topic 4: Patents

This particular type of intellectual property may seem easier to wrap your head around, but it is arguably the most expensive and complicated aspect of intellectual property law. In a nutshell, patents are used to protect your inventions. Even though they are the most complicated and expensive form of IP protection, they are also quite possibly the most powerful. If your business deals with physical products, chemical formulae, specific processes, or any other scientific or technological invention, patents are absolutely critical to your success.

Patent owners are given a full, artificial monopoly on their invention to do whatever they wish for a limited period of time, typically 20 years (in the jurisdiction they filed their patent in). In return for the monopoly, every single detail about your patent, including how it works and how to recreate it is provided to the entire public so that other inventors may try to improve upon your original design. This policy has been established to balance the individual’s benefits of owning a patent vs the progress of technological and scientific advancements for society as a whole.

Why Patents Are Important

Like other intellectual property instruments, patents grant an inventor exclusive property rights to sell, use, license, and otherwise deal with something they invented. “Something” sounds pretty vague, but that’s because patents deal with more than just physical inventions. Back to our Ice Cream Co example, patents protect chemical compositions (ice cream flavours), machines and tools (the specialized ice cream churner), and the production processes (the unique method used to create their delectable ice cream).

If applicable, businesses should look to get patent protection started as quickly as possible. The patent application process is a lengthy one, potentially taking up to 2 years for approval depending on the jurisdiction. A good first-step for most new inventions is a provisional patent application (in the US market). Provisional patents provide a year-long grace period of protection before a formal, more expensive, more detailed patent application is filed. This allows the inventor to test, refine, and pitch their idea to potential investors and distributors without having to worry that their creation will be infringed. Sometimes you’ll see “patent pending” on products; that means they have a provisional patent with a formal patent in the works. With the US market having the most patents in the world, it is the preferred jurisdiction to file a patent application for most international businesses. It would be a real bummer to have your patent approved in Canada, only to find out it’s already been patented in the US.

For specific industries like bio-tech, agricultural sciences, pharmaceuticals, and other R&D intensive companies, patents are the only way for a business to protect their interests. After refining an idea using a provisional patent as explained above, not every start-up will have the means to fully realize the true potential of their invention. Supply chain constraints, distribution issues, and simply having a network of salespeople to put in the legwork is economically unfeasible for small businesses. Securing patent protection allows the plucky start-up to bring their invention into the world, as they can license out their patent to well-established companies or secure investors to scale their own production of the invention.

Get a Lawyer (and a Patent Agent)

We mentioned that patent law is one of, if not the most expensive areas of intellectual property law and the legal industry as a whole. That’s because it’s one of the most complicated and has the highest potential for financial impact on a business.

Patents and the application processes are difficult to maneuver. On its face, a patent only needs to be “new”, “useful”, and “inventive” to be awarded patent protection, but the amount of nuance and complexities that are inherent in patent law requires the expertise of patent agents. Patent agents work with inventors to evaluate an invention, assess patentability, draft applications, and liaise with the governing body on the inventor’s behalf. The data from the Government of Canada indicates that over 90% of successful patent applications that are filed with their offices have a patent agent or lawyer representing the inventor.

As an entrepreneur, you are likely looking to change the entire world with your idea or invention. Before you get ahead of yourself, your first step in filing a patent should always be considering cross-border applications and which jurisdiction you want to file your patent in. Then, hiring a good lawyer or agent for a Knockout Search to help you look for other existing patents in that jurisdiction. This will ensure that your invention is indeed new and original and will greatly reduce the chances (and expense) of a rejected application.

Further, an inventor can choose to file patents simultaneously in the United States and in Canada to receive patent protection in both jurisdictions. There are slight nuances regarding the process for transitioning from provisional 12-month patents, to full 20 year-length ones. Costs are different, and the minimum requirements that need to be addressed in the patent application are different as well. All of that notwithstanding, many countries are subscribers to the Patent Cooperation Treaty, which supports applicants who seek to have international patent protection for their inventions. It is worth noting that the US does not participate in the PCT.

As the rules, regulations, process, and law can be dense and difficult to get through, having competent legal help in the form of a lawyer and patent agent will ensure that a critical component to your business is adequately addressed and protected.

Topic 5: Trade Secrets and Industrial Designs

We combined these two areas of intellectual property as they may not arise as frequently as the other three big-hitters. Trade secrets and industrial designs generally require operation within the business field for a sufficient period of time to gain recognition and status in order to maximize effectiveness.

Trade Secrets

As the name implies, trade secrets are a form of intellectual property that is private to the company that owns it, and perhaps a select few individuals. Canada does not protect trade secrets through any specific legislation, unlike trademarks, copyrights, and patents, which all have their own unique Acts. Trade secrets only protect information that is expressly confidential, and provided that the holders of the secret make it clear they want to prevent it from being accessed by the public. Unlike the other forms of intellectual property protection, there are no public disclosure requirements nor expiry dates.

Due to the lack of a governing scheme or Act, trade secrets are protected through contractual means instead. So, for companies with trade secrets, it’s absolutely critical to have rock-solid agreements where disclosure of the secret is concerned. From a company-centered lens, one can view protection from an internal perspective and an external perspective. Internally, and right from the very start, your business has to have a strong idea about what exactly it is you’re trying to protect. Knowing what you can protect in the first place, and what can’t be protected by a trade secret will set the stage for your business moving forward. Once you have a clear idea, implementing workplace policies and clear agreements for employees and staff is the first line of defence in protecting your secrets. Internal disclosure should be on a “need-to-know” basis only, meaning that only individuals who have to be intimately aware of the details of the trade secret to do their job should be privy to that knowledge.

Depending on the extent of your business’ relationships with outside parties, trade secrets will be almost exclusively secured with clear contractual provisions. Non-disclosure agreements are important during negotiations when the company has to disclose their trade secrets to make the pitch; supply agreements with confidentiality clauses can limit the amount of information that external parties can spread; and the list goes on. Contractual agreements are especially important when dictating what third parties can and cannot do with your trade secret.

Industrial Design

Industrial designs protect the physical appearance of a product, not the process to create, nor the inner workings of said product. Famous examples of industrial designs include Apple’s iMac computers, the Coca-Cola glass bottle, and the iconic Mini-Cooper shape.

In order to seek government protection for your product’s unique shape, you have to register it with CIPO (the Canadian Intellectual Property Office). When you successfully register your design, you have the exclusive property rights to enforce any claims or actions regarding your design for up to 15 years in Canada. Along with these rights, the owner of the industrial design can engage with third parties to sell, license, and otherwise make use of the industrial design.

The registration process, though not as arduous as the patent process, requires familiarity with the nuances of CIPO and industrial design law as a whole. There have been recent changes that have a number of practical effects in this area including the addition of colour, computer-generated designs, changes to expedite the process, and more.

Similar to patents, an industrial design search for similar product shapes must be conducted, otherwise protection will not be granted in the event of obvious similarities. One more consideration is the international flavour — where do you want to protect your industrial design? As Canada is a party to international treaties, there are three options available to business owners: 1) through the CIPO, 2) other Intellectual Property Offices, and 3) the Hague System for the International Registration of Industrial Designs.

This particular type of intellectual property may seem easier to wrap your head around, but it is arguably the most expensive and complicated aspect of intellectual property law. In a nutshell, patents are used to protect your inventions. Even though they are the most complicated and expensive form of IP protection, they are also quite possibly the most powerful. If your business deals with physical products, chemical formulae, specific processes, or any other scientific or technological invention, patents are absolutely critical to your success.

Patent owners are given a full, artificial monopoly on their invention to do whatever they wish for a limited period of time, typically 20 years (in the jurisdiction they filed their patent in). In return for the monopoly, every single detail about your patent, including how it works and how to recreate it is provided to the entire public so that other inventors may try to improve upon your original design. This policy has been established to balance the individual’s benefits of owning a patent vs the progress of technological and scientific advancements for society as a whole.

Why Patents Are Important

Like other intellectual property instruments, patents grant an inventor exclusive property rights to sell, use, license, and otherwise deal with something they invented. “Something” sounds pretty vague, but that’s because patents deal with more than just physical inventions. Back to our Ice Cream Co example, patents protect chemical compositions (ice cream flavours), machines and tools (the specialized ice cream churner), and the production processes (the unique method used to create their delectable ice cream).

If applicable, businesses should look to get patent protection started as quickly as possible. The patent application process is a lengthy one, potentially taking up to 2 years for approval depending on the jurisdiction. A good first-step for most new inventions is a provisional patent application (in the US market). Provisional patents provide a year-long grace period of protection before a formal, more expensive, more detailed patent application is filed. This allows the inventor to test, refine, and pitch their idea to potential investors and distributors without having to worry that their creation will be infringed. Sometimes you’ll see “patent pending” on products; that means they have a provisional patent with a formal patent in the works. With the US market having the most patents in the world, it is the preferred jurisdiction to file a patent application for most international businesses. It would be a real bummer to have your patent approved in Canada, only to find out it’s already been patented in the US.

For specific industries like bio-tech, agricultural sciences, pharmaceuticals, and other R&D intensive companies, patents are the only way for a business to protect their interests. After refining an idea using a provisional patent as explained above, not every start-up will have the means to fully realize the true potential of their invention. Supply chain constraints, distribution issues, and simply having a network of salespeople to put in the legwork is economically unfeasible for small businesses. Securing patent protection allows the plucky start-up to bring their invention into the world, as they can license out their patent to well-established companies or secure investors to scale their own production of the invention.

Get a Lawyer (and a Patent Agent)

We mentioned that patent law is one of, if not the most expensive areas of intellectual property law and the legal industry as a whole. That’s because it’s one of the most complicated and has the highest potential for financial impact on a business.

Patents and the application processes are difficult to maneuver. On its face, a patent only needs to be “new”, “useful”, and “inventive” to be awarded patent protection, but the amount of nuance and complexities that are inherent in patent law requires the expertise of patent agents. Patent agents work with inventors to evaluate an invention, assess patentability, draft applications, and liaise with the governing body on the inventor’s behalf. The data from the Government of Canada indicates that over 90% of successful patent applications that are filed with their offices have a patent agent or lawyer representing the inventor.

As an entrepreneur, you are likely looking to change the entire world with your idea or invention. Before you get ahead of yourself, your first step in filing a patent should always be considering cross-border applications and which jurisdiction you want to file your patent in. Then, hiring a good lawyer or agent for a Knockout Search to help you look for other existing patents in that jurisdiction. This will ensure that your invention is indeed new and original and will greatly reduce the chances (and expense) of a rejected application.

Further, an inventor can choose to file patents simultaneously in the United States and in Canada to receive patent protection in both jurisdictions. There are slight nuances regarding the process for transitioning from provisional 12-month patents, to full 20 year-length ones. Costs are different, and the minimum requirements that need to be addressed in the patent application are different as well. All of that notwithstanding, many countries are subscribers to the Patent Cooperation Treaty, which supports applicants who seek to have international patent protection for their inventions. It is worth noting that the US does not participate in the PCT.

As the rules, regulations, process, and law can be dense and difficult to get through, having competent legal help in the form of a lawyer and patent agent will ensure that a critical component to your business is adequately addressed and protected.

Conclusion

Hats off to you for making it through another slog of legal information, this one potentially the driest yet! Hopefully by now, you have a general idea of what kinds of intellectual property will apply to different aspects of your business and the issues that you need to look out for, particularly identifying parts where you need some expert help. To summarize these notes:

  1. All businesses big and small have some form of IP that is worth protecting.

  2. Trademarks protect unique identifiers that are associated with a particular company. 

  3. Copyrights are created automatically and protect original creative works. Timestamps are everything when it comes to owning copyright.

  4. Patents are used to protect inventions, and are the most complex form of IP protection. 

  5. You should probably hire a lawyer and come up with a solid IP strategy. 

Don’t miss out! Protecting your IP is pretty much guaranteed to add value to your company, and leaving it unprotected could have serious consequences.

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