1. CHAPTER Microsoft ® PowerPoint ® Presentation Prepared By Gail McKay, LLB, Thompson Rivers University © 2008 McGraw-Hill Ryerson Ltd., All Rights Reserved. © 2008 McGraw-Hill Ryerson Ltd. All Rights Reserved. 14 Intellectual Property – Patent, Trademark, Copyright, and Franchising Law

2. Fundamentals of Canadian Business Law, Second Edition © 2008 McGraw-Hill Ryerson Ltd. All Rights Reserved.14-1 OBJECTIVES 1.To discern and appreciate the importance of intellectual property rights in business 2.To examine patent law protection 3.To examine trademarks and their protection 4.To examine copyright and industrial design protection

3. Fundamentals of Canadian Business Law, Second Edition © 2008 McGraw-Hill Ryerson Ltd. All Rights Reserved.14-2 INTRODUCTION To protect what is not physical is a challenge, but that is the task of intellectual property law – which protects inventions, creations, and artistic works of the mind – in some cases a business’s most important asset Although the four categories of intellectual property are protected by federal legislation, they nevertheless remain vulnerable if risk reducing strategies such as registration and confidentiality are not followed

4. Fundamentals of Canadian Business Law, Second Edition © 2008 McGraw-Hill Ryerson Ltd. All Rights Reserved.14-3 TYPES OF INTELLECTUAL PROPERTY A patent is an exclusive right granted to an inventor of something new and different to produce the invention for 20 years in return for the disclosure of the invention to the public A trademark is a mark which distinguishes one’s goods or services from those of others Copyright is the right of ownership and control over works of art, and the right to copy them Industrial design is the production of an artistic work by an industrial process

5. Fundamentals of Canadian Business Law, Second Edition © 2008 McGraw-Hill Ryerson Ltd. All Rights Reserved.14-4 CONFIDENTIALITY: 1 st LINE OF DEFENCE A promise to keep information confidential may constitute an enforceable clause in contracts among businesses, partnerships or joint ventures who are discussing or exchanging ideas Or, in the most common cases, an employer may design a confidentiality clause upon hiring a new employee who will be using special equipment or having access to secret processes and formulas

6. Fundamentals of Canadian Business Law, Second Edition © 2008 McGraw-Hill Ryerson Ltd. All Rights Reserved.14-5 PATENTS: THE PATENT ACT The Patent Act protects inventors of “any new and useful art, process, machine, manufacture or composition of matter, or any new or useful improvement in the same” The invention must be neither unlawful nor only a slight improvement on an already existing invention The invention must be more than what a skilled worker could produce, since skill alone may not be the subject matter of a patent; and the invention must be kept secret and out of the public domain before filing the application

7. Fundamentals of Canadian Business Law, Second Edition © 2008 McGraw-Hill Ryerson Ltd. All Rights Reserved.14-6 PATENT PROCEDURE 1.Patent agent searches for similar patents 2.Agent submits a petition and very detailed specifications 3.A claims statement describing what is new and useful about the invention is submitted 4.If the invention is a machine or product requiring the assembling of parts, a drawing demonstrating how to do this is submitted 5.The patent filing fee and a short abstract written in non technical language is required

8. Fundamentals of Canadian Business Law, Second Edition © 2008 McGraw-Hill Ryerson Ltd. All Rights Reserved.14-7

9. Fundamentals of Canadian Business Law, Second Edition © 2008 McGraw-Hill Ryerson Ltd. All Rights Reserved.14-8 PATENTS, continued An examiner at the Canadian Intellectual Property Office searches to ensure the invention does not infringe on any other patent and if it does not, a patent is issued upon the payment of an issue fee There is also an annual fee to maintain the patent; however the registered patent provides the inventor with the exclusive rights to the manufacture and distribution of the invention for 20 years

10. Fundamentals of Canadian Business Law, Second Edition © 2008 McGraw-Hill Ryerson Ltd. All Rights Reserved.14-9 FOREIGN PATENT PROTECTION An agreement in Paris in 1883 recognized that an inventor who had applied for patent protection in his or her own country should have, upon application with 12 months of the original application, protection in member countries as well This philosophy has been confirmed by an international patent cooperation treaty which creates a uniform filing date for the inventor by allowing backdating of a foreign patent application to the date of the original in the inventor’s own jurisdiction

11. Fundamentals of Canadian Business Law, Second Edition © 2008 McGraw-Hill Ryerson Ltd. All Rights Reserved.14-10 COMPULSORY LICENCES An inventor who has been granted a patent may be obligated to produce the subject of the patent to satisfy public demand, or to license it to another willing to work the patent in return for payment of royalties Compulsory licences may be issued by the Commissioner of Patents after the patent has been in effect for three years, allowing someone else to work the patent - especially when production is part of a sequence upon which others rely

12. Fundamentals of Canadian Business Law, Second Edition © 2008 McGraw-Hill Ryerson Ltd. All Rights Reserved.14-11 INFRINGEMENT A monopoly to produce an invention for a fixed period of time is created for the inventor when a patent is issued; therefore unauthorized production, importation or any other type of working of the patent by anyone else is a patent infringement Remedies for infringement include damages, an injunction and an accounting The defendant may argue that a patent was invalid, that it had expired, or that he or she had ongoing tacit approval of the patentee

13. Fundamentals of Canadian Business Law, Second Edition © 2008 McGraw-Hill Ryerson Ltd. All Rights Reserved.14-12 TRADEMARKS A trademark is a distinguishing mark chosen by a business to identify its goods or services as distinct from those of other businesses The trademark may be a mark, a name, or a combination of both; a search must be conducted for similar names or marks; but if the search results are clear, the trademark is registered in the federal Intellectual Property Office – allowing protection for 15 years, with renewals allowed indefinitely

14. Fundamentals of Canadian Business Law, Second Edition © 2008 McGraw-Hill Ryerson Ltd. All Rights Reserved.14-13 TYPES OF MARKS Service marks are used by companies that provide a service to the public Certification marks identify goods or services of a certain quality produced in certain conditions A distinctive guise is associated with the shape of the packaging or of the product itself Trade name is a word or name instead of a mark and must not be similar to another name

15. Fundamentals of Canadian Business Law, Second Edition © 2008 McGraw-Hill Ryerson Ltd. All Rights Reserved.14-14 REGISTRATION REQUIREMENTS To meet the requirements of the Trademark Act, a trademark must be distinctive – not easily confused by the public with another company’s trade name - and it must be used There are specific prohibitions against: 1.Offensive symbols or names 2.Marks belonging to royalty or governments 3.Marks associated with a well known person who is living or has died within 30 years 4.An ordinary word that could apply to all manner of similar products

16. Fundamentals of Canadian Business Law, Second Edition © 2008 McGraw-Hill Ryerson Ltd. All Rights Reserved.14-15 ENFORCEMENT To prevent infringement of a trademark, the owner is expected to take legal action for an injunction and accounting of lost profits To succeed in a passing off action, the plaintiff must show the person passing off the goods or services misrepresented them as those of a well known business, that the goods or services could be confused with those of the well known company, and finally that the defendant well known company was injured by the misrepresentation

17. Fundamentals of Canadian Business Law, Second Edition © 2008 McGraw-Hill Ryerson Ltd. All Rights Reserved.14-16 FOREIGN TRADEMARKS An international convention to which Canada is a signatory permits the user of a foreign trademark to apply to have it registered in Canada Conversely, registered Canadian trademarks may, under the terms of the same convention, be registered in foreign member jurisdictions

18. Fundamentals of Canadian Business Law, Second Edition © 2008 McGraw-Hill Ryerson Ltd. All Rights Reserved.14-17 COPYRIGHT Copyright is the right to prevent copying or altering literary or other artistic works, and may include recording by electronic or mechanical means, photocopying, and storing in a computer retrieval system The Copyright Act gives the sole right to publish or reproduce an original work to the creator of it, a right which lasts throughout the lifetime of the writer or artist and endures for 50 years after his or her death

19. Fundamentals of Canadian Business Law, Second Edition © 2008 McGraw-Hill Ryerson Ltd. All Rights Reserved.14-18 COPYRIGHT, continued Registration of copyright is not essential, but acts as public notice of the copyright Writing or artistic work created in the course of employment is an exception to the ownership rights of the creator A right of copyright arises in the actual arrangement of words or in the way an idea is expressed, but not in the idea itself Copyright may be assigned, and licences may be granted in return for payment of royalties

20. Fundamentals of Canadian Business Law, Second Edition © 2008 McGraw-Hill Ryerson Ltd. All Rights Reserved.14-19 COPYRIGHT, continued Copyright may not be infringed in cases of fair dealing - which include copying for private study, research, criticism, review or newspaper summary However, infringement may occur if the moral rights of the writer or artist are affected Moral rights are defined as the “right to the integrity of the work” including the right that it be free from distortion or mutilation which may injure the honour or reputation of the creator

21. Fundamentals of Canadian Business Law, Second Edition © 2008 McGraw-Hill Ryerson Ltd. All Rights Reserved.14-20 INFRINGEMENT IN ELECTRONIC MEDIA Unauthorized copying from the Web by cut and paste methods or by downloading without the payment of royalties or without express permission of the copyright holder or agent is an infringement of copyright However, the anonymity of infringers on the Internet is a serious problem not yet solved by trying to hold Internet Service Providers (ISPs) liable – although ISPs who continue to host infringing material after having being served notice of that fact by the copyright holder will now be found liable

22. Fundamentals of Canadian Business Law, Second Edition © 2008 McGraw-Hill Ryerson Ltd. All Rights Reserved.14-21 DOMAIN NAMES At the present, there is no specific intellectual property law associated with domain names despite the fact that they have an economic value equivalent to a trademark A practice known as cybersquatting occurs when someone registers a domain name for the explicit purpose of later extorting money for surrendering it to a trademark holder – a practice now illegal in the United States

23. Fundamentals of Canadian Business Law, Second Edition © 2008 McGraw-Hill Ryerson Ltd. All Rights Reserved.14-22 PERFORMING RIGHTS SOCIETIES The purpose of performing rights societies is to facilitate an assignment of rights to perform artistic works The societies charge fees to issue licences to perform the plays or musicals, with part of the fee being paid to the artist and part to the operating costs of the society; fee schedules are filed with the Copyright Board and published in the Canada Gazette Collective societies operate licensing schemes for performances that are not held in theatres

24. Fundamentals of Canadian Business Law, Second Edition © 2008 McGraw-Hill Ryerson Ltd. All Rights Reserved.14-23 INDUSTRIAL DESIGNS The Industrial Designs Act protects a design that will be reproduced by an industrial process A registrable design is one that has - in the finished article – features of shape, pattern or ornament, configuration or any combination of these “that appeal to and are judged solely by the eye” A registered design gives its creator exclusive rights to produce the design for five years, renewable once, for a total of ten years

25. Fundamentals of Canadian Business Law, Second Edition © 2008 McGraw-Hill Ryerson Ltd. All Rights Reserved.14-24 FRANCHISES A franchise is a contractual relationship that licenses the use by one business of the trade name, trademark and detailed operating procedures of a well established business, as well as providing the franchisee with a defined geographic area in which to operate The franchise agreement strictly controls the conduct of the franchisee to ensure that the business standards of the reputable franchisor outlined in its confidential operating manual are upheld

26. Fundamentals of Canadian Business Law, Second Edition © 2008 McGraw-Hill Ryerson Ltd. All Rights Reserved.14-25 SUMMARY The intellectual property of a business is one of its most valuable assets Intellectual property includes patents, trademarks, copyright and industrial designs Each type, except copyright, requires registration and each type has its own federal statute offering an exclusive right to use the intellectual property for a specific period of time