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Section X: Intellectual Property

Doing Business in Canada

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Almost all business transactions and new product launches have intellectual property implications. Many products and services have aspects that may benefit from intellectual property protection.

Patents protect inventive functional features of a product or process. Copyrights protect creative works that are fixed in form, including, original drawings, packaging and software. Industrial design registrations protect new designs applied to an article. Trademarks protect distinctive words or designs identifying the company providing a product or service.  A secret formula, a product’s manufacturing process or a confidential business method might qualify as proprietary confidential information or a trade secret. In limited circumstances, personality rights might be protected if the name or likeness of a person is used to promote a product or service. Plant breeders’ rights are also available to protect plant varieties.

Federal law primarily governs intellectual property, with provincial common law governing validity or enforceability of the underlying intellectual property right.  Federal statutes regulate patents, trademarks, copyrights, industrial designs, and plant breeders’ rights.  The common law address protection such as passing off, personality rights, confidential information, trade secrets, the rights of co-owners, and, in some provinces, personality rights. Provincial law also governs contracts related to intellectual property, such as assignments, licences and security interests.

1. Federal Law

1.1 - Patents

1.1.1 - What inventions are eligible for a patent?

A patent is granted by the federal government for an invention that satisfies certain criteria pursuant to the Patent Act. The patentee may exclude others from making, using or selling an invention protected by a patent.

To be patentable, the subject matter claimed in a patent application must be new, useful and inventive. Utility is determined by whether the invention has a practical commercial function (as opposed to art, for example, which does not). Inventive means that the invention is not obvious to a person having ordinary skill in the technology to which the invention relates.

The novelty of an invention is assessed by the first person to file a patent application (not the first person to create the invention).  An invention made by an employee within the scope of employment is, in the absence of an agreement to the contrary, the employer’s property.

An invention is not patentable if it was made available to the public anywhere in the world prior to the filing date of the application unless the disclosure is made within a year prior to the filing date in Canada by the inventor or someone who derives knowledge from the inventor.

1.1.2 - How does a person apply for a patent?

Canada is a signatory to the Paris Convention and the General Agreement on Tariffs and Trade establishing the World Trade Organization (WTO). An applicant may rely on the filing date of its first patent application in another country that is also a member of either of these treaties (“priority date”) if the Canadian application is filed within one year of the priority date. Canada is also a signatory to the United States Mexico Canada Agreement (USMCA), the Budapest Treaty and the Patent Cooperation Treaty (PCT). A PCT application that designates Canada entitles the applicant to enter the national phase in Canada at a later date.

A patent application is subject to substantive examination by the Canadian Intellectual Property Office (CIPO) prior to grant. Examination must be requested within a designated period of time after the filing of an application. Advanced or accelerated examination is available under some circumstances upon request by the applicant. An applicant can also accelerate the examination process by entering the application into the Patent Prosecution Highway (PPH) Programs between CIPO and a number of other foreign patent offices. Under the PPH program, the claims of the Canadian application must, or must be amended to, substantially correspond with claims that have been found allowable by a foreign patent office.

1.1.3 - May a patent be transferred?

Inventions, patent applications and patents may be licensed, transferred or otherwise commercialized, in whole or in part. Transfers and exclusive licences must be recorded in the CIPO in order to have precedence over any recorded subsequent transfer or licence. A security interest may be recorded with CIPO if the holder of the security interest wishes to make that of public record. A security interest may also be recorded under provincial personal property security regimes.  While both recordations are enforceable, the personal property recordation is generally viewed as superior.

1.1.4 - What rights does a patent provide?

A patent is in force from its issue date to 20 years after its filing date. In some circumstances, a Certificate of Supplementary Protection may be obtained to provide up to two years of additional patent protection to compensate for delays in obtaining regulatory approval for a pharmaceutical product.  Further extensions under the USMCA are expected to be enacted if issuance takes longer than five years from filing or three years from the examination, whichever is later. Annual maintenance fees are required to keep patent applications pending and issued patents in force.

A patent entitles the patentee to seek remedies against the unauthorized importation, manufacture, use or sale in Canada of the claimed invention, whether the patented invention is copied or independently created. The sale in Canada of products made abroad by a process patented in Canada may also be prevented.

There are a number of remedies for patent infringement. These include:

  • Temporary (extremely rare) and permanent injunctive relief

  • Either the damages suffered by the patent owner or an accounting of the profits earned by the infringer from infringing activities that occur after issuance of the patent

  • “Reasonable compensation” for acts that occur between the publication date of the patent and the date of its grant that would have constituted infringement if the patent had been issued at the time
  • Punitive damages
  • Delivery up or destruction of infringing articles

1.2 - Trademarks

1.2.1 - Must a trademark be registered to be protected?

A trademark is a sign or combination of signs(such as a word, symbol, sound, shape, scent, hologram, moving image, taste or texture) used to distinguish a company’s goods or services from those of others. Trademark rights may be acquired through mere use of the mark in Canada in association with goods, services or both, or by registration. Although a trademark need not be registered to be protected, registration ensures protection throughout Canada and better facilitates enforcement of trademark rights.

In the absence of registration, a trademark can be protected only in the geographical area in which the owner can establish a reputation or goodwill in association with the trademark. See Section X, 2, “Provincial Law.”

The reservation of a business name or a corporate name, the incorporation of a company or the registration of a domain name will not in itself create any trademark rights.

1.2.2 - What trademarks may be registered?

A trademark may be refused registration for a variety of reasons under the Trademarks Act. Therefore, it is advisable to obtain advice from legal counsel regarding whether a mark is registrable before commencing use in Canada.

1.2.3 - How does a person apply to register a trademark?

A national trademark application is applied for through the Canadian Intellectual Property website.

The first person to “adopt” a trademark in Canada is generally considered to be the person entitled to registration in Canada, even if someone else was the first to apply to register the same mark. A trademark may be adopted by “use” or “making known” of the trademark in Canada or by filing an application for registration of the trademark in Canada. A person who has filed a trademark application in a country which is a member of the Paris Convention or the WTO is entitled to treat the filing date of the first foreign application (“priority date”) as an adoption date in Canada if a Canadian application for the same mark is filed within six months of the priority date and a claim to priority is made.

Recent amendments to the Trademarks Act have eliminated the requirement to specify a basis of registration in a trademark application or an intent to use the trademark. After an application has been filed, CIPO examines the application. If the mark is found to be registrable, the application is advertised in the Trademarks Journal. Any person may file an opposition to registration within two months of advertisement.

1.2.4 - May a trademark be transferred?

A trademark, an application for registration or a registration may be assigned, although one must be careful that the distinctiveness of the trademark is not thereby impaired. “Distinctiveness” refers to the trademark’s ability to distinguish a person’s goods and services from those of others. The owner of a trademark may license others to use the mark if the owner controls the character and quality of the licensee’s goods or services associated with the mark pursuant to a written or implied licence agreement. It is recommended that any such licence agreement be reduced to writing to make it easier to prove the existence of a licence between the relevant parties. A licence agreement is recommended even if the parties are related. If notice is given of the trademark owner’s name and that the use is a licensed use, control by the owner will be presumed.

A grant of a security interest may be filed against a trademark application or registration at CIPO. A security interest may also be recorded under provincial personal property security regimes.  While both recordations are enforceable, the personal property recordation is generally viewed as superior.

1.2.5 - What rights does a trademark registration provide?

Registration of a trademark is renewable for 10-year periods. A registration may be susceptible to expungement for several reasons, including, but not limited to the following:

  • The trademark is no longer in use

  • The mark was not validly registered

  • The mark is no longer distinctive of the goods and services of its registered owner

A trademark registration gives the owner the exclusive right to use the mark throughout Canada in respect of the goods and services for which it is registered. A person who sells, distributes or advertises goods or services in association with a confusing trademark or trade name infringes this right. Confusion may arise if two trademarks owned by different entities are used in similar channels of trade and there is a likelihood of confusion that the goods, services or business associated with such marks or names are manufactured, sold, leased, hired or performed by the same entity.

Remedies for trademark infringement include:

  • Temporary or permanent injunctive relief

  • Damages suffered by the trademark owner or the profits earned by the infringer

  • Punitive damages

  • An order prohibiting importation

  • Delivery up or destruction of offending materials

The owner of a Canadian trademark or copyright registration is able to file a request for assistance with the Canada Border Services Agency (CBSA). The CBSA will then be entitled to take such steps as obtaining information regarding allegedly infringing goods and providing the rights owner with a sample of such goods and information regarding the importation of such goods. Canadian customs authorities also have the right — upon their own initiative or on the request of a rights holder — to detain suspected infringing or counterfeit goods.

1.3 - Copyright

1.3.1 - What types of works are capable of copyright protection?

Copyright is governed by the Copyright Act. Copyright is the exclusive right to reproduce, publish and perform literary, dramatic, artistic and musical works. Copyright also includes rights of performers in their performances and rights in relation to sound recordings and broadcast signals. Only the form of expression of a work is protected, and not the content. Copyright does not protect an idea, concept or information. Computer programs are protected under copyright as literary works, regardless of the medium in which such programs are expressed.

Canada is a signatory to the Berne Convention, the Universal Copyright Convention and the Rome Convention. As noted above, Canada is also a signatory to the General Agreement on Tariffs and Trade. Pursuant to those conventions, Canada recognizes copyright in works and other subject matter created by nationals of other signatories to the conventions. Canada is also a member of the World Intellectual Property Organization (WIPO) Copyright Treaty, the WIPO Performances and Phonograms Treaty, the USMCA, and the Nice Agreement.

Copyright protection subsists from the moment a work is created and fixed in a tangible form, provided that certain conditions relating to the publication and residence or domicile of the author in a convention country are satisfied. No registration of copyright is necessary, although registration with CIPO is helpful as a means of proof of copyright and its ownership in the event of litigation. Marking of copyright on articles with a copyright notice is not necessary but is a common practice.

1.3.2 - Who owns copyright?

The work’s author is generally the first owner of copyright in the work. If the author is in the employment of another and the work is made in the course of such employment, the employer is the first owner of copyright. If the author is an independent contractor and there is no written transfer of copyright, copyright is owned by the independent contractor. Special rules apply to contributions to periodicals and works prepared or published by or under the direction or control of the federal government. Other special rules apply for performers’ performances, sound recordings and communication signals.

1.3.3 - What does copyright protect?

Copyright generally lasts for the life of the author of the work plus the period to the end of the calendar year 70 years thereafter. Published sound recordings and performers’ performances fixed in sound recordings are, in some circumstances, entitled to up to 70 years of protection measured from the end of the calendar year of first publication.

Copyright includes the right to produce or reproduce a work or any substantial part thereof in any material form whatsoever and to perform a work or any substantial part thereof in public. Copyright protects original works against the unauthorized reproduction in different media, adaptation or conversion to a different form, translation, publication, making available, and telecommunication to the public, among other activities, and the authorization of such activities. Copyright also protects against certain commercial activities with infringing copies if there is knowledge that the copies infringe. Copyright law further protects against interference with technological protection measures.

1.3.4 - May copyright be transferred?

Copyright may be assigned and licensed. Any assignment or licence of exclusive rights must be in writing. Assignments and licences should be recorded with CIPO. A grant of a security interest may be filed against a registered copyright with CIPO.  A security interest may also be recorded under provincial personal property security regimes. While both recordations are enforceable, the personal property recordation is generally viewed as superior.

1.3.5 - How may copyright be infringed?

Copyright is infringed by a person who copies or performs a work protected by copyright without the owner’s permission.

A number of activities that would otherwise constitute infringement are specifically exempted from infringement by users’ rights.  For example, fair dealing with a work for the purposes of private study, research, criticism, review, newspaper summary, education, parody or satire might be exempted from infringement.

A user who is in lawful possession of a computer program may, in certain circumstances, alter and adapt that program to its particular needs, and make back-up copies of it, without infringing copyright. There are numerous other user rights, directed to specific institutions and activities. For example, non-commercial user-generated content reproduced for private purposes may, in some circumstances, be exempt from infringement.

The civil remedies for copyright infringement include:

  • Temporary and permanent injunctive relief

  • An order prohibiting importation

  • Damages suffered by the copyright owner or the profits earned by the infringer through the sale of infringing copies (subject to a deduction for any overlap)

  • Punitive damages

In some cases, statutory damages may be available as an alternative to damages and profits. Further, all infringing copies of a work in which copyright subsists, and all plates used or intended to be used for the production of such infringing copies, may be deemed to be the property of the owner of the copyright.

In addition to civil liability for copyright infringement, an infringer may be exposed to criminal liability.

See the last paragraph of Section X.1.2.5, “What rights does a trademark registration provide?” regarding the recent introduction of border measures to protect against works entering the country that infringe upon the rights of the owner of copyright in Canada.

1.3.6 - What are moral rights?

Independent of any right of ownership of copyright in any literary, artistic, musical or dramatic work, the author of a work has moral rights in the work and a performer has moral rights in his or her performance. Moral rights include the right, where reasonable in the circumstances: to be associated with the work as its author by name or under a pseudonym; to remain anonymous; and the right to integrity of the work.  An author’s right to integrity of a work is infringed if the work is, to the prejudice of the honour or reputation of the author, distorted, mutilated or otherwise modified or used in association with a product, service, cause or institution. In the case of a painting, sculpture or engraving, prejudice is deemed to have occurred as a result of any distortion, mutilation or other modification of a work.  Moral rights may not be assigned, but must be expressly waived.

1.4 - Industrial designs

1.4.1 - What industrial designs are registrable?

An industrial design registration under the Industrial Design Act protects the visual features of an article (e.g., features of shape or ornamentation).  To be registrable, the design must be new and must not merely consist of features that are solely functional.

Any article that is manufactured may qualify for industrial design protection. This includes three-dimensional objects, such as bottles and handheld devices, and two-dimensional objects, such as static or moving icons and graphical user interfaces (GUIs).

1.4.2 - How does a person apply for registration?

As noted above, Canada is a signatory to the Paris Convention, the General Agreement on Tariffs and Trade, the USMCA, and the Hague Agreement Concerning the International Registration of Industrial Designs (“Hague Agreement”).

To obtain registration of a design, an application must be filed, identifying the proprietor’s name and including at least one drawing or photograph of the design. A written description of the design may optionally be included.

A design will be refused registration if the design was publicly disclosed anywhere in the world before the filing date of the application. A one-year grace period is available for any public disclosures by the applicant or by a person who obtained knowledge of the design from the applicant. A person who has filed an application for the design in another country that is a member of the Paris Convention or the WTO, may be entitled to treat the filing date of the foreign application, the priority date, as the effective filing date in Canada if a Canadian application is filed within six months of the priority date.

Once a design application is filed, it is examined to ensure that it meets the requirements of the Industrial Design Act. If the examiner raises any objections, the applicant will be provided with a period of time to file a reply. Once the examiner is satisfied that the design meets the requirements of the Industrial Design Act, the design is automatically registered.

1.4.3 - What does registration provide to a proprietor?

An industrial design registration is granted for a term of the later of 10 years from the date of registration and 15 years from the date of filing the application in Canada. A single maintenance fee must be paid by the registration date’s fifth anniversary to keep the registration in force for the remainder of its term.

An industrial design registration entitles the registrant to seek remedies against the unauthorized manufacture, importation for trade, sale and rental of any article in respect of which the design is registered and to which the design or a design not differing substantially therefrom has been applied. To obtain damages, the design must be marked with a “D” inside a circle and the owner’s name.  Marking establishes deemed knowledge of the design by any infringer.  If the infringer does not have knowledge of the design, then only injunctive relief is available.

The remedies for industrial design infringement include:

  • Temporary and permanent injunctive relief

  • Either the damages suffered by the design owner or the profits earned by the infringer

  • Punitive damages

  • Delivery up or destruction of infringing articles

1.4.4 - May an industrial design be transferred?

A design, whether an industrial design registration or an application for an industrial design registration, may be assigned or licensed. Assignments and licences may be recorded with CIPO. A security interest may also be recorded under provincial personal property security regimes. While both recordations are enforceable, the personal property recordation is generally viewed as superior.

1.5 - Personality rights

Although personality rights are generally governed by provincial law (see the discussion under “Provincial Law” below), the Trademarks Act provides that no person may adopt in connection with a business, as a trademark or otherwise, any mark consisting of, or so nearly resembling as to be likely to be mistaken for any matter that may falsely suggest a connection with any living individual or the portrait or signature of an individual who is living or has died within the preceding 30 years.

1.6 - Domain names

Canada has its own country code top-level domain name registry for .ca. To register a .ca domain name, an applicant must satisfy one of the 18 criteria in the Canadian Presence Requirements (CPR), which require some nexus with Canada. For example, the CPR may be satisfied if the applicant is a corporation incorporated in Canada or the domain name comprises a trademark registered in Canada by the applicant. The .ca registry has a domain name dispute resolution policy that is modelled on, but differs in some respects from, the Uniform Dispute Resolution Policy.

1.7 - Criminal law

The federal Criminal Code provides sanctions against the forgery of trademarks. Although the theft of tangible materials bearing confidential information is a criminal offence, the theft of information by itself is not a criminal offence. Under the USMCA there are new criminal code provisions for the theft of trade secrets. The Copyright Act also includes limited criminal offences for infringement involving sale or rental of materials.

2. Provincial Law

2.1 - Trademarks/passing off

Where someone makes a misrepresentation in the course of trade to prospective customers or ultimate consumers of goods or services that is calculated to injure the business or goodwill of another trader in the sense that it is a reasonably foreseeable consequence, and which causes, or is likely to cause, actual damage to a business or goodwill of the trader by whom the action is brought, such activity may be restrained by an action for passing off at common law. A similar cause of action is available pursuant to the Civil Code of Québec. To succeed in a passing off action, it is not necessary that the plaintiff conduct business in Canada, provided that the plaintiff has a reputation in its trademark in association with which the goods or services are offered.

2.2 - Business names

Business names, being the names (other than a corporate name) by which a business is known, are regulated by provincial law. By way of example, Ontario’s Business Names Act requires registration by every business operating in the province that uses a name other than its corporate name, or in the case of individuals, the owners’ names. Business is defined very broadly to include “every trade, occupation, profession, service or venture carried on with a view to profit.”

A person who has not registered a business name may not maintain a proceeding in an Ontario court in connection with that business except with leave of the court. The court may grant leave if the person in contravention of the Business Names Act satisfies the court that:

  • The failure to register was inadvertent

  • There is no evidence that the public has been deceived or misled

  • At the time of the application, the person is no longer in contravention

2.3 - Personality rights

The provinces of British Columbia, Manitoba, Newfoundland, Quebec and Saskatchewan have legislation dealing with personality rights. At common law, which applies in all Canadian jurisdictions other than Quebec, an individual generally has the right to restrain activities that suggest unauthorized endorsement, sanction or other involvement by him or her. Such involvement may be suggested through the misappropriation of a name, likeness or other recognizable indicia of the personality.

2.4 - Confidential information and trade secrets

The possessor of confidential information, which is of commercial or other value, can generally require another party who obtains that information to maintain it in confidence. The existence of this legal right depends on whether there is a contractual or other relationship imposing an obligation of confidentiality.

The remedies for the unauthorized use or disclosure of confidential information include:

  • Temporary or permanent injunctive relief

  • An order prohibiting use or disclosure

  • Either the damages suffered by the possessor or the profits earned by the violator

  • Punitive damages

As well, other benefits gained from the unauthorized use of confidential information may in some circumstances be recoverable by the party from whom the information was obtained.

2.5 - Licensing

All types of intellectual property may be licensed. The licensing of trademark rights must be handled carefully (see Section X.1.2.4, “May a trademark be transferred?”). The law of licensing is governed by the law of the contract. No approvals are necessary, although recordation in CIPO is advisable for intellectual property rights applied for or recorded by CIPO. Licence agreements are subject to federal competition law and to other laws of general application.