Print | Email

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 applying for these trademark registrations, 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, and to apply for trademark registration for them if available or consider alternative 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 that the proposed invention is an allowable subject matter (that is, an art, process, machine, manufacture, or composition of matter), new–-the invention must not have been previously available to the public, already described in an third party patent application, or (for the United States and Canada, and certain other countries with grace periods) publicly disclosed by the inventor more than a year before the filing of the patent application, useful, in that the invention has to work; and, finally, non-obvious or inventive, such that a person skilled in that particular field would not be able to easily arrive at the proposed invention in view of knowledge already available.

    If an innovation which is important to your business meets these considerations, you should consider filing a patent application to obtain exclusive rights to making, using and selling it so as to shield yourself from competitors and gain pricing power through the exclusivity.

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

    If you believe one or more aspects of your business may be potentially patentable, it is critical to keep the details of how to make and use the invention secret before filing a patent application, or else you will lose the ability to obtain a patent in many jurisdictions. 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 which would enable another to make and use it are not released prematurely.

    Canada and the United States (and a few other countries) have grace periods of one year on public disclosures of inventions by the inventor. If your invention has already been made public, you may file a patent application within a year of the earliest disclosure without violating the novelty requirement. Such a grace period, however, does not exist in many other jurisdictions, including in Europe and China.

    Some measures to maintain confidentiality of your invention, if it has not yet been publicly disclosed, are ensuring that those that are outside of your organization 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 the details of how to make and use your invention with potential investors and partners (absent a non-disclosure agreement), and delaying publications in trade magazines or other publicly distributed publications.

  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 apply for a patent for any aspects of your business operation, it may be prudent to conduct a patent search to determine whether any patents in force in the jurisdictions in which you intend to sell are subject to third party in-force patents. If you find that you are planning to sell a product or service which falls within the patent claims an existing in-force patent, you may be in serious risk of being sued for patent infringement.

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

    Any copyrightable 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 works include most business documentation, as well as photographs, graphics, web pages, audio and video works. Unlike patents and trademarks, in most cases copyrights come into force immediately upon the creation of the work provided it meets the conditions stipulated in the Copyright Act. Registration of your works provides additional benefits such as the presumption of ownership and deemed notice which provides certain benefits when seeking remedies for copyright infringement.

    Copyright protection give you the exclusive rights to your works and their reproduction or distribution by others, and entitles you to commence an infringement action against those who may be doing so without your consent.

    Works produced for your business by contractors are typically not owned by the business in the absence of a contractual assignment of 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 visual appearance rather than its function, it may be useful to take a look at applying for an industrial design registration (or design patent, as it is referred to in the United States). An industrial design is focused on protecting the visual elements of an article, namely, its design, shape, pattern or ornament. In order to obtain exclusive rights for your design, it must be unique and novel, in other words the disclosure requirements similar to those for patent protection 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 or imitated by competitors, filing an application for 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 has an aesthetic design which may be similar to others in the market, it is important to conduct a search of industrial designs that have been registered or granted in all the 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 or design patent infringement and should consider altering your design to fall outside the scope of the third party registration or patent.

  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 intellectual property is being created for your businesses. 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 in most circumstances be considered the property of the employer. But why leave it to chance when you can stipulate this provision in their employment contract and leave no doubt.

    For independent contractors, it is very important to contractually assign ownership of the completed works to your business otherwise you may only be buying a right to use the work they create. Further, it is often important to ensure that all individuals who complete work for your business, whether as employees or as contractors, are subject to non-disclosure provisions relating to the confidential information of the business.

  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 executed contracts in which they agreed to confidentiality provisions that survive termination of their prior employment. These provisions will very likely prohibit them from disclosing or using the innovations or confidential information of their prior workplace. However, these employees are still able to capitalize on the full extent of their skill, judgment and expertise without so using that their previous employer's confidential information.

    When hiring employees or contractors, it is worthwhile to familiarize yourself with their prior contractual obligations and how it may impact their performance in your business.