Bailment and Business Names Quiz

Corporate Form: Organizational Matters

• A corporation is the predominant business vehicle in modern commerce.
• It's a separate legal entity, treated as a legal person.
• Shareholders are not liable for a corporation's debts and liabilities.

The Corporation Defined

• The corporation is the predominant business vehicle in modern commerce.
• It is a separate legal entity and is treated as a legal person.
• The corporation alone is responsible for its own debts and other liabilities.
• Shareholders are not responsible for a corporation's default on its liabilities.

Landmark Case 15.1 (1)

• Salomon carried on a profitable shoe-manufacturing business and formed a corporation to run the business.
• He and his family were the only shareholders, with Salomon owning 20,001 shares and family members owning 6 shares.
• Salomon fully controlled the corporation and was also a secured creditor of the corporation.
• The business suffered financial problems and became insolvent.

Landmark Case 15.1 (2)

• Creditors sought to collect their debts from Salomon personally, suggesting it was improper for an individual to conduct his business through a one-person corporation to secure limited liability.
• House of Lords confirmed that there is nothing wrong with a shareholder being a creditor of the corporation, even when that shareholder essentially controls the company in question.
• Creditors knew they were dealing with a limited liability company on an unsecured basis.

Stakeholders in the Corporation (1)

• stakeholder: One who has an interest in a corporation.
• Internal stakeholders are individuals or groups who have a direct or indirect role in governing the corporation.
• officers: High-level management employees appointed by directors who manage day-to-day operations of the corporation.
• Examples include president, secretary, treasurer.

Stakeholders in the Corporation (2)

• External stakeholders are people who have dealings with the corporation but without a role in its governance.
• Examples include customers, employees, creditors, government.
• Corporation law seeks to regulate the relationships among the corporation's internal stakeholders.

Pre-Incorporation Issues

• Decisions to be made before incorporating a company include: whether to incorporate federally or provincially, what type of shares will be available and to whom, and what the name of the corporation will be.

Provincial and Federal Incorporation

• Both levels of government have passed legislation that provides for the incorporation of companies.
• Federally incorporated corporations have a right to carry on business in each province.
• Provincially incorporated corporations can only carry on business in the province in which they are incorporated.

Shares and Shareholders (1)

• The incorporators must decide on a share structure.
• A share represents an ownership interest in the issuing corporation.
• Shareholders do not have the right to use the assets of the corporation or any right to directly control or manage the corporation.
• Shareholders have those rights that specifically attach to their shares.

Shares and Shareholders (2)

• A corporation may have one type or class of shares, which will have all the basic shareholder rights attached to it, including the right to vote, receive dividends, and a share in the proceeds on dissolution.

Shares and Shareholders (3)

• The share structure will typically include different classes of shares which may include voting rights, financial rights, preference rights, cumulative rights, and redemption rights .
• The number of shares can be limited or open-ended.

Availability of Shares (1)

• A widely held corporation is a corporation whose shares are normally traded on a stock exchange.
• Widely held corporations are subject to regulation.
• Shares of widely held corporations are normally available to the public.

Availability of Shares (2)

• A closely held corporation is a corporation that does not sell its shares to the public.
• These are the most common form of corporation.
• They are not subject to securities legislation as long as they meet private corporation requirements.
• They may be subject to a lower tax rate.
• Examples include McCain Foods, Irving companies, and Holt Renfrew.

Who May Own Shares?

• A share is a piece of property and is freely transferable unless there is a restriction in place.
• In widely held corporations, shares are almost always freely transferable.
• In closely held corporations, a provision in the incorporating documents may require that shares cannot be transferred without the agreement of the directors or a majority of shareholders.

Business Application of the Law 15.1 (1)

• Rogers was founded by Ted Rogers in 1960 with a dual-class share structure.
• After his death in 2008, Edward Rogers attempted to terminate the CEO.
• The board removed Edward as chair and he replaced 5 of the 14 directors.

Business Application of the Law 15.1 (2)

• Ted Rogers left the voting shares to a trust for his family.
• The trust held 97 percent of the outstanding Class A Voting shares.
• The class B shares pay dividends but have no voting rights.
• Although the trust owned less than 30 percent of the company's equity, it controlled more than 97 percent of the votes.

A Corporate Name (1)

• All jurisdictions require a company to be identified by a name or designated number.
• The corporation's name must be distinctive, must not cause confusion with any existing name or trademark and must include a legal element (Ltd, Corp, Inc, etc.)
• The name must not include any unacceptable terms.

A Corporate Name (2)

• If a company's name is confusingly similar to another business's name, the entrepreneur may be sued for trademark infringement and passing off.
• They may be liable for damages suffered by the other business.
• A numbered name may be used instead of a distinctive name.
• A shelf company, often incorporated by law firms, is a company that does not engage in active business.

Case 15.1 (1)

• Aquatera Utilities Inc was incorporated in Alberta.
• Aquatera Utilities has a head office in Grande Prairie and operates in various regions.
• Aquaterra Water Management Inc changed its name to Aquaterra Water in 2014.
• Aquaterra Water provides services to oilfield waste management.

Case 15.1 (2)

• Aquatera Utilities requested the Corporate Registrar direct Aquaterra Water to change its name.
• The Corporate Registrar found the names confusingly similar.
• The names violated the Business Corporations Act.
• Aquaterra was directed to change its name.

Case 15.1 (3)

• The court upheld the registrar's decision to direct Aquaterra Water to change its name.

The Process of Incorporation (1)

• Processes across Canada vary but are similar.
• An incorporator sets the incorporation process in motion.
• The "articles of incorporation" document is a key part of incorporation.

The Process of Incorporation (2)

• The process can differ across provinces but generally involves submitting the articles of incorporation, a notice of registered office, a notice of directors, and a NUANS report.
• A filing fee is typically paid.

Organizing the Corporation

• After incorporation, directors meet, create bylaws--operating procedures for the corporation.
• They adopt forms of share certificates, authorize the issuance of shares and securities, and appoint officers.
• The first meeting of shareholders must happen within 18 months of incorporating.

Financing the Corporation

• Two methods of financing a corporation exist: debt financing and equity financing.
• Securities (e.g., shares, bonds) are used in both.

Debt Financing

• A corporation can borrow money from banks, family, shareholders, and government.
• Bonds and debentures are used to show a debt owed by the corporation.
• These are often used to refer to a secured debt (bond) or an unsecured debt (debenture).
• Holders of these instruments have priority over shareholders in the event of insolvency.

Equity Financing

• A corporation raises money by selling shares.
• This results in an ownership position.
• This provides investors with an opportunity to benefit from the corporation's growth.
• Corporations can combine shares and bonds to raise money, which may include conversion rights where one type of security can be turned into another.
• On insolvency, shareholders are entitled to share in the proceeds after all creditors' claims are settled.

Business and Legislation 15.1 (1)

• Crowdfunding obtains funds by soliciting small amounts from a large number of people.
• This is usually done online.
• The three models of crowdfunding are donation, lending, and investment/equity.

Business and Legislation 15.1 (2)

• In 2021, the Canadian Securities Administrators (CSA) created a national framework for start-up crowdfunding that permits issuers to raise up to $1.5 million in a 12-month period.

Securities Legislation (1)

• Securities legislation creates a mechanism to regulate the transfer of securities, provides information to investors, and regulates those in the trading of securities.
• It seeks to protect the public.

Business and Legislation 15.2

• There are 13 provincial and territorial securities regulators in Canada.
• The Cooperative Capital Markets Regulatory System was established in 2013 to provide a single regulatory framework for the national market.
• In 2018, the Supreme Court of Canada ruled the system did not violate the powers of the individual provinces.

Securities Legislation (2)

• All Canadian securities regimes have three requirements: registration, disclosure, and insider-trading restrictions.

Corporate Liability: Liability in Tort (1)

• A corporation is a legal person.
• It has primary liability for actions; this is when the corporation itself commits the tort.
• It has vicarious liability is when the tort has been committed by their employee or agent, but the agent or employee was acting in the course of their work for the corporation.

Corporate Liability: Liability in Tort (2)

• Identification theory proposes that a corporation is liable for the acts of individuals if they act as its directing mind.
• The directing mind is a higher-level employee who exercises decision-making authority within corporate policy.

Corporate Liability: Liability in Contract (1)

• Agency law determines whether a corporation is liable on a contract.
• A corporation is bound by a contract if its agent had actual or apparent
• authority. To avoid personal liability, the person signing the document should state it's on behalf of the corporation and not personally. Use of shelf corporations may be advisable.

Corporate Liability: Criminal and Regulatory Liability (1)

• The identification theory has been adapted to criminal law.
• A corporation is said to have committed a crime if the person who committed the crime was a directing mind of the corporation, and it was committed in the course of their duties.

Corporate Liability: Criminal and Regulatory Liability (2)

• For intentional criminal offences, a corporation may be liable if a senior officer engages in activity benefiting the corporation, or directs a representative to do so, or is aware of the unsafe conduct but does not act, leading to death or injury.
• For offences based on negligence, a corporation can be liable if a representative's action departs markedly from the reasonable standard of care needed to prevent the incident(s)

Business Application of the Law 16.1

• Four workers died due to the collapse of a scaffold.
• Five parties were found guilty of safety-related offences; the supervisor permitted work without safety harnesses and used marijuana. The project manager was sentenced for criminal negligence.

Corporate Liability: Regulatory Offences

• A regulatory offence is contrary to the public interest.
• Corporations and directors/officers can face penalties and civil liability for damages in several areas including taxation, human rights, pay equity, employment standards, and consumer protection.

Directors and Officers

• Directors are elected by shareholders to manage and supervise the business.
• They have general authority, and specific powers/obligations outlined by legislation.
• Duties include declaring dividends, calling meetings, adopting bylaws, issuing shares, and appointing officers.

Business and Legislation 16.1 (1)

• Canada now requires some public corporations with publicly traded securities to disclose diversity information.
• This information includes race, status, and disabilities.

Business and Legislation 16.1 (2)

• The amendments do not impose quotas; instead, a "comply or explain" system is implemented.
• Corporations must disclose whether they have a diversity and inclusion policy and explain if they do not.

Duties of Directors and Officers: The Fiduciary Duty

• Self-dealing contract: A contract in which a fiduciary has a conflict of interest.
• Directors must act honestly and in good faith for the benefit of the corporation as a whole, avoiding conflicts of personal interest.
• They cannot take corporate opportunities for themselves.

Landmark Case 16.1

• Two corporate officers left their company to set up their own venture and successfully bid on the same contract as their former employer. The court held the employees liable to account to their former company for the profits they made under the contract.

Ethical Considerations 16.1 (1)

• Voluntary actions by corporations in areas like the economy, social, and environment are on the rise.
• CSR, or Corporate Social Responsibility, is now a cornerstone of corporate structure.
• Businesses must now consider the wide range of stakeholders, including employees, suppliers, customers, government, and the community.
• Example: Maple Leaf Foods started a centre to address food insecurity.

Ethical Considerations 16.1 (2)

• In 2019, the Canada Business Corporation Act (CBCA) amended fiduciary duty to codify a permissive standard.
• The directors and officers of the corporation can consider the interests of shareholders, employees, retirees, and pensioners, creditors, and consumers, and the environment.

The Duty of Competence

• Directors and officers must exercise the care, diligence, and skill that a reasonably prudent person would exercise in comparable circumstances.

Case 16.1 (1)

• Wise Stores Inc. was a publicly traded company that operated 50 junior department stores in Québec.
• The Wise brothers were the majority shareholders.
• In 1992, Wise Inc. acquired shares of Peoples Department Stores.
• The companies were experiencing financial difficulties.
• The Wise brothers implemented a joint inventory purchasing policy.

Case 16.1 (2)

• Peoples purchased inventory during the joint inventory purchasing program but did not receive reimbursement.
• Both companies went bankrupt.
• A trustee in bankruptcy sued the Wise brothers for breaching their duties as directors.

Case 16.1 (3)

• The Wise brothers did not owe a fiduciary duty to the creditors but owed to the corporation.
• The court applied the "business judgment rule" in assessing the directors' duty of care.

Liabilities of Directors and Officers

• If a director commits a tort, it is usually attributed to the corporation.
• Similarly, if a director (as an agent) breaches a contract, the corporation is liable.
• Directors and officers have personal liability in some cases.

Liabilities of Directors and Officers : Liability in Tort

• Courts disagree about factors that lead to personal liability.
• However, courts agree that personal liability for directors and officers can arise.

Liabilities of Directors and Officers: Liability in Contract

• A director might be personally liable for a contract if there's evidence they intended to assume personal liability, such as contracting on their behalf and on behalf of the company, or guaranteeing the company's contractual performance.

Liabilities of Directors and Officers: Liability by Statute

• Statutes may place obligations on directors, with failure to meet them resulting in personal liability.
• An example is the Canadian Environmental Protection Act.

Case 16.2 (1)

• Midwest purchased an industrially zoned property.
• Midwest was interested in buying an adjacent property owned by Thordarson.
• Environmental studies revealed contamination.

Case 16.2 (2)

• Thorco, controlled by Thordarson, breached orders related to the contamination.
• Midwest sued Thordarson for damages under the EPA.

Business Application of the Law 16.2 (1)

• Directors can reduce their risk of personal liability by exercising care, diligence, and skill in their duties; attending meetings and reviewing documents.

Business Application of the Law 16.2 (2)

• Directors should make informed decisions, identify potential risks, stay informed of company matters, and seek reliable professional advice.
• An indemnity agreement should be in place.

Shareholder Liability (1)

• Shareholders have limited responsibility and few obligations to the corporation,
• unlike directors and officers.
• They can freely compete with the corporation and are not obligated to attend meetings, cast votes, review reports, or take any personal interest whatsoever in the progress of the corporation.
• They are generally not liable for corporation debts.

Shareholder Liability (2)

• Lifting the corporate veil is when the court determines a corporation is not a separate entity from its shareholders, usually when a company is a mere facade to conceal the true facts and the corporate form has been used as a shield for conduct akin to fraud.

Business Application of the Law 16.3 (1)

• Texaco dumped billions of litres of oil into Ecuadorian open air pits between 1964 and 1992.
• The contamination had devastating effects on the rain forest, rivers, and residents, causing long-term health issues.
• The Ecuadorian Court ordered Chevron to pay $9.5 billion in damages.

Business Application of the Law 16.3 (2)

• US courts refused to enforce the Ecuadorian judgment against Chevron Canada.
• Chevron Canada was considered a different entity from Chevron.
• A Canadian court also refused to pierce the corporate veil, finding insufficient evidence to suggest it was a puppet of Chevron.

Shareholder Rights

• Shareholders' fundamental rights are to vote, receive information, and their financial rights (dividends and assets, pre-emptive rights).
• Different classes of shares have varying rights.

Shareholder Remedies

• Shareholders have remedies if dissatisfied with their corporation.
• Selling shares are easy in publicly traded corporations but may involve restrictions.
• Dissent and appraisal rights allow shareholders to have their shares purchased at a fair price.
• Derivative action is a suite filed on behalf of the corporation by a shareholder, intended to enforce a corporate cause of action.
• Oppression remedy is a statutory remedy available to shareholders and other stakeholders to protect their corporate interests, if the corporation has oppressed or prejudiced the interests of shareholders.

Other Shareholder Remedies (Optional)

• Shareholders' agreement defines the relationship among shareholders.
• Unanimous shareholders' agreement restricts the powers of the directors, maintaining control with the shareholders.

Case 16.3 (1)

• Intramodal Inc., owned by Menillo and Rosati, had informal dealings and did not always comply with formal CBCA requirements.
• They rarely put anything in writing.
• The company was a two-person private organization.

Case 16.3 (2)

• Menillo brought an oppression action claiming he was improperly removed as a shareholder.
• The court affirmed that oppression is judged by “business realities” rather than "narrow legalities."

Business Application of the Law 16.4 (1)

• Agreements can define the relationship among shareholders, provide mechanisms for resolving problems, and procedures for termination.

Business Application of the Law 16.4 (2)

Agreements can also encompass protection for minority shareholders, control over shareholders, setting out provision of a market for shares and capital contribution, and buy-sell arrangements (disputes).

Creditor Protection (1)

• A corporation is responsible for its own liabilities.
• Shareholders cannot avoid paying creditors by stripping assets.
• Creditors have priority over shareholders in the event of insolvency.

Creditor Protection (2)

• The Canada Business Corporation Act (CBCA) prevents shareholder abuses.
• This may include preventing excessive dividends to jeopardize the company's ability to repay debts
• Debt is an ongoing duty of care to creditors.

Termination of the Corporation

• Winding up: The process of dissolving a corporation, which is complex.
• A corporation may lapse if it fails to file annual reports or comply with other reporting requirements--this is generally simpler than winding up. Courts can order termination if it's necessary for a just resolution between the corporation and shareholders.
• Companies can go bankrupt, which leads to termination.

Introduction to Property Law

• Property refers to items that can be owned, controlled, and transferred.
• Property can be divided into personal and real property.

Categories of Property

• Personal property consists of all items that are not land or attached to land.
• Real property consists of all land and items permanently attached.
• Examples of real property include land, buildings, mines, minerals, and Aboriginal title lands..

Business Application of the Law 17.1 (1)

• Aboriginal title is a right of enjoyment and occupancy of land for Indigenous peoples, as protected by the Constitution Act, 1982.
• It includes the right to possess the land; the right to the benefits and use of the land; and the right to manage and use the land proactively.
• It is established by proof of sufficient pre-sovereignty occupation that is continuous and exclusive.

Business Application of the Law 17.1 (2)

• Aboriginal title is distinct from fee simple and cannot be sold.
• The rights of the Aboriginal title holder include possession, enjoyment, management, and occupation of land.
• Land use isn't restricted to traditional uses.

Business Application of the Law 17.1 (3)

• A duty to consult and accommodate arises when the Crown has knowledge of a potential Aboriginal right or title that may be affected by government actions.
• The required level of consultation and accommodation depends on the strength of the claim.
• Once title is established, development is normally subject to the title holder’s consent.

Personal Property (1)

• Personal property encompasses everything besides real property.
• It can be tangible or intangible.
• Tangible property is physical and has inherent value based on its form (e.g., delivery truck, inventory). Intangible property has value based on associated legal rights (e.g., choses in action).

Personal Property (2)

• There is no standardized system for registering titles to personal property as there is with real property. Some registries exist for various items (e.g., motor vehicles, patents, trademarks).
• Personal property is usually mobile, and significant cost and complexity associated with regulating this would likely not be worth the low value compared to real property.

Business Application of the Law 17.2

• The United Nations General Assembly acknowledged the right to safe and clean drinking water as a human right.
• In Canada, ownership of water resources is vested with provincial Crowns.

Acquiring Property Rights

• Land can be acquired by purchasing or leasing.
• Goods can be acquired through purchasing or manufacturing.
• Insurance coverage is bought; accounts receivable are generated from fulfilling goods/service agreements; and some intellectual property is owned through creation (e.g., original work).
• Some property can also be acquired through finding and taking possession of lost or abandoned personal property.

Business Application of the Law 17.3 (1)

• Sperm and other human tissue can be considered property, but there are legal considerations to that process.
• Courts have determined stored sperm to be "goods" under warehousing legislation.
• Similarly, in 2009, liver tissue removed as part of a procedure became hospital property.

Business Application of the Law 17.3 (2)

• While some jurisdictions treat sperm/ova as property, commercial trading is unclear/not possible in these cases.
• The inheritable status and possible property rights are also unclear in cases where the donor is deceased.

Legal Rights Associated with Property

• Unlike in the US constitution, the Canadian Charter of Rights and Freedoms doesn't explicitly protect property rights; however, they are protected through statutes.
• Some examples include the Bill of Rights and other relevant legislation.
• The common law also protects a number of property rights through torts (e.g., nuisance, trespass, and passing off).

The Bundle of Rights

• Ownership of property typically includes the right to exclude others; use and possess; and transfer/dispose of property.
• These rights may have limitations, for example, a renter usually cannot transfer the rented space.

Right to Exclude

• Property owners can exclude others from using property and prevent interference with its use.
• Legal examples include copyright protecting a book and trespass laws preventing unauthorized entry.

Case 17.1 (1)

• The Tŝilhqot'in Nation, in British Columbia, claimed Aboriginal title over lands, due to continuous occupation and use.
• Provincial legislation granted a commercial logging license, which was opposed by members of the nation.

Case 17.1 (2)

• The Supreme Court found the Tŝilhqot’in Nation had exclusive use of the land/occupied it regularly.

Technology and the Law 17.1 (1)

• Drones may interfere with property owners' rights to exclude others from their property, though specific height limits aren't always well-established.
• Such heights are necessary for the ordinary use and enjoyment of the land.

Technology and the Law 17.1 (2)

• Transport Canada regulations may place limits on drone operation over private property; this includes restrictions on altitude, near-by humans, and data collection.

Right to Possess and Use

• Ownership and possession of property are often tied together, but can be separated, such as in leases.
• A lease contract transfers possession of property (land or personal items) for a fee in an exchange.
• Inventors may give licenses for manufacturing and selling a product/using a process. A business may sue if someone mis-use its name and goodwill.

Right to Transfer or Dispose

• Ordinarily, the owners of property have rights to transfer or sell it to another party.
• However, there are exceptions, such as with Aboriginal title lands and property leased (often prohibited from transfer).
• Interests in property held by a trustee often involves legal restrictions.

Legal Obligations Associated with Property Ownership

• Property ownership implies legal obligations such as payment of property taxes
• Landowners may be obligated to co-operate with intrusions.
• There are statutory obligations to use environmentally sensitive property to protect it.
• Municipalities will have the power to regulate land use.

Bailment of Personal Property (1)

• A bailment occurs when one person temporarily transfers possession of personal property to another.
• Examples include lending a friend a car, leaving goods with an online retailer, leaving a car at a repair shop, paying for storage of a car, or lending a lawn mower.

Bailment of Personal Property (2)

• A bailment requires voluntary delivery to the bailee, the intention of the parties for the bailee to have custody and control, and the intention of the parties for the property to be returned.
• Some bailments are subject to special regulations like transportation, storage, or repair.

Bailment of Personal Property (3)

• Bailee liability is generally determined by common law and terms of contract.
• Statutory rules can apply in cases involving warehouses or innkeepers.
• Bailees may be liable for the acts of their employees.

Common Law Liability of Bailees

• The degree of care for bailed property depends on factors like the payment involved, the beneficial interest, the nature/value of the property; and unusual circumstances regarding the transaction.

The Contract of Bailment

• An independent bailment arrangement may exist.
• Contracts outlining the duties, fees, damages, and remedies of the bailor and bailee are generally advisable.

Specialized Bailments (1)

• Some bailments have specific regulations or rules, such as transportation, storage, repair, and lodging bailments.

Specialized Bailments (2)

• Repair: Bailees have a right to retain possession of property until payment.
• Storage: Bailees must take care and are liable for damage or loss.
• Contracts usually limit bailee’s liability.

Specialized Bailments (3)

• Transportation Carrier: Common carriers have a high standard of care and limited legal defenses.
• Lodging Innkeepers: Subject to great care and are liable for loss or theft; liability is sometimes limited to a certain amount.

Case 17.2

• A recreational vehicle seller agreed to store a customer's trailer for free.
• The trailer was stolen after the security check.
• The court decided that the bailee (Camp Mart) met its duty of care.

Business Application of the Law 17.4

• Clauses limiting liability in bailment contracts are vulnerable in some situations.
• Clear and understandable language is essential.
• Unilateral breaches of contract or unconscionable terms are challenged.

Intellectual Property

• Intellectual property consists of the results of creative processes—ideas and expressions of ideas—protected through various laws.
• This protection covers written works, recipes, formulas, jingles, names, and business & marketing plans.

Patents

• Patents provide a monopoly to make, use, or sell an invention, protecting inventions in the pharmaceutical, electronics, chemical, and manufacturing industries.
• Patents protect inventions from being copied and can be used to exclude others from using specific technologies.
• Patents can cover compositions of matter, machines, apparatuses, and processes (e.g., pay-per-use billing systems).

Case 18.1 (1)

• Monsanto introduced Roundup Ready canola, which was genetically modified to resist Roundup pesticide.
• Monsanto licensed the canola to farmers who purchased seeds from an authorized agent.

Case 18.1 (2)

• Schmeiser cultivated canola plants without purchasing seeds from Monsanto.
• Monsanto sued for patent infringement.
• The Court upheld the patentability of cells/genes, and held that rights in those entities extended to plants containing them.

Exclusions from Patent Protection

• Things receiving protection under other laws (e.g., software in copyright)
• Things or concepts that are not inventions under the definition of a patent (e.g., scientific principles, policy reasons, illicit objects, or surgical treatments).

Case 18.2

• Amazon sought a patent for its one-click shopping system.
• The Canadian Intellectual Property office rejected it, saying the application was a business method not an inventive process/machine.
• The Federal Court reversed the decision.

Requirements for Patentability

• A patent requires a new, useful, and unobvious invention.
• There is a one-year grace period for inventor disclosure within the prior year.
• The invention must have some degree of ingenuity and industrial value.
• Changes that are obvious to someone skilled in the relevant area will not be patentable.

Patent Protection and Application (1)

• Patent protection does not arise automatically.
• Applications are typically prepared by a patent agent and then submitted to the Canadian Intellectual Property Office.
• Proper application timing is essential.

Patent Protection and Application (2)

• Inventors are typically the initial owners.
• In the employment setting, special circumstances, such as specific hiring for an invention, or contractual agreements, may determine if an employer or employee is the owner.

Patent Protection and Application (3/4/5)

• Patent applications are examined for prior art.
• If approved, the patent is issued.
• Patents are national; they only protect use in the specific country of issuance.
• Owners of Canadian patents have no auto-protection in the United States.

Industrial Designs

• Industrial design describes the visual aspects of a finished product.
• These can be shape, configuration, ornamentation, and any combination of these.
• An industrial design is patentable if it is “new.”

Requirements for Registration, Registration Process, and Protection

• To register an industrial design, an application will include a description and graphic depiction.
• If the application is valid, a registration certificate is issued.
• Owners receive exclusive rights of making, importing, or selling the registered design, and can stop similar types of products from being sold.
• The term of protection is based on when the application was registered or after filing.

Trademarks

• A trademark is a sign or combination of signs used to distinguish goods/services.
• This can include words, slogans, designs, symbols, colours, and shapes of products.

Traditional and Non-Traditional Trademarks (1/2/3)

• Traditional trademarks include words, slogans, and designs (e.g., logos).
• Non-traditional trademarks include symbols, three-dimensional shapes, moving images, modes of packaging, sounds, and scents.

Common Law Trademarks (1/2)

• A business adopting and using a particular trademark can gain common law protection, which applies in the geographic areas in which the trademark is used.
• Common law trademarks, unlike registered trademarks, do not gain nationwide protection.

Trade Names

• Trade names are the names under which businesses operate; they can be protected by trademark law.

Trademarks and Domain Names

• Domain name refers to a website address.
• Cyber-squatting is the practice of registering someone else's name as a domain name.

Requirements for Registration of Trademarks (1/2)

• The application must demonstrate ownership of the trademark.
• This is shown by use, application submission/registration, and making the mark known within Canada.
• The mark must be distinctive, differentiating it from other marks

Requirements for Registration of Trademarks (2)

• A registered trademark is not registrable if the name or surname is used in the preceding 30 years of a living or deceased person, is descriptive of the character or quality of wares/services/place of origin, or is deceptively descriptive or confusing with other registered marks or common law trademarks.

Case 18.3 (1/2)

• Diageo and Heaven Hills were involved in a dispute over a trademark infringement.
• The court discussed the three elements of passing off, which include significance of a trademark (trust/goodwill), deception that it causes confusion, and damage.
• The court found Heaven Hills infringed Diageo’s registered trademarks and caused Diageo harm.

Registration Process and Protection

• The first person to use a trademark in Canada often has the right to register it.
• Trademark agents search for any existing trademarks.
• Registered marks have exclusive use rights for around 10 years and can be renewed.

Business Application of the Law 18.1

• The Tragically Hip sued Mill Street Brewery for trademark infringement.
• The Hip used the name of one of their songs for a new beer.
• The court held the name was correctly registered.

Copyright

• Copyright protects original literary, dramatic, musical, or artistic work.
• This protection is granted automatically when the work is created, but a formal registration process may give an advantage in dispute resolution.

Requirements for Protection

• Copyright protection arises automatically on the creation of a work.
• Registration provides a presumption of ownership.
• Works need to meet the requirements of originality and fixation. o Original means of the author's own work. o Fixation means evidence the work was created in concrete form (e.g., written, audio recording).
• Applicable terms of protection vary by country.

Rights Under Copyright (1/2)

• Reproduction, public performance, publication, and translation are some basic rights under copyright.
• Adaptation, mechanical reproduction, cinematographic presentation, communication, exhibition, rental, and authorization are other rights under copyright (more advanced or broader rights)

Copyright Infringement

• Copyright infringement occurs when someone copies a substantial portion of a work without the owner's consent.
• The determination of “substantial” is often complex/involves legal dispute.

Case 18.4 (1/2/3/4)

• Robinson (creator of "Curiosity") and Cinar Corporation (producer of "Sucroë") were involved in a copyright dispute over similar children’s TV show concepts.
• The Court ruled that Robinson’s work had been infringed and awarded damages
• Non-literal and direct copying resulted in copyright infringement.

Moral Rights

• Moral rights are the author's rights to attribution of work and safeguarding against prejudicial modification or association with undesired products.
• Moral rights are distinct from copyright; they give authors some control over how their works are used (e.g. name or pseudonym of author).

Case 18.5

• Snow created the sculpture “Flight Stop” of geese.
• The Eaton Centre added ribbons to the