Business Law Quiz on Contracts and Shareholders

Corporate Form: Organizational Matters

• A corporation is a separate legal entity, treated as a person
• Shareholders are not personally liable for a corporation's debts.
• The Salomon v Salomon Ltd case established the principle of limited liability.
• Shareholders can be creditors of the corporation.
• Internal stakeholders include shareholders, directors, and officers.
• Officers are high-level employees managing daily operations.
• External stakeholders interact with the corporation but have no role in governance, such as customers, employees, creditors, and government.
• Pre-incorporation decisions include choice of incorporation jurisdiction (federal or provincial), types of shares, and the corporation's name.
• Both federal and provincial governments have legislation for incorporating companies.
• Federally incorporated companies have the right to conduct business in all provinces.
• Provincially incorporated companies can only operate in their province of incorporation, though they can be licensed to conduct business in other provinces.
• Shares represent ownership; shareholders don't have control over management, and have specified rights dependent on the share structure.
• A widely held corporation's shares trade on a stock exchange and subject to securities regulation.
• A closely held corporation's shares don't trade publicly.
• "Right of first refusal" secures the right of the current shareholders to buy shares before an outsider.
• Key legal issues like Rogers Communication's case, involving dual-class shares, are frequently encountered.
• A corporate name must be distinctive and not confusing, and include a legal element (such as Ltd. Corp. Inc.).

Landmark Case 15.1 (1)

• Salomon carried on a successful shoe-manufacturing business.
• He formed a company with his family as the only shareholders

Landmark Case 15.1 (2)

• Creditors sought to collect debts from Salomon personally.
• House of Lords confirmed that a shareholder being a creditor is permissible.

Stakeholders in the Corporation (1)

• Stakeholder: A person or group with an interest in the corporation.
• Internal stakeholders: Shareholders, directors, officers.
• Officers: Top-level management employees, appointed by directors.

Stakeholders in the Corporation (2)

• External stakeholders: Customers, employees, creditors, government.

Pre-Incorporation Issues

• Decisions about federal or provincial incorporation.
• Determining share structure and details.
• Selecting a name and acceptable terms

Provincial and Federal Incorporation

• Both federal and provincial governments enact legislation for company incorporation.
• Federally incorporated companies have the right to carry on business in all Canadian provinces.
• Provincially incorporated corporations only operate in their province of incorporation, although they can be licensed to operate in other provinces.

Shares and Shareholders (1)

• Share structure decisions are crucial for incorporators.
• A share represents an ownership interest.
• Shareholders do not control the corporation's day-to-day operations.
• Shareholder rights are specific to their type of share.

Shares and Shareholders (2)

• A corporation could offer only one class of shares, inheriting all inherent shareholder rights.
• Fundamental rights include voting in directors, receiving dividends, and sharing in proceeds on dissolution (after paying off creditors).

Shares and Shareholders (3)

• Common share structures could include different rights to shareholders.
• Share structures may include a range of additional rights and privileges: voting, financial, preference, cumulative, or redemption rights.
• Share number can be limited or unlimited (open-ended).

Availability of Shares (1)

• Widely-held corporations generally trade their shares on stock exchanges.
• These corporations are subject to relevant securities legislation.
• Shares in these companies are generally available for public purchase.

Availability of Shares (2)

• Closely-held Corporations do not have their shares traded publicly.
• This type of corporation is often called a “private corporation.”
• They typically have a limited number of shareholders with no overt public trading.
• They can have lower tax rates.

Who May Own Shares?

• Shares are typically freely transferable unless restricted by conditions of the incorporating documents.
• Closely held corporations may have provisions requiring director or majority shareholder approval before transferring shares.
• "Right of first refusal" allows current owners or the directors to buy back shares from sellers first (i.e. offer the share to insiders at the same price as outsiders).

Business Application of the Law 15.1 (1)

• Rogers Communications, found in 1960, had a dual-class share structure
• Both voting and non-voting shares are part of the structure.
• After Ted Rogers’ death, Edward Rogers (chair) attempted to terminate the CEO, which fellow board members opposed.
• The board blocked Edward's plan to remove the CEO.
• Edward replaced 5 of the 14 directors, reinstating himself as chair

Business Application of the Law 15.1 (2)

• Ted Rogers had left the voting shares to a Rogers Control Trust for his family.
• The Rogers Control Trust held a high percentage of class A voting shares and a much smaller percentage of Class B non-voting shares.
• The Class B shares paid dividends in the corporation, but with no voting rights

A Corporate Name (1)

• Jurisdictions demand either a name or a number for a company.
• The name must be distinctive and avoid confusion with existing names or trademarks and follow the legal elements of corporations (Ltd, Corp, Inc.)

A Corporate Name (2)

• Careful name selection is crucial; using a confusingly similar name to an established business can lead to legal challenges (passing off).
• Corporations can have numbered names in place of distinctive names.

Case 15.1 (1)

• Aquatera Utilities Inc was incorporated in 2003, and acquired its name.
• They provide water, sewer, waste handling, and recycling services in the Grande Prairie region.

Case 15.1 (2)

• Aquatera Utilities requested the Corporate Registrar to direct Aquaterra Water to change its name.
• The Corporate Registrar ruled that the names were confusingly similar and directed Aquaterra Water to change its name per the associated regulations.

Case 15.1 (3)

• The Corporate Registrar’s decision was upheld by the court.
• The similarities between the two names were considered in the decision regarding confusing similarity, as was the duration of the respective uses (2003 vs 2014), and the nature of the services.

The Process of Incorporation (1)

• The incorporation process varies across Canada but has similar steps.
• The incorporator begins the process.
• Articles of incorporation define the corporation’s characteristics.

The Process of Incorporation (2)

• Steps: submitting the articles of incorporation, notice of registered office, notice of directors, NUANS report, and filing fees.

Organizing the Corporation

• Directors will adopt bylaws, share certificate forms, authorize share and securities issues, and appoint officers.
• The first shareholders' meeting occurs within 18 months of incorporation.

Financing the Corporation

• Corporations use debt or equity financing to operate.
• Debt financing is through loans, bonds, and debentures.
• Equity financing is through share sales.

Debt Financing

• Corporations raise money by borrowing from banks, family, shareholders, and government.
• Bonds and debentures create a claim on the corporation's assets for the lender if the debt is not repaid.
• Secured debt may lead to repossessions in the event of unpaid debts.
• Unsecured debt may lead to legal actions against the company for non-payment

Equity Financing

• Selling shares is how corporations raise money through equity financing.
• Ownership is established when shares are purchased from investors
• Corporations may offer conversion rights to combine shares and bonds, allowing one to trade the type of security.

Crowdfunding

• It involves many people donating small sums of money.
• This is usually conducted online with an entrepreneur's presentation.
• Three models exist: donation, lending, and investment/equity.

Business and Legislation 15.1 (1)

• The Canadian Securities Administrators (CSA) approved a harmonized national framework for start-up crowdfunding in 2021.
• The limit for raising funds increased to $1.5 million in the 12 month period.
• Individuals can invest $2500.

Securities Legislation (1)

• Securities legislation provides a mechanism to transfer securities.
• It ensures investors have access to information necessary for informed decisions.
• It establishes stability and confidence in the financial marketplace.
• It regulates those involved in securities trading.
• It enforces rules on misconduct or non-compliance.

Business and Legislation 15.2

• Canada has 13 provincial and territorial securities regulators.
• A regulatory system for administering a single set of rules for regulating the Canadian securities market was launched by the federal government.
• The Supreme Court of Canada upheld the system.
• Funding for the organization was not given.

Securities Legislation (2)

• Registration of businesses selling securities in a specific area.
• Disclosure of information about the business and its securities to the public
• Insider trading laws and restrictions
• Prospectus: publication to provide the public with the necessary information for investing
• A statutory action is available in case of losses due to misstatements by a business

Case 15.2

• Investors sought a class action lawsuit.
• They alleged losses on the secondary market because of Pretium's delayed disclosure of an unfavorable report about a mining project.
• The court ruled that there was no omission of material fact.

Insider-Trading Restrictions

• Insider trading involves transactions based on material information not made public by the relevant corporation's insiders
• Insiders must report any dealings to the corporation.
• Insiders cannot tip others regarding confidential materials.
• Tipees are persons who receive confidential material.

Case 15.3

• Several prominent legal professionals were convicted of insider trading and tipping.
• The Ontario Securities Commission (OSC) proved these cases through circumstantial evidence of trades, phone calls, and timelines.
• The OSC imposed significant penalties, costs, and disgorgements against them

Corporate Liability: Liability in Tort (1)

• Corporations are legally liable for their actions, through agents like employees.
• Primarily liable if a tort is committed by the corporation itself.
• Vicariously liable if the tort is committed by an agent or employee, not a controlling person for the corporation

Corporate Liability: Liability in Tort (2)

• Identification Theory: A corporation is liable the person who is the "directing mind" of the corporation.
• Directing mind is the top-level official in the corporation.
• A corporation may have more than one directing mind.

Corporate Liability: Liability in Contract

• Agency law is used to determine a corporation's liability in contract situations
• The extent of corporate liability in contract often depends on its agent's authorized authority, both actual and apparent.
• Corporations should make contracts very clear that actions are being taken on behalf of the corporation, to avoid personal liability claims.
• The use of shelf companies is advised to avoid pre-incorporation contracts.

Corporate Liability: Criminal and Regulatory Liability (1)

• A corporation cannot be punished in a criminal way in the same way as a human, but the identification theory of criminal law does allow corporate charges in situations where the directing mind committed the crime.
• The theory places criminal responsibility on the individuals who direct or control the corporation's actions.
• Legal precedence expands the range of individuals liable to senior officers in criminal law situations.

Corporate Liability: Criminal and Regulatory Liability (2)

• For intentional criminal offences, corporations are liable when a senior officer acts in their authority with the intent to benefit the corporation in unsafe conduct.
• For negligence, the senior officer/s overseeing the representative must have departed from reasonable care.

Business Application of the Law 16.1

• Several parties were found liable in a workplace accident involving scaffolding collapse.
• The offences were safety-related and violations of the Occupational Health and Safety Act.
• Supervisors also participated in the act of failing to provide necessary safety harnesses.

Corporate Liability: Regulatory Offences

• Regulatory offences are illegal acts against the public interest.
• The corporation and its officers may face penalties (fines or legal action) in breach.
• Examples of regulatory offences in a corporation include taxes, human rights, pay equity, employment standards, consumer protection, unfair business practices, occupational health & safety, and environmental protection

Directors and Officers

• Directors are elected by shareholders and are responsible for managing the corporation.
• Directors are beholden to the corporation as a whole.
• Directors must act honestly and fairly, and prevent conflicts of interest.
• They have limited legal liability through their actions (as previously outlined)..

Business and Legislation 16.1 (1)

• Canada now requires some public corporations with publicly traded securities to disclose diversity in both officers and directors, going beyond gender.
• Specific guidelines are implemented by the legislation.

Business and Legislation 16.1 (2)

• The legislation is a "comply or explain" regime.
• Corporations must disclose their diversity and inclusion policies or explain the reason for the lack of one

Duties of Directors and Officers

• Fiduciary duties:
• Honest and good faith
• No favouritism to one shareholder over another.
• No conflict of interest to duties
• No interception of corporate opportunities

Duties of Directors and Officers: The Fiduciary Duty

• Self-dealing contract: A contract involving a conflict of interest.
• Example: A director with materials the corporation may need is beholden to give the lowest possible price on behalf of the corporation, not personal profit.
• Corporate opportunity: A business that gives the corporation a vested interest
• Example: Directors and business cannot take action to profit from these opportunities.

Landmark Case 16.1

• Two officers of a company setup a new company to compete for the same contract.
• They were found liable to account to their former employer for their profits under this contract

Ethical Considerations 16.1 (1)

• Voluntary actions by a corporation to operate in an environmentally sustainable manner is more common.
• Businesses are accountable to a wide range of stakeholders.

Ethical Considerations 16.1 (2)

• The Canada Business Corporation Act (CBCA) has been amended to codify the permissive standard for fiduciary duty.
• Directors and officers are obligated to consider stakeholder interests, including shareholders, employees, pensioners, creditors, consumers, the environment, and the long-term interest of the corporation.

The Duty of Competence

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

Case 16.1 (1)

• Wise Stores Inc was a public company operating a chain of department stores.
• Majority shareholders were the Wise brothers
• They acquired another company, Peoples Department Stores Inc, making them the sole directors.
• Subsequent business downturns were followed by a joint inventory purchasing policy implemented by the vice-president of administration

Case 16.1 (2)

• Peoples purchased most of Wise's inventory, subject to later reimbursement
• Wise inc incurred large debts to Peoples, which led to subsequent bankruptcies of both companies
• The Trustee in bankruptcy sued the Wise brothers for failing in their duty to directors

Case 16.1 (3)

• The Wise brothers had no fiduciary duty to the creditors, only the corporation.
• Their actions didn’t breach their duties of care, as their business judgment was made in good faith, and on proper information from internal sources.

Liabilities of Directors and Officers

• Director tort liability is often attributed to the corporation.
• If a director breaches a contract, acting as the company's agent, the corporation is typically liable.
• Personal liability for directors and officers can arise in various situations.

Liabilities of Directors and Officers: Liability in Tort

• Courts disagree over when a director’s actions in their duties cause personal liability.
• There can be personal liability in tort for directors and officers.
• Directors and officers should exercise care to avoid committing torts.

Liabilities of Directors and Officers: Liability in Contract

• Directors may face personal liability if their actions show an intention to assume personal liability, such as when the director forms a contract in their own name, or guarantees the performance of a contract by the business.

Liabilities of Directors and Officers: Liability by Statute

• State statutes can make directors personally liable if they fail to meet the obligations set forth.
• One example is The Canadian Environmental Protection Act, making directors participably responsible for offences in their capacity.

Case 16.2 (1)

• Midwest Properties acquired property from Thorco Contracting, where earlier activities had caused contamination to the land.
• Midwest learned of the contamination through environmental studies.

Case 16.2 (2)

• Thorco and Thordarson were convicted of environmental offences.
• Midwest sued Thordarson in his personal capacity 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.
• Following procedures, attending meetings, reading materials, and asking questions will reduce risk

Business Application of the Law 16.2 (2)

• Actively manage their decisions, and actively learn about issues affecting the company, such as its financial state

Shareholder Liability (1)

• Shareholders have few responsibilities other than holding shares of the corporation.
• They do not take on responsibilities normally associated with officers.

Shareholder Liability (2)

• In specific circumstances, the corporate veil can be "lifted," meaning the company is not considered separate from the shareholders.
• This occurs when the company is a facade to hide fraudulent activities.
• The controlling shareholder must have committed conduct akin to fraud.

Business Application of the Law 16.3 (1)

• The Texaco case in Ecuador illustrates the issue of a corporation having no remaining assets after a lawsuit resulting in high liability demands,

Business Application of the Law 16.3 (2)

• U.S. courts refused to enforce a judgment that ordered Chevron to pay damages to Ecuadorians for environmental damage, as Chevron Canada was held as a separate entity legally.

Shareholder Rights

• The three primary rights of shareholders are: voting, information, and financial rights
• Different classes of shares may carry different rights.

Classes of Shares

• Common shares typically carry voting rights, dividends, and dissolution proceeds.
• Preferred shares get preference in dividend and payout distribution.

Shareholder Right to Vote

• Shareholders have rights to attend general meetings and vote.
• They can introduce motions and ask questions.
• A proxy is a person authorized to exercise a shareholder's voting rights.

Shareholder Right to Information

• Shareholders have the right to view the company's annual financial statements.
• They can request to have an appointed inspector if there is concern over management misconduct.
• They can access relevant records such as minute books.

Shareholder Financial Rights

• Shareholders are entitled to dividends.
• Assets of the corporation during dissolution can be claimed by the shareholder.
• Pre-emptive rights give shareholders a preferential right to purchase additional shares.

Shareholder Remedies

• Dissenting shareholders have the option of forcing an appraisal of their shares for fair value if the corporation undergoes significant changes.
• A shareholder can sue on behalf of the corporation if its interests are harmed.
• The oppression remedy is used to protect shareholder rights if their interests are harmed.

Other Shareholder Remedies (Optional)

• A shareholder's agreement defines rights and the relationship among shareholders.
• Unanimous shareholders' agreements restrict the powers of directors and retain power among shareholders.

Case 16.3 (1)

• The corporation Intramodal did not comply with many formal requirements of the CBCA.
• The dealings between the parties involved in the corporation were informal.

Case 16.3 (2)

• Mennillo, a shareholder, sought relief under the oppression remedy in their corporate relationship between him and Rosati.
• The court held that the corporate laws were not paramount for oppression issues; real-life business realities should be used to gauge damages.

Business Application of the Law 16.4 (1)

• Shareholders' agreements are used to manage potential risks in business relationships.
• Agreements help define relationships, manage problems, and allow for potential severance.

Business Application of the Law 16.4 (2)

• Agreements related to company management, rights of shareholders, market provisions, capital contributions, and dispute resolution are common.

Creditor Protection (1)

• A corporation is responsible for its liabilities.
• Shareholders cannot strip assets from the corporation to avoid paying off debts.
• Creditors have a priority claim over shareholders in the case of insolvency.

Creditor Protection (2)

• The Canada Business Corporations Act (CBCA) has provisions to protect creditors from shareholder abuses.
• Prevents a corporation paying dividends if they jeopardize their debts.
• Paying dividends if it causes insolvency
• Creditors can use oppression remedy to protect against prejudicial conduct

Termination of the Corporation

• Winding up: The process for dissolving a corporation, a complex process.
• Lapse: When a corporation stops meeting legal requirements, a simpler process.
• Court order: Courts can order termination when it's just.
• Bankruptcy: When the corporation is declared bankrupt.

Introduction to Property Law

• The meaning of property as defined by law
• Different forms and types of property
• How property interests are acquired
• Various rights and obligations associated with property

Categories of Property

• Personal property: Land and things permanently attached
• Real property: Everything other than land and permanently attached things

Real Property

• Land and permanently affixed items
• Includes land, buildings, mines, minerals and aboriginal titles land.

Business Application of the Law 17.1 (1)

• Land title rights are protected by various statutes and treaties.
• Aboriginal title rights incorporate enjoyment, occupancy, possession, economic benefits and proactive management of the land.
• Aboriginal title acknowledges prior indigenous occupancy of the land.

Business Application of the Law 17.1 (2)

• Aboriginal title is distinct from other property interests.
• This type of title cannot be sold as it's a collective form held for present and future generations.
• Rights include possession, enjoyment, and management of the land.
• Uses of land are not limited to traditional customs.

Business Application of the Law 17.1 (3)

• A duty to consult and accommodate is triggered when the Crown has knowledge of the possibility that indigenous rights or title might be affected by a proposed action.
• The required level of consultation depends on the strength of the indigenous claim to the land.

Personal Property (1)

• All property that isn't real property.
• Involves tangible and intangible property.
• Tangible property is concrete and physical, sometimes called chattels or moveables.
• Intangible property has legal value such as rights or claims

Personal Property (2)

• There is not a comprehensive system for registering personal property as with real property.
• Specialized registries exist for motor vehicles, trademarks, and patents.
• Registration is often impractical given that personal property is highly mobile.

Business Application of the Law 17.2

• Should all things be privately owned by individuals or businesses?
• There is growing recognition of fresh water as a right, not just a property interest.

Acquiring Property Rights

• Land can often be purchased or leased.
• Goods can be acquired through purchasing or manufacturing.
• Insurance coverage can be bought.
• Accounts receivables are established through goods or services that are exchanged with the consumer in a business transaction
• Intellectual property can be acquired through creation or recognition.

Business Application of the Law 17.3 (1)

• Disputes about ownership of sperm/other human tissue when stored for later use

Business Application of the Law 17.3 (2)

• It is unclear if sperm and ova are inheritable from deceased individuals.
• Most legal issues require written consent to use sperm/ova of the deceased.

Legal Rights Associated with Property

• Unlike U.S. law, Canada's Charter of Rights and Freedoms does not provide constitutional protection for property.
• Protections for property are found in various statutes.
• Common law may protect property rights through legal remedies such as nuisance, trespassing, and passing off.

The Bundle of Rights

• Owning property includes several rights.
• Right to Exclude
• Right to Possess and Use
• Right to Transfer or Dispose

Right to Exclude

• Property owners have legal rights to prevent others from interfering with use or entering their property.
• Common law, like the tort of trespass, recognizes property owners' right to exclude others.
• Copyrights allow owners the right to restrict copying or modification.

Case 17.1 (1)

• The Tŝilhqot'in Nation have resided in the BC province for centuries
• The lands in question weren't surrendered in a treaty.
• The province granted logging rights contrary to the Tŝilhqot'in Nation's claim.

Case 17.1 (2)

• Court decisions in favour of the Tŝilhqot'in Nation recognized and upheld their Aboriginal title.
• The courts determined the area was regularly occupied, and maintained exclusive rights.

Technology and the Law 17.1 (1)

• Legalities surrounding drone use in relation to private property

Technology and the Law 17.1 (2)

• Governing rules for operating drones in Canada, based on provincial and federal guidelines

Right to Possess and Use

• Ownership of property, and right to possess property; these rights may be separated as in a lease.
• Leases are contracts transferring property possession for a certain time period.
• Inventions may be licensed to others, to produce, manufacture or sell for a fee.
• Business names can be restricted by trademarks

Right to Transfer or Dispose

• Property is usually transferable as a normal legal right.
• In certain circumstances (such as aboriginal land or leased property), the rights may be limited or restricted.
• A trust is a legal arrangement where one party holds the legal title of the property in the interest of someone else

Legal Obligations Associated with Property Ownership

• Property owners commonly owe duties as well as rights.
• They may be beholden to governmental rules and regulations, especially with land ownership and use.

Bailment of Personal Property (1)

• Bailment: A temporary transfer of ownership of personal property from one person to another.
• Examples: Lending items such as a car, leaving things at a garage, and leaving items at retail stores and shops.
• Bailor or bailee can be either a person or business

Bailment of Personal Property (2)

• A bailment requires a voluntary transfer of possession, with the intent to return the item, by the bailor to the bailee
• The parties must agree to return the item

Bailment of Personal Property (3)

• The liability of a bailee (recipient of the personal property) is decided by common law and any contract stipulations.
• Statutory regulations may apply to certain types of bailees like warehouses and innkeepers.
• Bailees are often held responsible for the wrongdoing of their employees

Common Law Liability of Bailees

• Depending on the specific facts of the case, a court must evaluate aspects like payment, benefit, and expertise.

The Contract of Bailment

• A bailment can exist independently of the contract, but a written contract is recommended.
• The contract should include details like services offered, payment terms, liability limits, and remedies for failure.

Specialized Bailments (1)

• Certain bailments, such as transportation, storage, repair, or lodging, are subject to special regulations.

Specialized Bailments (2)

• Bailees who provide repairs could hold a lien on the property for unpaid services.
• Storage of goods, and contracts related to storing goods.

Specialized Bailments (3)

• Common carriers' standard of care is high, implying greater liability for losses; agreements restrict liabilities to a set amount
• Lodging establishments (innkeepers) must take extensive care of goods

Case 17.2

• A recreational vehicle seller agreed to store a trailer for free.
• The trailer was stolen after security checks, and the seller (bailee) had not been grossly negligent in keeping the trailer secured.
• The court found that the bailee's measures were similar to other businesses with similar situations, not falling within negligent standards.

Business Application of the Law 17.4

• Defining the scope of liability within a bailment contract helps to manage risk.
• Unclear or confusing terms might be challenged if they're not brought forth in a clear manner to the customer as is reasonable

Intellectual Property

• The results of creative work, such as ideas, expressions, and unique design elements, as protected by various Canadian laws.

Patents

• Patents are a form of legal protection for inventions; they grant the inventor a monopoly to manufacture, use, or sell the invention.
• Patents may cover technologies (such as new medical treatments or manufacturing processes), as well as physical goods or devices/components
• Patents are essential for businesses in sectors like pharmaceuticals, chemistry, electronics, and manufacturing.
• Patents can be used to stop others from using new technologies

Case 18.1 (1)

• Monsanto created and patented a variety of genetically modified canola for use in agriculture.
• The crops could withstand Roundup herbicide, enabling weed removal without harming the crop.
• Monsanto licensed these canola products to farmers.

Case 18.1 (2)

• Schmeiser, against the instructions from Monsanto, cultivated canola from blown-in seeds without purchasing seeds from the company.
• Monsanto claimed infringement; the court ruled that patent rights also covered the components of a product (i.e. genes and cells).

Exclusions from Patent Protection

• Some things are excluded from patent protection under the law due to various factors, such as the previously existing protection of those things under other areas of law (patenting software, surgical procedures) or due to policy reasons (illegal activities, scientific principles).

Case 18.2

• Amazon created a method to reduce the buying process online.
• It claimed a patent for the system.
• The patent was denied due to it being a business method rather than a procedure.

Requirements for Patentability

• An invention has to be new, useful, and non-obvious to be patentable.
• A patent is not available for inventions that have been previously published, used in public, or disclosed.

Patent Protection and Application (1)

• Unlike other intellectual property rights; patent protection does not arise automatically
• A patent application must be filed.
• A patent agent helps to prepare the application.
• The application must comply with the law to be processed.

Patent Protection and Application (2)

• The inventor is typically the first owner.
• Employees who invent something during their work are not typically the owners unless there is a specific agreement or their job is inventing.

Patent Protection and Application (3)

• The preparation of patent applications needs a proper description and claims.
• The description clarifies the details of the invention while the claims outline its scope and what the inventor wishes to be granted exclusive rights over.

Patent Protection and Application (4)

• The application goes through an examination process.
• If a patent is approved, it is granted.
• The patented items may include the word "patented" on them

Patent Protection and Application (5)

• Once approved, the patent owner has exclusive rights to make, use, and sell the invention in the granted region.
• Patents are issued in the context of a specific geographic area.
• If a product is invented elsewhere, but developed and patented in a specific country, the protections of the patent only apply within that country.

Industrial Designs

• Industrial designs cover visual aspects (shape, colour, pattern) of a created/manufactured product or service

Requirements for Registration, Registration Process, and Protection

• Applications of industrial designs may need representations (in picture form or detail), and meet the requirements set forth by the legislation

Trademarks

• A trademark is an identifier.
• A trademark identifies a product or service to distinguish it from others

Traditional and Non-traditional Trademarks (1)

• A trademark can encompass many things like words, letters, symbols, shapes, holograms and scents, as well as multi-dimensional objects and actions.

Traditional and Non-traditional Trademarks (2)

• A trademark can be a symbol, three-dimensional shape (such as a bottle), a hologram, or other forms of expression.

Traditional and Non-traditional Trademarks (3)

• A trademark may consist of a taste, scent, or colour.

Common Law Trademarks (1)

• Unregistered trademarks are subject to the common law
• Common law protection for a trademark exists when the company uses it in or around its locale or region.
• The rights extend to places where the product's reputation is recognized

Common Law Trademarks (2)

• Common-law trademark infringement can be addressed via passing-off law, a tort
• Registered trademarks receive nationwide recognition
• Registration creates a presumption of ownership and validity

Trade Names

• Trade names are names a business uses to operate.
• They are usually registered with trademark laws.

Trademarks and Domain Names

• Domain names are website addresses; cyber-squatting is the use of trademarked domain names not in the rightful owner's control.
• Domain names can be registered for commercial purposes or to attempt to limit the domain name registration for the owner.

Requirements for Registration of Trademarks (1)

• An applicant must have proof of use of a trademark.
• An applicant must prove that the trademark is distinct or could become distinguishable to competitors or other users.

Requirements for Registration of Trademarks (2)

• Trademarks are not registered if they are already taken, or are descriptive, or deceptively misdescriptive of their purpose.

Case 18.3 (1)

• Diageo sells Captain Morgan rum using a 17th-century privateer's image.
• Heaven Hill sold Admiral Nelson rum, also referencing a historical naval character.
• Diageo sued Heaven Hills for passing off, trademark infringement, and depreciation of goodwill.

Case 18.3 (2)

• Courts decided Diageo’s goodwill and significant aspects of its name were valid.
• Heaven Hills infringed on the registered trademarks of Diageo.
• The conduct of Heaven Hills was likely to cause public confusion.

Registration Process and Protection

• The first user or creator of a trademark in Canada is eligible for registration.
• Trademark agents conduct registration searches.
• Registered trademarks grant exclusive rights for a ten-year period.

Business Application of the Law 18.1

• The Tragically Hip sued Mill Street Brewery for trademark infringement since the beer's name was similar to a song's title
• The legal issue was whether the beer's name caused confusion for consumers.
• The court ruled that the trademark was not a copy and was different, thus not an infringement.

Copyright

• Copyright protects original literary, dramatic, musical, and artistic works
• It grants rights of exploitation for the author's recognized work
• Protects underlying expressions of work, but not ideas or facts, slogans, etc.

Requirements for Protection

• Copyright protection is usually automatic when the work is created or recorded.
• Original works receive automatic protection
• Certain original works have an optional registration process; with that registration, a presumption of ownership is made.
• Original works, or works created from other similar works, need a creative component and a recognizable form

Rights Under Copyright (1)

• Reproducing the form of the work

Rights Under Copyright (2)

• Communicating with the public
• Exhibiting the work to the public

Copyright Infringement

• Copyright infringement occurs when someone copies or modifies a work without permission from the owner.
• Copying whole works or parts that have a key element/meaning constitutes copyright infringement
• Making agreements (to settle) with users can help to mitigate enforcement difficulties

Case 18.4 (1)

• Robinson created sketches, storyboards, scripts, and promotional materials for a children's TV show titled Robinson Curiosity.
• Obtained copyright registration in 1985
• In 1995, Cinar Corporation created a show titled Robinson Sucroë (which was not a direct copy of Robinson Curiosity). Robinson Curiosity was accused of copyright infringement by Cinar.

Case 18.

Test your knowledge on key aspects of business law, including the liabilities of bailees, types of bailment, and shareholder rights. This quiz covers important concepts that every business law student should understand and is essential for those in legal studies. Prepare to dive into contract obligations and shareholder entitlements!