Word of law: An intellectual property primer for manufacturers

Innovation is crucial to obtaining and maintaining a competitive advantage in manufacturing. Innovation can be legally protected by intellectual property (IP) rights.

IP rights can promote revenue by restraining competitive products/services, so a business can monetize its initial investment, and potentially increase revenue and profitability.

IP can also attract money through investors, act as collateral for financing, as well as provide opportunities to license or sell the IP to others. This article will briefly review five common types of IP, and their characteristics. The different IP types are not exclusive to reach other, and can all exist in the same product.

Patents

Patents are monopolies granted by a government. A patent is the legal right to exclude others from making, using or selling an invention for a specific number of years, in exchange for public disclosure of the invention in the patent application. In Canada, patent protection is for 20 years from the date the patent’s application was filed. A patent cannot be renewed.

For an invention to be patentable, the invention must: (1) consist of patentable subject matter; (2) be novel; (3) have utility; and (4) not be obvious.

A patent is obtained by preparing and filing a patent application, which is then examined by a government patent examiner. In Canada, an application must be filed within one year of an invention’s public disclosure.

It is highly recommended that before proceeding to market and file a patent application claiming an invention, a qualified patent professional is retained to render an opinion whether the invention infringes prior patent rights.

This helps to to avoid investing in a product that attracts a patent infringement lawsuit, with the associated legal fees and damages. The financial consequences of a patent infringement lawsuit can be significant.

A patent application must sufficiently describe the invention in enough detail to enable a person skilled in the invention’s field to make, construct, compound or use the invention. Given this required level of public disclosure, many businesses elect to employ trade secrets to protect their inventions instead of filing a patent application.

Trade secrets

A trade secret is any valuable business information that derives its value from the secrecy. Examples of trade secrets include the Coca Cola® original soft drink formula, the Google® search algorithm, and confidential client lists.

Given their inherent secrecy, trade secrets are not protected by a government-issued registration. Instead, trade secrets are protected by a business obtaining value from the secret and taking all reasonable measures to ensure that the secret remains secret.

Innovation can be legally protected by intellectual property (IP) rights.

Such measures include: (a) limiting disclosure of the secret to only business personnel who need to know the secret; (b) marking documents relating to the secret as confidential; (c) non-disclosure agreements; (d) limiting physical access to facilities relating to the secret; and (e) digital restrictions, such as encryption and passwords.

A trade secret can potentially remain secret indefinitely. Once the secret is public, the trade secret protection ends and typically the business value is lost.

Trademarks

A trademark is a combination of letters, words, sounds, designs or scents that distinguishes one business’ goods/services from others. This consumer shorthand is important, because over time, the trademark stands not only for the business’ goods/services, but also the business’ reputation (a.k.a. brand). Trademark examples include Amazon®, Microsoft® and Zoom®.

Given the requirement for a trademark to be unique, as with inventions and patents, it is important to retain a qualified trademark professional to render an opinion as to whether the trademark infringes third-party rights. This helps to avoid building a marketing campaign around a trademark that is not available, and the associated legal fees and damages, which can be financially significant.

A Canadian trademark registration, obtained by filing a trademark application with the government, provides the owner the exclusive national right to use the trademark with the goods/services claimed in the registration.

Canadian trademark registrations have a 10-year term, and can be renewed if certain requirements are met. A trademark registration also allows the owner to register their trademark with Canadian custom authorities to help thwart the importation of counterfeit goods.

Copyright

Copyright is the exclusive right to reproduce all or a substantial part of an original work, created by a citizen or person ordinarily resident in Canada or most countries, for which copyright protection is available.

Copyright works include literary (e.g., books and product manuals), visual (e.g., videos), sound recordings and computer programs. Generally, copyright expires December 31 of the 50th year after the creator dies.

While copyright does not need to be registered to exist, a copyright registration is rebuttable evidence that copyright exists, and the owner listed on the registration owns the copyright in the work. In some instances, clearance searching may be recommended before a copyright work is distributed.

Industrial designs

An industrial design (a.k.a. design patent) protects the novel visual features of shape, configuration, pattern or ornament, or any combination of these features, when applied to a finished article. These visual features must be purely aesthetic, and cannot be functional. Examples of industrial designs include container shapes and graphical user interfaces.

Before commercialization, an appropriate legal professional should be retained to confirm that the industrial design will not infringe prior filed applications/registrations. Canadian applications must be filed as soon as possible to preserve novelty, and if the design has been published or otherwise disclosed to the public, within 12 months of such disclosure.

A Canadian industrial design registration term can exist for up to 10 years from the registration date or 15 years from the filing date, whichever period ends later.

Future articles in this series will focus on how to select a defensible trademark, anti-counterfeiting strategies, and licensing and contract manufacturing agreements.

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Lorraine M. Fleck (M.Sc.F., LL.B.) is an Ontario lawyer and Canadian trademark agent. She practices as in-house legal counsel at an international consumer packaged goods company, and as principal of Fleck Innovation Law, a Toronto firm that has been recognized by Canadian Lawyer magazine as one of the top 10 intellectual property boutiques in Canada. Lorraine is a recommended expert in World Trademark Review’s WTR 1000 (2016 to 2021 editions), has been repeatedly recommended as one of the world’s leading intellectual property strategists in Intellectual Asset Magazine’s IAM 300 ranking (2017 to 2019), and also in the 2017 through 2021 editions of Best Lawyers® in Canada. Lorraine has served in leadership roles in a number of legal trade associations, and is a frequent invited speaker and writer on her areas of practice.

This article appears in the March/April 2021 edition of Manufacturing AUTOMATION.