Canadian Business Law Fall 2024 Past Paper PDF

Join: 725533 Abraham Thomas Courses / Canadian Business Law - Fall 2024 - 16 Content Cl G d b k My Spaces / Chapter 18: Intellectual Property...

Join: 725533 Abraham Thomas Courses / Canadian Business Law - Fall 2024 - 16 Content Cl G d b k My Spaces / Chapter 18: Intellectual Property Fullscreen All Content Review Chapter 18: Intellectual Property OBJECTIVES [A] After studying this chapter, you should have an understanding of the nature of intellectual property the rights that attach to intellectual property how intellectual property is acquired  how to protect the intellectual property assets of an organization Business Law in Practice Since graduating from university three years ago, Estelle Perez has been employed in the engineering department of ELEX Technologies Inc, a small manufacturer of electronic products including sensors, mobile phones, and wireless routers. Estelle’s main responsibility has been to devise better and more efficient production methods. Although she likes her job with ELEX, Estelle’s ultimate goal is to start a company that would focus on her real passion, namely invention and design. Driven by this ambition, Estelle spends virtually every evening and weekend experimenting with her own highly innovative product ideas. Though ELEX is a successful company, it faces many challenges. For example, last year alone, as much as 15 percent of its products malfunctioned and were returned by customers, resulting in lost sales and profits. ELEX confirmed that product breakdown was being caused by electrostatic discharge (ESD) during shipping, a huge problem for electronics manufacturers across the board. Estelle concluded that the main industry solution relied upon by ELEX, that of using plastic packaging to reduce ESD, had been neither efficient (witness ELEX’s failure rate) nor environmentally friendly (because all that plastic simply ended up in landfills). Estelle has come up with a seemingly optimal solution. She has designed protective packaging made of recyclable conductive paper, which has the ability to absorb the damaging effects of static electricity. Estelle’s design calls for the static protection to be woven into the fibre of the paper, which could, in turn, be converted into boxes, bags, and envelopes. She has even figured out how to add colour options to the packaging, thereby providing customization opportunities to suit the commercial customer’s individual marketing requirements. Estelle believes in her new product and would like to quit her job with ELEX in order to work full time on it. However, she also worries about her lack of experience on the business side of product development and how she could ever keep her invention a secret while exploring the possibility of funding. Also, assuming the product is successful, Estelle is concerned that she will be required to share the proceeds of her invention with ELEX. Estelle knows that the future of her anticipated new product will depend, in part, on marketing, and she has already come up with a catchy name for her product—Chargeless. She does not think anyone else is using that name except a financial services company that deploys it as part of the slogan, “We charge less.” As her name has a different spelling and is in an entirely different business sector, Estelle concludes that she will be okay in using Chargeless as her product moniker. 1. Is Estelle’s idea a patentable invention? 2. Who owns the rights to Estelle’s invention: Estelle or ELEX? 3. How can Estelle protect her idea while she seeks funding from potential lenders and investors? 4. Is Estelle entitled to use the name “Chargeless” for her product, and should she do anything to protect the name? Introduction Intellectual property is a term often used to describe the results of intellectual or creative processes. Put another way, the term is used for describing ideas or ways of expressing ideas. Some common business examples of intellectual property include the following: recipes and formulas for making products manufacturing processes methods of extracting minerals advertising jingles business and marketing plans the distinctive name given to a product or service Estelle’s method of weaving static protection into the fibre of paper and the name for her product are also examples. The term intellectual property is also used to describe the “bundle of rights” that people have regarding their ideas or the ways in which they are expressed. These rights are rewards or incentives for creating and developing ideas. There are differing rights in intellectual property as the law gives varying types of protection to its many forms. The main categories of intellectual property laws are patents, trademarks, copyrights, industrial designs, and confidential (business) information. (Refer to Figure 18.9 for a comparison of these forms.) There are other laws, however, that provide protection for specific types of intellectual property. For example, there are laws that protect plant varieties, integrated circuit topographies, and personality rights. Intellectual property is a necessary and critical asset in many industries, as illustrated in these examples: Patents protect inventions and are essential to businesses in the pharmaceutical, electronics, chemical, and manufacturing industries, as patents may be used to exclude others from using new technology. Industrial designs protect the appearance of useful articles against copying and are relevant to businesses that offer goods to consumers. Trademarks serve to distinguish the goods or services of one provider from those of another and are essential to all businesses that sell goods or services to the public. Copyright prevents the copying of certain works and is the basis for businesses involved in art, publishing, music, communications, and software, as copyright provides the basis for a saleable product. The law governing confidentiality is the means of protecting such information as marketing plans, customer lists, databases, and price lists, and is crucial to all businesses. Intellectual property offers both opportunities and challenges to business. Businesses can gain a competitive advantage by developing new products, innovative business methods, and creative brand names. Also, they can exploit these things by assigning or licensing their use to other businesses. However, the development of various technologies—such as photocopiers, video cameras, computers, and smartphones—has made it easier for others to “take” intellectual property. This chapter explores the creation, acquisition, and protection of intellectual property. Quiz Question 18.1 Mark as: None Review Which of the following is least likely to qualify for intellectual property protection? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a a unique recipe used by a restaurant b the unique name of a restaurant a restaurant’s practice of selling only c organic foods d a restaurant’s advertising jingle Show Show Correct Submitted Answer Answer Check My Answer Creation of Intellectual Property Rights Estelle’s intellectual property comprises the method for weaving static protection into the fibre, the name of her product, and any written materials such as drawings, plans, and brochures. Various aspects of her intellectual property may qualify for protection under different legal regimes. Patents Estelle’s method for protecting electronic products may qualify for patent protection. A patent is a statutory right that provides protection for inventions. Patents Defined The Patent Act defines an invention as “any new and useful art, process, machine, manufacture or composition of matter or any new and useful improvement in any art, process, machine, manufacture or composition of matter.” The definition is very broad and encompasses a number of different kinds of inventions such as the following: processes or methods (e.g., a pay-per-use billing system, a system for applying a selective herbicide to improve crop yield, a method of cleaning carpets) machines or apparatuses (e.g., computer hardware, a hay rake, a vacuum cleaner) products or compositions of matter (e.g., pharmaceuticals, chemical compounds, microorganisms) Estelle’s invention may qualify for patent protection as a new and improved method for protecting electronic products from electrostatic discharge. Substances intended for food or medicine, as well as the processes for producing them, are patentable. The question of whether new life forms created as the result of genetic engineering should be patentable has been the subject of much controversy. CASE 18.1 Monsanto v Schmeiser, 2004 SCC 34 THE BUSINESS CONTEXT: In 2002, in Harvard College v Canada (Commissioner of Patents), the Supreme Court of Canada held by a narrow five-to-four margin that higher life forms are not patentable. Although the process for genetically modifying cells was held to be patentable, the end result, a mouse susceptible to cancer, was not. The decision was a large disappointment to many in the biotechnology industry, as Canada’s major trading partners, including the United States, Europe, Australia, and Japan, permit such patents. The decision also created uncertainty as to the scope of protection afforded to biotechnology- related inventions. FACTUAL BACKGROUND: Percy Schmeiser is a Saskatchewan farmer who grows canola. ­- Monsanto is a multinational firm specializing in biotechnologies used in agriculture. In the 1990s, Monsanto introduced Roundup Ready canola, a variety of genetically modified canola containing genes and cells patented by Monsanto. Roundup Ready canola is resistant to Roundup, a pesticide, which means that the canola plants can be sprayed with Roundup to kill weeds but not harm the crop. Monsanto licensed its Roundup Ready canola to farmers for a fee, provided the farmers purchased the canola seeds from an authorized Monsanto agent. Schmeiser did not purchase Roundup Ready canola seeds, nor did he obtain a licence from Monsanto. By chance, he discovered some Roundup Ready canola growing on his property. It is unclear how the canola got onto his property, but it is possible that the seeds blew there from a neighbour’s land. Schmeiser collected and cultivated the seeds and most of his 1998 canola crop comprised Roundup Ready canola. Once his activities were detected, Monsanto sued him for patent infringement. THE LEGAL QUESTION: Had Schmeiser, by collecting and planting the seeds and harvesting and selling the plants, infringed Monsanto’s patents relating to genetically modified canola? RESOLUTION: By a narrow five-to-four margin, the Supreme Court of Canada held that Monsanto’s patents were valid and that Schmeiser had infringed them. Schmeiser had argued that he had not “used” the invention by growing canola plants (Figure 18.1) because the plants are not covered by Monsanto’s patents, only the plant cells containing the modified gene. The majority disagreed. The court held that the plants were composed of modified plant cells containing the modified genes, and therefore growing the modified plants constituted use of the invention. The majority used the following analogy: “If an infringing use were alleged in building a structure with patented Lego blocks, it would be no bar to a finding of infringement that only the blocks were used and not the whole structure.”(at para 42) In essence, the court confirmed the patentability of cells and genes, and held that the rights in patented genes and cells extend to plants containing them. Video 18.1 discusses Monsanto v Schmeiser, alongside the release of a movie about this case. Video  Please visit the textbook on a web or mobile device to view video content. Figure 18.1 What are the benefits of granting Critical Analysis Loading question... Quiz Question 18.3 Mark as: None Review  What legal principle was established by the Supreme Court of Canada in Monsanto v Schmeiser, 2004 SCC 34? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. Growing plants that contain patented cells and genes is not an infringement of the a patents as growing is not a “use” of the patents. b Higher life forms are not patentable. Farmers who find genetically modified seeds that have drifted onto their property c have the right to sue the patent holder of the seed. Cells and genes are patentable, and the d rights in patented genes and cells extend to plants containing them. Show Show Correct Submitted Answer Answer Check My Answer Exclusions from Patent Protection There are also exclusions or exceptions to what may be patented. The most common are the following: Things that receive exclusive protection under other areas of the law. For example, computer programs (i.e., software) are not patentable, as they receive protection under copyright law. They could, however, receive patent protection as part of a broader patent, as, for example, a computerized method of controlling the operation of a plant. Things that do not meet the definition of a patent. For example, scientific principles,  natural phenomena, and abstract theorems are “discoveries” as opposed to inventions and are therefore not patentable. A practical application of a theory could, however, qualify for protection. Things that are, for policy reasons, not patentable. For example, methods of medical or surgical treatment are not patentable; neither are illicit objects. Also, historically, business methods such as franchising arrangements, accounting methods, insurance schemes, tax loopholes, and protocols for interacting with customers have not been patentable. This is because patents have been largely confined to physical inventions such as a method of manufacturing a physical article or a method of operating a mechanical device. Business methods usually do not involve elements that are physical. The following case, which is the first legal decision in Canada to consider the validity of a business methods patent, however, holds that business methods are not precluded from being patented. Quiz Question 18.4 Mark as: None Review Dr. James Martin is a medical researcher and surgeon. He has developed a new surgical technique that is truly innovative and will surely save the lives of many people. He is hoping to patent his new process. What will likely be the result of Dr. Martin's patent application? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. Provided that the procedure is truly a innovative, a patent will likely be granted. The patent application will likely be b denied due to the difficulty of proving  utility. The patent application will be granted c because surgical applications generally are granted. The patent application will be denied for d policy reasons. Show Show Correct Submitted Answer Answer Check My Answer CASE 18.2 Canada (Attorney General) v Amazon.com Inc, 2011 FCA 328 BUSINESS CONTEXT: In both Canada and the United States, there has been much debate about the patentability of methods of conducting business. The following decision provides some clarity on the law in Canada and brings it more in line with the law in the United States. FACTUAL BACKGROUND: In 1998, Amazon.com applied for a patent for an invention entitled “Method and system for placing a purchase order via a communications network.” The invention is a system that allows a purchaser to reduce the number of interactions when ordering over the internet. A purchaser can visit a website, enter their user and payment information, and then be given an identifier that can be stored as a cookie on their computer. On a subsequent visit to the website, a server will be able to recognize the customer’s computer with the identifying cookie and retrieve the user and payment information. By using this system, a customer could purchase an item with a single click of the mouse. The Canadian Intellectual Property Office rejected Amazon’s “one-click” patent application on the basis that “a claimed invention which in form or in substance amounts to a business method is excluded from patentability” or alternatively, the claimed subject matter did not fall within the meaning of “art” in the Patent Act. Amazon.com appealed to the Federal Court. LEGAL QUESTION: Is a business method patentable? RESOLUTION: The Federal Court held that there is no authority in Canadian law to exclude business methods from patentability. A business method can be patentable under appropriate circumstances. To be patentable, an invention must fall within one of the categories of art, process, machine, manufacture, or composition of matter. The category for business methods is “art.” Relying on the Supreme Court of Canada’s decision in Shell Oil Co v Commissioner of Patents, the court stated that to be a patentable art, the subject matter of the claim (a) must not be a disembodied idea but have a method of practical application; (b) must be a new and inventive method of applying skill and knowledge; and (c) must have a commercially useful result. The court applied the test and held ­Amazon’s one-click application to be patentable. The Commissioner of Patents appealed. The Federal Court of Appeal largely affirmed the lower court’s legal analysis. However, the court granted the Commissioner’s appeal and ordered that the one-click application be sent back to the Canadian Intellectual Property Office for re- evaluation (Figure 18.2). The court ruled that the lower court had insufficient evidence to determine whether the one-click application constitutes patentable subject matter. Critical Analysis Loading question... Figure 18.2 What is the downside to allowing b POSTSCRIPT: The Canadian Intellectual Property Office ultimately allowed Amazon’s patent application. Requirements for Patentability Not all inventions, however wonderful, are patentable. A patent will be granted only for an invention that is new, useful, and unobvious. New The invention must be new or novel. An invention need not be absolutely new, however. It is new if it has not been disclosed publicly. This means that any public disclosure, public use, or sale of the invention prior to filing for a patent renders the invention old and unpatentable. For example, displaying the new product at a trade show, distributing marketing brochures that describe or display the product, or advertising the product in a way that reveals the invention is a disclosure and a bar to obtaining a patent. There is, however, a one-year grace period. If the inventor or someone who derived knowledge from the inventor makes a disclosure within the year preceding the filing of the application, this will not operate as public disclosure. Estelle needs to determine whether her new and improved method of protecting electronic products from electrostatic discharge has been disclosed to the public in some manner. She can have a patent agent search relevant literature so that an opinion can be formed as to whether her invention is novel. Useful An invention must solve some practical problem, and it must actually work—that is, it must do what it purports to do. An invention that does not work is useless and unpatentable. The invention must have industrial value, although it need not be commercially successful. The invention must have practical use as opposed to being a mere scientific curiosity. For example, a perpetual motion machine lacks utility, as it does not have a practical use. Estelle’s product meets the requirement of usefulness as it solves an identifiable industry problem and it apparently works. Unobvious The third requirement relates to inventiveness. It means that there must be some ingenuity or inventive step involved in the invention. Changes to something that would be obvious to someone skilled in the art to which the invention pertains would not be patentable. For example, simply using a different material for making a product would not be patentable, as it does not involve an inventive step. The test is difficult to apply in practice because it involves ascertaining the state of the art or knowledge prior to the invention and analyzing whether the invention was merely the obvious next step in the state of the knowledge or instead involves an inventive step. The question of whether Estelle’s new method is unobvious can be answered only by asking someone knowledgeable in the field of electrostatic discharge (ESD). The patent agent who searches the literature to determine whether an invention is novel will also express an opinion on whether the invention is obvious. That said, the industry’s problems with ESD are indicative that Estelle’s invention is unobvious and involves an inventive step. Quiz Question 18.6 Mark as: None Review With respect to the eligibility of an invention for patent protection, which of the following would a patent agent most likely say is incorrect? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a must be new or novel  must be useful and solve some practical b problem c must be filed within two years of invention d must be an unobvious inventive step Show Show Correct Submitted Answer Answer Check My Answer Patent Protection and Application Patent protection, unlike some other intellectual property rights, does not arise automatically. An application for a patent must be filed with the Canadian Intellectual Property Office. Timing of the application is a critical concern because the patent regime is based on a first-to-file system. This means that if more than one person has independently invented the same process, method, or machine, the Canadian Intellectual Property Office gives priority to the first person to file the application. The inventor is generally the first owner of the invention and thus the person entitled to apply for a patent. The Patent Act does not contain specific provisions for the ownership of inventions created by employees in the course of employment; generally, however, an employee will be the owner unless (1) the employee was specifically hired to produce the invention and makes the invention in the course of employment, or (2) there is an express or implied agreement that precludes the employee from claiming ownership of inventions relating to and developed in the course of employment. As Estelle has not been employed to produce a method to protect electronic products, and as she invented the method on her own time, she is the “inventor” and entitled to apply for a patent. Assuming she has not signed an agreement to the contrary, she has no obligation to share the invention and its proceeds with her employer. Employers should consider whether employment contracts, as well as contracts with consultants, address the ownership of all intellectual property including inventions produced in the course of employment. The preparation of a patent application is a highly complex matter and is normally done by a patent agent, who has particular expertise in this area. The application has two main parts. One part describes how the product is made or the best way to perform the process or method; this is known as the specifications. The other part, known as the claims , is the sequentially numbered, single-sentence definitions of the invention. This part in effect defines the exclusive rights enjoyed by the patent holder. In short, the specifications tell the readers how to put the invention into practice after the patent expires. The claims tell the readers what they cannot do prior to the expiry of the patent. The application is examined by the Canadian Intellectual Property Office to ensure that the invention has not already been invented and that the application complies with the Patent Act. If the application is successful, a patent is issued upon the payment of the required fee. The word “patented” and the patent number may be put on all manufactured goods. Marking is not mandatory, but it is legally useful, as it notifies others of the existence of a right and reduces the number of innocent infringers. Often manufacturers will put the term “patent pending” or “patent applied for” on their products before the patent is issued. This warns others that a patent may eventually be issued for these products and they could be liable to pay damages for infringing the patent once the patent is granted. A patent gives the inventor the right to exclude others from making, selling, or using the invention to which the patent relates for a period of 20 years from the date of filing the application so long as the appropriate maintenance fees are paid. Patents are national in nature in that they exist only in the country in which the applications are made and granted. The rights under a Canadian patent do not apply elsewhere. For example, an owner of a Canadian patent cannot stop the use or sale of the invention in the United States, unless the owner also has a U.S. patent. Estelle’s method of weaving static protection into the fibre of paper qualifies for patent protection if the method is considered to be new, useful, and unobvious. If it is patentable, she will need to apply for a patent and pay the requisite fee. The patent process requires her to disclose her discovery to the world; in return, she receives a monopoly over the invention for 20 years. The patent process is costly and time consuming, so Estelle needs to evaluate the costs and benefits of pursuing this route. Quiz Question 18.7 Mark as: None Review Under what circumstances will an invention created by an employee be owned by the employer? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. The employee was hired to produce the a  invention. The invention occurred while the worker b was an employee of the employer. c The employer files a patent application. The employer had the employee sign a d confidentiality agreement. Show Show Correct Submitted Answer Answer Check My Answer Industrial Designs The Industrial Design Act provides protection for the appearance of mass-­produced (i.e., numbering more than 50) useful articles or objects. Industrial Designs Defined The term industrial design is not defined in the Act. An industrial design is usually taken to mean a feature of shape, configuration, pattern, or ornament, or any combination of these, that in a finished article appeals to and is judged solely by the eye. Put another way, an industrial design protects the shapes or ornamental aspects of a product but does not protect features that are dictated solely by function. Features that have both a useful and a visually appealing aspect are protectable. Typical examples of industrial designs are the shape and ornamentations applied to toys, vehicles, furniture, and household utensils, and the patterns applied to wallpaper or fabric (Figure 18.3). Also, computer keyboards, cell phones, computer interfaces, electronic or computer- generated icons, and computer-generated animated designs may be registered as industrial designs. Figure 18.3 What features of consumer goods Requirements for Registration To be registered, an industrial design must be original and novel. The originality standard is lower than the standard of inventiveness found in patents. A high degree of ingenuity or creativity is not necessary. That said, an industrial design must be substantially different from prior art, be more than a simple variation, and contain some spark of inspiration. An industrial design must be novel. Disclosure or use of the industrial design or of articles displaying, bearing, or embodying the industrial design is a bar to registration unless it was within the year prior to filing the application. Quiz Question 18.8 Mark as: None Review  Which of the following would immediately bar the registration of an industrial design? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a payment for the application by another b novel application of a disclosed design disclosure or use more than 18 months c ago d a low degree of creativity Show Show Correct Submitted Answer Answer Check My Answer Registration Process and Protection As with patents, industrial design protection does not arise automatically. An application, usually drafted by a patent agent, must be submitted to the Canadian Intellectual Property Office. The owner of the rights in the design is entitled to make the application. The designer is the owner unless the design was ordered and paid for by another. The application normally consists of a written description and a graphic depiction, photograph, or drawing. If the application meets the requirements of the Act, a certificate of registration will be issued. The registration gives the owner the exclusive right to make, import, or sell any article in respect to which the design is registered. Also, the owner of the design can stop competitors from manufacturing and selling a design that looks confusingly similar. The industrial design term is the later of 10 years from the registration date and 15 years after the filing date. It is not mandatory to mark the design to indicate that it is registered; however, doing so will enhance the owner’s rights in a successful infringement action. If the product is marked, a court may award monetary damages for infringement. If there is no marking, the court is limited to awarding an injunction. The proper marking is a capital D inside a circle (), set next to the name of the design owner (Ⓓ). Trademarks Estelle’s intellectual property also includes the name of her product—­Chargeless. This aspect of her intellectual property may qualify for protection under trademark law. Trademark Defined A trademark is a sign or combination of signs used to distinguish a person’s products or services from those of others. Its function is to indicate the source or origin of the goods or services. A trademark includes the following traditional and non-traditional marks: a word (e.g., Exxon, Xerox, Lego, Billabong) words (e.g., The Body Shop, The Pink Panther, Shake ’n Bake) a slogan (e.g., “Just do it,” “Mr. Christie, you make good cookies”) a design (e.g., McDonald’s golden arches, Disney’s cartoon characters) a series of letters (e.g., ABC for a laundry detergent, BMW for a car)  numbers (e.g., 6/49 for lottery services, 900 service for telephone operations) a symbol (e.g., a series of Chinese characters, Nike’s “swoosh”) a three-dimensional shape (e.g., Coca-Cola bottle, Perrier bottle) a hologram (e.g., dove in flight) a moving image (e.g., book being opened) a mode of packaging (e.g., goods wrapped in green cellophane ) a sound (e.g., lion’s roar) a scent (e.g., scent of strawberry) a taste (e.g., taste of black licorice) a colour (e.g., red and yellow for Mastercard logo, ochre for background of Interac’s logo) a texture (e.g., 100-grit sandpaper on surface of goods, fine leather on bottle, waffle-type texture on toilet paper) positioning of a sign (e.g., v-shaped stitching applied to a pocket, fanciful horse applied to a three-dimensional bottle) any combination of these (e.g., the words “London Fog” with a depiction of Big Ben for a brand of clothing) Trade Names Closely related to trademarks are trade names, which also receive protection under trademark law. A trade name is the name under which a business is carried on and it may overlap with the business’s trademarks. For example, in the case of Apple, the company name “Apple Inc” is the same as the company’s main trademark. In other cases, the trade name (i.e., Research in Motion Inc until it changed its name to Blackberry Inc) is completely different from the trademark (i.e., Blackberry). An important connection between the two is that the adoption of a trademark may prevent the use of an identical or similar trade name, and vice versa— that is, the adoption of a trade name can prevent the adoption of a trademark. For example, if Estelle calls her business Chargeless, then her adoption of this as a trade name prevents others from using the name or a similar one as a trademark in the same line of business. Common Law Trademarks Trademarks may be registered or unregistered. If unregistered, they are often referred to as common law trademarks. Whether registered or unregistered, trademarks receive protection under both the common law and the Trademarks Act. A common law trademark comes into existence when a business simply adopts and uses it. If Estelle starts using Chargeless to describe her product, then she has a common law trademark. Such a trademark is considered to be part of the goodwill of a company, and rights attach to it in much the same manner as they do to registered trademarks. Infringement of the trademark by a competitor using the same or a similar trademark can be addressed through the tort of passing off. The rights that attach to common law trademarks, however, tend to be more restrictive, and there are certain advantages associated with registration. A common law trademark has rights only in the geographic areas in which it has been used and in areas into which the reputation of the owner has spread. A registered trademark enjoys protection throughout the country. Registration is also advantageous in that it creates a presumption of ownership and validity. Quiz  Question 18.9 Mark as: None Review Which statement best explains the connection between trademarks and trade names? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. The use of both denotes the registration of a the distinguishing guise of business products. The use of both gives an indication that a b product meets a defined standard. Adoption of one by a business may c prevent registration by competitors of the other. Closely related trademarks are trade d names that receive protection under trademark law. Show Show Correct Submitted Answer Answer Check My Answer Trademarks and Domain Names A domain name is essentially an internet address. It consists of two or more elements divided into a hierarchical field separated by a “dot.” To the right of the dot is an abbreviation describing the root identifier or a top-level domain (TLD). A TLD can be generic (such as.com,.org, or.net), country-specific (such as.ca for Canada or.uk for the United Kingdom), sponsored (such as.edu for educational institutions and.gov for governments), or custom (such as.tech,.blog, or. clothing). (Figure 18.4) To the left of the dot is the second-level domain, which is usually a business name, trademark, or other identifier. For example, in tophat.com, “.com” is the TLD and “tophat” is the second-level domain. Domain names are controlled by organizations that act as registrars. The Internet Corporation for Assigned Names and Numbers (ICANN), a U.S. non- profit corporation manages most domain names with the exception of country-specific domain names, which are assigned by national authorities. For example, in Canada, the Canadian Internet Registration Authority (CIRA) is responsible for maintaining Canada’s internet domain names. The registrars issue names for a fee on a first-come, first-served basis. In addition, for.ca names, applicants must satisfy Canadian presence requirements such as being a Canadian citizen or permanent resident, a corporation incorporated in Canada, or owning a trademark registered in Canada. Figure 18.4 Why might a business want to register a domain n generic (.com), sponsored (.edu), or cu Domain names come into conflict with trademarks when a domain name is issued that includes another’s trademark. Sometime this occurs when two parties both have a legitimate interest in the trademark. For example, businesses such as Imperial Tobacco, Imperial Oil, and Imperial Margarine would all have a legitimate interest in a domain name containing “Imperial.” These disputes can be settled through litigation using the general law on the adoption and use of trademarks. Often, however, domain names are registered for illegitimate purposes, such as for the purpose of selling them to the trademark owners, as a means of advertising the registrant’s own services or products, to redirect traffic to the registrant’s own website, or to prevent the trademark owners from using them. These activities are generally known as cyber-squatting. In such cases, a complainant may negotiate the purchase of the domain name, institute court proceedings for trademark infringement, or use the dispute resolution procedures set up by the domain name provider. Both ICANN and CIRA provide a quick and cheap dispute resolution system to deal with bad-faith registration. To be successful, a complainant must prove that the domain name is identical or confusingly similar to the complainant’s trademark, that the registrant has no legitimate interest in the domain name, and that the name is being used in bad faith by the registrant. If the complainant is successful, the registrar can cancel the domain registration or transfer it to the trademark owner. Quiz Question 18.10 Mark as: None Review  What is cyber-squatting? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. the inadvertent use of a domain name that is too similar to that of an existing a business name such that consumers are confused the bad-faith practice of registering trademarks or trade names of others as b domain names for the purpose of selling the domain name to the rightful owner the bad-faith practice of using a domain c name without registering it the inadvertent practice of registering trademarks or trade names without d conducting a search to ensure the name is not already in use Show Show Correct Submitted Answer Answer Check My Answer Requirements for Registration To register a trademark, an applicant must demonstrate that they have title to the trademark, that the trademark is distinctive or capable of becoming distinctive, and that the trademark is registrable. Title An applicant may register only a trademark that they own. Ownership or title is not established by inventing or selecting a mark. It comes from the following: use of the trademark filing an application to register a proposed trademark  making it known in Canada A trademark is deemed to be in use in Canada if the trademark is on the goods or the packaging at the time of any transfer in the ordinary course of business. With respect to services, a trademark is deemed to be in use if it is used or displayed in the performance or advertising of the services. A trademark can be registered on the basis of proposed use. Actual use need not commence prior to the grant of registration but if after three years from the date of registration the trademark is not in use, it may be cancelled. Estelle may make an application to register “Chargeless” on the basis of proposed use. An application to register can be made on the basis that the mark, although not in use in Canada, is nonetheless well known in Canada. An applicant would need to demonstrate that the mark is, in fact, well known in Canada, that knowledge of the mark arose from advertisements that circulated in Canada, and that the applicant used the mark in another country. Distinctiveness The second general requirement goes to the heart of trademark law. The mark must be distinctive—in other words, it must actually distinguish the goods or services in association with which it is used. Invented words like “Lego,” “Exxon,” and “Kodak” are ideal candidates as they are inherently distinctive. Other, more descriptive words—such as “pleasant,” “sudsy,” and “shiny”— do not have the same quality of distinctiveness. They may gain this quality only through use in business and advertising. Registrability The Trademarks Act specifies that a mark must be “registrable.” To be registrable, the trademark must not be any of the following: The trademark must not be primarily the name or surname of an individual who is living or has died within the preceding 30 years (e.g., “Smith” or “Joe White”). It must not be descriptive of the character or quality of the wares or services, or their place of origin (e.g., “sweet” for apples, “Ontario wines” for wines from Ontario, or “shredded wheat” for cereal ). It must not be deceptively misdescriptive of the character or quality of the wares or services, or their place of origin (e.g., “sugar sweet” for candy that is artificially sweetened, or “all-silk” for a cotton blouse). It must not be the name in any language of any ware or service in connection with which it is used or proposed to be used (e.g., “avion” for airplanes, “wurst” for sausages, "zapatos" for shoes). It must not be confusing with regard to another registered trademark (e.g., “Mego” for children’s plastic building blocks; “Budway” for cannabis ). The trademark must not be an official or prohibited mark. Estelle’s product name “Chargeless” may be registrable depending on these factors. Although another business is using “charge less” in its slogan, this would not prevent the registration of Estelle’s name, as “charge less” is not being used as a trademark, and it is being used in an entirely different business. A key concern, however, will be whether the same or a similar trademark has been registered in the same industry and whether the mark is considered sufficiently distinctive. CASE 18.3 Diageo Canada Inc v Heaven Hill Distilleries et al, 2017 FC 571 THE BUSINESS CONTEXT: The sale of alcoholic beverages is big business and companies spend significant dollars protecting their brands and market share. Diageo Canada Inc (Diageo)— the Canadian subsidiary of ­London-based Diageo plc, one of the world’s largest producers of alcoholic beverages—sells several varieties of Captain Morgan, ­Canada’s best-selling rum. Diageo spends approximately $17 million per year advertising Captain Morgan rum, and sales in Canada are over $300 million per year, representing over 30 percent of the Canadian rum market. It is not therefore surprising that Diageo moved aggressively to prevent disruption to the value of its brand by the intrusion of a competitor into the Canadian market. FACTUAL BACKGROUND: Diageo sells all varieties of its rum under the brand, Captain Morgan, which features a nautical theme and a fanciful depiction of the 17th century privateer, Sir Henry Morgan. Diageo owns 10 Canadian trademark registrations covering various depictions of Sir Henry Morgan. Heaven Hills, the seventh largest alcohol supplier in the world, is a family-owned ­American company that sells rum products among other alcoholic beverages. Its five varieties of rum sold in Canada under the Admiral Nelson brand also have a nautical theme and feature a fanciful depiction of the 18th century British naval officer, Vice Admiral Horatio Lord Nelson (Figure 18.5). After Diageo learned of Heaven Hills’s sale of rum products to Canadian retailers, it sued for passing off, infringement of registered trademarks, and the depreciation of goodwill. Figure 18.5 Is the casual or ordinary purchaser of rum produ confused as to the source of Admiral Nelson rum? Why or w THE LEGAL QUESTIONS: Has Heaven Hills passed off its rum products as the goods of Diageo? Has Heaven Hills infringed Diageo’s registered trademarks? Has Heaven Hills depreciated the value of the goodwill associated with Diageo’s trademarks? RESOLUTION: The court held that Heaven Hills had passed off its Admiral Nelson rum products as those of Diageo’s Captain Morgan. The court determined the unregistered trade dress or “get up” (the overall visual appearance of the goods) associated with the Captain Morgan rum products constituted a valid and enforceable common law trademark. The three components of passing off were proven: 1. Diageo had significant goodwill (a positive association that draws consumers) in the Captain Morgan brand. This was established by reference to the sales of Captain Morgan rum products and the extensive amount of money spent on marketing and promotion efforts. 2. Heaven Hills deceived the public by directing attention to Admiral Nelson rum products in such a way as to cause or likely to cause confusion with the Captain Morgan brand. Confusion occurs if the use of both trademarks would lead to the conclusion that the goods came from the same source. The test is whether the average or ordinary consumer somewhat in a hurry would likely be confused. Evidence of source confusion was established by surveys conducted by experts. 3. As a result, Diageo could potentially sustain damage. The court also held that Heavens Hills’s use of its Admiral Nelson’s trademarks in association with rum products infringed Diageo’s registered trademarks. The resemblance between the Admiral Nelson character and the Captain Morgan character is significant and is likely to cause confusion between Admiral Nelson rum products and nine of Diageo’s registered trademarks. Finally, the court held that although Heaven Hills had not actually used any of Diageo’s trademarks, use of the Admiral Nelson trademarks is likely to depreciate the value of the goodwill associated with Diageo’s trademarks. This was particularly the case as some of the Admiral Nelson products exhibited quality control issues. The court awarded Diageo damages and permanently enjoined Heaven Hills from using the Admiral Nelson character or trade dress in Canada. It also ordered the destruction of all Admiral Nelson bottles, materials, packages, labels, and advertising material in Canada. Critical Analysis Loading question... Registration Process and Protection The first person who uses or makes a trademark known in Canada is entitled to trademark registration. In the absence of use, the first to file a trademark application is entitled to registration. Prior to applying for registration, a trademark agent usually does a search of the trademarks office database to ensure that the trademark or a similar one is not already registered. Federal and provincial business name registries and other sources such as trade journals, telephone directories, and specialty magazines are also consulted to determine whether there are common law rights. The application must comply with all the provisions of the Act, including the provision of a comprehensive list of products or services associated with the trademark. An examiner reviews the application, and, if it is acceptable, the trademarks office advertises the trademark in the trademark journal. Any interested members of the public can object to the registration on the grounds that they have a better title to the trademark than the applicant, that the trademark is not distinctive, that the trademark does not meet the requirements of registrability or that the application for registration was filed in bad faith. If there is no opposition or the opposition is overcome, the registration will be issued on payment of the appropriate fee. A trademark registration gives the owner the exclusive right to use the trademark in association with the goods and services specified in the registration. It also provides a right to prevent others from using a confusingly similar trademark. A trademark owner should clearly indicate its ownership of a trademark with the following marks: ® for registered trademarks ™ for unregistered trademarks Registration provides protection across Canada for a period of 10 years. The registration can be renewed for additional 10-year terms as long as the renewal fee is paid and the trademark continues in use. Quiz  Question 18.12 Mark as: None Review Woddington Farms Ltd has used its name combined with an outline of a rooster on its deli products for the past 20 years but has never registered a trademark. Would Woddington be successful in suing a competitor who attempts to use its name and symbol? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. no, because its trademark was not a registered no, because its name and symbol cannot b be the subject of a trademark yes, because an unregistered trademark c receives protection under the common law yes, because the name and symbol are d confidential information Show Show Correct Submitted Answer Answer Check My Answer BUSINESS APPLICATION OF THE LAW 18.1 The Tragically Hip Sues Mill Street Brewery over “100th Meridian” Beer The Tragically Hip is one of Canada’s most well- known rock bands and “At the Hundredth Meridian” is one of its most well-known songs. The song was a hit single on the band’s 1992 album, Fully Completely. The title of the song refers to the line of longitude that marks the beginnings of the Great Plains. The Hip, as the band is popularly referred to, has sued Trillium Beverage Inc doing business as Mill Street Brewery because of its “100th Meridian Amber lager” (Figure 18.6). The lawsuit, launched in 2021 claims that Mill Street by naming its beer after one of The Hip’s most popular tracks and by marketing its beer with reference to the Tragically Hip, has caused or is likely to cause confusion in Canada contrary to the Trademarks Act. The allegation is that Mill Street ‘s promotion of its 100th Meridian branded beer may lead consumers to infer a connection, collaboration, and association with the band. When The Hip embarked on its farewell tour in 2016, Mill Street posted images of the beer with captions promoting The Hip’s concerts and albums. One example of association shows a Facebook post by the Mill Street brewery that says 100th Meridian is “an appropriate beer to celebrate the Tragically Hip playing Yonge and Dundas Square.” Another example is an advertisement from the Mill Street brewpub in St. John’s, Newfoundland, announcing the bar would be broadcasting the Tragically Hip’s final concert on August 19, 2016, with a special on pints of 100th Meridian during the show. The Hip alleges that Mill Street has created a false impression between the beer and The Hip; there is no legal or business relationship between the two. Mill Street has claimed that its 100th Meridian, which was successfully registered with the Canadian Intellectual Property Office in 2015, does not refer to the Tragically Hip’s song but that the name refers to the place of origin of the beer’s ingredients. The name is meant to be attributed to farmers. Mill Street, should the case go to trial, may also argue that its marketing of the lager with reference to The Hip on social media was intended as a homage to the band’s legacy. The Tragically Hip wants an order requiring Mill Street to remove all social media posts referencing the band, an order compelling Mill Street to publicly deny any association between their product and The Tragically Hip, damages, and order expunging Mill Street’s 100th Meridian trademarks. Critical Analysis Loading question... Figure 18.6 Does the name of the beer create a false associatio band’s trademark rights are Copyright Estelle’s intellectual property may also include promotional brochures, business plans, drawings, and other written material. All such works may qualify for ­copyright protection. Copyright is governed almost entirely by the Copyright Act. Copyright is intended to provide a right of exploitation to authors of certain works. As its name suggests, copyright is intended to prevent the copying of works. In other words, subject to certain exemptions, only the author (or the owner of the copyright) has the right to copy a work. Others are not entitled to copy the work unless they fall within one of the exemption categories or have the author’s permission to make a copy. This “right to copy” or “copyright” does not protect the author’s underlying ideas or facts, however. For example, no one has copyright in the life story of Ken Thomson or KC Irving, but once the story is written, copyright resides in the expression of the life story. Copyright Defined Copyright applies to both traditional and non- traditional works. Copyright applies to every original literary, dramatic, musical, and artistic work, such as the following: Literary works: Books, pamphlets, compilations, translations, and computer programs. Dramatic works: Any piece for recitation, choreographic works, scenic arrangements, and cinematography productions such as plays, operas, mime, films, videos, and screenplays.  Musical works: Any combination of melody and harmony, including sheet music. Artistic works: Paintings, drawings, maps, charts, plans, photographs, engravings, sculptures, works of artistic craftsmanship, and architectural works of art (Figure 18.7). Figure 18.7 Does copyright apply to body art or tatto In essence, copyright extends to almost anything written, composed, drawn, or shaped. Items not protected include facts, names, slogans, short phrases, and most titles. The examples of works included in each category are non- exhaustive, which means the categories can encompass new technologies and new forms of expression. Copyright also applies to non- traditional works such as sound recordings, performances, and broadcasts. There are many business examples of these various kinds of works. In fact, whole industries are founded on works of this nature, particularly the entertainment and publishing industries. Businesses that are not so directly affected still create many works that may attract copyright protection, such as advertising copy, photographs, manuals, memorandums, plans, sketches, and computer programs, to name a few common examples. Requirements for Protection To attract copyright protection, a work must meet requirements of originality and fixation. Originality means that the work must originate from the author, not be copied from another, and involve the exercise of skill and judgment. In CCH Canadian Ltd v Law Society of Upper Canada, the Supreme Court of Canada held that the headnotes (a short summary of a case and key words) of a legal decision are original works; however, the edited version of a court decision is not original because it involves only minor changes and additions—a mere mechanical exercise too trivial to warrant copyright protection. The requirement of fixation means that the work must be expressed in some fixed form, such as on paper or on disk. Works such as speeches, luncheon addresses, and interviews that do not exist in a fixed form do not attract copyright. The fixation requirement exists to separate unprotectable ideas from protectable expression and to provide a means of comparison for judging whether copyright has been infringed. Registration Process and Protection Copyright protection arises automatically on the creation of a work. There is an optional registration process that has an evidentiary advantage in that registration provides a presumption of ownership. The owner of a copyright may mark a work; however, there is no requirement to do so to enforce copyright in Canada. The mark can, however, enhance international protection of the work. The following is the typical form of a copyright notice: © year of publication; name of owner Under the Copyright Act, the author of a work is the copyright owner unless there is an agreement to the contrary. The major exception is for works created in the course of employment, in which case the employer is the owner. Copyright protection is generally for the life of the author or composer plus 70 years. Quiz Question 18.14 Mark as: None Review Which of the following is a requirement for obtaining copyright protection? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a marking the work with a copyright notice b registration under the Copyright Act c publication of a creative work  d creation of a work that is original and fixed Show Show Correct Submitted Answer Answer Check My Answer Rights Under Copyright Copyright gives certain rights to the owner of the copyright (the rights may vary somewhat depending on the type of work). These rights include the following: Reproduction: The right to reproduce the work or a substantial part of it in any material form. Public performance: The right to perform the work or a substantial part of it. Publication: The right, if the work is unpublished, to publish the work. Translation: The right to produce, reproduce, perform, or publish any translation of the work. Adaptation: The right to convert works into other formats (e.g., a book into a movie). Mechanical reproduction: The right to make sound recordings or cinematographic recordings. Cinematographic presentation: The right to reproduce, adapt, and publicly present the work by filming or videotaping. Communication: The right to communicate the work to the public by telecommunication. Exhibition: The right to present in public, for purposes other than sale or hire, an artistic work. Rental: The right to rent out sound recordings and computer programs. Authorization: The right to “authorize” any of the other rights. Copyright is infringed when anyone does, without the consent of the owner, anything only the owner can do. This includes, for example, copying all or a substantial part of a work. The question of what is substantial is vexing. It is generally thought that substantial has both a qualitative and a quantitative aspect. The test seems to be whether the part that is taken is a key or distinctive part. Quiz Question 18.15 Mark as: None Review Which of the following is NOT part of the usual bundle of rights held by an owner of a copyright? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a right to limit reproduction b right to restrict fair dealing c right to prohibit exhibition d right to permit adaptation Show Show Correct Submitted Answer Answer Check My Answer CASE 18.4 Cinar Corporation v Robinson, 2013 SCC 73 BUSINESS CONTEXT: It is not uncommon for a new work such as an animated television program aimed at children to be based on or inspired by a work in the public domain. When two such works are created or produced, the issue of copyright infringement is likely to arise. FACTUAL BACKGROUND: In 1982, Claude Robinson, an artist and cartoonist, prepared sketches, storyboards, scripts, synopses, and promotional material for a new children’s television show titled Robinson Curiosity (Curiosity). He obtained copyright registration for his work in 1985. In an effort to find a producer, he contacted a number of companies including Cinar Corporation, a Montréal-based animation company. He was not successful. In 1995, a new television show titled Robinson Sucroë (Sucroë) and produced by Cinar aired in Québec. Robinson brought an action for copyright infringement. Curiosity and Sucroë were both inspired by the novel Robinson Crusoe written by Daniel Defoe in 1719. Both shows featured a protagonist who wore a beard, glasses, and a straw hat and lived on a tropical island interacting with characters who shared common personality traits. There were, however, also differences. The secondary characters in Curiosity were animals, whereas the secondary characters in Sucroë were mostly human and featured pirate villains. Also, the main personality trait of the protagonist in Curiosity was curiosity, whereas the protagonist in Sucroë was not particularly curious. LEGAL QUESTION: Had Cinar infringed ­- Robinson’s copyright in Robinson Curiosity by copying a substantial part of his work? RESOLUTION: Under the Copyright Act, copying all or a substantial part of a work without the copyright owner’s permission is prima facie copyright infringement. The court noted that a substantial part of a work is a “flexible notion” and “a matter of degree” and that substantially is measured by the quality rather than the quantity of the original work. Further, infringement is not confined to a literal reproduction of a protected work but may also include non-literal copying. According to the court: A substantial part of a work is not limited to the words on the page or the brushstrokes on the canvas. The Act protects authors against both literal and non-literal copying, so long as the copied material forms a substantial part of the infringed work. As the House of Lords put it, … the “part” which is regarded as substantial can be a feature or combination of features of the work, abstracted from it rather than forming a discrete part … [T]he original elements in the plot of a play or novel may be a substantial part, so that copyright may be infringed by a work which does not reproduce a single sentence of the original.( at para 27) The court also confirmed that the proper approach to determining infringement was qualitative and holistic, considering the cumulative effect of the copied features rather than dissecting the two works as a whole. Using this approach, the court held Cinar had “copied a number of features from Curiosity, including the visual appearance of the main protagonist, the personality traits of the main protagonist and the other characters, visual aspects of the setting, and recurring scenographic elements” (at para 9) and that “considered as a whole, the copied features constituted a substantial part of Robinson’s work.” (at para 33) Robinson was awarded over $4 million, including $400 000 in non-pecuniary damages for psychological harm and $500 000 in punitive damages. He was also awarded costs including trial costs of $1.5 million. Search for “Robinson Conspiracy” online to review a video that provides background on Robinson’s litigation. Critical Analysis Loading question... It is also infringement for anyone to authorize doing anything that only the copyright owner is allowed to do. Authorization means to “sanction, approve and countenance.” A person does not, however, authorize infringement by merely providing the means that could be used to infringe copyright. For example, the provision of photocopiers does not constitute authorization of the use of the copiers to infringe copyright, particularly in the case where the provider has little control over the user. The enforcement of rights has been problematic, particularly the collection of fees and royalties for the use of copyrighted works. These problems have been addressed by provisions in the Copyright Act for the establishment of collectives that negotiate agreements with users on royalties and use. For example, Access Copyright (The Canadian Copyright Licensing Agency, formerly known as Can-Copy) represents numerous publishers and authors and negotiates agreements with institutions such as universities, libraries, and copy shops, providing for the payment of royalties for photocopying from books. Similar collectives such as the Society of Composers, Authors and Music Publishers of Canada (SOCAN) operate in the music industry. Quiz Question 18.17 Mark as: None Review Which of the following is correct with respect to the infringement of copyright? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. All of a work must be copied to constitute a copyright infringement. Copying a substantial part of a work is b infringement if the part copied is more than 25 percent of the work. Copyright infringement is determined by c whether a key or distinctive part is copied rather than the quantity of the copying. Copyright infringement is assessed by d counting the number of words that have been copied. Show Show Correct Submitted Answer Answer Check My Answer Moral Rights The author of a work has what are known as moral rights. Moral rights exist independently of copyright and provide authors with some control over how their works are used and exploited. Moral rights include the following: Paternity: The author has the right to be associated with the work as its author by name or under a pseudonym and the right to remain anonymous if reasonable in the circumstances. Integrity: The author has the right to object to dealings or uses of the work if they are prejudicial to the author’s reputation or honour. Association: The author has the right to object to the work being used in association with a product, service, cause, or institution. CASE 18.5 Snow v The Eaton Centre Ltd (1982), 70 CPR (2d) 105, OJ No 3645 (ONHC)  Figure 18.8 Michael Snow’s Flight Stop [I] THE BUSINESS CONTEXT: Many works that receive copyright protection are created for the purpose of making a profit through a sale. However, the sale of a work does not extinguish all of the author’s or creator’s rights. FACTUAL BACKGROUND: Michael Snow created a sculpture of geese known as Flight Stop, which was sold to the owners of the Eaton Centre in Toronto (Figure 18.8). In connection with a Christmas display, the Eaton Centre attached red ribbons to the necks of the 60 geese forming the sculpture. Snow claimed that his naturalistic composition had been made to look ridiculous by the addition. In short, he alleged that his moral rights in the sculpture had been infringed. THE LEGAL QUESTION: Were the acts of the Eaton Centre a distortion or modification of Snow’s work that would be prejudicial to his honour and reputation? RESOLUTION: The court held that the ribbons distorted and modified Snow’s work and that Snow’s concern that this was prejudicial to his honour and reputation was reasonable in the circumstances. The Eaton Centre was required to remove the ribbons. Critical Analysis Loading question... Exemptions There are a large number of exceptions or defences under the Copyright Act. Aside from specific exemptions for libraries, museums, archives, people with disabilities, and educational institutions, there are exemptions for copying for private purposes, combining or using copyrighted material to create a “mashup,” and making a back-up and an adaptation copy of computer software. In addition and most relevant to business is the fair dealing exemption. This exemption permits the copying of works for the purposes of private study, research, criticism, review, education, parody, or satire. The test for fair dealing involves a two-step analysis. First, the copying must be for one of the enumerated purposes. In CCH Canadian Ltd v Law Society of Upper Canada, the Supreme Court ruled that research must be given a large and liberal interpretation and not be limited to non- commercial or private research. Further, research is not limited to creative purposes but can include consumer research for the purpose of purchasing goods or services. Second, the dealing must also be fair. In assessing whether the dealing is fair, the following factors are considered: the purposes of the dealing the character of the dealing the amount of the dealing alternatives to the dealing the nature of the work the effect of the dealing on the work CASE 18.6 Wiseau Studio, LLC et al v Harper et al, 2020 ONSC 2504 THE BUSINESS CONTEXT: The production of films, television programs, and videos is an important and growing industry in Canada. The following case provides an application of the Copyright Act’s fair dealing and moral rights provisions to the documentary film sector of this industry. FACTUAL BACKGROUND: In 2003, Tommy Wiseau (Wiseau) and Wiseau Studio, LLC, released a feature film called The Room. It is 99 minutes long and tells the story of Johnny, a banker, and his fiancée, Lisa, who no longer loves Johnny and is sleeping with Johnny’s best friend, Mark. The story is written and directed by Wiseau and he has the starring role as “Johnny.” The film was a box office flop and received terrible reviews. The BBC described the film as “not just bad—it’s intoxicatingly awful.” Entertainment Weekly described it as the “Citizen Kane of bad movies.” The Huffington Post called it a “99 minute train wreck.” Despite these reviews, or perhaps because of them, the film developed a cult-like status. Wiseau became somewhat of a celebrity, often attending screenings to promote the film, meet with fans, engage in question-and-answer sessions, and sell Wiseau-related merchandise, including t-shirts and Tommy Wiseau underwear. In 2010, Richard Harper became a fan of the film after attending a screening in Ottawa. In 2011, Harper together with his friends, sponsored a screening of The Room in Ottawa, which included an appearance by Wiseau. Harper, his friends, and Wiseau hit it off, and with Wiseau’s encouragement, Harper and friends decided to create a documentary about The Room and its fans. Not long after, however, Wiseau said he was no longer interested in participating as he felt the project was becoming critical of him. Over the next few years, Harper and friends worked on the documentary, investing their own money and raising money through a crowdfunding website. The documentary, entitled Room Full of Spoons, was completed in January 2016 and tells Harper’s story of his interest in The Room and in Tommy Wiseau, how the film was made, and reactions to it. It includes interviews with many members of the cast and crew, fans, film professors, critics, and others. The documentary is 109 minutes long and contains a total of about 7 minutes of clips from The Room. Search online for a trailer for Room Full of Spoons to find a video that discusses the making of the documentary. Even before the documentary was complete, Wiseau made many attempts to have it suppressed. His attacks included unfounded allegations of copyright and trademark infringement, sending emails to exhibitors and potential exhibitors of the film demanding that the film not be shown, and getting an injunction to prevent the documentary’s public release. He then commenced an action claiming, among other things, that the use of the clips constituted copyright infringement and that the documentary infringed his moral rights in The Room. The defendants counter-claimed for damages arising from the plaintiffs’ conduct in bringing the action and obtaining an injunction. THE LEGAL QUESTIONS: Did the documentary breach copyright in the original film? Was there a breach of Wiseau’s moral rights? RESOLUTION: The court found in favour of the defendants. The Copyright Act, s 3, provides that only the owner of copyright can reproduce all or a substantial amount of a protected work. The seven minutes worth of clips amounted to a substantial amount. While the amount of the clips was not large compared to the length of the film, the documentary would not be the same without the number of clips used, and the amount cannot be regarded as “trivial.” The use of the clips however, fell within the fair dealing exemption in the Copyright Act. Fair dealing is a user’s right that must be interpreted generously to maintain the balance between the interests of the copyright owners and the public interest in encouraging creativity and innovation. For the fair dealing exception to apply, the original work must be used for one or more of purposes enumerated, and the use must be fair. The documentary use of the clips was for the allowable purpose of criticism or review as the documentary discussed and analyzed the film. Further, the clips also fell within the news reporting purpose, given the cultural phenomenon surrounding the movie and its creator. The court considered the six-factor test set out in CCH Canadian Ltd v Law Society of Upper Canada and found that the use of the clips was fair. The court’s analysis of the test is as follows: The purpose of the dealing: To provide review, critique, and information are permitted purposes. The character of the dealing: Each of the clips was accompanied by commentary before or after. The amount of the dealing: Seven minutes was not trivial, but it was not excessive as use was limited and linked to the objectives of the film. Alternatives to the dealing: There are no viable non-copyrighted alternatives to using the film. The nature of the work: The work (The Room) is not confidential or unpublished. The effect of the dealing: The documentary does not replicate or replace the original film. Wiseau claimed his moral rights were infringed because of the use of low-quality clips of The Room and because he was associated with the documentary against his will, which he found “reprehensible, both artistically and personally.” Moral rights protect the integrity of a work and may be breached if the work is distorted, mutilated, or otherwise modified or used in association with a product, service, cause, or institution, in a manner that prejudices the author’s honour or reputation. A moral rights inquiry involves both a subjective and an objective inquiry. Infringement is not determined solely on the feelings and opinions of the creator. The first claim was not supported by the evidence. On the second, there was nothing in the documentary that would lead the public to believe that Wiseau was involved or endorsed the movie. In any event, the documentary did not prejudice Wiseau’s honour or reputation because the extent to which Wiseau is portrayed as someone who made a terrible movie, there is nothing new about that. The court also held that the injunction was improperly issued as Wiseau Films had failed to make full and frank disclosure and that Wiseau had engaged in litigation misconduct. The defendants were awarded USD$550 000 in compensatory damages and CAD$200 000 in punitive damages. Critical Analysis Loading question... Quiz  Question 18.20 Mark as: None Review What is the defence of fair dealing as it relates to the copying of copyrighted works? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. The reproduction was for private a purposes. The copying of the works was made with b proper notice to the copyright holder. The copying of works was for the purposes c of private study, research, criticism, review, education, parody or satire. The copier is only making an additional d copy of the material and it has already been paid for. Show Show Correct Submitted Answer Answer Check My Answer Confidential Business Information Most businesses have commercial information that they wish to keep private or secret. Examples include the following: strategic business information (e.g., customer lists, price lists, bookkeeping methods, presentation programs, advertising campaigns) products (e.g., recipes, formulas) compilations (e.g., databases) technological secrets (e.g., scientific processes, know-how) There is no specific legislation like the Patents Act, Copyright Act, or the Industrial Design Act that provides protection for confidential business information. Its misappropriation is protected by criminal law provisions and common law doctrines such as breach of confidence and breach of contract. Requirements for Protection A key requirement for accessing remedies for the misappropriation of information is the requirement that the information is confidential or secret. Factors that are considered in ascertaining whether information is “confidential”: Economic value as a result of not being generally known: The information must have some commercial value to the company or its competitors. An indication of the commercial value of the information may be the efforts by others to obtain it. The value of the information derives in large measure from the fact that it is not known by some or is not generally known. Subject to efforts to keep it secret: There must be efforts to keep the information secret. Thus, if a company is careless about information or fails to take steps to protect the confidentiality of information, the information may lose its confidential status. Not generally known in the industry: Information does not have to be absolutely confidential; it can be a compilation of readily available information from various sources. Also, information can be known by some and still maintain its status. In this regard, the extent to which the information is known within the company, as well as outside the company, is relevant. Process and Scope of Protection Confidential business information may be protected forever so long as the information is not disclosed to the general public. Recipes for well- known products such as Coca-Cola Classic, Hostess Twinkies, Mrs. Fields’ Chocolate Chip Cookies, Listerine, and Kentucky Fried Chicken have been “secret” for many years. There are no application procedures for protection. Information receives protection through claims for breach of express or implied terms, and for breach of confidence. If confidential business information or trade secrets are misappropriated, the criminal law and common law provide redress. Amendments to the criminal law make it an offence to “knowingly obtain, communicate or make available a trade secret” by deceit, falsehood, or other fraudulent means. The penalties are up to 14 years imprisonment if convicted of an indictable offence and a maximum of two years less a day imprisonment and/or a fine up to $5000 for summary conviction. The common law actions for misappropriation include claims for breach of express or implied contractual terms, and breach of confidence. Parties may have express obligations to keep information confidential. Non-disclosure agreements require recipients of information to respect its confidentiality by agreeing not to discuss, disclose, or use it. Failure to do so may result in an action for breach of contract. Estelle could require potential lenders and investors to sign a confidentiality agreement prior to discussing her invention with them. In the absence of an express provision regarding confidence, an obligation of confidence may be implied in a contract or arise by virtue of a fiduciary relationship. This is the case in the employment context, particularly in industries in which there is a lot of confidential information and the importance of confidentiality is stressed. Finally, an obligation of confidence can exist when information was conveyed in circumstances suggesting a relationship of confidence. Landmark Case 18.1 is a leading decision on receipt of confidential information in circumstances of confidentiality. Quiz Question 18.21 Mark as: None Review The president of Amanda’s organization has instructed that all strategic business information be protected due to its confidentiality. How will this secret information receive protection? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. Protection is afforded exclusively through a patent claims. Protection is afforded through express or b implied confidentiality obligations. c Protection is afforded by copyright law. Protection is afforded through the trade d secret application process. Show Show Correct Submitted Answer Answer  Check My Answer LANDMARK CASE 18.1 LAC Minerals Ltd v International Corona Resources Ltd, 1989 CanLII 34 (SCC) THE HISTORICAL CONTEXT: In the negotiations preceding a contract, the parties may divulge a great deal of information, some of which is sensitive and confidential. This is often necessary in order to reach contractual consensus. This case explores the obligations of the recipient of the information to the revealer of the information, in the absence of a contract of confidentiality. FACTUAL BACKGROUND: Corona was the owner of a group of mining claims that it was exploring. Being a junior company, it was eager to attract investors and had publicized certain information about its property. LAC Minerals, a major mining corporation, became interested, and a site visit was arranged. The LAC geologists were shown core samples and sections, and the parties discussed the geology of Corona’s site as well as the property to the west, known as the Williams property. Another meeting was held a couple of days later in Toronto, during which it was again mentioned that Corona was attempting to purchase the Williams property. No mention was made of confidentiality. Following this meeting, there were further discussions and an exchange of joint venture ideas, as well as a full presentation by Corona of its results and its interest in the Williams property. A short time after these meetings, negotiations between LAC and Corona broke down. Subsequently, LAC made an offer to purchase the Williams property. The offer was accepted, and LAC proceeded to develop the property on its own. It turned out to be the biggest gold mine in Canada, and LAC made huge profits. Corona sued for breach of confidence and breach of fiduciary duty. THE LEGAL QUESTION: Was LAC liable for breach of confidence or breach of fiduciary duty? RESOLUTION: The Supreme Court of Canada unanimously found LAC liable on the grounds of breach of confidence. The court confirmed that three elements must be established to impose liability on this ground: The information conveyed was confidential. It was communicated in circumstances in which a duty of confidence arises. It was misused by the party to whom it was communicated. Although some of the information conveyed by Corona was not confidential, clearly most of it was, and LAC used it to acquire the Williams property. The court said the information was communicated with the mutual understanding that the parties were working toward a joint venture or some other arrangement. A reasonable person in the position of LAC would know that the information was being given in confidence. LAC used the information to its gain and at the expense of Corona. Although the court did not go so far as to find a breach of a fiduciary duty, there was a violation of confidence. Critical Analysis  Loading question... Limitations on Protection Confidential business information loses the protection of the law when the information is no longer secret, either because the information has been divulged or because the information has been discovered by independent development using publicly available information, or by reverse engineering (i.e., finding the secret or confidential information by examining or dissecting a product). For example, if Estelle keeps her method a secret and at the same time manufactures and sells products using the method, she will not be able to prevent others who discover the method through reverse engineering from using it. Information is also no longer confidential when it becomes part of the ­employee’s personal knowledge, skill, or expertise (i.e., trade information). In distinguishing between information that is confidential and trade information, the courts attempt to strike a balance between the employee’s right to use the skills, knowledge, and experience gained during the course of employment and the employer’s right to protect its information. Quiz Question 18.23 Mark as: None Review Once confidential information such as a recipe, becomes generally known in the industry, it ceases to lose its protection. Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer.  a True b False Show Show Correct Submitted Answer Answer Check My Answer Figure 18.9 compares the major forms of intellectual property. Figure 18.9 A Comparison of Long Text Description Acquisition and Protection of Intellectual Property Intellectual property rights can be extremely valuable to a business. Intellectual property is often created within the business in much the same manner as Estelle invented her method of protecting electronic products and chose her product name. The process of doing so can be time consuming and costly. This suggests that an effective intellectual property program should be put in place to ensure that intellectual assets are valid, enforceable, and effectively exploited. Such a program should include the identification of all intellectual property assets; the determination of the nature, scope, and validity of the assets; and the evaluation of any potential risks and opportunities. Assignments and Licences Although intellectual property may be created in- house, it is also possible to purchase or receive an assignment of intellectual property rights or to receive a licence to use the intellectual property. By the same token, it is possible for a business to exploit its rights by assigning them or licensing their use. An assignment involves a change of ownership from the assignor to the assignee. As a general rule, all intellectual property rights are assignable in whole or in part. An exception to the general rule is that moral rights cannot be assigned, although they may be waived. A business may also obtain a licence to use another’s intellectual property. A licence is consent or permission to use the right on the terms specified in the licence. All intellectual property rights are capable of being licensed. This approach may be a viable way for Estelle to exploit her invention. The process of getting an assignment or licence of intellectual property is not always easy. The process is often complicated by technological developments. Consider, for example, multimedia works that integrate text, graphics, still images, sounds, music, animation, or video, and with which the user can interact. The product involves various forms of media working together and may rely on literally thousands of sources, including copyrighted text, images, and music, for its content. The developer of the multimedia work has to ensure that all the relevant rights to these copyrighted works have been obtained, either through ownership or some form of licence or other permission. Intellectual rights are often subject to compulsory licensing. For example, the Canadian Intellectual Property Office may order a patent holder to grant a licence if the exclusive rights under the patent are deemed to be “abused.” Examples of abuses are refusal by the patent holder to grant a licence on reasonable terms, thereby prejudicing trade or industry, and failure by the patent holder to meet local demand for a patented article. Quiz Question 18.24 Mark as: None Review Which statement regarding the law of licensing is correct? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. A licence must be registered in order to be a enforceable. Failure to utilize a licence in a timely b manner will result in its forfeiture.  All intellectual property rights are capable c of being licensed. A licence involves an exchange of d ownership from licensor to licensee. Show Show Correct Submitted Answer Answer Check My Answer Protection of Intellectual Property Intellectual property is an asset in the same manner as other business assets. Just as an organization takes measures to protect its buildings, land, equipment, and personnel, so too must it take steps to protect its intellectual property. It is not sufficient for Estelle to simply “create” intellectual property rights. Her rights require continuous monitoring and protection. Use Intellectual property rights are subject to loss if they are not properly used and maintained, as is shown in the following examples: A patent may be considered abused if, among other things, insufficient quantities of the patented item are produced to meet demand in Canada. As a result, a licence to use the patent may be granted to another, or the patent may even be revoked. Industrial design rights may be substantially reduced if the goods are not properly marked. A defence of innocent infringement is available unless proper notice (i.e., Ⓓ) is used on articles or their containers. The defence  has the effect of limiting the owner’s remedy for infringement to injunctive relief. A trademark can be subject to attacks for non- use or abandonment if it is not used continuously in association with the goods or services for which it is registered. A trademark may also be lost if it loses its distinctiveness, as when it slips into everyday usage. For example, nylon, kleenex, zipper, escalator, cellophane, and dry ice, once trademarks, lost their distinctiveness and thus their status as trademarks by falling into everyday usage and becoming generic terms. Confidential business information is lost once it is disclosed. A business needs to be particularly vigilant in protecting confidential business information. A business can implement a program for maintaining security that includes restricting access to confidential information, implementing physical security measures (e.g., labelling documents “secret” or “confidential,” locking areas where the information is kept, and changing computer passwords), and using confidentiality agreements that require others to maintain confidences. Quiz Question 18.25 Mark as: None Review Rosh Pharmaceuticals Corp is based in Israel, but it maintains intellectual property protection of all its drugs with the Canadian Patent Office. What is the most likely result if insufficient quantities of Rosh Pharmaceuticals Corp’s newly patented pancreatic cancer drug are produced to meet demand in Canada? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a Rosh’s Canadian patent will be cancelled.  Rosh will be required to produce enough b of the drug to meet Canadian demand. Rosh will be required to assign their c Canadian patent to a Canadian company. d There will be no impact on Rosh. Show Show Correct Submitted Answer Answer Check My Answer BUSINESS APPLICATION OF THE LAW 18.2 Social Media and Copyright Social media—Facebook, YouTube, X, Instagram, WhatsApp, TikTok, and the like—is often used by businesses to promote their business, engage with customers, and boost sales (Figure 18.10). For example, Mini Mioche, a Toronto-based clothing retailer, has used Instagram; Sports System, a company that builds and installs sport equipment, has posted videos on Facebook and YouTube; and beer manufacturer Molson Coors Canada has used Twitter (now X) to direct customers to blogs and videos. Social media is an economical way to attract customers as it does not cost anything to create a Facebook page, have a YouTube channel, or to post on Instagram. The key to most social media marketing is the images that are posted as it is images that get views, likes, and shares. While there are advantages from a marketing perspective in using images, their use is not without intellectual property risks. Search online for “legal rights in photographs on social media,” to find a video from Kevin Newman Live that provides an analysis. An image—whether a photograph, a painting, or a graphic—is a work that receives copyright protection when it is created. In Canada, there is an optional registration system, but registration is not necessary to receive copyright protection. A business that uses images, other than images that it creates itself, risks being sued for copyright infringement. Avoiding Copyright Infringement As noted, if the business creates its own images— takes its own photographs, paints its own pictures, or designs its own graphics—there is no risk of infringement of copyright. If the business uses images created by others, there is infringement unless the image is in public domain, the fair dealing exemption applies, or the business has permission to use the image. Figure 18.10 How does copyright apply to social me Long Text Description Public Domain A business can use images that are in the public domain witho