Protecting Your Start-Up Company's IP
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The document outlines key aspects of protecting intellectual property (IP) for start-up companies, including types of IP such as patents, trademarks, copyrights, and trade secrets. It emphasizes the importance of legal statutes, registration, and strategies for maintaining IP rights, along with potential traps and monitoring practices. Additionally, it discusses contractual agreements like non-disclosure and IP assignment agreements to safeguard proprietary information.
Protecting Your Start-Up Company's IP
- 1. Protecting Your Start‐up Company’s IP … Without it, There’s Only One Exit Event. Presented to TEC EDMONTON Edmonton, Alberta March 15, 2013 Presented by: Rob McDonald, Partner & Marlon Rajakaruna, Partner 1
- 2. INTRODUCTION 2
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- 7. PATENTS 7
- 8. PATENTS •Patent Act •Inventions – any new and useful art, process, machine, method of manufacture or composition of matter, or any new and useful improvement thereof •Novel •Non‐obvious to a person skilled in the art or science 8
- 9. PATENTS (con’t) •Public Disclosure – 1 year grace period in Canada and U.S. but fatal in other countries •Must have registration for protection •Exclusive rights to make, construct, use and sell the invention – 20 years from filing date, non‐renewable •First to file – compare to U.S. first to invent America Invents Act will change this 9
- 10. Patents (con’t) Marking – not required, but penalties for false marking Filing strategies – PCT filings, foreign filings and Convention Priority 10
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- 13. INDUSTRIAL DESIGNS Industrial Design Act Design of an article – 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 Non‐functional elements 13
- 14. INDUSTRIAL DESIGNS (con’t) Public Disclosure/publication – must file application within 1 year from first publication Must have registration for protection Exclusive rights to apply the design to an article for sale 10 years from registration date – non‐ renewable Marking ‐ Ⓓ ‐ can limit recovery of damages if not properly marked 14
- 15. COPYRIGHT 15
- 16. Copyright • Copyright Act • New Copyright Modernization Act (November 7, 2012) • Bundle of rights – produce, reproduce, perform, publish, telecommunicate, rent, moral rights, neighboring rights • Copyright subsists in every original work • Works – literary, musical, dramatic, artistic compilations • No copyright in concepts or ideas, fixation required 16
- 17. Copyright (con’t) •Registration not necessary for protection •Advantages to registration – presumptions, innocent infringer defense •Marking ‐ ©, name of owner and year of creation on publication •Exclusive rights – 50 years from death of author (creator) •Moral rights – integrity, authorship 17
- 19. TRADE‐MARKS 19
- 20. Trade‐marks • Trade‐marks Act • Trade‐marks – a mark used to distinguish one competitor’s products and services from those of another • Words, phrases, logos, shapes of packaging, colours • ‐non‐traditional marks – sounds, smells, tastes, 3‐D shapes, holograms, moving images, etc. • Bill C‐56 proposed revisions – “signs” 20
- 21. Trade‐mark (con’t) •Registration not necessary for protection but scope of protection more narrow for unregistered marks •Registered vs. unregistered marks •Exclusive rights ‐ 15 year registration with perpetual renewals •Rights are based on first use and continued use 21
- 22. Trade‐marks (con’t) •Marking trade‐mark – unregistered ™ or registered ® •Filing strategies – claiming foreign filings and convention priority 22
- 23. TRADE‐MARK CHECKLIST 1. Selecting a trade‐mark ___ Must be distinctive! ___ Not a person’s name ___ Not clearly descriptive of the product or service ___ Not the name of the product or service in another language ___ May be a word, logo, phrase, color or combination of these – Strong trade‐marks are coined words, ordinary words given arbitrary meanings, suggestive but not descriptive words – Weak trade‐marks are overly descriptive, merely descriptive and generic words 23
- 24. TRADE‐MARK CHECKLIST 2. Searching ___ Cannot be confusing with existing registered or pending trade‐marks that relate to the same or similar products and services ___ Should not be confusing with existing registered corporate names or trade names ___ Should not be confusing with existing unregistered trade‐marks ___ Conduct industry search ___ Conduct registrability search 24
- 25. TRADE‐MARK CHECKLIST 3. Should you register? Consider: ___ Exclusive use throughout Canada ___ Importance of product or service ___ Length of use (short term vs. long term) ___ Estimated value of trade‐mark (licensing, merchandising) ___ Ability to enforce trade‐mark rights ___ Strength of trade‐mark 25
- 26. TRADE‐MARK CHECKLIST 4. Registration Details ___ Which entity is using or intends to use the trade‐mark (ownership)? ___ Will the trade‐mark be licensed for use by other entities? ___ What specific products and services are being sold using the trade‐mark? ___ When was the trade‐mark first used in commerce (for services, the date of first advertisement; for products, the date of first sale) 26
- 27. TRADE‐MARK CHECKLIST 5. Using the trade‐mark ___ Always capitalize at least the first letter of the trade‐ mark ___ Do not pluralize trade‐marks ___ Do not use trade‐marks as a verb ___ Do not change the appearance of a design trade‐mark ___ Use proper marking (® for registered, TM for unregistered) ___ No generic use of trade‐mark ___ No use of the trade‐mark by others without license and control ___ Monitor in‐house and outside use of the trade‐mark ___ Do not ignore infringements 27
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- 32. TOP 10 IP TRAPS COPYRIGHT 1. Ownership claim by employee/independent contractor 2. Moral rights claims 3. Substantial similarity not just quantitative 4. Improper Assignment 32
- 33. TOP 10 IP TRAPS TRADE‐MARKS 5. Not registering and being restricted to area of reputation 6. Assuming rights in corporate names and trade‐names 7. Adopting non‐distinctive marks 8. Losing distinctiveness through loss of control and improper licensing 33
- 34. TOP 10 IP TRAPS PATENT 9. Lack of ownership agreement 10. Public disclosure 34
- 35. OTHER WAYS TO PROTECT IP 35
- 37. NDA’s • What is a Trade Secret? Confidential information that retains its value by being confidential – Software – Client Lists – Procedures / methods / recipes • No statutory rules or protection ‐ any rights or protection comes from contractual arrangements and the common law • Protection lasts for as long as the secrecy is maintained 37
- 38. NDA’s WITH THIRD PARTIES • Confidentiality clauses and non‐disclosure agreements (“NDAs”) are crucial to protecting trade secrets – When to use – Avoid the mistake of assuming an NDA is “standard” and then execute it without careful review – Remember to address oral disclosure of information, information gathered by observation and unmarked information of a confidential or proprietary nature – NDAs should ensure that confidential information remains confidential for an appropriate length of time – Carve‐outs – Watch out for IP ownership provisions – It should also address the return of files, client lists, and other information upon termination or expiration of the agreement 38
- 39. NDA’s WITH EMPLOYEES AND CONTRACTORS • Can use standalone NDA or incorporate as part of EA/ICA • Remember to address oral disclosure of information, information gathered by observation and information of confidential or proprietary nature • NDAs should ensure that confidential information remains confidential during term of employment/ services contract and for an appropriate length of time after • Limit carve‐outs • It should also address the return of files, client lists, and other information upon termination of employment/services contract 39
- 40. OTHER SECURITY MEASURES • Marking of documents can help establish some protection • Internal security procedures are necessary – Physical and network security – Storage of information – Entry and exit interviews – Disclosing information on a need‐to‐know basis – Proper arrangements with independent contractors 40
- 41. OTHER SECURITY MEASURES (cont’d) • Trade Secrets cost as much (or as little) to protect as you are willing to invest • It takes time and money to: – implement proper marking of documents – Physically protect data and networks – Educate employees and contractors – Monitor for misappropriation of trade secrets – Draft non‐disclosure and confidentiality agreements 41
- 42. IP ASSIGNMENT AGREEMENTS • At common law, independent contractors and employees own the patent for inventions made in the course of business – Exception for employees whose job it is to invent • Consider whether the common law position needs to be shifted ‐ can be addressed by an IP assignment agreement that transfers ownership to the employer or the business. • As part of this transfer, ensure all IP developed in the course of employment/services contract is transferred to the employer/business 42
- 43. IP ASSIGNMENT AGREEMENTS (cont’d) • IP assignment agreements should deal with a waiver of moral rights to ensure that the IP that can be assigned is assigned, and that moral rights are waived. • Confidentiality • Non‐competition? 43
- 44. CORPORATE STRUCTURE • Incorporate • Use separate legal entity to “own” IP • License to the various corporate affiliates • Effective creditor‐proofing • Caveat: Banks may want security over IP 44
- 45. MONITORING INFRINGEMENT • CIPO is not the IP police – they do not monitor how IP is being used or stop infringement • You need to devote resources to monitoring for infringement – Determine who in the organization will be responsible to monitor – Large organizations will have a watch service to continually monitor use of IP • Cost‐benefit analysis – if it’s really not that valuable, is it worth registering and protecting? 45
- 48. “SPONSOR” INITIATED RESEARCH AGREEMENTS • Carve‐outs to Confidentiality • Background IP • Other IP developed at the same time under separate research • Fortuitous discoveries • License back • Restrictions on use of names, marks, etc 48
- 49. RESEARCHER INITIATED RESEARCH AGREEMENTS • Confidentiality • Background IP • Other IP developed at the same time under separate research • Fortuitous discoveries • IP developed in direct performance of research (or at least license‐back) • Restrictions on publication 49
- 50. LICENSE AGREEMENTS • Narrow Scope • Confidentiality • Address ownership of new IP • Restrictions on use of names, marks, etc 50
- 51. CONTRACTOR AGREEMENTS • Confidentiality • Limit carve‐outs to confidentiality • Assignment of ownership of work product including IP; waiver of moral rights • No modification of IP • Non‐competition? 51
- 53. The preceding presentation deals with the kinds of issues companies dealing with the protection of intellectual property could face. If you are faced with one of these issues, please retain professional assistance as each situation is unique.