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Ten Key IP Questions You Should Consider When Starting a Business

You need to concern yourself with intellectual property rights at the start of any new business.

If you fail to respect the intellectual property rights of others, you may become liable for monetary damages and you could be forced to redesign your product or service or to rebrand your products, services or business. You will also want to protect your own intellectual property assets to increase the value of your business and protect it from competitors.

Below is a list of ten important IP questions you should review when starting a business, along with key considerations in evaluating each question:

  1. Can the business adopt, use and register its proposed name in Canada and other jurisdictions in which it will do business?

    Your business name will likely be used in association with the products and services you will be offering. If the goods and services you are selling grow in popularity and appeal, competitors may emerge who will attempt to capitalize on the goodwill built around your brand. In order to avoid such potential losses, it is prudent to apply to register your business name as a trademark in Canada and other jurisdictions into which you plan to expand your operations.

    Before securing these trademarks, you ought to check whether they are already in use within the jurisdiction in question. This can be done through a trademark search. The next step would be to evaluate any other potential barriers to registration of key brand names, and to potentially reconsider the use of names or slogans that may present obstacles.

  2. Can the business adopt, use and register the proposed names for the products and services it will sell as trademarks in Canada and other jurisdictions in which it will sell its products and services?

    The names of your products and services, similarly to the name and brand of your business, are likely to accumulate a reputation based on your marketing efforts and the commercial strength of the goods and services you are offering.

    Make sure to conduct a trademark search for any names of products or services that you believe will become a significant part of your business or brand, and to register them as trademarks or consider alternate names where necessary.

  3. Is any aspect of the IP of the business new, inventive and useful and therefore potentially patentable?

    In answering this question, it may be useful to check out our primer on patentability requirements in Canada. The main considerations for patentability are as follows: an allowable subject matter (that is, an art, process, machine, manufacture, or composition of matter); novelty – the invention must not have been previously available to the public, already described in an third party patent application, or publicly disclosed by the inventor more than a year before the filing of the patent application; usefulness, in that the invention has to work; and, finally, non-obviousness - something that a person skilled in that particular field would not be able to easily replicate in view of knowledge already available.

    If an innovation which is an integral part of your business meets these considerations, it may be useful to look into submitting a patent application to protect it from being copied by competitors.

  4. Are there procedures in place to keep any potentially patentable inventions confidential until a patent application may be filed?

    If you have evaluated one or several aspects of your business to be potentially patentable according to the above considerations, it is crucial to ensure that disclosure requirements are not violated. Since a patent application must meet the novelty requirement – that is, the invention should be new to the public as of the date filed – it is crucial to ensure that details of the invention are not released prematurely.

    Canada and the United States both have grace periods of one year on disclosure of inventions. If your invention has already been made public, you may file a patent application within a year of that disclosure date that would not violate the novelty requirement. Such a grace period, however, does not exist in many other jurisdictions, including in Europe.p>

    Some measures to maintain confidentiality of your invention, if it has not yet been publicly disclosed, are ensuring that those who must be exposed to your invention through the course of your business dealings sign a non-disclosure agreement, limiting the scope to which you discuss your invention with potential investors and partners, and delaying publications in trade magazines or other publicly distributed sources.

  5. Are there any third party patents that could prevent the business from selling its products and/or services in Canada or other jurisdictions in which it will make, use or sell its products and services?

    Even if you do not intend to patent any aspects of your business operation, it may be prudent to conduct a patent search to determine whether any of the inventions that are crucial to the operation of your business have been patented by someone else. If you find that you planning to sell a product or service which falls within an existing in-force patent, you may be in risk of being sued for patent infringement.

  6. What aspects of products and services of the business are protected by copyright?

    Any creative work that is made for the purposes of your business, whether by you or by your employees, is the copyrighted property of that business. Examples of such creative works include music, art, poetry and writing among others. Unlike patents and trademarks, copyrights come into force immediately upon the creation of the work provided it meets the conditions stipulated in the Copyright Act.

    Copyright protection prevents your works from being reproduced or distributed by others for commercial purposes, and entitles you to commence action against those who may be doing so.

    Works produced for your business by contractors are typically not owned by the business in the absence of a contract assignment ownership of those rights.

  7. If the business will sell a product, is the design of the product protectable as an industrial design in Canada or as a design patent or design in other jurisdictions in which it will sell its products?

    If the product your business is selling is novel and unique in its shape and style rather than its function, it may be useful to take a look at industrial design (or design patent, as it is referred to in the United States and other foreign jurisdictions) protection. An industrial design is focused on protecting the visual elements of an article, namely, its design, shape, pattern or ornament. In order to obtain protections for your design, it must be unique and novel (disclosure requirements identical to those for patent protections apply).

    If you believe that the success of your product is dependent on its aesthetic appearance and do not wish for that appearance to be replicated by competitors, filing an industrial design registration or design patent should be on your to-do list.

  8. Are there any third party design registrations that could prevent the business from selling products embodying the design in Canada or other jurisdictions in which it will sell its products?

    If you believe that your product is dependent on its aesthetic design for commercial success, it is important to conduct a search of the existing industrial designs that have been registered in all jurisdictions in which you plan to conduct your operations. If you discover that a design is identical or very similar to the designs your business is proposing, you may be in danger of industrial design infringement and should consider altering your designs so that they fall outside the scope of the third party registration.

  9. Does the business have written agreements with its employees and contractors that clearly assign IP created to the business and provide for the maintenance of confidential information and trade secrets?

    Ownership of intellectual property is an important consideration when new works are being created for your businesses by individuals other than yourself. If the individual that has created the work is employed by your company, then the work they have completed as part of their job duties will typically be considered the property of the employer. It is still useful, however, to stipulate this provision in the employment contact and leave no doubt.

    For independent contractors, it is even more important to stipulate the transfer of ownership of the completed works to your business. Further, it may be important to ensure that all individuals who complete work for your business, whether as employees or as contractors, are also subject to non-disclosure and trade secret provisions.

  10. Do any of the employees or contractors have contractual obligations to a former employer that might relate to the IP being developed in the business?

    If you are hiring employees or contractors with previous work experience in the field in which you are developing your product, it is possible that they have signed contracts that stipulate confidentiality provisions even after the termination of their employment. These provisions may include being unable to reveal or use some of the innovations and techniques used in their prior workplace. However, employees are still able to capitalize on the full extent of their skill and expertise.

    When hiring employees or contractors, it is important to familiarize yourself with their prior contractual obligation and any limitations they may be subject to when performing their job functions for your business.