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2019: AN INTELLECTUAL PROPERTY YEAR IN REVIEW

While it seems hard to believe, 2019 is coming to an end.  This year was full of changes to intellectual property law, and interesting decisions. Below, we have a summary of these events.

January 2019: Not everybody is loving it.  A European Union court expunged McDonald’s Corp “BIG MAC” trademark registration. The Court argued the McDonald’s had not genuinely used the trademark for the preceding five years. Some stated this decision can help prevent larger companies from trademark squatting.

February 2019:  Pop culture wants to be popular but not imitated. Alfonso Ribiero sued several video game publishers for their use of the Carleton Dance from The Fresh Prince of Bel-Air and tried to register the dance with the US Copyright Office. However, the US Copyright Office stated that the dance was a “simple choreographic routine” and thus not protected by copyright.

March 2019: Are you registered?  In Fourth Estate Public Benefit Corp. v. Wallstreet.com, LLC, et al., the US Supreme Court ruled that an US-based copyright holder can only sue for infringement upon registration. This decision shows how US copyright differs from Canadian copyright, where registration is not a requirement.

April 2019: On April 1, 2019, Canada joined WIPO’s Digital Access Services for industrial design applicants. This means industrial design applicants only have to provide the number and filing date of a priority document filed in a reciprocating jurisdiction. They do not have to file a certified copy of the priority document. This will make the application process potentially easier and faster.

May 2019:  An American federal judge ruled that Qualcomm’s patent-licensing policies violated antitrust laws. Judge Koh wrote that “Qualcomm’s licensing practices have strangled competition” in the wireless modem chip industry. This case is divergent from other antirust investigations and cases.  For example, in 2013, the Federal Trade Commission abruptly ended an investigation into Google.

June 2019: On June 17, 2019, Canada implemented the new Trademarks Act and acceded to the Madrid Agreement, the Singapore Treaty and the Nice Agreement. The Madrid Agreement permits one to register a trademark in contracting jurisdictions. This Act made significant changes to Canada’s trademark rules. Now, trademarks protect smells, sounds and textures not just words or designs. A trademark’s lifespan is only 10 years. Some business owners might appreciate the increased number of characteristics they can protect. In contrast, some might worry this new Act could lead to unscrupulous allegations of infringement. For example, no two people process scent in the exact same way. Therefore, it would be easy for an owner of a scent to unfairly allege a competitor’s scent is confusing.

July 2019:  The European Court of Justice found that the German news site “Funke Medien” might have infringed the German government’s copyright by publishing government documents discussing military deployments.  Funke Medien argued there was public interest in the documents. The Court stated that freedom of expression was important goal and can be an exception to copyright law. However, if that exception applied in the above- mentioned case was for another court to decide. This case shows how intellectual property protection sometimes clashes with other values.

August 2019:  Use it or lose it. Trademark owners must use their trademarks or they risk having them expunged. Use requires that Canadians receive a “tangible and meaningful benefit while in Canada”. However, the question is what exactly constitutes a “tangible and meaningful benefit while in Canada”. In Live! Holdings, LLC v. Oyen Wiggs Green & Mutala LLP, 2019 FC 1042, the Federal Court decided “use” did not occur when Canadians could book hotels rooms in the USA on a website that contained the company’s trademark. The court stated that the benefit, a booked hotel room, was only realized in the USA. Thus, the benefit was not realized in Canada. This case highlights that the Federal Court has a broad interpretation of “use” but it does not have an unlimited interpretation of “use”.

September 2019: During the 2019 Canadian federal election, the Liberal Party promised, if re-elected, to institute a federal orphan drug policy. Canada is currently the only industrialized jurisdiction without a federal orphan drug policy. Orphan drugs are drugs that treat rare diseases; such diseases being diseases that affect relatively small percentages of the population. Due to the relatively small number of affected individuals, many pharmaceutical companies feel such drugs would not be profitable. This is to the detriment of people with rare diseases. Therefore, many governments have instituted sui generis policies to encourage the production of such drugs. Some policies include tax credits and exclusivity periods. It will be interesting to see what a made-in-Canada orphan drug policy includes.

October 2019: On October 30, 2019, significant changes to Canada’s Patent Act and Patent Rules came into effect. These changes were to conform with several treaties including the Patent Law Treaty. The changes are both administrative, including shorter timelines for responding to final fee payments and examination requests, and substantive, like granting certain third-party rights during abandonment. Similar to the new Trademarks Act, these changes were another example of the Canadian government amending Canada’s intellectual property statutes to conform with international standards.

November 2019: In a Canadian first, the Federal Court ruled, in Bell TV Media Inc. v GoldTV.Biz 2019 FC 1432, that Internet Service Providers should block websites that sell pirated television shows. This decision generated a lot of commentary. Some argue this decision ensures people have a wide range of arsenal to combat piracy and copyright infringement. In contrast, others believe this decision is an overly heavy-handed measure.

December 2019:  Not everybody will let it go. Trust Your Journey, a Nevada-based cancer advocacy group, sued Disney for trademark infringement for using the term “Trust Your Journey” on Frozen branded merchandise. It will be interesting to see what the result of this dispute. Will it be settled outside of court? Will it go to court?

There you have it! These were just some of the important 2019 intellectual property milestones. It will be interesting to see what the new decade will bring!

Author: Margot Mary Davis

Intellectual property (IP) issues for hiring employees

When hiring new employees, it is important to be cognizant of IP issues. Specifically, a hiring company should look to reduce IP flight risk, which is the risk of losing valuable IP. As explained previously, a company is vulnerable to losing IP if:

  • IP is not properly identified; and/or
  • IP is not properly secured.

With regard to employees, proactively incorporating relevant and useful IP clauses into employment agreements is a great way for a company to reduce IP flight risk. This is particularly important because it may be difficult to contact employees after they have left the company.

Different clauses need to be incorporated into employment agreements for the different types of IP.

Inventions

Typically, inventions are either protected as trade secrets or through patents. As explained above, IP needs to be properly identified. An employment agreement should include clauses requiring the employee to identify IP that the employee created in the course of his/her employment. Examples include clauses requiring the employee to:

  • Promptly disclose all inventions that the employee has created during the course of his or her employment; and
  • Participate in IP discovery or mining sessions where the employee discloses inventions created. This could include clauses requiring the employee to fill invention disclosure forms.

The IP then needs to be properly secured. The employment agreement should also resolve issues around ownership of inventions. In many jurisdictions, the employer does not automatically own the invention. Instead, the employee initially owns the invention. Therefore, the employment agreement should include clauses with express language stating that the employee assigns to the company all applicable future rights in inventions created in the course of employment. This is a safeguard in situations where the company does not have current contact with a former employee, or a former employee refuses to execute an assignment to an invention developed in the course of his employment. If the company decides to patent the invention, then the company should require the inventor to execute an appropriate assignment document to transfer ownership of the invention to the company. Coupling an IP-aware employment agreement with an assignment document is strong evidence that the ownership of the invention has been assigned to the company.

Confidentiality is vital to securing the IP in the invention. The employment agreement should include clauses relating to non-disclosure. In the case of trade secrets, confidentiality is extremely important since that is the only form of protection of the invention.

Additionally, it may be necessary for the employee to sign various documents for patent and trade secret protection. The employment agreement should include clauses which compel the employee to co-operate with the company and sign all relevant documents necessary for IP protection. Examples of relevant documents include inventor declaration forms and assignment documents.

The employment agreement should also include clauses transferring power of attorney to the company to strengthen and enforce protection of the IP. For example, in the case of patents, there should be clauses which allow the company to prosecute the patents at different jurisdictions and, if necessary, enforce the patents through lawsuits.

Companies may also seek to reward employees for inventions created during their employment. The employment agreement should state the form of the reward and when the reward will be granted to the employee.

Artistic or other written forms of work, slogans and software

Typically, copyright or trademarks protect works, slogans and software.

Similar to patents or trade secrets, employers should require employees to sign employment agreements where they assign their copyright in works and developments, that they produced or co-produced, to the employer. The employment agreement should contain provisions that permit the employer to register a copyright in these works or developments and if necessary, permit the employer to commence copyright infringement suits. Relatedly, such an employment agreement should bar the employee from registering a copyright for the relevant work or development, from disclosing the work or development to the public and initiating copyright infringement suits related to the works or developments.

In some jurisdictions, employers are the “first owners” of the copyright. However, employers should not rely on these provisions and should always ensure their employees explicitly assign their copyright. These provisions usually contain exceptions and the employer does not want an employee to wrongly assume that an exception applies.

Copyright, in certain jurisdictions, also presents the issue of moral rights. For example, the Canadian Copyright Act protects moral rights which include the author’s right to not have the work modified, the right to be associated with the work and the right to remain anonymous. Moral rights cannot be assigned but the author may waive them. If an author does not waive their moral rights, it could lead to future headaches. An employment agreement should contain an explicit and permanent waiver of the author’s moral rights

Some forms of intellectual property are not frequently subject to employer-employee ownership disputes. One such example are trademarks because they require the owner to use them. However, employees will usually not be contributing to only one form of intellectual property. They are probably contributing to various types of intellectual property. To err on the side of caution, employers should still get the employees to assign their intellectual property rights and waive their moral rights where applicable.

Conclusion

To prevent IP flight risk, employers should include employer IP ownership clauses in employment agreements. These clauses should be detailed, require the employee to assign their rights to the employer and tailored to the specific situation. This is a good practice regardless of the jurisdiction, any relevant legislation and the type of intellectual property.

Co-authored by:

Ramesh Rajaduray & Margot Davis

IP issues when working with contractor or on contract

Companies engage with contractors/consultants all the time to perform services or carry out engagements. It is therefore important for both companies and contractors/consultants to understand the IP issues around these engagements.

From the company perspective, the company should ensure that it retains ownership and control of all IP developed during the engagement. If the consultant/contractor is a company, then the services or engagement agreement should specify that the consultant/contractor is responsible for ensuring that each of the consultant/contractor’s employees performing work on the project has either agreed or agrees in writing to assign all IP rights. The company will then have a cause of action against the consultant/contractor if it fails to obtain the assignments.

Express language should be included in the services/engagement agreement as evidence of contractor/consultant agreement that it will not retain any rights in the developed IP. For example, if a company hires a contractor/consultant to develop a logo or website, the contractor/consultant will own any copyrights to the logo or website unless those rights are expressly transferred to the company in writing. In addition, moral rights such as the right of integrity of work and the right to attribution also attach to the copyrighted works. These moral rights may prevent the company from modifying the logo or website after the fact. To avoid issues, the company should secure IP assignments from consultants/contractors that address these issues and ask the consultants/contractors to waive their moral rights. The service/engagement agreement should also require the consultant/contractor to: Identify any sub-contractors used and obtain assignment and waiver of all IP rights from all sub-contractors used.

From the point of view of the contractor/consultant, the contractor/consultant should look to retain ownership of any pre-existing or background IP that it is likely to utilize to perform the engagement. This can be achieved by:

  • Clearly defining the consultant/contractor’s pre-existing IP that is likely to be used in performing the services within the services or engagement agreement.
  • Notifying the company if pre-existing IP is incorporated into the IP developed in the course of the engagement.

If the pre-existing IP is further developed during the engagement, and the consultant/contractor wishes to practice the developed IP, then the consultant/contractor should look to obtain a license to ensure that the consultant/contractor has freedom to practise the developed IP. Ideally, the service agreement should grant a license to the consultant/contractor to allow use of IP developed during the course of the engagement.

During the term of the engagement, the consultant/contractor may independently develop IP that is not related to the scope of work under the agreement. Then the consultant/contractor that develops the IP will retain the ownership rights in the IP and the service agreement will typically exclude such IP from any grant of rights to the other party.

In most cases, the company will retain ownership of all IP developed during the engagement, and the service agreement usually requires that the contractor/consultant takes every possible effort to ensure proper assignment of all IP rights to the company. If the contractor/consultant is a company with employees, then the contractor/consultant should ensure that each of its employees working on the project agrees in writing to assign all IP rights. This may include, for example, ensuring that all documents necessary for such assignments be executed by its employees.

If the consultant/contractor works with a sub-contractor during the course of the engagement, then the sub-contracting agreement should clearly specify that all IP developed during the course of the engagement will be assigned to the consultant/contractor. Furthermore, there should also be language to require the sub-contractor to identify any further sub-contractors used. The subcontractor should also agree in writing to obtain assignment and waiver of all IP rights from all further sub-contractors used.

Author: Ramesh Rajaduray & Margot Davis

Please note this piece does not constitute legal advice.

 

A Potential Canada-Wide Orphan Drug Policy? Why Canada Should Implement This and What It Should Include.

The federal election is around the corner. Political parties are campaigning and making new promises. With this in mind, the Liberal Party, today, promised to implement an orphan drug policy if re-elected. Canada is currently one of the few developed jurisdictions without a nation-wide orphan drug strategy. Below, this piece will discuss why Canada should adopt a national orphan drug policy and what it should include.

Firstly, one needs to define what is an orphan drug. Orphan drugs are drugs that treat rare diseases. Rare diseases are disease or conditions that affect small amounts of the population. Exact definitions differ jurisdiction to jurisdiction. For example, the European Union requires that a disease must have a prevalence rate of less than 5 per 10 000 people or it be particularly “debilitating” to be classified as “rare”.[1]

Despite being called “rare diseases”, their impact is significant. If all the people who had rare diseases lived in one country, it would be the third most populous nation in the world.[2] Rare diseases often strongly affect the family and caregivers of individuals with such conditions.[3] Therefore, it is vital to help individuals with such rare diseases.

While it is important to help such people, unfortunately pharmaceutical companies might not find it economically viable to produce orphan drugs. Orphan drugs are meant for a small segment of the market. The production of orphan drugs needs to be encouraged. This is why sui-generis orphan drug legislation is important.  For example, after the USA introduced the 1983 Orphan Drug Act, which provided tax credits for testing orphan drugs, grants for producing said drugs and afforded seven years exclusivity for such drugs, the FDA approved more than three hundred orphan drug applications.[4] In contrast, it approved ten orphan drug applications from 1973 to 1983.[5]

Related to how federal orphan drug policies have been associated with an increase in orphan drug applications, a lack of a national orphan drug strategy has led to comparative disadvantages for Canadians with rare diseases.  Compared to EU citizens, Americans or Japanese citizens, Canadians wait six years longer for orphan drugs and only sixty percent of orphan drugs make it into Canada.[6] Therefore, it crucial to have a Canada-wide orphan drug strategy. It could remedy this situation.

While Canada is a relative latecomer to adopting a federal orphan drug policy, that provides an unique benefit. Canada can avoid the mistakes of other jurisdictions.  For example, Canada can implement exclusivity periods that are contingent upon “fair pricing”.[7] Due to the quasi-monopoly status of exclusivity, some corporations charge excessive prices for orphan drugs.[8] Various activists argue that only permitting exclusivity periods if a corporation promises to ensure prices are fair is a potential antidote to this problem.[9]

Similarly, Canada can also avoid prevalence-based definitions of “rare diseases”. Researchers note that some orphan drug treatments are profitable and can cost anywhere from $100 000 to $200 000. [10]  The public might not be happy subsidizing the cost of profitable drugs which could result in general hostility towards the entire program.  Additionally, prevalence-based definitions have led to “salami slicing” where corporations down an entire drug market into “smaller components” by setting specific parameters.[11] This permits drugs that treat relatively common diseases to qualify for the advantages afforded to orphan drugs and again this could annoy some.[12] A possible alternative to prevalence-based definitions are “disease pathways”-rooted definitions.[13]

To conclude, all Canadians and political parties should get behind an orphan drug policy. Our framework could be evidence-based incorporating what works and avoiding what does not.  As a country we owe it to our fellow Canadians with rare diseases.

Author: Margot Mary Davis

This piece does not constitute legal advice.

References

[1]Commission Regulation (EC) 847/2000 of 27 April 2000 laying down the provisions for implementation of the criteria for designation of a medicinal product as an orphan medicinal product and definitions of the concepts ‘similar medicinal product’ and ‘clinical superiority’, [2000] OJ, L 103/5 at 2(1)(a) [Commission Regulation (EC) 847/2000].

[2] Medunik Canada Inc, “What is a Rare Disease?” (2016), Medunik Canada Inc (website), online:< https://www.medunikcanada.com/en/rare-diseases-community/what-is-a-rare-disease> [Medunik Canada Inc.].

[3] Ibid.

[4] An Act to amend the Federal Food, Drug, and Cosmetic Act to facilitate the development of drugs for rare diseases and conditions, and for other purposes, 96 Stat ⸹ 2049 at 1(b)(1) (1983) [Orphan Drug Act]; Enrique Seoane-Vazquez et al, “Incentives for Orphan Drug Research and Development in the United States”(2008) 3:33 Orphanet Journal of Rare Diseases 1 [Enrique Seoane-Vazquez et al].

[5] Enrique Seoane-Vazquez et al, ibid.

[6] Medunik Canada Inc., supra note 2.

[7] Eve Roberts, Matthew Herder, & Aidan Hollis, “Fair Pricing of “Old” Orphan Drugs: Considerations for Canada’s Orphan Drug Policy” (2015) 187:6 CMAJ 422 at 424 [Eve Roberts, Matthew Herder & Aidan Hollis].

[8] Sarah Jane Tribble, “Drugs for Rare Diseases have become Uncommonly Rich Monopolies”, National Public Radio (17 January 2017), online:< http://www.npr.org/sections/health-shots/2017/01/17/509506836/drugs-for-rare-diseases-have-become-uncommonly-rich-monopolies&gt;.

[9] Eve Roberts, Matthew Herder & Aidan Hollis, supra note 7.

[10] Matthew Herder, “What is the Purpose of the Orphan Drug Act?” (2017) 14:1 PLoS 1 at 2 [Herder].

[11] Herder, supra note 10 at 1; Yvette Leung, “Funding Orphan Drugs: Pitfalls of the Orphan Drug Act”, Harvard College Global Health Review (19 October 2012), online:< https://www.hcs.harvard.edu/hghr/print/student/orphan-drug-act/&gt;.

[12] Herder, supra note 10 at 2.

[13] Ibid.

Copyright Ownership and the Australian Aboriginal Flag

Copyright disputes are often linked to larger policy questions and a recent Australian copyright dispute is not a stranger to this trend. In late 2018, Harold Thomas, the copyright owner of the Australian Aboriginal flag, entered into licensing agreement with Wam Clothing, which is not Indigenous owned. Recently, Wam Clothing has sent cease-and-desist letters to an Aboriginal health group, Spark Health, over their use of the Aboriginal flag. Spark Health has asked for legal advice.

This case is indicative of the broader question about how to protect Aboriginal Traditional Knowledge (ATK) and Aboriginal art. Some argue currently existing intellectual property mechanisms are enough. For example, Canadian law permits certification marks to certify the “class of workers”.  The Inuit Art Foundation uses the “igloo mark” to certify authentic Inuit art.

Conversely, others suggest traditional IP laws are not enough because of intellectual property’s demand for originality and individuality, they have argued for sui generis protection for ATK. Others suggest mandatory consultation with Native communities.

Pertaining to this specific conflict, activists and politicians have offered various solutions. One Member of Parliament, Bob Katter, suggested that the Australian government should claim copyright ownership of the Aboriginal flag. Similarly, Fionna Phillips, an Australian copyright lawyer, has suggested that the Australian government should buy the rights from Thomas on “public policy grounds”. However, others contest this deprives Thomas the right to profit from his design. A Labour Party spokesperson said it was important that the flag remains “the property of the First Nations people.”

It will be interesting to see how the dispute unfolds. Will public opinion play a role in this dispute? In 2006 after public outrage, Aveda decided not to trademark the term “Indigenous”. Will this dispute be settled out of court? If heard by a court, will there be interventions by various activist groups? Finally, will Parliament enact any new laws in response to this situation?

Author: Margot Mary Davis

 

Searching for Trust: An Examination of the Google Antitrust Investigation.

Recently, the Federal Trade Commission stated they would commence an investigation into Google for potentially violating US antitrust laws. The alleged violations of antitrust law relate to its search policies.

In the past, Google has remained relatively unmaimed by US antitrust investigations. For example, a 2013 FTC antitrust investigation into Google was closed. This contrasts to other jurisdictions, like the European Union. The EU Commission has fined Google three separate times since July 2017. The most recent fine, from March 2019, amounted to 1.49 billion euros. US antitrust investigators may have closed antitrust investigations because of the relatively high threshold required to prove such violations. Some behaviours only violate US antitrust law when they harm consumers.

While Google has remained relatively unmaimed in the past, that trend might not continue. This investigation into Google comes at a time of significant criticism, from various sources, of Google and other large tech companies’ practices. For example, some 2020 presidential candidates have expressed their desire to break up big tech companies. Criticism of large tech companies has not only been limited to statements. In February 2019, the FTC’s Bureau of Competition created a “Technology Task Force” to specifically combat anti-competitive practices in the tech industry. US Senator Klobuchar introduced a bill, in winter 2019, to strengthen US antitrust laws. A court recently ruled that Qualcomm violated antitrust law for their pricing policy.

All this considered, it will be interesting to see the outcome of this investigation. While it be a result that please advocates of stronger antitrust laws or an outcome that favours larger tech companies?

Author: Margot Mary Davis

Roses or Rosé? Trademark Fame and Trademark Infringement

Recently, the band Guns N’ Roses filed a trademark lawsuit against Oskar Blues Brewery, a Colorado- based brewery for alleged trademark infringement. The lawsuit alleges that the defendant’s “Guns N’ Rosé” ale and associated merchandise, “intentionally trade on the GNR’s goodwill, prestige, and fame without GNR’s approval, license, or consent”. Guns N’ Roses seeks damages and legal costs.

Particularly interesting is the lawsuit’s mention of the mark’s fame. American case law has repeatedly highlighted fame’s importance in determining the existence of trademark confusion. In the Application of E.I. Dupont De Nemours & Co, 476 F. 2d 1357 (CCPA 1973), the Federal Circuit Court of Appeals specifically stated the “fame of the prior mark” must be considered when “testing for the likelihood of confusion”. The United States Court of Appeal, Federal Circuit, in Palm Bay Imports Inc. v Veuve Clicquot Ponsardin Maison Fondee En 1972, ruled that famous marks “enjoy a wide latitude of legal protection”. Particularly relevant for this lawsuit, Starbucks U.S. Brands, LLC & Starbucks Corporation v. Marshall S. Ruben says that “As the fame of the mark increases, the degree of similarity between the marks necessary to support a conclusion of likely confusion declines.”

With a US trademark infringement lawsuit relying heavily on the mark’s fame, one might wonder how Canadian law addresses famous trade-marks. The answer is somewhat differently.

In Mattel, Inc. v 3894207 Canada Inc., the Supreme Court of Canada ruled that BARBIE, to distinguish restaurant and catering services, was not confusing with Mattel’s registered trade-mark “BARBIE” for BARBIE dolls. The Supreme Court of Canada stated that a “trade-mark’s fame is capable of carrying the mark across product lines where lesser marks would be circumscribed to their traditional wares or services” but fame “does not deliver the knockout blow.” Related, the Supreme Court of Canada, in Veuve Clicquot Ponsardin v. Boutiques Cliquot Ltée, says that “Fame does not provide absolute protection for a trade-mark” and “It is one factor that must be assessed with all the others.” Therefore, a Canadian trade-mark infringement’s lawsuit that focused heavily on a trade-mark’s fame might be less successful than an American trademark infringement lawsuit relying on a mark’s fame.

These different approaches, again, highlight intellectual property’s jurisdiction-specific nature. Additionally, it will be interesting to see what results from this lawsuit.

Authored by Margot Mary Davis

Please note this piece does not constitute legal advice.