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10 Key IP Questions You Should Consider When Starting a Business

By: Christopher Heer, Annette Latoszewska, Daryna Kutsyna | Last updated: April 24, 2023
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 by associating your business name with their own products and/or services. In order to avoid the potential losses flowing therefrom, 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 a trademark registration, you ought to check whether the name you propose to register is already in use within the jurisdiction in question. Many companies mistakenly believe that by virtue of having received government approval of the name during the incorporation process, the name necessarily can only be used by them, or is already protected as a trademark. This is not the case. Assessing whether your business name is available for adoption, use and registration as a trademark can be achieved with a trademark search.

    A trademark search reviews existing trademark registrations and applications for trademarks and may also search for common law uses of your business name as a trademark to determine whether it is likely to be allowed to register. An application to register a business name as a trademark may be refused if confusingly similar marks are applied for or are registered. Further, even if there are no such marks, the owner of common law trademark rights may oppose your application if the mark is likely to be confused with their own. The next step following a search 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. Other barriers may include the lack of distinctiveness of a mark or its descriptiveness of the goods or services with which it is associated.

    Quite apart from assessing the registrability of your mark, a trademark search may also be used to evaluate whether your use of a trademark is likely to infringe the trademark rights of others. In other words, whether another entity is using or has registered a similar or identical mark in association with similar or identical goods/services.

    By asking this question at the outset, you can avoid investing time and money into a trademark that is not registrable, is not distinctive, or is likely to invite a lawsuit for trademark infringement or passing off. Rebrands are expensive and challenging and defending a lawsuit is even worse. Thus, the value in investing in a trademark search cannot be overstated.

  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 also apply for trademark registrations for these if available, or consider alternative names as described above.

  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: 1) constitutes allowable subject matter (that is, the invention should be an art, process, machine, manufacture, or composition of matter, and not an abstract theorem, scientific principle, higher life form or method of medical treatment), 2) is new–-the invention must not have been previously available to the public, described in a third party patent application, or (for the United States, Canada, and certain other countries with grace periods) publicly disclosed by the inventor more than a year before the filing of the patent application, 3) is useful, in that the invention has to work; and, finally, 4) is 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 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 of filing – 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 your earliest disclosure of the invention 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 in the course of your business dealings sign a non-disclosure agreement, limiting the degree 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 of the products 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 claims of an existing in-force patent, you may be at serious risk of being sued for patent infringement. Note that the fact of having improved on the product or process claimed in a patent does not render the manufacture, use or sale of that improvement legal without the permission of the patent owner.

  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, copyright subsists in these works immediately upon the creation of the works provided they meet the conditions set out in the Copyright Act. Registering copyright in your works, however, provides additional benefits such as the presumption of ownership (the owner of a copyright registration is presumed to be the owner of that copyright) and deemed notice (an individual is deemed to have had notice of a copyright if that copyright was registered at the relevant time) which can be advantageous when seeking remedies for copyright infringement.

    Copyright protection gives you the exclusive to produce, reproduce, publish or perform a work and entitles you to commence an infringement action against those who may be doing any of the foregoing without your consent.

    Copyright in works produced for your business by contractors typically isn’t owned by the business but by the contractor in the absence of a contractual assignment of copyright from that contractor. Care should be taken to ensure that you will be legally able to reproduce, to the extent desired, the works created for your business by independent contractors. You should also be mindful of moral rights, which are held by authors of creative works and cannot be assigned. In the absence of a waiver of these rights from the author, these rights can require that you give the author credit or may prevent you from modifying the work.

    You may want to consider marking your copyrighted works with the copyright symbol, ©. Although this is not required, use of the symbol puts the public on notice that a work is subject to copyright and may not be reproduced without permission. The copyright symbol is typically followed by the name of the copyright owner and the date of publication.

  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 look into 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. Examples of industrial designs registered in Canada include designs for clothing, shoes, cars, and kettles, among others. In order to obtain exclusive rights for your design, it must be unique and novel, in other words disclosure requirements like those for patent protection apply. As in the case of patents, a 1-year grace period applies in Canada to an inventor’s disclosure of a design, meaning the inventor’s disclosure is not held against them as novelty-destroying prior art if an industrial design application is filed within a year of the earliest disclosure.

    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 by these individuals 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 include a provision to this effect in their employment contract or in a separate intellectual property assignment agreement such that ownership is unambiguous.

    For independent contractors, it is very important to have ownership of the completed works contractually assigned 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 to protect, among other things, your inventions for which patent applications have yet to be filed.

  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 using their previous employer's confidential information.

    When hiring employees or contractors, it is worthwhile to familiarize yourself with their prior contractual obligations and how these may impact their performance in your business. If you would like us to review a prior contract to determine what you or your new employee can and cannot do, please contact us for a complimentary and confidential initial telephone appointment to discuss this further.