IP in business transactions: Canada overview

A guide to intellectual property law in Canada. The IP in business transactions Q&A gives an overview of maintaining an IP portfolio, exploiting an IP portfolio through assignment and licensing, taking security over IPRs, IP and M&A transactions, and the impact of IP on key areas such as competition law, employees and tax.

To compare answers across multiple jurisdictions, visit the IP in business transactions Country Q&A tool.

This Q&A is part of the multi-jurisdictional guide to IP law. For a full list of jurisdictional Q&As visit www.practicallaw.com/ip-mjg.

Contents

Overview of main IPRs

1. What are the main IPRs in your jurisdiction? How are they protected?

Patents

Statutory national protection is provided under the Patent Act, after formal and substantive examination of the application by the Canadian Intellectual Property Office (CIPO).

Trade marks

Statutory protection is provided under the Trade-marks Act for registered and unregistered marks, as well as common law protection through the tort of passing off. While not required for protection, registration of a trade mark is prima facie evidence of ownership and provides national (as opposed to merely local) protection.

Copyright

Statutory protection is provided under the Copyright Act for the following original works:

  • Literary.

  • Dramatic.

  • Musical.

  • Artistic works.

  • Compilations of such works.

  • Performers' performances.

  • Sound recordings.

  • Communication signals.

Registration is not required, but is available. Registration provides prima facie evidence of ownership and constructive notice of rights.

Moral rights also are protected under the Copyright Act. Moral rights cannot be assigned or licensed, but may be waived in whole or in part by the author of the work.

Design rights

Statutory national protection is given under the Industrial Design Act for registered industrial designs with an original aesthetic appearance. Unregistered designs are not protected.

Confidential information

Protection is given at common law for misuse of confidential information. There is no statutory protection.

Other

Statutory protection is given for the three-dimensional configuration of circuits in a computer chip under the Integrated Circuit Topography Act. Registration of a topography is required for protection.

Statutory protection for new plant varieties is given under the Plant Breeders' Rights Act, after examination by the Plant Breeders' Rights Office (PBRO) of the Canadian Food Inspection Agency.

For further information about the main IPRs, see Patents, trade marks, copyright and designs in Canada ( www.practicallaw.com/6-505-4626) .

 

Maintaining IPRs

Search and information facilities

2. What facilities are available to conduct IP searches and obtain IP information on registered IP rights?

Patents

The Canadian Intellectual Property Office (CIPO) maintains an online searchable database of patents and published, pending applications. Commercial databases also exist that include additional search criteria and features.

Trade marks

The CIPO maintains an online searchable database of registered trade marks and pending applications. Commercial databases also exist that include additional search criteria and features.

Copyright

The CIPO maintains an online searchable database of registered copyrights.

Design rights

The CIPO maintains an online searchable database of registered industrial designs.

Confidential information

Not applicable.

Other

Not applicable.

 

Maintenance of main IPRs

3. What steps must a business take to maintain the registration and status of its main IPRs?

Patents

Maintenance fees are payable from the second anniversary of the filing date and must be paid annually thereafter, until the nineteenth anniversary of the filing date for issued patents and pending applications. A one year grace period is available with the payment of additional fees.

There is no requirement that the patentee use the claimed invention. However, the Attorney General of Canada or any person interested at any time after three years from the grant of the patent may apply to Canadian Intellectual Property Office (CIPO) alleging there has been an abuse of the patent rights. Failure to make the invention available to meet the demand in Canada or refusal to grant a licence on reasonable terms may be considered an abuse. If the exclusive right is deemed to have been abused, the available remedies include an order to grant a licence or an order to revoke the patent. But such proceedings are not common.

Trade marks

Trade mark owners must use their marks to maintain their rights. A registered trade mark is subject to cancellation on the request by a third party if, at any time after the third anniversary of registration, the mark has not been used during the three-year period immediately preceding the request. A trade mark registration can be expunged by the Federal Court if it has been abandoned by its owner.

Registered marks must be renewed by paying a renewal fee every 15 years. Failure to pay the renewal fee on time will result in cancellation of the registration. A six-month grace period is available (additional fees apply).

Copyright

There are no steps required to maintain a copyright registration.

Design rights

A maintenance fee must be paid within five years from registration to keep the industrial design registration in force. Restoration for failure to pay a maintenance fee is possible within a six-month grace period after the deadline for paying the maintenance fee.

Confidential information

A person who has knowledge of confidential information must take reasonable steps to prevent unauthorised use of this information.

Other

Not applicable.

 

Monitoring infringement

4. What steps can a business take to avoid committing an infringement of another party's IPRs and to monitor whether a competitor is infringing its IPRs?

Patents

A business seeking to avoid a claim for infringement may wish to conduct a search of the Canadian Patents database to identify patents and patent applications for claims that appear to cover the scope of the business' commercial activity.

With the assistance of a qualified patent agent or lawyer, the business can avoid infringement by designing a product that omits or changes an essential feature of the claims of the patent. Alternatively, the business can seek a licence from the patentee.

The business can seek a declaration of invalidity from the Federal Court and have the patent cancelled. No threats of litigation are required in order to do this.

A patentee is responsible for monitoring and asserting its exclusive rights under the patent.

Trade marks

A business may wish to conduct a search of the Canadian trade marks database of registered trade marks to ensure there are no registrations or prior pending applications for a confusingly similar mark. Businesses can use a registered trade mark agent or lawyer to obtain a clearance opinion.

Trade mark owners are responsible for monitoring and asserting trade mark rights.

Recent amendments to the Trade-marks Act have introduced border controls for counterfeit goods. If the owner of a registered trade mark makes a "request for assistance" to border officials, the owner receives a notice if a commercial shipment is detained with goods bearing that registered mark or a mark that cannot be distinguished in its essential aspects from the registered mark. Trade mark owners that choose to participate in the programme may be liable for the storage costs for detained goods.

Copyright

Although businesses can conduct a search of the Canadian copyright database, it does not contain copies of the registered works, making it difficult to determine whether copyright may be infringed.

A business seeking to avoid a claim for infringement may wish to obtain a licence or acquire the copyright from the licensor or seller respectively of the copyrighted work.

Copyright owners are responsible for monitoring and asserting their rights in the copyrighted work.

Recent amendments to the Copyright Act have introduced border controls for infringing copies of a work. If the owner of a copyright makes a "request for assistance" to border officials, the owner receives notices when commercial shipments suspected of containing infringing articles are detained. Copyright owners that choose to participate in the program may be liable for the storage costs for detained goods.

Design rights

A business can conduct a search of the Canadian database of industrial designs to check whether the design of its product may infringe the rights of another party in a similar registered design.

An owner of an industrial design registration is responsible for monitoring and asserting their rights.

Confidential information

A business seeking to avoid a claim of breach of confidence can take reasonable steps to prevent disclosure of confidential information. This includes limiting access to the confidential information and requiring all persons that may have access to the confidential information to sign non-disclosure or confidentiality agreements.

Other

Not applicable.

 

Exploiting IPRs

5. What are the main steps in an IP audit in your jurisdiction to determine the content of an IP portfolio?

Patents

The main steps when auditing a patent portfolio are as follows:

  • If known, identify all relevant affiliates of the company to establish a target group of entities that may be holding patent rights.

  • Conduct searches at the national level to identify patents and applications filed by or assigned to the target group.

  • Conduct searches at international level to identify Patent Cooperation Treaty (PCT) applications filed by, or assigned to, the target group within the current national phase entry window (that is, the last 42 months).

  • Review maintenance fee records to verify that annuities for all pending applications and patents have been kept up to date.

  • Retrieve file wrappers for all applications and granted patents from the Canadian Intellectual Property Office (CIPO) (not available online) and:

    • verify that the chain of title is complete, correct, and fully recorded;

    • identify procedural abandonments or other prosecution errors.

  • Search the court dockets by party name and intellectual property number to identify pending litigation.

  • Conduct validity or freedom to operate searches to assess patent strength or possible infringement claims.

  • Review licensing strategies for patents licensed in or licensed out.

  • If known, identify and review any innovations for which patent protection has not yet been filed.

  • If available, review employment agreements and contracts to ensure ownership of rights flows to the correct entity.

  • Obtain and review any relevant legal opinions.

Trade marks

The audit process for trade marks is analogous to the process set out above for patents, with the following additional considerations:

  • Review licensing strategies to ensure all goodwill flows to a single entity.

  • Search the trade mark register to identify confusing co-pending or granted third party trade marks.

  • Review current branding used for goods and services and identify marks in need of further protection.

  • Conduct "in use" investigations of key trade marks to determine whether other parties are making use of the same or similar.

  • Determine whether a watch service is in place for trade mark oppositions, and if appropriate, institute a watch program.

  • Review domain name registrations, including those of third parties.

Copyright

Copyright registration is not required. Foreign copyrights are recognised under the Berne Convention for the Protection of Literary and Artistic Works. As a result, most enforceable copyrights in Canada are unregistered. A copyright audit involves:

  • Conducting searches at the national level to identify copyright registrations in the name of the company or its known affiliates.

  • Searching the court dockets by party name or copyright registration number to identify pending litigation.

  • Identifying creative works, technical documents, manuals, databases, source code, publications, advertising and logos of commercial interest.

  • Reviewing the adequacy of existing licensing arrangements, particularly in regard to third party copyrights that may not be adequately licensed.

Design rights

Unlike copyrights, all industrial design rights must be registered. The audit process for industrial designs is analogous to that for patents.

Confidential information

An audit of confidential information requires:

  • Identifying trade secrets that are of commercial value.

  • Ensuring that adequate steps are taken to ensure confidentiality, including:

    • reviewing relevant disclosures by the company asserting possible trade secrets, such as presentations, technical documents, manuscripts, journal articles, and published patent applications;

    • reviewing the adequacy of existing contractual obligations for non-disclosure or use of trade secrets by employees after departure;

    • reviewing physical and electronic security measures.

  • Conducting online and database searches to assess whether trade secrets have become known to the public through third party disclosure.

Other

A company must confirm that any novel plant varieties have been registered.

 

Assignment

Scope of assignment

6. On what basis can main IPRs be assigned?

IPRs can be assigned in whole or in part. Assignments should specify the exact nature of the rights being assigned. Pending applications can be assigned prior to grant. The following additional considerations apply:

  • Co-ownership: upcoming amendments to the Trade-marks Act will allow co-ownership of trade marks. Patents can be co-owned, but a co-owner of a patent cannot further divide its interest without the consent of the existing co-owners.

  • Writing: most IPRs can only be assigned in writing. Trade marks and confidential information are exceptions to this general rule.

Registration is available for all IPRs. Registration is not mandatory, but is recommended as it secures the assignee's place in the chain of title.

 

Formalities for assignment

7. What formalities are required to assign each of the main IPRs?

Patents

Patents and patent applications must be assigned by an instrument in writing. A request to register an assignment must contain the:

  • Name(s) of the assignor(s).

  • Name and complete address of the assignee(s).

  • Application or patent number against which the assignment is to be registered.

  • Specific information identifying the rights that are being assigned.

  • Whether the interest in a right is being transferred in whole or in part.

A copy of the document effecting the transfer and either an affidavit or other proof of execution satisfactory to the Canadian Intellectual Property Office (CIPO) must be submitted. Generally, the name and signature of a witness is sufficient proof of execution.

Trade marks

A registered or unregistered trade mark is assignable by way of written instrument or otherwise. There is no requirement that a trade mark is assigned with the goodwill associated with the mark, and the rights in a trade mark can be assigned in whole or in part. An assignment in writing of trade mark rights may be registered with CIPO. The address of the assignee is required. The assignment (original or photocopy) should contain the names of the assignor(s) and assignee(s) and the details of the assignment, along with the prescribed fee.

Copyright

Copyright must be assigned by an instrument in writing. Assignments of registered copyright may be registered with CIPO. The full name and address of the assignor and assignee is required. Moral rights cannot be assigned, but may be waived by the author of the work.

Design rights

The rights in a registered industrial design must be assigned by an instrument in writing. Assignments of registered industrial designs may be registered with CIPO.

Confidential information

Not applicable.

Other

Not applicable.

 

Main terms for assignments

8. What main terms should be included in an assignment of IPRs?

An assignment should include the following:

  • The full legal name and address of the assignor and assignee, their signatures, and preferably the signature of a witness or other proof of execution.

  • Identification of the IPR being assigned, preferably with reference to any titles, application numbers or registration numbers, if known.

  • Identification of the jurisdiction in which the rights are being assigned (that is, Canada or worldwide).

  • Identification of the nature of the rights being assigned, including full or partial interests, future applications and neighbouring rights (for copyright), goodwill (for trade mark), and rights of recovery for past infringement.

  • The consideration received by the assignor for the transfer.

  • An obligation on the assignor to execute further documentation as required in order to perfect or register title.

 

Licensing

Scope of licensing

9. On what basis can the main IPRs be licensed?

Patents

Patents can be licensed and sublicensed, wholly or partially, exclusively or non-exclusively. The licence can be either general or subject to limitations such as:

  • Term.

  • Territory.

  • Specific interests in:

    • making;

    • constructing;

    • using the invention.

Trade marks

Trade marks can be licensed and sublicensed, wholly or partially, exclusively or non-exclusively. The licence can be either general or subject to limitations such as term, territory or specific goods or services.

Copyright

Copyright can be licensed and sublicensed, in whole or in part, exclusively or non-exclusively. The licence can be either general or subject to limitations such as territory, medium, or specific interests in the copyright.

Design rights

Industrial design can be licensed and sublicensed, in whole or in part, exclusively or non-exclusively. The licence can be either general or subject to limitations such as term, territory, or specific interests in the design.

Confidential information

Confidential information can be licensed and sublicensed, in whole or in part, exclusively or non-exclusively. The licence can be either general or subject to limitations such as the scope and extent of the rights.

Other

Trade secrets, know-how and other forms of IPRs can be licensed in the similar manner as confidential information.

 

Formalities for licensing

10. What are the formalities to license each of the main IPRs?

Patents

Generally, a patent licence is in writing and signed by the parties and identifies the patent application or patent number and the rights licensed. A patent licence can be registered at the Canadian Intellectual Property Office (CIPO), if desired. The licence submitted for registration must be in English or French or be accompanied by a translation into English or French.

Trade marks

A written trade marks licence is not required but is recommended. A written licence must be signed by the parties, and identify the trade mark application or registration number and the rights licensed. It is important that the licence stipulates that the licensor exercises direct or indirect control of the character or the quality of the goods or services for which the licence has been granted for use. Licences can be registered, if desired.

Copyright

A copyright licence must be in writing, signed by the parties and identify the rights licensed. A copyright licence can be registered, if desired.

Design rights

A design licence must be in writing, signed by the parties, and identify the rights licensed. A design licence may be registered, if desired.

Confidential information

A written licence is not required but recommended. No registration option exists.

Other

There are no specific formality requirements for trade secrets, know-how and other forms of IPRs.

 

Main terms for licences

11. What main terms should be included in an IP licence?

An IP licence should address the following:

  • Identification of the parties, including full legal names, mailing addresses and jurisdictions of incorporation.

  • An unambiguous description of the IPRs being licensed and the scope of the licence given.

  • Compensation, including the amount and duration of royalties.

  • A right of inspection for the licensor to permit verification of royalties paid.

  • For trade mark licences, the ability of the licensor to maintain control over the character and quality of the goods and services offered under the mark.

  • All other obligations of the parties under the licence.

  • Term and termination.

  • Conflict resolution and choice of law.

 

Taking security

12. Is security commonly taken over IPRs?

Security is commonly taken over IPRs. The taking of security is governed by provincial law. However, federal legislation permits the recording of security interests in registered IPRs on a national level. Security interests must be in writing.

Various provincial legislation exists that allows lenders to secure loans by means of security agreements that create security interests that attach to property and are perfected to establish priority for the purposes of enforcement.

At the same time, the Canadian Intellectual Property Office (CIPO) maintains a record of security interests specifically for IPRs at national level. It is highly recommended, although not mandatory, to provide notice by recording the security interest with CIPO where the collateral consists of:

  • Patents.

  • Registered trade marks.

  • Trade mark applications.

  • Industrial designs.

  • Registered or unregistered copyrights.

Recording of the security interest with the CIPO can be done by filing a copy of the security agreement or a redacted copy of it and paying any applicable prescribed fee.

 
13. What are the main security interests taken over IPRs?

A security interest is usually a contingent interest in an IPR that is realised on default of a debt that comprises direct ownership of the IPR or a power of attorney to execute an assignment of the IPR to a third party, on the debtor’s behalf. The enforcement of security interests is governed by provincial law. However, bankruptcies are governed by federal legislation.

Security interests are commonly registered with the Canadian Intellectual Property Office (CIPO) against:

  • Patents.

  • Registered trade marks.

  • Registered copyrights.

The deposit of the security agreement at the CIPO serves only as a public notice and grants no independent right to the secured party. The CIPO does not consider the registration of the security document as affecting ownership in the patent. Therefore, the secured party will not receive notice of subsequent transactions affecting the secured patent.

For patents, any co-owners that remain after enforcement of the security interest have an unrestricted right to make, use and sell the invention, regardless of the extent of their co-ownership. A co-owner can also transfer its interest to a third party, but cannot subdivide its co-ownership interest by executing non-exclusive licences or executing partial transfers to multiple entities.

For trade marks, if a secured party enforces its rights and assumes title, the trade mark can lose its value on transfer. This is because the trade mark derives its value from its relationship with the debtor as the source of relevant goods and services associated with the trade mark. The parties may therefore prefer to avoid an assignment of a trade mark and instead include a power of attorney in the security agreement that permits the secured party, on an event of default occurring and the secured party enforcing its rights under the security agreement, to execute an assignment on the debtor’s behalf.

 

M&A

Due diligence

14. What IP-related due diligence is commonly carried out in both a share sale and an asset sale?

Asset sale

Due diligence includes:

  • Title search, including a search of title documents recorded with the relevant IP office (for example, the Patent Office and Trade Marks Office).

  • A review of the employment contracts of the creators of the IP is sometimes required (particularly where there is no explicit assignment of rights in favour of the creators' employer).

  • A review of maintenance fee or renewal fee payments, if required, is usually conducted.

  • For patents, a review of the "file wrapper", consisting of correspondence between the applicant and the patent examiner during the pendency of the patent application is sometimes carried out.

  • In some situations (particularly if the use of the IP is critical to the buyer), a freedom to operate search is conducted to determine (to the extent possible) whether use of the IP being purchased would infringe the IP rights of others.

  • Validity opinions are sometimes prepared, particularly for IP rights that are considered to be high value.

Share sale

The due diligence commonly carried out in respect of an asset sale is usually carried out in respect of a share sale as well.

A search of court records for pending litigation relating to the IP being purchased is also conducted in some cases.

 

Warranties/indemnities

15. What IP-related warranties and/or indemnities are commonly given by the seller to the buyer in both a share sale and an asset sale?

Asset sale

The common warranties and indemnities given by the seller are:

  • A warranty of good title is sometimes given, depending on the circumstances and the relative bargaining power of the parties. Sometimes, the warranty is limited to the best of the seller's knowledge (that is that the seller warrants that, to the best of its knowledge, it has good and marketable title).

  • A warranty that no litigation is ongoing that alleges the invalidity of the IP is often provided.

  • Depending on the circumstances and the bargaining power of the parties, a "freedom to operate" warranty (that is, a warranty that use of the IP will not infringe the IP rights of others) is sometimes given. Sometimes, such a warranty is limited to the best of the seller's knowledge.

  • Depending on the circumstances and the bargaining power of the parties, a warranty that the IP is valid may be given. This warranty may be limited to the seller's knowledge (that is that the seller is not aware of any reason why the IP may be invalid).

  • In some circumstances, the seller may indemnify the buyer, wholly or partially, for liability that may be incurred through use of the IP (either through infringement of the IP of a third party, or through product liability for products embodying the IP).

Share sale

The warranties and indemnities commonly granted for an asset sale are also commonly granted for a share sale.

 

Transfer of IPRs

16. How are the main IPRs transferred in both a share sale and an asset sale?

Asset sale

In an asset sale, assignments of IP rights in favour of the buyer are typically signed pursuant to a master purchase and sale agreement. The assignments are transferred to the buyer pursuant to the master agreement, and are subsequently recorded in the relevant office within the Canadian Intellectual Property Office (CIPO) (for example, the Patent Office and the Trade Marks Office).

Share sale

In a share sale, title to IP rights is not transferred. Instead, ownership of the entity that owns the relevant IP rights is transferred.

 

Joint ventures

17. Is it common for companies to set up joint ventures in your jurisdiction to develop projects that heavily involve IPRs?

Joint ventures can be used to:

  • Formalise co-operation between parties.

  • Increase access to capital.

  • Compartmentalise risk.

The main IP-related provisions that should be included in a joint venture agreement include:

  • Ownership and control of the venture, decision-making, dispute resolution, and any obligations of the participating companies in relation to the venture.

  • Identification of the IPRs that contributed to the venture on formation and whether these IPRs are transferred or merely licensed to the venture.

  • If the IPRs are transferred to the venture, accessory agreements providing confirmatory assignments for recording and licensing IPRs back to the participating companies as appropriate.

  • If IPRs are licensed to the venture then the following should be included:

    • any indemnities offered by the licensor;

    • any obligation of the licensor to enforce the IPRs;

    • any restrictions on the scope of use by the venture;

    • whether further sublicenses can be granted.

  • Ownership of IPRs developed in the venture, and if appropriate, a right of license for the participating companies to any new IPRs.

  • Confidentiality of information contributed to the venture on formation and confidentiality of information generated by the venture during operation.

  • Non-compete and non-disclosure clauses for the venture and the participating companies forming the venture.

  • Termination, including dissolving the venture and distributing its IPRs.

 

Competition law

Main provisions and common issues

18. What are the main provisions of your national competition law that can affect the exploitation of the main IPRs?

The Competition Act contains certain provisions that can affect the exploitation of IPRs. A government body (the Competition Bureau) enforces the Competition Act. Certain private causes of action are also created under the Competition Act.

The mere exercise of an IPR typically does not automatically engage the Competition Act. Nevertheless, Section 32 of the Competition Act permits the Competition Bureau to intervene against the use of IPRs in a manner that prevents or lessens competition "unduly". The Competition Bureau has advised that it will only use this special remedy in exceptional circumstances. Otherwise, some additional anti-competitive behaviour is required, over and above the right of exclusion granted by the IPR.

The provisions on criminal offences include:

  • Conspiracy (section 45, Competition Act).

  • Bid-rigging (section 47, Competition Act).

  • Price maintenance (section 6.1, Competition Act).

  • Price discrimination and predatory pricing (section 50, Competition Act).

  • Some forms of misleading advertising and related deceptive marketing practices (sections 52 to 55, Competition Act).

These criminal offences are typically investigated by the Competition Bureau. However, section 36 of the Competition Act creates a parallel private cause of action for loss or damage suffered from violations of the criminal provisions of the Competition Act.

The provisions on non-criminal matters include:

  • Abuse of dominant position (section 79, Competition Act).

  • Exclusive dealing, tied selling and market restriction (section 77, Competition Act).

  • Refusal to deal (section 75, Competition Act).

  • Competitor agreements (section 90.1, Competition Act).

  • Mergers (section 92, Competition Act).

  • Misleading advertising and related deceptive marketing practices (section 74, Competition Act).

These offences can only be investigated by the Competition Bureau.

The Competition Bureau publishes the Intellectual Property Enforcement Guidelines that explain the Bureau's approach for all provisions of the Competition Act where IPRs may be involved.

 
19. What are the most common national competition law issues that arise in the exploitation of the main IPRs?

The following anti-competitive challenges may arise:

  • Exclusive licences to competitors.

  • Tied selling.

  • Participation in patent pools.

  • Participation in standard setting activities.

  • Grant-back of improvements from licensee to licensor.

  • Anti-competitive settlement agreements.

 

Exclusions/exemptions

20. What exclusions or exemptions are available for national competition law issues involving the exploitation of the main IPRs?

IPRs are subject to competition laws. Nevertheless, the mere exercise of IPRs, without anything more, is usually insufficient to attract enforcement under the Competition Act. Other than in exceptional circumstances, additional anti-competitive conduct is required to create, enhance, or maintain market power, over and above the exercise of the rights granted by the IPR.

 

Advertising

21. To what extent do advertising laws impact on the use of third party trade marks?

Limited comparative advertising involving the direct comparison of a sponsored brand to a competitive brand may be permitted in Canada. Challenges to advertising claims may be brought under applicable statutory frameworks and at a common law.

Marketing and advertising is generally governed by the Competition Act, which is federal law. Provisions of the Competition Act provide for enforcement via criminal or civil proceedings. The main provisions prohibit claims that are false or misleading in a material respect.

The Trade-marks Act can also be used to prevent the use of a competitor's trade marks. For an advertisement to be objectionable, the defendant's activities must constitute a "use" of the claimant's trade mark within the meaning of Trade-marks Act. Therefore, advertisements for goods are often only found objectionable if the competitor's trade mark is:

  • Displayed on the product being advertised.

  • Displayed on the packaging for the product.

  • Appears in advertising available at the point of sale.

It follows that a defendant that displays the claimant's mark in the course of advertising the defendant's services would be deemed to have used the claimant's mark.

Additionally, the Trade-marks Act can also be used to:

  • Prohibit a defendant from making false or misleading statements tending to discredit the business, goods or services of the claimant.

  • Protect the goodwill of the claimant's business from misrepresentations made by the defendant that its goods and services are those of the claimant.

Such conduct may be prohibited by injunction.

The Copyright Act can be used to prevent a competitor from reproducing a company's logos and packaging graphics in advertising.

The common law torts of injurious falsehood and wrongful interference with economic relations can be used to seek redress for damages caused by a competitor's false statements that disparage the nature of a person's business.

 

Employees and consultants

22. Who owns each of the main IPRs created by an employee in the course of his employment? Is compensation payable to the employee? What main steps can an employer take to ensure it owns each of the main IPRs?

Ownership

Patents. A patent for an invention created by an employee is typically owned by the employee, unless:

  • The employee was employed for the purpose of inventing.

  • The invention is within the scope of the purpose of employment.

  • The invention was done in the ordinary course of employment duties.

Trade marks. A trade mark is an indicator of the source of goods or services, and as such is owned by the entity using that mark in the course of providing such goods or services. Employees do not typically acquire rights in trade marks used by their employers.

Copyright. The author of a work is ordinarily the first owner of copyright in the work. If an employee creates a work in the course of his employment, then the employer is the first owner of the copyright in that work.

Industrial designs. If the employer is engaged in an ornamental business and the employee is given valuable consideration to make designs, then the design belongs to the employer. Otherwise, ownership of the design remains with the employee.

Compensation

Employees that create intellectual property, the ownership of which vests in their employer, are not entitled to any compensation beyond what is provided for by the terms of their employment.

Main steps

It is prudent to have the employee execute an assignment in favour of the employer, in respect of every item of intellectual property that they create that is of potential commercial interest. Such assignments should be registered with the Canadian Intellectual Property Office (CIPO) as soon as practicable. The employee's terms of employment should also contain general clauses that assign the rights to any IP that the employee produces in the course of his employment with the employer, and which require the employee to execute an appropriate assignment document.

For copyright works produced by an employee, a waiver of moral rights should also be executed in respect of every work that is produced that is of potential commercial interest. The employee's terms of employment should include a term waiving all moral rights and requiring the employee to sign waivers in respect of each work produced.

 
23. Who owns each of the main IPRs created by an external consultant? What main steps can a business take to ensure it owns each of the main IPRs?

Ownership

Patents. A patent for an invention created by an external consultant is owned by the external consultant unless there is an agreement with the external contractor to the contrary.

Trade marks. An external consultant should agree that it will not apply to register or it should be required to assign any application or registration for the mark developed by it for the business.

Copyright. An external consultant or any other non-employee that is hired to create a work owns the copyright in that work, unless there is an agreement with the external consultant or non-employee to the contrary.

Industrial designs. An external consultant that is the author of a design is also the owner of the design, unless there is an agreement with the consultant to the contrary.

Main steps

Ownership of intellectual property created by a consultant should be agreed on in advance and should be reflected in the written agreement between a company and the consultant. Ideally, the consultant should be contractually obligated to execute an assignment in favour of the company in respect of each item of intellectual property created and such assignments should be registered with the Canadian Intellectual Property Office (CIPO) as soon as practicable.

 

Tax

24. What are the main taxes payable by a licensor on the licensing of the main IPRs?

Licence fees are generally fully taxable as income in the year in which they are earned.

 
25. What are the main taxes payable by a seller on the disposal of the main IPRs?

Depending on the rights and the nature of the transaction in which IPRs are disposed, proceeds received on the sale of the IPRs may be treated as a capital receipt or an income receipt. Accordingly, the tax treatment of the disposal of the IPRs is subject to the applicable principles of capital receipt and income receipt.

 

Cross-border issues

26. What international IP treaties is your jurisdiction party to?

Canada is a party to:

  • Paris Convention for the Protection of Industrial Property (1 September 1923).

  • Berne Convention for the Protection of Literary and Artistic Works (10 April 1928).

  • Rome Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organisations (4 June 1998).

  • Patent Cooperation Treaty (2 January 1990).

  • Convention Establishing the World Intellectual Property Organisation (June 26, 1970).

  • World Intellectual Property Organisation (WIPO) Copyright Treaty (13 August 2014).

  • WIPO Performances and Phonograms Treaty (13 August 2014)

  • World Trade Organisation (WTO) Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement) 1994 (1 January 1995).

  • Budapest Treaty on the International Recognition of the Deposit of Micro-organisms for the Purposes of Patent Procedure (21 September 1996).

  • Strasbourg Agreement Concerning the International Patent Classification (11 January 1996).

In view of recent and proposed amendments to IPR legislation, Canada is expected to accede shortly to the following:

  • Madrid Agreement Concerning the International Registration of Marks.

  • Patent Law Treaty.

  • Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks.

  • Nice Agreement Concerning the International Classification of Goods and Services for the Purposes of the Registration of Marks.

  • Singapore Treaty on the Law of Trade Marks.

  • Hague Agreement Concerning the International Registration of Industrial Designs.

A detailed list of treaties can be found at http://www.wipo.int/wipolex/en/profile.jsp?code=CA.

 
27. Are foreign IPRs recognised in your jurisdiction?

Generally, the courts cannot enforce IPRs obtained outside of Canada. However, in some circumstances, foreign IPRs are recognised within Canada.

Patents

Foreign patents are not enforceable. Canada is a party to the Paris Convention for the Protection of Industrial Property (1 September 1923) and will recognise priority rights in a foreign-filed application if the Canadian application is filed within 12 months of the foreign filing date. Canada will also recognise an application filed under the Patent Cooperation Treaty (PCT) where Canada has been designated and national phase entry has been affected in Canada.

Trade marks

Foreign trade mark registrations are not enforceable. Rights may nevertheless exist if the foreign entity has used its trade mark in Canada. A trade mark application may claim priority to an earlier-filed foreign application provided that the application is filed within six months of the earliest filed foreign application. It is also currently possible to obtain registration based on use and registration abroad, although this will be changing. Upcoming amendments will also permit international applications to be filed in Canada under the Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks.

Copyright

Foreign copyright is recognised for works created by nationals or residents of the Berne Convention for the Protection of Literary and Artistic Works (10 April 1928) or World Trade Organisation (WTO) Member nations.

Design rights

Foreign design registrations are not enforceable. An industrial design application may claim priority to an earlier-filed foreign application provided that the application is filed within six months of the earliest filed foreign application. Upcoming amendments will also permit international applications to be filed under the Hague Agreement Concerning the International Registration of Industrial Designs.

 

Reform

28. Are there any proposals for reform?

Almost all IPRs in Canada are currently experiencing significant reform. Current and planned legislation includes:

  • Copyrights and trade marks: introducing border controls for counterfeit products and strengthening criminal sanctions: Combating Counterfeit Products Act, S.C. 2014, c. 32 (Bill C-8) enacted 12 December 12 (partly in force, mostly reserved).

  • Trade marks: implementing the Nice Agreement Concerning the International Classification of Goods and Services for the Purposes of the Registration of Marks, Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks and the Singapore Treaty on the Law of Trade Marks, amongst other changes:

    • Combating Counterfeit Products Act, S.C. 2014, c. 32 (Bill C-8) enacted 12 December 2014 (partly in force, mostly reserved);

    • Economic Action Plan 2014 Act, No. 1, Division 25, S.C. 2014, c. 20 (Bill C-31) enacted 19 June 2014 (not yet in force).

  • Patents: implementing the Patent Law Treaty, amongst other changes: Economic Action Plan 2014 Act, No. 2, Part 4, S.C. 2014, c. 39 (Bill C-43) enacted 16 December 2014 (not yet in force).

  • Industrial designs: implementing the Hague Agreement Concerning the International Registration of Industrial Designs, amongst other changes: Economic Action Plan 2014 Act, No. 2, Part 4, S.C. 2014, c. 39 (Bill C-43) enacted 16 December 2014 (not yet in force).

  • Plant varieties: implementing International Convention for the Protection of New Varieties of Plants (UPOV) 1991, amongst other changes: Agricultural Growth Act, S.C. 2015, c. 2 (Bill C-18) enacted 25 February 2015 (not yet in force).

** The authors wish to acknowledge the invaluable contributions to this article of Erika Murray and Yaroslav Riabinin, both students-at-law.

 

Online resources

Justice Laws Website

W www.laws-lois.justice.gc.ca/eng/acts

Description. This is the official consolidation, or updated version, of the Federal Acts and regulations maintained by the Department of Justice of Canada where copies of the IP statutes (Patent Act, Trade-marks Act, Copyright Act and Industrial Design Act) and relevant non-IP statutes (Competition Act) can be found.



Contributor profiles

Janet M Fuhrer, Partner

Ridout & Maybee LLP

T 613 236 8804
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E jfuhrer@ridoutmaybee.com
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Professional qualifications. Province of Ontario, Canada, Barrister & Solicitor, 1987; Canada, registered trade mark agent, 1987; Law Society of Upper Canada, Certified Specialist (Intellectual Property Law: Trade-marks/Copyright), 2004

Areas of practice. Trade marks; copyright; trade secrets; licensing and IP transactions; litigation; mediation and arbitration; information technology; advertising and marketing

Non-professional qualifications. LLB, Queen's University, 1985; LLM (e-Business), York University, Osgoode Hall Law School, 2003

Professional associations/memberships. Intellectual Property Institute of Canada (IPIC), Past President and Fellow; Canadian Bar Association (CBA), First Vice-President, National Sections Council Executive, Past Chair; Professional Development Committee, Past Chair, First Vice-President; Ontario Bar Association (OBA), Strategic Planning Committee, Past Chair; International Trade Mark Association (INTA); Trade marks Agents Examination Board, Past Chair

Publications.

  • Trade mark Co-existence Agreements: To Co-exist or Not - A Canadian Perspective – Paper. Texas State Bar 25th Annual Intellectual Property Law Course, 2012, Houston, TX.
  • IP Goes Digital - How the Internet Has Changed the Way We Look at IP –Panelist, The Law Society of Upper Canada 16th Annual Intellectual Property Law Year in Review, 2012, Ottawa, ON.

Jaimie Bordman, Associate

Ridout & Maybee LLP

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Professional qualification. Barrister and Solicitor, Province of Ontario, Canada, 2010; Attorney at law, State of New York, US, 2010; registered trade mark agent, Canada, 2011

Areas of practice. Patents; trade marks; litigation; licensing and IP transactions; electrical and high tech; information technology

Non-professional qualifications. B.Eng. (Engineering Physics), Carleton University, Canada, 2005; LLB, University of Windsor, Canada, 2009; JD, University of Detroit Mercy, US, 2009

Professional associations/memberships. Canadian Bar Association (CBA), member; Ontario Bar Association (OBA), member; New York State Bar Association (NYSBA), member; Intellectual Property Institute of Canada (IPIC), affiliate

Andrew Montague, Associate

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Professional qualifications. Province of Ontario, Barrister & Solicitor, 2011; registered trade mark agent, Canada, 2012; registered patent agent, Canada, 2014

Areas of practice. Patents; trade marks; litigation; licensing and IP transactions; biotechnology, chemical and pharmaceutical

Non-professional qualifications. BSc, (Honours Molecular Biology & Genetics), University of Guelph, Canada, 2003; MSc (Plant Agriculture), University of Guelph, Canada, 2006; LLB, University of Ottawa, Canada, 2010

Professional associations/memberships. Canadian Bar Association (CBA), Member; Intellectual Property Institute of Canada (IPIC), Affiliate; IPIC, Young Practitioners Committee, Member; IPIC, Biotechnology Patents Committee, Member; Member of Editorial Board of CLB's Canadian Patent Reporter (CPR)

Publications. Montague., Ziauddin A, Lee R., Ainley W M, and Strommer J (2007) "High efficiency phosphinothricin-based selection for alfalfa transformation", Plant Cell Tissue and Organ Culture 91:29-36.

Roy Yang, Associate

Ridout & Maybee LLP

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Professional qualifications. Province of Ontario, Canada, Barrister & Solicitor, 2013; Registered trade mark agent, Canada, 2015

Areas of practice. Patents; trade marks; licensing and IP transactions; electrical and high tech; information technology

Non-professional qualifications. BSc (Electrical Engineering), Beijing Jiaotong University, 1996; MBA (Strategic management), Schulich School of Business, York University, 2010; JD, University of Ottawa, Canada, 2011

Languages. Mandarin, English

Professional associations/memberships. Intellectual Property Institute of Canada (IPIC), affiliate; International Trade Mark Association (INTA)

Kenneth Ma, Associate

Ridout & Maybee LLP

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Professional qualifications. Province of Ontario, Canada, Barrister & Solicitor, 2014.

Areas of practice. Patents; trade marks; licensing and IP transactions; litigation biotechnology, chemical and pharmaceutical; clean tech group

Non-professional qualifications. PhD (Cellular and Molecular Medicine), University of Ottawa, Canada, 2005; BSc, McGill University, 1997; JD, University of Ottawa, Canada, 2013

Languages. English, Cantonese

Professional associations/memberships. Intellectual Property Institute of Canada (IPIC), 2014; Law Society of Upper Canada, 2014; Canadian Bar Association (CBA), member

Publications

  • Ma, Kenneth K-Y, Banas, Krystyna, and de Bold, Adolfo J, "Determinants of Inducible Brain Natriuretic Peptide Promoter Activity", Regulatory Peptides, 2005 Jun 30; 128(3):169-76.
  • Ma, Kenneth K-Y, and de Bold, Adolfo J, "Atrial Natriuretic Factor and Family of Natriuretic Peptides. Encyclopedia of Endocrine Diseases", ed Luciano Martini. Academic Press, March 2004.

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