Ownership Rights vs. Public Domain and User Rights

This article is intended to be a brief outline of aspects of Canadian law relating to intellectual property and the public domain.  When intellectual-property ownership rights exist in a product, a purchaser of the product will generally only obtain limited “user rights”.  In contrast, when something is in the “public domain” there are no ownership rights and it is available for any member of the public to use without permission and without limitation.  As an intellectual-property lawyer, a general failure by members of the public to understand this distinction and how ownership rights are created or lost, keeps me busy.
When an inventor creates a patentable invention, the invention enters the public domain 12 months after public disclosure, unless an application is filed with the Patent Office within that period.  A patent gives the inventor ownership rights, subject to payment of an annual fee, for a period of 20 years from the filing date of the application; after which the invention will enter the “public domain”.   For example, Alexander Graham Bell’s patents relating to the telephone are all public domain.
When a person creates an attractive design for a functional object, such as a chair; the design enters the public domain 12 months after public disclosure unless an application is filed with the Industrial Design Office within that period.  An industrial design registration gives the designer ownership rights in the design, subject to a 5 year renewal fee, for a period of 10 years; after which the design will enter the “public domain”.   For example, when one sees the same chair made by numerous companies, it is a strong indication that the design is in the public domain.
When a user purchases an article that is protected by a patent or industrial design registration, the user acquires a “user right” to use that article without paying further payments to the inventor.  The user also acquires a “user right” to conduct normal maintenance to keep the article in good condition.  However, the “user right” does not include the right to reconstruct major components of the article.
Regrettably, inventors and designers attending our office to seek protection are often shocked to discover that they have missed their time period and that their creations are now public domain.
Another form of intellectual property, copyright, relates to written works, recordings, software, music etc. Unlike patents and industrial designs, copyright arises automatically upon the  creation of a suitable work; registration is merely an optional public notification that need not take place within a specified time period.  The usual term of copyright is the life of the author plus 50 years; once copyright in a work has expired, the work enters the public domain.  For example, the works of  Shakespeare, Jane Austen and Charles Dickens are all in the public domain.  The rules concerning photographs are slightly different; the photographer acquires rights for a period of 50 years from the date the photograph was taken.  “User rights” in the copyright area are primarily limited to personal use, the user may not distribute or make a commercial use of the literary work, although the law has carved out special exceptions, such as: news reporting, persons with disabilities (e.g., audio books for the blind), libraries, and education.  The most common legal issues in this area relate to users using text or photographs for commercial purposes, such as on a commercial website.
In your personal and business dealings you will encounter some items or materials that are clearly public domain, some that clearly have limited user rights and some that you are uncertain into which category they fall.  If in doubt, I urge you to seek legal advice and avoid potential legal problems.

Why You Should Care About Copyright

Copyright is a type of intellectual property that applies to literary works (deemed to include software), artistic works (e.g., graphic designs and web designs), musical works and dramatic works. Copyright protects the form of expression rather than the idea or content expressed.  For example, copyright protects the words of a novel (the expression), but not the plot or themes (the idea or content).

Businesses are routinely involved in the creation of  works subject to copyright, but often fail to consider ownership of copyright.  Unless there is an agreement to the contrary: a)  if an employee creates a work subject to copyright in the normal course of his employment, the copyright belongs to the employer; and b) if a contractor creates a work subject to copyright in the performance of a contract, the contractor owns the copyright and the customer has an implied licence to use the work for the purpose for which it was created.

The presumption of employer ownership in the employer-employee situation, makes sense to most people.  However, the presumption of contractor ownership in the contractor-customer situation  may come as an unpleasant surprise to the customer.

For example, if a business retains a graphic design firm to create a brochure for a run of 1,000 and their agreement says nothing about ownership of copyright, then the design firm owns copyright in the brochure and the business has an implied licence (that is, permission to do something implied by operation of law), to a run of 1,000.  If the  business were to later have 10,000 copies printed without the design firm’s permission, the design firm would be legally entitled to compensation for copyright infringement.

Another example is where a business retains a programmer to create some custom enterprise software for use by the business.  Again, absent an agreement to the contrary, the programmer owns copyright in the software and the business has an implied licence to use if for the purpose for which it was created (that is, in its business operations).  This means that, although the business paid the development costs for the software, the programmer, not the business, is entitled to sell copies of the software to others.

Thus, in a customer-contractor situation that may give rise to a work subject to copyright, it is important for the parties to have a clear and documented understanding about who will own the copyright.  It is usually possible to reach agreement on this issue as either party may be willing to give up ownership of copyright for an adjustment in price or other consideration (e.g., the right to make more copies of a brochure at a low or no charge).

Border Enforcement of IP Rights by Customs Officers

Businesses can obtain assistance from the United States government to prevent the importation of counterfeit goods into the United States (19 CFR 133).  On March 1, 2013 first reading was given to a proposed Canadian law (Bill C-56) which would give Canadian businesses a similar right to obtain assistance from the Canadian government to prevent importation of counterfeit goods into Canada.  The proposed law sets forth a procedure for Canadian businesses to follow and protects government officials from liability for steps that they may take in intercepting shipments and holding them for a period of time.  This law is long overdue and I hope for speedy passage.

Division of Trademark With Long Lists of Products

Canadian Trademark law is based upon the principle of use.  Under current law, a business is unable to secure Registration of a Trademark unless the Trademark has been used with the good or services listed in the Trademark Application.  Where Trademark Application have a long list of goods or services, the Trademark Registration is often delayed for years while the business gets around to demonstrating use of the Trademark with all of the goods or services on the long list.  On March 1, 2013 first reading was given to a proposed Canadian law (Bill C-56) which will allow a business to complete their Trademark Registration for those goods and services which have used and still pursue the remaining goods and services in a “divisional” Trademark Application that can claim the original filing date to maintain their priority.

Proposed Use For Organizations Setting Standards

There is a class of Trademarks in Canada known as “Certification” Trademarks. They differ from normal Trademarks, in that the owner does not directly sell any product or service. Certification marks indicate that the quality of goods or services made by others meet specified standards. For example “Senior Friendly” could be obtained as a Certification Mark by a seniors organization who wishes to set standards for businesses to meet regarding conducting business with elderly persons. For example “Green Shores” could be obtained as a Certification Mark by an environmental organization wishing to set standards for proposed shoreline development. At this time, most Canadian Trademarks can be filed based upon “Proposed Use”, Certification Trademarks cannot. On March 1, 2013 first reading was given to a proposed Canadian law (Bill C-56) which will allow Certification Trademarks to be filed based upon “proposed use”. This will simplify the process for any service organization seeking to establish standards for businesses.

Changes in Canadian Law Bring Unconventional Trademarks into the Mainstream

Through the years there have been attempts to obtain Trademark Protection for what have come to be known as “unconventional” Trademarks, such as sound, scents and moving images.  To date these “unconventional” Trademarks have not received a warm reception, as most applications for “unconventional” Trademarks are refused.  On March 1, 2013 Bill C-56 passed first reading in Canada’s parliament.  If passed, the proposed law will thrust these “unconventional” Trademarks into the mainstream.  It recognizes Trademarks can consist of various signs or combinations of signs including: a word, a personal surname, a design, a letter, a numeral, a colour, a figurative element, a three-dimensional shape, a hologram, a moving image, a mode of packaging, a sound, a scent, a taste, a texture, or a positioning of the signs.   If an Applicant can show that their use of one of the aforementioned “signs” distinguishes their products or services from those of their competitors, protection can be obtained.

New Canadian Patent Guidelines on Computer Implemented Inventions

All patent offices are wrestling with setting rules as to when a “method” should be patentable.  A method that has a series of computer implemented steps has been considered to be good subject matter for invention.  On March 8, 2013, the Canadian Intellectual Property Office (CIPO) issued guidelines as to when a computer implemented invention is patentable.  The guidelines require the Examiner to differentiate between inventions relating to “computers” as opposed to solutions to problems that use computers but are not “computer problems”.  If the invention is intended to solve a problem that is not relating to the operation of a computer, the Examiner is to determine whether the use of the computer is essential or simply a convenience.  The computer is not essential if the same result could be obtained (albeit more slowly) with pen and paper calculations.

New Canadian Patent Guidelines on Purposive Construction

In the Amazon.com case, the Court was highly critical of the Canadian Intellectual Property Office (CIPO) for not using “purposive construction” of patents.  On March 8, 2013, CIPO issued new guidelines for Patent Examiners regarding “purposive construction”.  Guideline 1 requires the Examiner to use a “fair, balanced and informed approach” to understand the background knowledge that existed at the time of the invention.  Guideline 2 requires a problem and solution approach in which an invention is considered to be a solution to a practical problem.  There being a “promise of invention” regarding invention providing a solution to the problem identified. Guideline 3 requires context for the meaning of the claims to be drawn from an understanding of the patent application as a whole.  Guideline 4 requires essential elements to be identified in order to determine whether any essential elements are missing from the claim.  Guideline 5 requires each patent to be a solution to only one problem.  Where solutions are proposed to more than one problem, it is suggestive of more than one invention. These guidelines are a huge step forward.  There is one troubling aspect.  Where a problem and solution are not identified by the patent applicant (and there is no obligation to do so in section 80 of the Patent Rules), these guidelines require an Examiner to determine a “problem”, a “solution” and the “promise of the invention” regarding the invention providing a solution to a problem. There will undoubtedly be disputes in future over the Examiner’s interpretation.

A Discussion Of Patent Strategy

The end objective for an established business is to develop and launch a product or service that captures substantial market share and returns a profit to the business.  When considering patent protection, I strongly recommend that the established business invest in the best patent search available.  The reason for this recommendation is that the business may reconsider its position if patent protection cannot be obtained and the business will certainly reconsider its position if the product infringes a patent owned by a competitor.  Assuming that there are no negative indications in the search results, the business will file a well written patent application.  It takes the patent office approximately 3 years to get around to reviewing the patent application.  By this time the business knows whether the product has been successful.  If the product has been successful, the patent agent is usually instructed to obtain the best possible patent protection without budget constraints being imposed.

An inventor who is trying to sell his idea to an established business has different considerations.  The end of objective of the inventor is to enter into a successful negotiation with the established business.  A patent without a buyer is of no interest to the inventor, regardless of how strong the patent may be.  Unless the business shows an interest in the invention, money is tight and comes out of savings.  For this type of inventor, I recommend the following strategy:

Step 1  – Do some searching.  There are free databases online at the government patent offices.  If some funds are available, purchase an hour of a professional patent agent’s time.  A competent patent agent can determine within that hour if there are already a dozen or more patents similar to your invention.  You do not need an exhaustive review at this stage, but would like to know if you are clearly wasting your time and your money before you move forward.

Step 2 – Figure out what you can safely say to a business to attract their interest without saying too much and giving them your idea for free.  By way of example, a client of mine was able to indicate that he had developed a method and apparatus by which an unconscious disabled lineman suspended by his harness from a power pole could be lowered by a co-worker to the ground.   As you can see, the description indicates what is achieved but not how it is achieved.

Step 3 – Approach a number of businesses until you find one that is sufficiently interested that they ask you to send more information and provide you with a name and email address that can be used as a channel of communication.  Larger businesses will have established a review procedure, complete with “idea submission” forms that must be signed.

Step 4 – Have your patent agent file a “provisional” U.S. patent application or an “informal” Canadian patent application.  With a provisional or informal patent application the rules are less stringent and it should cost you less money to get to the “patent pending” stage.  Bear in mind that you still must ensure that the patent application fully describes the component parts that make up your invention, how they are assembled and how the invention may be used.

Step 5 – once protection is in place, provide the information to the business and indicate you will follow up after 30 days if you have not heard from them within that period.  The business will indicate whether or not they are interested.  It they are interested you are into a negotiation.  If they are not interested, ask for the reason why they have decided not to move forward.  A client of mine had an idea rejected because the business thought the bingo market was too small.  The client then provided statistics on the actual size of the bingo market; the business reconsidered and decided to proceed.  Another client had an idea rejected because the invention only suited one style of plastic wrap machine.  The client then confirmed that the business would still be interested if the invention was modified to work with all styles of plastic wrap machine.    While you await word from the business, bear in mind that the due diligence evaluation by the business usually takes three stages and leads to the preparation of a mini-business plan:
Stage 1 Marketplace evaluation – Is there a need for this product or service in the market?  Is the market for this product or service large enough to present an opportunity?  Who are the competitors?  How does this product or service stack up against the competitors?  Are there barriers to entry?

Step 2  Financial evaluation – Can the business make money?  What are people prepared to pay?  What are the costs associated with getting this product or service into the marketplace?

Step 3 – Legal evaluation – Here the business will be doing the best patent search available.  They will also receive recommendations on how to structure a transaction with you, the inventor.

World Wide Web – When Do You Cross the line?

World Wide Web – When Do You Cross the line?

In this article we will discuss two recent cases that may of interest to businesses and individuals regarding the World Wide Web.  There is a great deal of information on the web that is useful to business.  Recently the Supreme Court of British Columbia was asked to consider what use companies can make of information taken from competitor’s websites, in the case Century 21 Canada Limited Partnership et al v. Zoocasa Inc.  Zoocasa was using information taken from the Century 21 website.  The lawyer for Zoocasa argued that information made available on the internet must be available for use by everyone through indexing, linking and otherwise, without contractual restrictions.  It was suggested that this was required for the proper functioning of the web.  The lawyer for Century 21 argued that Zoocasa had breached the contractual terms accepted by users of the Century 21 website.  Mr. Justice Punnett decided that although the manner of contracting had changed, traditional contract law still applied to the web.  The Century 21 website had Terms of Use associated with the website; Zoocasa had actual notice of those Terms of Use, had accepted them and were bound by them.   In addition, Century 21 had copyright in the pictures and articles on the website.  In taking the pictures and articles, Zoocasa had infringed the copyright of Century 21.  The lesson to be taken from this case for website owners, is to establish Terms of Use and ensure that users of your website have notice of those Terms of Use and accept them to create an enforceable contract.

In this world of GOOGLE, FACEBOOK, and LINKEDIN, there is also a great deal of information on the web regarding individuals.  In most cases, it is completely proper to access this information.  For example, I had to examine a witness under oath a few months ago and availed myself of information that was on his FACEBOOK page to assist me.  Recently the Ontario Court of Appeal was asked to consider where the line should be drawn with respect to intrusions into one’s privacy in the case of Jones v. Tsige.  Winnie Tsige was the common law partner of the former husband of Sandra Jones.  Ms Tsige was also a bank employee.  Ms. Tsige used her position at the bank to repeatedly access online records that are not accessible to members of the public and inspect Sandra Jones private banking records.  Presumably, this information was being passed along to Mr. Jones for use in a dispute with Mrs. Jones.  The Court found this intrusion to have crossed a line.  This is an unusual situation of an abuse of bank databases by a bank employee and may not have had much application to the rest of us, were it not for the fact that the Ontario Court of Appeal had to create a new cause of action of intrusion of privacy to give Sandra Jones a remedy.  That remedy is now a precedent.  The boundaries of the remedy will be set by future cases.  It will likely be relied upon by celebrities against overly aggressive paparazzi.  Should you be so unfortunate as to experience some intrusion into your privacy that is excessive, unwarranted and deserving of sanction, you should speak to your lawyer.