Author: Marsha Simone Cadogan | MSC IPTL
One of the important dynamics of a business strategy involves taking stock of the proprietary interests in the business and ensuring that effective legal safeguards are in place to sustain its worth. This is where use of intellectual property rights law (IP) and strategy can make a difference. This note gives an overview of how IP matters to your venture, and a summary of the main types of IP used to protect proprietary interests.
The intangible right in products and services
Ideas cannot be protected as IP. However, the ability of the mind to generate innovative ideas and to bring these to reality in skilful ways has an important cornerstone in IP rights. The creative ways in which ideas and their forms are expressed by us, help to explain what IP embodies. Creativity and innovation are commonplace themes in the notion of an IP right. Most products and services have their origin in creative and/or innovative outlays. Whether in the form of musical compositions, or the human mind behind algorithmic configurations, developing a business’s logo and its name, or in inventing green technology to mitigate climate change matters, consumer markets are increasingly defined by forms of innovation.
Once ideas take on a physical form (as a product or service), IP law helps creators, inventors, and entrepreneurs to exercise exclusive rights over how their output is commercialized and otherwise shared with the public. Framers of early IP legislation believed that exclusive rights and prospects of earning from protected products and services would incentivise right holders to produce content that would stimulate economic growth. Even today, the ties between economic growth and IP remain relevant, although it is not easily tenable. A registered or protected IP does not give rise to rights in perpetuity. With most forms of IP, rights can be cancelled, expunged, or expire after a period of time.
Rights are also territorial in nature. This means that when a rights holder obtains IP protection in Canada, protection does not extend to another country. The caveat to this is the case of well-known or famous trademarks which, because they are well known to consumers, the law of a foreign country (under international law) may allow an otherwise unregistered mark to be protected against infringement or acts of unfair competition. However, as the expungement of the McDonald’s Big Mac (for sandwiches) trademark in the European Union shows, a well-known mark will be placed under the microscope to determine if it is well-known to consumers in specified markets.
Types of Intellectual Property
Depending on the types of products or services involved in business transactions, there are six main types of IP that rightsholders use in safeguarding their proprietary interests. All six are not always relevant to every product or service. However, it is possible for rightsholders to have a diversified IP portfolio made up of different rights protecting one product or service. To explain the relationship between IP and products/services, a hypothetical example is used below:
P manufactures and distributes food and beverage products and developed a specific name and logo for her food and beverage business. P uses a secret ingredient in her baked goods lines; this ingredient gives her baked goods a special taste. P wants her products to appeal to her customers, so she has designed a novel packaging for her baked goods. In addition, in efforts to boost sales she has written sales and distribution manuals for her employees.
Trademarks: To distinguish her food and beverage products from that of her competitors, P can use a trademark to protect her product’s name and logo. A trademark is an indication of source and serves two functions. First, it provides consumers with source information about what they have purchased and who made the product or created the service. Second, if managed well, trademarks can be used to leverage brands in consumer markets thereby building both brand loyalty and revenues along value chains. In Canada and most countries, registered trademarks are granted ten years of protection and renewable thereafter each time for ten years.
Trade secrets: Trade secrets are not registrable as intellectual property. However, they can be protected as intellectual property if they fit the criteria for protection. In keeping with its commitments under the Canada-United States-Mexico Agreement (CUSMA), Canada updated its Criminal Code to codify protection for trade secrets on July 1, 2020. If P’s secret ingredient is not generally known in her trade, has an economic value, and reasonable efforts are made to keep the information a secret, it is likely protectable as a trade secret. P may use a non-disclosure agreement to specify terms on which she discloses the secret ingredient to employees, and how this information is to be safeguarded from unauthorized disclosure.
Design Rights (Industrial designs):
Design rights applies to features of shape, ornaments, pattern, configuration (or a combination of these) that appeal and are judged solely by the eye (Industrial Designs Act s. 2). If the design is novel, has not been disclosed to the public and does not entirely relate to a functional aspect of the product, then it may be registrable as an industrial design. In our example, if P’s baked goods packaging fits the criteria for protection, she can apply for a design rights registration for her design. Successful registration gives P ten and up to fifteen years of exclusive use of the design in her business.
Copyright Protection: Copyright subsists in original and creative expressions created by humans. Registration is not required for copyright protection to be granted to creations. Examples of works that copyright protection subsist in are films, sound recordings, computer programs, paintings, drawings, video games, books, and manuscripts. If P’s manuals are her original writings and were compiled with some level of creativity, copyright will likely subsist in her work. Therefore, she has exclusive rights over how she shares, uses, and deals with her work in relation to others (in commerce or otherwise). This right lasts for the duration of her life, the remainder of the calendar year in which died, plus fifty years after the end of her death.
The final two types of IP in this note were not discussed in P’s example but are explained below.
Patents: A patent is an exclusive right given to an inventor to make, construct, sell, license, and use an invention. This exclusive right is granted for twenty years. Not all inventions are patentable. Patentable subject matter must be novel, and relate to a new and useful art, or a process, machine, manufacture, the composition of a manufacture, or any new and useful improvements on these inventions. Example of products for which patents may be granted include software applications, pharmaceuticals, semi-conductors and robotic devices.
Geographical Indications (GI): If you have eaten FETA made in Greece, drank Champagne from France, used Argan Oil from Morocco in your hair, brewed Colombian coffee, drank Quebec’s Ice wine, then you have consumed origin-based food protected with a GI designation. GIs are words or symbols used on product (or its packaging) to convey that there is a direct relationship between a product and where it is grown or produced. This may relate to the product’s quality, reputation and/or characteristics. This relationship must be essentially attributable to the human or natural factors that exists in the product’s territory. While wine and spirit GIs have been protected in Canada against infringements and unfair competition for many years, food and agricultural GIs have only been registrable since June 17, 2019 (based on changes to the Trademarks Act). GIs are not renewable but remain protected as long as they are not cancelled from the registry.
The notion of creativity, innovation and growth are almost constants in talks about IP, business continuity and growth. As the above points show, there are many aspects to IP protection – this comes from what the right embodies in the first place. Once prospective rights holders have a solid understanding of their business model, incorporating IP protection as part of a business strategy can be progressive step forward.
This article is for general information purpose only and is not intended to be legal advise.