Although traditional economies (i.e., industrial and resource based ones) will probably still be around for a while, there is no doubt that a knowledge based economy, reliant on science, technology, and information is slowly taking off. As a result, it is likely that the explosion of technology creation that has occurred in recent years will continue, and possibly become even greater.
This new focus on technology creation and innovation, however, poses unique legal questions for business owners and employees. For most new endeavors, the necessary technology will not exist. As a result, employees, or even other businesses, may need to be engaged to develop whatever is required. But who will own those creations? How will businesses use the law to protect their ideas or work?
Intellectual property law will play a key role here in giving businesses, or people, ownership rights for these new creations. The following is a discussion of three prominent forms of intellectual property and how ownership arises under each. As one will see, there are steps that can be taken ahead of time to ensure that intellectual property ownership is being protected in the best way possible.
The term "trade secret" essentially refers to confidential information. This may include business plans, customer lists, formulas, ideas and so on. Unfortunately, there really isn't a great legal mechanism to obtain ownership over confidential information. Once confidential information is disclosed, all rights to it may be lost. So, it is often said that the best way to protect confidential information is to never disclose it in the first place. But that does not make sense when you need to run a business that involves teams of people or employees.
With that said, in some circumstances there may be a remedy against employees or business partners who take confidential information and use it elsewhere. A duty of confidentiality may arise automatically with certain people, such as those in a fiduciary relationship. However, the most prudent way to protect confidential information is through the use of a non-disclosure agreement – a contract whereby the person receiving the information promises, amongst other things, to not disclose information or use it. If need be, that agreement can then be used to seek remedies in court, such as damages or an injunction.
Copyright law protects the expression of ideas. It does not protect the idea itself, but rather it extends to the form in which the idea is expressed. The range of forms that copyright may extend to is broad. It includes works of art, books, drawings, designs, logos, songs, movies, software source code, and website content. Copyright owners are given certain rights including the exclusive right to copy, publish, distribute, or perform the work.
The Copyright Act sets out some basic rules about ownership. Usually, the author of the work automatically becomes the owner of the copyright. However, there is an important exception to this rule for employees. An employee that creates work in the course of employment will likely not be the owner of the copyright. Instead, the employer is deemed to be the first owner. Independent contractors, on the other hand, do not fall within this exception and will retain copyright ownership.
These general rules can always be modified by an express contractual agreement. A written agreement may set out who owns what during the course of a business or employment relationship. Indeed, an agreement like this is a valuable tool to ensure that a business retains copyright and to prevent uncertainty, especially when using independent contractors. Since it is not always clear as to whether a person is an "employee" or an "independent contractor" in the first place.
Functional inventions are protected by patent law. However, patents are not automatically granted. Instead, there is an application process that is complex, technical, and usually quite expensive. Further, not everything will be patentable. There are certain criteria that have to be met. For instance, the invention must fall within patentable subject matter. In Canada there is specific subject matter that cannot be patented, including mathematic formulas, abstract theorems, and scientific principles.
Patents are usually granted to the inventor. The Canadian Patent Act does not have any specific rules about ownership in the employer/employee context. However, cases that have gone through the courts do provide some guidance. For example, in Nature-Control Technologies Inc. v. Li, the B.C. Supreme Court stated the following:
"There is a presumption that an inventor, even one who is an employee, is entitled to the benefit of his or her own invention... The presumption can apply even if the employee's invention is useful for the employer's business; the employee made use of his employer's time, co-employees, and material; and the employee allowed the employer to use the invention. There are only two exceptions to this presumption: where there is an express contract to the contrary or where the person was employed for the express purpose of inventing or innovating (meaning that the parties impliedly intended otherwise)..."
If an employee invents something while doing the very thing they were employed to do, then the employer is likely to be the owner of the invention (see here for such a case).
Once a patent is granted, it gives the owner certain rights. This includes the ability to recover money from those who wrongfully sell or otherwise use the invention and the right to exclude others from using the invention altogether.
Get a written agreement
As one may begin to notice, there is a common theme here. Written agreements are key instruments when it comes to protecting ownership of intellectual property and avoiding uncertainty. Whether it is with the people you are doing business with, or between employer and employee, a well-written contract will go a long way if there is ever a dispute about who the rightful owner of intellectual property is.
About Mackrell International – Canada - Lindsay Kenney LLP is a full service business law firm with offices in Vancouver and Langley, BC and a member of Mackrell International. Mackrell International – Canada is comprised of four independent law firms in Alberta, British Columbia, Ontario and Quebec. Each firm is regionally based and well-connected in our communities, an advantage shared with our clients. With close relations amongst our Canadian member firms, we are committed to working with clients who have legal needs in multiple jurisdictions within Canada.
This article is intended to be an overview and is for informational purposes only.