Managing the Law: Intellectual Property (PDF)

Managing the Law: The Legal Aspects of Doing Business Sixth Canadian Edition Chapter 18 Intellectual Property Copyright © 2023 Pearson Canada Inc. 18 - 1 Chapter 18 Overview Ideas as...

Managing the Law: The Legal Aspects of Doing Business Sixth Canadian Edition Chapter 18 Intellectual Property Copyright © 2023 Pearson Canada Inc. 18 - 1 Chapter 18 Overview Ideas as property – The nature of ideas – The economics of ideas Intellectual property law – Copyright – Trademarks – Patents – Industrial designs Confidential information and trade secrets Copyright © 2023 Pearson Canada Inc. 18 IDEAS Copyright © 2023 Pearson Canada Inc. 18 - 3 The Nature of Ideas Exclusive possession – Enjoyment of a thing while prohibiting use by others Easy with respect to tangible goods (e.g. cars) Difficult with respect to information (e.g. ideas) Non-exclusive possession – Thing can be enjoyed by several persons simultaneously One’s enjoyment does not diminish another’s (e.g. me watching a TV show does not stop you from watching same show) Natural occurrence for information and ideas Copyright © 2023 Pearson Canada Inc. 18 Economics of Ideas Natural scarcity – Naturally occurs when demand exceeds supply Artificial scarcity – Occurs when an idea is rendered exclusive, thereby limiting supply – IP (“intellectual property”) law creates market for information Reduces supply of information Increases value of information-based assets Provides incentives to create ideas Copyright © 2023 Pearson Canada Inc. 18 INTELLECTUAL PROPERTY Copyright © 2023 Pearson Canada Inc. 18 Intellectual Property IP law aims to protect the products of the mind Provide an incentive to create, invent, design, breed Balance incentive with public interest Solution: the limited time monopoly – E.g. Patent term – E.g. Copyright term Copyright © 2023 Pearson Canada Inc. 18 Intellectual Property Théberge v Galérie d’Art du Petit Champlain Claude Théberge, a famous Quebec painter, sued a gallery for using his work without permission. The gallery bought a poster from Théberge and, using advanced technology, transferred the ink to canvas without making copies. The Supreme Court of Canada ruled that since no copies were made, it wasn't copyright infringement. The court highlighted the importance of balance in copyright law, cautioning against excessive control by copyright owners. They emphasized the need for a balance that considers user rights and the public interest, stating that too much control could hinder creativity and the long-term benefit to society. This case marked a shift toward recognizing the importance of maintaining this balance in intellectual property law. Copyright © 2023 Pearson Canada Inc. 18 Types of IP All the IPs are intangibles Subject to study in this created by one or more chapter are the following statutes statutory IPs: Copyright Act Copyright Trademark Act Trademarks Patent Act Patents Industrial Design Act Industrial designs Integrated Circuit Topography Act Plant Breeders Rights Act Copyright © 2023 Pearson Canada Inc. 18 IP: COPYRIGHT Copyright © 2023 Pearson Canada Inc. 18 Copyright Copyright does not protect ideas, but rather the manner in which ideas are expressed – E.g., you have an idea for a novel about a young wizard attending a magical school. The idea itself— of a magical school and a young wizard—is not protected by copyright because it's just an idea. However, the specific expression of that idea, such as the plot, characters, dialogue, and setting in your novel, would be protected by copyright. No need to register CR, but recommended Copyright © 2023 Pearson Canada Inc. 18 Copyright Requirements Requirements for copyright protection in Canada – Work must be original (not copied from another source) – Work must be fixed (e.g. recorded, written down) Eg., Broadcast should be recorded – Author of work must be connected to Canada Work created in Canada or Work created by a Canadian or Work created by a person resident in a treaty member state – Berne Copyright Convention – Rome Convention – Universal Copyright Convention Copyright © 2023 Pearson Canada Inc. 18 Forms of Expression that are Protected WORK OTHER SUBJECT MATTER Dramatic Artistic Performer’s Performances Literary Makers of Sound Recordings Musical Broadcasters Copyright © 2023 Pearson Canada Inc. 18 Works Copyright © 2023 Pearson Canada Inc. 18 Forms of Expression Not Protected by Copyright Slogans Short phrases Titles for songs Names of computer programs Factual information (considered as public domain) Copyright © 2023 Pearson Canada Inc. 18 Economic and Moral Rights Copyright © 2023 Pearson Canada Inc. 18 Economic Rights (1 of 2) Primary – Produce, perform publish Derivative: – To fix work, or convert work into different forms E.g. convert novel into sound recording, t-shirt etc. Economic Rights only apply to Works Can be assigned or licensed Copyright © 2023 Pearson Canada Inc. 18 Economic Rights (2 of 2) Figure 18.2 The Economic Rights Held by the Copyright Owner the right to produce, reproduce, perform, or publish a work the right to translate a work the right to convert a dramatic work into a novel, non-dramatic work, or sound recording the right to convert a non-dramatic or artistic work into a dramatic work through public performance the right to communicate a work by telecommunication the right to reproduce, adapt, or present a work by film or photograph the right to present an artistic work at a public exhibition (works created after June 7, 1988) the right to create a sound recording of a musical work the right to license computer software the right to reproduce any performance that has been fixed the right to fix any performance that has not yet been fixed the right to reproduce, license, or publish sound recordings the right to fix or reproduce broadcast signals the right to authorize another broadcaster to simultaneously retransmit the signa SOURCE: Industry Canada A Guide to Copyrights (2000) at 3–4. Copyright © 2023 Pearson Canada Inc. 18 Permission to Use Copyright May need permission to use copyright matter – From copyright owner – Copyright collectives Organization administers rights for members – Private copying and blank audio recording media levy Fee added to price of blank recording materials collected by copyright collectives and distributed to copyright holders Compensation for presumed copyright violations Copyright © 2023 Pearson Canada Inc. 18 Duration of Copyright Canada: author’s life plus 50 years – Artist is deemed to die on the 31st Dec in the year of death European Union and the United States: author’s life plus 70 years Work subsequently falls into public domain (realm of works that below to the community) – Works belong to world at large – Works can freely be used by anyone Copyright © 2023 Pearson Canada Inc. 18 Moral Rights Generally, right of author to – Right of attribution / paternity Names are attached to the work – Right of integrity over a work Provides author full control over the work sold – Right to be associated with work Moral rights – Cannot be assigned or licensed – Can be waived (especially in a business perspective) Moral rights apply to all works and performer’s performances Copyright © 2023 Pearson Canada Inc. 18 Copyright Ownership and Economic Rights Author generally owns copyright Exception – Employment context Employer generally owner if created in course of employment – Independent contractor not covered by exception Risk management: contract should expressly transfer to business Copyright © 2023 Pearson Canada Inc. 18 Copyright Infringement Unpermitted use of all or substantial part of work may be copyright infringement Copyright protects entire work, and may protect a portion of work. Infringement if integrity of whole undermined – E.g. 60 out of 14 000 lines codes of software lawful – E.g. few bars from a popular song unlawful Act done in private may not be infringement – E.g. “happy birthday” at basement party lawful, but not on TV Copyright © 2023 Pearson Canada Inc. 18 Infringement and the Internet Internet reduces costs of legitimate distribution, but increases risk and ease of copyright infringement Canada’s new copyright modernization act provides new measures to guard against digital copyright infringement – Technological protection measures (digital locks) – File sharing/ISP liability – Requires ISPs to notify customers of suspected infringement upon receipt of notice from owner – Other provisions Copyright © 2023 Pearson Canada Inc. 18 The Right to Use Copyright Works Rights to use, sometimes called “exemptions” more commonly ”Fair Dealing” (fair use in the USA) Use of works as fair dealing – Private study, research, criticism, reporting – Newly added: education, parody, satire – Further additions: format-shifting, time-shifting, “mash ups” backups Copyright © 2023 Pearson Canada Inc. 18 Canada’s Copyright Pentalogy SCC affirmed fair dealing as a “user right” enabling significant access to copyrighted works – Set low threshold for coming within fair dealing category E.g. purpose of “research”: – Interpreted broadly and from user perspective – Includes lifelong learning and daily information seeking E.g. “private study” can occur in a classroom or group activity Risk management: learn the new fair dealing provisions Copyright © 2023 Pearson Canada Inc. 18 Canada’s Copyright Pentalogy Additional Material : These cases significantly shaped Canadian copyright law and addressed various aspects of copyright, including fair dealing, technological neutrality, and the rights of copyright holders. The five cases included in the Copyright Pentalogy are: 1.Entertainment Software Association v. Society of Composers, Authors and Music Publishers of Canada (SOCAN): This case addressed the issue of whether the downloading of video game files constituted a communication to the public under Canadian copyright law. 2.Alberta (Education) v. Canadian Copyright Licensing Agency (Access Copyright): This case dealt with whether photocopying materials for classroom use constituted fair dealing under Canadian copyright law. 3.Rogers Communications Inc. v. Society of Composers, Authors and Music Publishers of Canada (SOCAN): This case examined whether online music previews constituted communication to the public under Canadian copyright law. 4.Society of Composers, Authors and Music Publishers of Canada (SOCAN) v. Bell Canada: This case focused on whether music previews for ringtones constituted communication to the public under Canadian copyright law. 5.Canadian Broadcasting Corp. v. SODRAC 2003 Inc.: This case addressed the issue of whether broadcasters were required to pay royalties for ephemeral copies made in the broadcasting process. Copyright © 2023 Pearson Canada Inc. 18 I P: TRADEMARKS Copyright © 2023 Pearson Canada Inc. 18 Trademarks Words, symbols, or designs that distinguish one’s goods or services from another’s in marketplace – Protect business’s brand (image, reputation, goodwill) – Serves public interest by assuring consumer that will receive expected quality (e.g. the Maytag® repairman) May be sold or licensed: e.g. as part of franchising deal Trademark owner may stop others from using mark with similar wares and services Copyright © 2023 Pearson Canada Inc. 18 Registering a Trademark Right arises only after mark used with wares or services Registration not required for ownership of trademark Registration not absolute proof of ownership Advantages of registration – Protection across Canada for 10 years (previously 15 yrs.) Can be renewed indefinitely with continued use and fee payment – Burden upon challenger to disprove ownership – Enforced through statutory remedies (more details on the other slides) Copyright © 2023 Pearson Canada Inc. 18 Unregistered Trademarks Also known at common law marks and use the TM symbol instead of the Ò used with registered marks Unregistered trademarks – Protected only in geographic area of use – Enforced through tort of passing off (confusingly similar mark or name) Risk management – Register all variations on mark, name, or logo Copyright © 2023 Pearson Canada Inc. 18 Categories of Trademarks Categories of trademarks that can be registered Category Description Example Ordinary marks distinguish goods and “Tom’s House of Pizza ® ” Pizza registered sign” services with words or “Pizza Made to PerfectionTM ” Perfection trademark” designs Certification marks demonstrate that goods or “Recognized by the services meet standards Canadian Dental Assoc.” Distinguishing identify unique shape of Distinctively shaped Coca – guises product or package Cola ® bottle Cola registered sign New categories (sound, motion, smell and holograms) are now allowed in Canada Copyright © 2023 Pearson Canada Inc. 18 Trademark Infringement: Passing-Off In order to succeed in a claim under the tort of passing off, the business claiming that its mark or name has been illegitimately used must prove that: – Plaintiff has goodwill or reputation in name, mark, or logo – Defendant represented itself in manner that resulted in misrepresentation or confusion to the public – Plaintiff suffered or likely to suffer harm Scope of tort – Protection for both registered and unregistered trademarks – Protection limited to location of reputation Copyright © 2023 Pearson Canada Inc. 18 Registered Trademark Infringement Registered trademark rights may be infringed in additional ways: – Unauthorized use: exact imitation – Knock-off: similar product and similar mark – Trademark dilution / depreciation: acts that tarnish the value of trademark – Unauthorized importation of an authentically branded product – Confusing use in the marketplace Copyright © 2023 Pearson Canada Inc. 18 Trademark Infringement: Remedies Compensatory damages in tort – Monetarily repair plaintiff’s wrongful loss Accounting of profits – Monetarily disgorge defendant’s wrongful gain (requiring the infringer to transfer profits) Injunction – Order prohibiting to do business Delivering up – Order requiring disposal of offending items (to give up goods bearing the TM) Copyright © 2023 Pearson Canada Inc. 18 IP: PATENTS Copyright © 2023 Pearson Canada Inc. 18 Patents: The Patent Bargain Inventor granted 20-year monopoly to exploit invention – from the date of filing – Inventor enjoys exclusive right to make, use, license or sell – Creates incentive for research and development In exchange, inventor must fully disclose details – Crucial component in dissemination of ideas – Patent office as repository of knowledge also avoids duplication Must apply for patent rights in order for rights to arise (unlike copyright and common law trademarks) Copyright © 2023 Pearson Canada Inc. 18 Criteria for Patentability Patentable subject matter (see next slide) that is – New: not previously known to public (broadly defined) – Non-obvious: not obvious to people fluent in similar technologies, and – Useful: fulfills useful (in opinion of market) function and functional While patent must have world wide novelty, it is only enforceable in the jurisdiction that granted it Copyright © 2023 Pearson Canada Inc. 18 Patentable Subject Matter Patentable under the Patent Act – Invention: any “new and useful art, process, machine, manufacture, or composition of matter” – Improvement on existing invention Not patentable under Patent Act – Natural law, scientific principle, abstract theory – Computer program, business method – Higher life forms (e.g. transgenic mouse) But synthetic genes bases are patentable and protectable even when inserted into an organism e.g. plants) Copyright © 2023 Pearson Canada Inc. 18 Patent Infringement Patent infringement claims: the means by which patent holders enforce the monopoly on their inventions If patent is valid, inventors can file an infringement case to anyone who uses their inventions for commercial use Courts go through a process of claims construction: – What is the patent claiming as the invention? – Does the allegedly infringing product appropriate the invention’s substance (or “pith and marrow”)? – Courts now use a purposeful interpretation Copyright © 2023 Pearson Canada Inc. 18 Remedies for Patent Infringement Compensatory damages – Monetarily repair plaintiff’s wrongful loss Accounting of profits – Monetarily disgorge defendant’s wrongful gain Injunction – Order prohibiting continued infringement Delivering up – Order requiring disposal of offending items Copyright © 2023 Pearson Canada Inc. 18 Patents: Risk Management Search patent databases before engaging in R&D or new activity (avoid duplication and infringement) To preserve “novelty”, include confidentiality clauses in employment contract, and train employees – There might be some instances that the idea comes into public (eg, conferences) File patent applications as soon as possible Consider that defendant will seek to invalidate your patent in patent infringement action Recognize that some investors require patents Copyright © 2023 Pearson Canada Inc. 18 Forms of Patent Exploitation Owner of patent rights may – Retain full control over patent (prevent others from using) – License the patent in exchange for royalties Exclusive license: patent rights to a single licensee period with only title remaining with patent holder Non-exclusive license: granted to one or many licensees Any license may be limited in time, field of use, and geography – Sell the patent for lump sum Copyright © 2023 Pearson Canada Inc. 18  International Patent System Patents rights, granted by statute, are territorial Application for monopoly costly in multiple jurisdictions International treaties allow costs to be deferred or reduced – Inventors from member state have 12 months to 2.5 years from first patent application to file in other jurisdictions – Streamline the process for gaining protection in some jurisdictions by allowing a single application in one language (this was done by the Patent Cooperation Treaty (PCT) and the European Patent Convention (EPC) Paris Convention for the Protection of Industrial Property is one of the oldest and most important treaties dealing with a range of intellectual property matters including trademarks, industrial designs, and patents. Copyright © 2023 Pearson Canada Inc. 18 I P: INDUSTRIAL DESIGNS Copyright © 2023 Pearson Canada Inc. 18 Industrial Designs Definition: protects the shape, configuration, pattern, or ornament of an article to improve aesthetics – Recent amendments also allow the colour protection Rights protected only if registered – Registration for up to 10 years (will fall in public domain afterwards) – Registration does not protect designs that Are purely functional in nature (use patents for this) Have no fixed appearance Are not clearly visible Rights may be sold or licensed Copyright © 2023 Pearson Canada Inc. 18 Remedies for Industrial Design Infringement If design marked with name and symbol – Registrant entitled to compensatory damages If design not marked – Registrant entitled to injunction only Copyright © 2023 Pearson Canada Inc. 18 CONFIDENTIAL INFORMATION Copyright © 2023 Pearson Canada Inc. 18 Confidential Information Definition: material exchanged in relationship that prohibits recipient from sharing it or using it to disadvantage of person who communicated it Material may be confidential by confidentiality agreement or by common law Liability may arise when confidential information – Is improperly used by person entrusted with information – Is improperly disclosed This is a non-statutory IP Copyright © 2023 Pearson Canada Inc. 18 Breach of Confidence Definition: occurs when person improperly uses confidential information it has been entrusted with Plaintiff must prove: – Information was of a confidential nature – Info was disclosed to defendant in circumstances giving rise to obligation of confidence, and – There was a misuse or unauthorized use of the information Available remedies are broad (somewhat the same of patent infringement) Copyright © 2023 Pearson Canada Inc. 18 Trade Secrets Special type of confidential information such as a formula or recipe or even an invention that is used to obtain advantage over competitors – E.g. KFC secret herb & spice recipe Can be exploited indefinitely, as long as the information is kept secret If another party invents it and patents it, you can no longer use it Copyright © 2023 Pearson Canada Inc. 18 Secrets and Risk Management Risk management – Use of non-disclosure agreements and strict information access controls to manage risk – Worker may claim information as their own Expense required to prove ownership of idea – Outsider may independently discover idea No protection against coincidental discovery – Tell recipients info is confidential when disclosing Copyright © 2023 Pearson Canada Inc. 18 Summary Concept Summary 18.1 Differentiating between Five Main Types of Protection of Intellectual Works Blank Industrial Trade Copyright Trademarks Patents Designs Secrets Basis statutory statutory and statutory statutory common law common law (passing off) Registration not mandatory not mandatory mandatory mandatory not possible but beneficial but beneficial What it original forms marks used in useful, non- features, such as secret protects of expression association obvious, and shape and pattern, information (eg dramatic, with particular novel that appeal to the literary, businesses, inventions that eye as applied to a software, wares, and are patentable finished article musical) services subject matter Term of generally life of renewable in maximum of maximum of 10 indefinite, so protection the author plus perpetuity, 20 years years long as 50 years unless mark is secrecy is not used and maintained then it is expunged Copyright © 2023 Pearson Canada Inc. 18 TAKE-AWAYS What surprised you? Should Coke- Cola® have used a patent instead of a Cola super registered trademark trade secret to protect its formula? Copyright © 2023 Pearson Canada Inc. 18