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Intellectual Property and Business Law


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In this presentation, Rob McDonald and Stephen Parker discuss the following topics related to intellectual property:
- IP Due Diligence in Commercial Transactions
- Common IP Disputes that Arise in Business
- The New Copyright Modernization Act

Published in: Business
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Intellectual Property and Business Law

  1. 1. Intellectual Property And Business Law 1) IP Due Diligence in Commercial Transactions  2) Common IP Disputes that Arise in Business  3)  The New Copyright Modernizaton Act Presented to Fraser Milner Casgrain LLP  Business Law Department November 5, 2012 Presented by:  Rob McDonald and Stephen Parker 1
  3. 3. Identify the Type of Transaction• Merger or acquisition• Share purchase vs. asset purchase• IPO• Out source contract• Initial financing• Bridge financing• Licensing 3
  4. 4. Identify Parties to the Transaction• Buyer• Seller• Bank• Underwriter• Licensor• Licensee• Angel Investor• Receiver/Trustee 4
  5. 5. Specific IP Due Diligence IssuesTypes of Intellectual Property: Trade‐marks (Including domain names) Copyrights Patents Industrial Designs Confidential Information and Trade Secrets 5
  6. 6. Identify Relevant IP Documentation Identify all existing intellectual property rights Determine potential encumbrances on such rights Review representations and warranties in respect of  IP rights Review covenants and indemnities relating to IP  rights Determine ownership of IP rights Review and assess infringement claims Review and assess strength and value of IP rights 6
  7. 7. Typical IP Agreements Confidentiality/Non‐disclosure Agreements Employment Agreements IP ownership Agreements Licences Assignment Agreements Co‐Branding Agreements Software Development Agreements Manufacturing and Supply Agreements Security Agreements  Releases Software Escrow Agreements Co‐existence Agreements Forbearance Agreements 7
  8. 8. Conducting Due Diligence• Checklist• Manual Document Review• Electronic document and data review• Interviews• On‐sight tours• Field Visits• Product Demonstrations• Searches of Intellectual Property Registers• Searches of Security Registers• Internet Searches 8
  9. 9. Trade‐mark Due Diligence• Review trade‐mark portfolio• Consider multi‐jurisdictional issues• Assess validity and enforceability of trade‐marks• Assess scope and strength of trade‐marks• Assess potential infringement of trade‐marks• Assess potential infringement of third party marks• Review all registered and unregistered trade‐marks • Review Co‐existence Agreements• Review corporate names, trade names, domain names 9
  10. 10. Patent Due Diligence• Review registered patents• Review status of pending applications• Evaluate prior art and competitor’s patents• Prepare patentability opinion• Prepare registerability opinion• Prepare freedom to operate opinion• Assess validity and enforceability of patents• Analyze prior disclosures/confidentiality and non‐ disclosure agreements 10
  11. 11. Copyright Due Diligence• Ownership• Moral rights• Joint Authorship• Works created in course of employment v. works  created by independent contractor• Assess potential infringement by third parties• Assess potential infringement of third party  copyrights 11
  12. 12. Confidential Information/Trade Secret Due Diligence• Assess means by wish the entity protects confidential  information and trade secrets• Determine reliance on and value of confidential  information and trade secrets• Identify potential risks of disclosure• Identify who has access to such information• Review employment agreements• Review confidential information for proper marking  and restrictions on availability 12
  13. 13. Common IP Disputes that  Arise in Business 13
  14. 14. TOP 10 IP TRAPSCOPYRIGHT 1. Ownership claim by      employee/independent contractor 2. Moral rights claims 3. Substantial similarity not just quantitative 4. Improper Assignment 14
  15. 15. TOP 10 IP TRAPS TRADE‐MARKS 5. Not registering and being restricted to  area of reputation 6. Assuming rights in corporate names and  trade‐names 7. Adopting non‐distinctive marks 8. Losing distinctiveness through loss of  control and improper licensing 15
  16. 16. TOP 10 IP TRAPSPATENT 9. Lack of ownership agreement 10. Public disclosure 16
  18. 18. • Copyright• Trade‐mark• Patent• Industrial Design• Confidential Information/Trade Secrets• Plant Breeder’s Rights• Integrated Circuit Topographies 18
  19. 19. 19
  21. 21. • Important to properly define what types of IP are included in an Agreement• May want very broad or very narrow definition depending on the nature of the Agreement• ex. Some Agreements may deal only with patents or patentable inventions, others may include concepts, ideas and methods, whether patentable or not• ex. Some Agreements may deal only with registered trade‐ marks, others may include unregistered trade‐marks goodwill and domain names 21
  23. 23. COPYRIGHT 23
  24. 24. • General Rule‐ the author of a work is the first owner of the copyright in that work (s.13.(1))• Author is not defined but means the creator of work• Exceptions to the general rule include: – Work made in the course of employment •Contract of service = employment •Contract for services = independent contractor – Photographs and engravings – Crown copyright 24
  25. 25. Major Exception: Work Made in the Course of Employment13 (3) Where the author of a work was in the employment ofsome other person under a contract of service orapprenticeship and the work was made in the course of hisemployment by that person, the person by whom the authorwas employed shall, in the absence of any agreement to thecontrary, be the first owner of the copyright, but where thework is an article or other contribution to a newspaper,magazine or similar periodical, there shall, in the absence ofany agreement to the contrary, be deemed to be reserved tothe author a right to restrain the publication of the work,otherwise than as part of a newspaper, magazine or similarperiodical. 25
  26. 26. TRADE‐MARKS 26
  27. 27. General Rule:• The first to use a trade‐mark in commerce in a  particular jurisdiction acquires certain rights in such  mark• Several exceptions:   – foreign registrations  – loss of trade‐mark rights, – territorial limitations 27
  29. 29. PATENTS 29
  30. 30. General Rule:• The inventor is the first ownerMAJOR EXCEPTION: – Inventors often assign ownership rights to other entities – No rule requiring an inventor to assign rights to an employer – Inventions created or conceived within the scope of the inventor’s employment 30
  32. 32. • It is critical to continue to use a trade‐mark properly in order  to retain rights• Several events can result in loss of trade‐mark rights, including  non‐use, improper registration and loss of distinctiveness• Distinctiveness is the ability of a trade‐mark to distinguish the  products and services of one owner’s mark from those of  another• AVOID CONFUSION! 32
  33. 33. 33
  34. 34. TRADE‐MARK CHECKLIST Using the trade‐mark___  Always capitalize at least the first letter of the trade‐mark___  Do not pluralize trade‐marks___  Do not use trade‐marks as a verb___  Do not change the appearance of a design trade‐mark___  Use proper marking (® for registered, TM for unregistered)___ No generic use of trade‐mark___  No use of the trade‐mark by others without license and  control (see s.50(2) – presumptions if public notice is given)___  Monitor in‐house and outside use of the trade‐mark___  Do not ignore infringements 34
  35. 35. MORAL RIGHTS 35
  36. 36. •Copyright is actually a bundle of several  exclusive rights that exist by virtue of the  Federal Copyright Act, R.S.C. 1985, c‐32: 36
  37. 37. •Part I Rights• Part I rights are set out in Section 3 of the Act and include the right to produce, reproduce, perform, or publish a work or any substantial part of a work, the right to communicate a work to the public by telecommunication, and the right to rent out certain works. Part I copyrights also include the sole right to authorize or permit any of these things. 37
  38. 38. Moral Rights• The bundle of rights also includes moral rights, which are essentially the author’s right to the integrity of the work and the right to be associated to the work by name (s.14.1). Moral rights accrue only to the author of a work, not the owner. 38
  39. 39. S. 14(1) – Defines the rightS. 14(2) – cannot be assigned, but can be waivedS.  28.2(1) ‐ Infringement The author’s right to the integrity of a work is infringed only if the work is, to the prejudice of the honors or reputation of the author,(a) distorted, mutilated or otherwise modified; or(b) used in association with a product, service, cause or institution. 39
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  41. 41. • Always deal with moral rights in a written agreement  with the author• Employers cannot waive moral rights on behalf of an  employee• Consider carving out reasonable exceptions to a  general waiver, ex. attribution rights, portfolio rights 41
  42. 42. The preceding presentation contains examples of the kinds of issues companies dealing with Intellectual Property Law could  face. If you are faced with one of these issues, please retain  professional assistance as each situation is unique.
  43. 43. Thank You!Rob McDonaldFraser Milner Casgrain LLP | www.fmc‐law.comT: 780 423 7305 | F: 780 423 7276E: rob.mcdonald@fmc‐law.comStephen ParkerFraser Milner Casgrain LLP | www.fmc‐law.comT: 780 423 7368 | F: 780 423 7276E: stephen.parker@fmc‐