Saturday, December 18, 2010

Anti-spam law enacted in Canada

On Wednesday, Canada becomes the final G8 country to have laws specifically targeting unsolicited email marketing (spam).

Being a Canadian law, it only applies to spam originating from Canada. So while it may not make that much difference in the number of spam arriving in your inbox daily promoting hot Russian software, it does mean that Canadian businesses will need to be more careful when marketing their products and services to the Canadian public lest they contravene the new anti-spam law and subject themselves to a fine.

Under the new anti-spam law, commercial electronic marketing messages may only be sent when the recipient has consented, explicitly or implicitly, to receiving it.

Consent may be implied if:
  • there is an existing relationship between the sender and the recipient, business-related or otherwise;
  • the recipient has published his email address without an accompanying statement that he does not wish to receive unsolicited commercial electronic messages at that electronic address, and the message is relevant to the person's business, role, functions or duties in a business or official capacity; and
  • the recipient has disclosed his email address to the sender without indicating a wish not to receive unsolicited commercial electronic messages at that email address, and the message is relevant to the person's business, role, functions or duties in a business or official capacity.
Moreover, the format of the message must:
  • identify the person who sent the message, including contact information;
  • identify the person, if any, on whose behalf the message is sent, including contact information;
  • set out an unsubscribe mechanism; and
  • ensure that all contact information referred to above is valid for a minimum of 60 days after the message has been sent.
Violations of the anti-spam law may be made to the CRTC. Additionally, the new anti-spam law includes a private right of action allowing anyone to apply to a court to pursue violators.

The anti-spam law is anticipated to come into force in the fall of 2011, after regulations are in place.

Wednesday, December 01, 2010

RIM v. Kik part 2

Yesterday, RIM launched a suit against Kik Interactive for patent infringement.

I just had a look at the statement of claim (available here), and it looks like there's more to the story than simply patent infringement.

Not only does RIM allege that Kik infringed the following Canadian Patents:

It also looks like Ted Livingston, the CEO of Kik interactive, worked at RIM as part of the BBM group in 2007 to 2008. RIM alleged that Ted had access to confidential information regarding BBM development, future plans, and technology and used them to his benefit.

RIM also alleged that Kik had, without obtaining user consent, transmitted end users' personal information, including information from their address books, to Kik's servers and then used that information to send spam.

This is going to be an interesting case to watch, as RIM will certainly ask for an injunction to stop Kik from distributing its software across not only BlackBerry, but all other mobile platforms as well.

RIM sues Kik for patent infringement

If you've been following BlackBerry news lately, you know that Kik Messenger was booted out of the Blackberry app store by RIM on Nov 12, for "breaching contractual obligations".

Kik is an in instant messaging service, much like RIM's BlackBerry Messenger (BBM).  Just like BBM, Kik Messenger also has little indicators that shows when a message has been sent, delivered, read, and even when a user is typing a message.  With 2.5 million users after only a month in existence, Kik certainly presents a credible threat to BBM if it continues to gain users at such a rapid pace.

It looks like RIM just upped the ante on Kik.  On Nov 30, lawyers for Research in Motion filed a patent infringement lawsuit against Kik in Canada's Federal Court in Toronto, in court file T-1996-10.  I haven't read the Statement of Claim outlining RIM's allegations against Kik yet, but I suspect that the patent at issue covers a messaging platform that provides sent, delivered, read, and typing indicators.

And if a Canadian suit has been filed, a US patent infringement suit can't be far behind.  RIM is likely to have a US patent with claims similar in scope as the Canadian patent in T-1996-10.

Update: I took a look at the statement of claim, and it's not just patent infringement that's at issue.

Update 2: Kik has now filed their statement of defence and counterclaim.

Tuesday, November 23, 2010

Directors' responsibilities

An opportunity arises and you have the opportunity to become a Director.  To sit on a Board of Directors is exciting, whether it's your own company or if it's an entity like a charity or a not-for-profit that you're especially passionate about.

But before you take that plunge, know that Directors have special legal responsibilities to the company, over even that of Officers (CEOs or CFOs).  Directors owe a fiduciary duty to the corporation.  What this means is that as a Director, you must act honestly and in good faith in the best interests of the corporation, rather than in your own personal interest.

While at first glance this may sound self explanatory and you may wonder why fiduciary duty is such a big issue, the reality is that in ordinary everyday business dealings, Directors often forget about this fiduciary and unknowingly breach it. 

So before taking that big seat at the Directors' table, be sure to consult a lawyer and know the new responsibilities that you're taking on.

Monday, November 15, 2010

Appeal - Patents claiming a method of doing business

As I posted earlier, on October 14, 2010 the Federal Court in Amazon v. Canada, 2010 FC 1011 held that a method of doing business (a "business method") can be patentable subject matter, and that there is no categorical exclusion for business method patents. The Court rejected the Canadian Intellectual Property Office's reliance on foreign legislation and foreign court decisions, and the Canadian Intellectual Property Office has no discretion to refuse a patent on the basis of public policy and must always substantiate its decision with express provisions in the Patent Act.

Today, the Department of Justice on behalf of the Canadian Intellectual Property Office filed an appeal to the Federal Court of Appeal, in court file A-435-10.  With the launch of the appeal, Amazon has 10 days to cross-appeal (appeal the Federal Court decision on grounds other than those raised by the DOJ) if they so desire.

The results of the appeal will not be known for some time (likely within a year).  In the meantime, the Federal Court decision stands, and it is the law in Canada that a method of doing business is patentable subject matter.

Sunday, November 07, 2010

The SR&ED Tax Incentive Program

Research and development is expensive, and as an innovative entrepreneur you need all the financial help you can get. 

One of the best things you can do for your startup financially is to apply for the Scientific Research and Experimental Development (SR&ED) Tax Incentive Program. 

What is it?
The SR&ED is a tax incentive program to encourage Canadian businesses to conduct research and development in Canada.  You can use SR&ED investment tax credits for expenses such as wages, materials, and equipment.

Who qualifies for it?
Generally, a Canadian-controlled private corporation (CCPC) can earn an investment tax credit of 35% up to the first $3 million of qualified expenditures for scientific research and experimental development carried out in Canada, and 20% on any excess amount.

What kind of projects qualify?
To qualify for the SR&ED program, work must advance the understanding of scientific relations or technologies, address scientific or technological uncertainty, and incorporate a systematic investigation by qualified personnel.

For more information about the SR&ED, including how to apply for the SR&ED, visit the CRA's web site at

Sunday, October 31, 2010

Different types of intellectual property rights

You may have heard about patents, trademarks, copyrights, and even industrial designs, and had always wondered what they are.

Intellectual property is a funny thing: you can't touch it, but you can sell it, give it away, and even retire from the income generated by it. It's as important as your other tangible assets, and as an entrepreneur it's important to at least know about the different forms of intellectual property rights available in Canada.

In general, a patent is an monopoly right granted to an inventor of an invention so that the inventor can make, use, or sell the invention for a certain period of years exclusively. In return, the inventor teaches society his invention so that anyone can make or use the invention after the inventor's monopoly period is over.

A trademark (called a trade-mark in Canada) is a distinctive name (or graphic, or both) which you use to distinguish your products or services from those of someone else. A trademark can be registered or unregistered. Unlike patents, a trademark registration can be repeatedly renewed.

Copyright protects the expression of an original literary, dramatic, musical or artistic work. The definition of a "work" is broad, and includes obvious ones like paintings, photos, movies, and sound recordings, and also non-obvious ones like maps, plans, tables, manuals, recorded lectures, an oral interview written down, computer programs, and even compilations of other works, as long as it is non-trivial and non-mechanical.

Other Intellectual Property Rights
An industrial design protects externally visible non-utilitarian aesthetic features that are applied to useful articles.

There are many other less used intellectual property rights in Canada as well, such as Plant Breeders’ Rights, specific protection for Integrated Circuit Topographies, the Tort of Misappropriation of Personality, and Distinguishing Guise.  Depending on your circumstances, one or more of the above can apply to protect your business and creative output.

Sunday, October 24, 2010

Incorporating your start-up

You've got a great idea for a business, and you're eager to get started.  You don't have a lot of start-up funds, and you want to ensure that most of your funds stay in your business.

When should you incorporate?  You know that you should incorporate eventually, but when's a good time to do so?

Don't incorporate just because you've got an idea for a business.   That's way too early.

Generally, incorporating a business is more than filling out a few government forms and requires professional help.  If there is more than one owner, if there are outside investors, debt, intellectual property or employees involved, if the business is a franchise or a regulated profession like medicine, or if there are not-for-profit or charitable components, you should get a lawyer to incorporate your start-up.

There are two things that define a corporation.  Owners (shareholders) have limited liability, and the corporation is a separate legal person.

Limited liability means that shareholders are not personally liable for the debts of the corporation.  If a corporation is unable to pay its debts, the maximum that you (as a shareholder of the corporation) may lose is the amount that you've invested into the corporation's shares, and no more.  This means that you won't lose your house if your start-up fails.

Under Canadian law, a corporation has the capacity, the rights, powers and privileges of a natural person.  For example, when renting office space, you can cause the corporation to sign the lease (and assume the liability) on its own behalf.

The general rule of thumb is that you should incorporate before your start-up takes any big steps or makes big commitments. Generally, you should contact a lawyer and incorporate your start-up before any of the following occurs:
  • Having outside investors invest in your start-up
  • Having more than one owner or responsible person
  • Splitting or sharing the ownership of the start-up with another individual or corporate entity
  • Obtaining debt such as a loan
  • Leasing or buying any big ticket item like office space or expensive equipment
  • Signing any agreements with suppliers or manufacturers
  • Putting warranties on your products
  • Hiring employees

In the meantime, here are some things that you should feel free to do even if your start-up is not incorporated:
  • Applying for patent or trademark protection
  • Marketing and selling your product or service

Tuesday, October 19, 2010

Making money from your patent

Congratulations, after spending tens of thousands of dollars and suffering through years of tedious back and forth with the Canadian Intellectual Property Office, you've finally got a patent with claims covering your invention!

Now that you've got the issued patent with the shiny seal in your hands, what are you going to do with it?

Frame it and hang it on your wall?

Sure.  But there are other ways to make money from an issued patent as well.

Sell it / Sell a portion of it
You're an inventor at heart and you want to keep inventing.  You don't want to go into the business of mass producing your invention, deal with the headaches of marketing, or devote time to after-sales customer support.  You can sell your patent to someone who is in the business of manufacturing, marketing and support.  For example, if your patent claims a new home renovation tool, you can sell your patent to Black & Decker for a lump sum payment and let them worry about manufacturing, marketing, and supporting the product.

License it
Similarly, you can license your patent to someone who is in the business of manufacturing, marketing and support.  For example, if your patent claims a new home renovation tool, you can license your patent to Black & Decker, and for each tool they sell, you can get a certain percentage of the profit as a royalty.

Exclusive right to make, use or sell
For 20 years after your patent's filing date, your patent gives you the exclusive right to make, use, or sell your invention.  If any of your competitors infringe on your claims by making, using, or selling a product in Canada which falls within the scope of the claims in your patent, you can go to court and seek an injunction stopping them from ever infringing again, damages for your losses stemming from their infringement, all of their profits stemming from their infringement, delivery up of all their infringing inventory, pre-judgment and post-judgment interest, court costs, and more.

And the best part is, none of the above prevents you from framing the patent and hanging it on your wall too.

Thursday, October 14, 2010

Patents claiming a method of doing business are patentable in Canada

In March 2009, the Commissioner for Patents had rejected Amazon's patent application claiming a "1-click" method of internet shopping, holding that business methods such as these are categorically unpatentable.  The Commissioner appeared to adopt a public policy role, and relied heavily on foreign legislation and foreign court decisions in order to support its decision.  This decision created uncertainty in the Canadian patent regime because after this decision, the Canadian Patent Office considered business methods no longer patentable but had failed to substantiate it with clear Canadian legislative or judicial authority. 

Today, the Federal Court in Amazon v. Canada, 2010 FC 1011 brought back much clarity to the world of Canadian patents.  The Court held that a method of doing business (a "business method") can be patentable subject matter, and that there is no categorical exclusion for business method patents.   The Court rejected the Commissioner's reliance on foreign legislation and foreign court decisions, and reminded the Commissioner that it is bound by the Canadian patent regime and its interpretation by the Courts. The Commissioner has no discretion to refuse a patent on the basis of public policy and must always substantiate its decision with express provisions in the Patent Act.  International jurisprudence, and certainly the policies advocated therein, are not determinative, but at most a potential guide when applied correctly and mindfully. 

Inventors and intellectual property lawyers are glad that the patentability of business methods are affirmed.  I will keep you updated if 2010 FC 1011 is appealed to a higher court.

Tuesday, October 12, 2010

What's a registered trademark and why do I want one?

When you buy a mobile phone, do you look for a phone with a full QWERTY keyboard, or do you look for a BlackBerry?  When you buy a handbag, do you look for a leather handbag with zippers, or do you look for a red Gucci handbag?

What does a BlackBerry signify to you, that any other phone with a full QWERTY keyboard doesn't?  Encryption and security?  Push e-mail?  A sense of mature business-mindedness, of a no-nonsense worker getting things done?

What about the Gucci handbag?  What does it mean to you when you carry a Gucci handbag versus any other handbag?  A sense of style and elegance?  A display of wealth?  Or both?

As consumers, we all rely on brands as shorthand to tell us certain attributes about the product, and to tell the world certain attributes about us as users of the product. 

Your brand is one of the most important ways to identify and distinguish your product from the product of someone else.  It reassures your customers that the product they're purchasing came from you, and that because it came from you, they can expect the same quality and service and exude the same image that is customarily associated with you and your product.

Because your brand is such an important indicia, it's important to protect it from being misappropriated by others. One of the easiest ways to protect it is by registering it as a trademark.

Let me be clear - you don't have to register your brand as a trademark in order to use it on your product, service, or marketing materials.  Even without registration, you still have "common law" rights to your brand, as long as you're able to show in court that through your use of your brand through time, you've acquired a distinctive reputation in your geographic area.

However, there are distinct benefits to registering your brand as a trademark.

First, having a registered trademark makes pursuing an infringer for trademark infringement much easier.  You don't have to provide evidence in court that you actually have common law rights to your brand, because being the registered owner of a trademark registration is de facto proof that you have the exclusive rights to the use of the registered trademark.

Second, a registered trademark gives you the exclusive right to use it throughout Canada, whereas common law rights are restricted to the particular geographic area in which you've used your brand and have acquired a distinctive reputation.

In general, there are more advantages to registering a trademark than not.  Start protecting your most important intangible asset - your brand - by contacting me and registering it today.

Saturday, October 02, 2010

Why patents are such a hassle to obtain - the public policy for patents

Many first-time inventors are surprised at the costs and time involved in obtaining a patent.  "Why is a patent so expensive to obtain and takes so many years to issue?", they ask.

Because all patents applications must be carefully prepared by a qualified professional and must then go through a rigorous examination process. 

At its core, patents are a bargain between an inventor and society (in this case the people of Canada).

In return for a 20 year legal monopoly on his invention, the inventor agrees to teach society a new and non-obvious invention, one that the world has never before seen or contemplated. No mere idea, the inventor also teaches society how to make and use his invention in the best way the inventor knows how.

The patent application is the vehicle through which the inventor teaches his invention to society. This is one of the reasons why patents are published publicly, and are even available on Google.  Once a patent's monopoly term expires, anyone in the society can take advantage of the invention.

This bargain is also why a patent application must be examined by the Canadian Intellectual Property Office (CIPO) before the patent application can be approved as an issued patent. Among other things, CIPO searches the state of the art to ensure that the invention as taught is truly new and non-obvious - thus ensuring the integrity of the bargain.  This examination process is rigorous and patent applications typically require amendments before the CIPO is satisfied that the invention is new and non-obvious.

And that's why a patent can cost thousands of dollars and take a few years to issue.

Thursday, September 30, 2010

Operating a business together

You and a buddy want to operate a business, and both of you want to save some money. You're both informal people eager to get on with business, so both of you simply start selling stuff. 

You've just entered into a partnership with your buddy.  As partners, each of you is liable to the full extent of your personal assets for the debts and other liabilities of the partnership business.

That sounds scary, but a partnership is not automatically a bad thing.  Depending on the particular circumstances, a partnership may be the best way to do business because the law may not allow you to incorporate.  For example, many investment funds operate as a partnership, and some law firms operate a special form of partnership as well.

What is important is that both of you know that you've created a partnership, and that both of you wanted it to be that way. 

A partnership may be created even without an express partnership agreement.  Whether a partnership exists is determined objectively by a court.

In fact, an express provision in a written agreement denying that the you and your buddy are NOT partners may not be conclusive proof in showing that a partnership does not exist.

The best way to show that you're not in a partnership?  Incorporate.