Intellectual property can be overlooked in a business context, sometimes with dire consequences.
I've heard or seen the expression ``intellectual property`` - what does it mean?
Intellectual property is an umbrella term for copyright, trademarks, trade names and patents; each of which can be broadly described as “creations of the mind”. The law protects these creations from use by others for a set period of time. It is important to understand how intellectual property works and to address and negotiate it as part of business deals.
Other types of intellectual property include geographical indications, industrial designs, integrated circuit topographies and plant breeders’ rights, some which are protected by legislation.
What does intellectual property have anything to do with my business?
Intellectual property is everywhere – from Corb Lund’s songs to Yousuf Karsh’s photographs, from Buckley’s cold medicine to Tim Hortons’ RRRoll Up the Rim To Win slogan. Whether your business runs on creativity or just plain old hard work, you can bet intellectual property has something to do with it.
When an employee invents a new product as part of her job duties and with your business’ computer equipment, should she personally reap the benefits of the invention or should it belong to your company? Can an employee keep all of the photographs he’s taken for your website after he has left the company and prevent you from using them in the future? What about the clever slogan you’ve created to describe your products; can a competitor start using it for his own products? Or, if you buy out another business, does the deal include all their nifty marketing materials?
These are all examples of how intellectual property can affect your business.
What does copyright protect?
Only works that are original and tangible can be protected; for instance, an idea is not copyrightable but writing it down as an original short story in a notebook is.
A work is copyrighted for the entire lifetime of its author and for 70 years after his death. It usually does not need to be registered to attract protection.
Not only is using the work the exclusive right of the owner but so is copying, distributing, selling or broadcasting the work. There are some exceptions to the principle of exclusivity, commonly referred to as “fair dealing”.
Copyright licensing and assignment
Licensing arrangements and assignments generally enable a person other than the copyright owner to use copyrighted material.
A license gives another person the ability to exercise some or all of the copyright owner’s rights in the copyrighted material, for a specific term or geographical location. There are three types of licenses:
A non-exclusive license means that licenses can be granted to an indefinite number of parties
A sole license allows both the copyright owner and licensee to use the material, to the exclusion of all others.
An exclusive license strips the owner’s rights in favour of the licensee, usually for a specific term or geographical location.
An assignment is where the copyright owner transfers his ownership to another person, thereby losing ownership for himself. A copyright owner can grant a license orally, though exclusive licenses as well as assignments of copyright must be in writing.
Only the owner of the work can license out or assign his rights to others. It is best to keep in mind that the author of the work is not always its owner, and vice-versa.
Can an employee stop me from using copyrighted works she's created as part of her job?
The default rule of copyright is that the author of a work is its first owner. However, in an employment context, the default rule is different. Any copyright created in the course of employment by an employee who is hired under a contract will belong to the employer, not the employee. The employer will have exclusive rights over the work to restrict others – including the employee – from using, copying, distributing or selling the work. An employment contract can modify this to state, for example, that the employee retains ownership of the copyright.
Further, this default rule does not typically apply to independent contractors and consultants. If you hire an independent contractor who will create things for your business, ownership of the resulting copyright needs to be properly addressed as part of the contracting arrangement.
A smart business will address copyright created by employees, independent contractors and consultants as part of all contracts made with these individuals. A business owner should also consider obtaining a waiver from the employee with respect to moral rights (which are different from but related to copyright), as these rights may impact the employer’s ability to use an employee’s copyrighted works.
Copyright is not the end, my friend...
In conjunction with copyright, there are other rights which are given to the author exclusively. These are called moral rights and include the right to be associated (or not) with the work she has created and the right to the integrity of the work. Only the author of the work can claim these rights, though she may waive them in whole or in part. Assigning copyright to another person or licensing a copyrighted work in and of themselves are not effective ways of waiving moral rights.
Failing to deal with moral rights as part of employment or other contracts can cause trouble down the road. In a well-known Canadian case from 1982, Michael Snow, an artist who had created swan sculptures for the Eaton Centre in Toronto, successfully sued the shopping centre because they had put Christmas bows on his swans during the holiday season. The Supreme Court of Canada decided that, by tying the bows around the swans’ necks, the Eaton Centre had distorted Snow’s art and caused harm to his honour and reputation amongst his fellow artists. Had the Eaton Centre obtained a proper waiver of the sculptor’s moral rights, the outcome might have been different…
My Uncle Kevin just invented a time travelling app! What now?
Patents are related to inventions that meet certain criteria. Not each one of your Uncle Kevin’s ‘inventions’ can be patented; his invention must be novel, useful and non-obvious to be patentable. Patenting an invention can be a complex process as it involves filing an application that includes detailed technical or scientific claims at the Patent Office. The patent process also requires the inventor to publicly disclose his invention as part of the application.
A registered patent enables the inventor to exclude all others from commercially using, selling, importing or distributing the patent. Usually, the inventor will grant licenses to others to use the patent in exchange for royalties. Patents expire 20 years after the filing date; fees must be paid on a regular basis to maintain the patent registration.
Rather than obtaining a patent, businesses can rely upon trade secrets to protect inventions so long as the proprietary information is kept confidential. Trade secrets are protected not by legislation but by nondisclosure or employment agreements; they can be protected for longer than 20 years and do not require public disclosure. The Coke recipe is a famous example of a well-kept trade secret.
What is the difference between a trademark and a trade name?
A trademark is a logo, sign, design or slogan that is used by a business or individual to distinguish its products and services from those of competitors. Sounds can also be trademarked.
A trade name is the name under which a business operates. It can only be registered as a trademark if the trade name is also used as trademark to distinguish products and services. If you use a trade name to operate a business, it is important that the name be distinctive from other trade names and trademarks. The Registrar of Trademarks in Canada maintains an up-to-date, searchable database of all registered trademarks.
A trademark does not need to be registered to be valid. However, by definition, establishing a trademark using this method will take time since it must be proved that the trademark has been actually used over time in association with specific products and services.
Can I register my trademark as John Q. Public's Naturally Sweet Italy Ice Cream Gelato™?
Probably not, since it contravenes some of the rules for the registration of trademarks. Certain marks cannot be registered including:
a person’s name or surname, e.g., John Q. Public;
a mark that clearly describes the character or quality of the goods being sold in association with the mark, e.g., Sweet Ice Cream (as all good ice cream is usually sweet);
a mark that deceptively misrepresents the character or quality of goods, e.g., Naturally Sweet Ice Cream, if the ice cream is sweetened with artificial sweetener;
words that refer to the geographical origin of goods and services, e.g., Italy Ice Cream Gelato (since Italy is well known as being a place of origin of gelato);
words in other languages, e.g., Italy Ice Cream Gelato (since gelato is the Italian word for Italian-style ice cream);
words or designs that are confusingly similar to previously registered trademarks or pending trademarks; and
words or designs resembling prohibited marks such as official government logos, badges, coats of arms, emblems, flags or provincial, municipal or public symbols.
There are exceptions to these general prohibitions.
If you make use distinctive logos to identify your products, it may make good sense to register these as trademarks to protect them from use by competitors.