Frequently Asked Startup Questions

I love meeting with entrepreneurs, their passion, energy and guts are inspiring.  Entrepreneurs starting a new business usually have a million questions, lots of uncertainty, and usually no money to pay the many bills that arise before ‘going live’.  Here are some answers to questions I get regarding IP questions for start-ups.

“Do I need a trade-mark registration before I launch my product or services”?

As soon as you start using your trade-mark in association with services or goods, and those goods are available to the public (not just samples or mugs and t-shirts for your friends) you gain common law rights automatically.  Those rights only go so far as your reputation extends, so it is wise to register as soon as you can afford to (typical costs are $2,000-$3,000 CDN), which gives you better rights and rights across Canada.  You should be recording all your uses of the mark pre-registration, as this is vital for your trade-mark agent when you do register, and in case you need to deal with conflicting claims to the mark.  You should also be using the TM notation beside your mark.

“How do I choose a strong trade-mark”?

I often wish a client had consulted me before they sunk lots of money and time into an unprotectable trade-mark.   See my article here explaining how to choose a strong trade-mark.

“Should I patent my product or business idea”?

You might, if you have an invention that is new and have never been disclosed anywhere in the world.  Some software and business models may be registerable in Canada, though these are exceptional – the case law is changing, since the Amazon “one-click” patent case found that Amazon’s method of online sales was patentable subject matter.  There is significant cost and effort involved in registering a patent.  You should speak to a patent agent/lawyer before disclosing your idea/invention or you could lose your rights after one year.  This includes disclosure on the internet!

Alternatively, you may be able to gain the same protection through trade-secret law.  Speak to a lawyer about drafting a non-disclosure agreement if you want this kind of protection.

“I’m overloaded with launching my business. Why spend time and money on intellectual property now”? 

Let’s face it, few companies in North America make widgets these days.  Most companies are knowlege-based and service businesses, who make money based on their reputation, goodwill and company know-how.  The value of your business will be your intellectual property; the extent to which you can monetize this IP, for raising capital and potentially franchising or selling your business down the road, will depend to the extent to which you can point to steps taken to secure your reputation, goodwill and company know-how.

SCC Copyright Hearing Bonanza

Today I didn’t get as much work done as I had hoped.  While this is a common lament from me, today I had an extra awesome reason – COPYRIGHT SUPREME COURT HEARING WEBSTREAMING BONANZA!!!

Today and tomorrow the Supreme Court of Canada is streaming five hearings, all on various copyright issues.  All of the cases arise from hearings before the Copyright Board to determine appropriate administrative tariffs, so much of the jurisprudence may be regarding administrative law rather than copyright.  However, what I saw today was some very interesting discussion regarding fair dealing, and a peppering of some very smart counsel with questions by the Honourable Madam Justice Abella and other Justices.

Links to all of the web-streams remaining tomorrow and the facta can be found here at ippractice.ca.

Much of the discussion is on Fair Dealing, which is an exception to copyright in Canada, but far more limited to the american doctrine of Fair Use, which includes protection for such broad things as parodies (which our law does not).  Of particular interest, Abella strongly challenged the submissions that users’ rights are entitled to some sort of constitutional protection, on the basis of free speech, on par with the free speech rights of the composers and authors.  I must say I don’t see the logic in this argument either and think it is a stretch to say that user rights are constitutionally guaranteed by the Charter.

The majority of the tension in these hearings is that SOCAN and other composer/author groups are advocating for a narrow reading of fair dealing, limiting the research exception, for example, to a small set of circumstances, and not to commercial activities such a previewing music clips before you buy them.  The opposing position is put forward by various user groups who argue that the fair dealing exceptions should be interpreted broadly, so as to encompass lots of different activities.  I admired the counsel for the intervener Canadian Association of University Teachers’ point when she said ‘although it could be said that I represent the elite (university profs in the proverbial ivory towers), I urge you not to limit the fair dealing provision only to that elite.’  Well said.

It was also interesting to hear the submissions of Apple Inc., who advocates that previews of a music file are not the same as playing on the radio, because the radio sells advertisements, whereas the preview is simply a sampling of the goods consumers are going to buy.  I must say, it seems different to me.  SOCAN replied that there is a cost if you sell a sample of food in a store.  It made me wonder whether HMV and Virgin, when they set up headphones on the walls of the store to sample, payed an extra SOCAN fee for that right.  That strikes me as odd.

I recommend you tune in tomorrow if you can.  The rows are filled with some especially brilliant counsel making some expecially brilliant submissions (for the most part).

 

 

Crookes v. the Internet – SCC on Internet Defamation

A new Supreme Court of Canada decision has been released – Crookes v. Newton aka ‘the Internet’ (he originally sued Google and Wikipedia as well). Intellectual property lawyers like me get geeky excited when a new IP decision gets released by our top court, since it happens infrequently.  This case will now be a ‘must read’ for bloggers who post links to other websites.

I have been watching this very interesting BC case wind its way up through the courts. It provides some exciting comments on internet defamation, and perhaps on internet law in general.  Crookes was a high profile figure in BC: the owner of West Coast Title Search and a political player.  He took umbrage at some online comments about him and Green Party members as being part of a “gang of crooks”.  He sued not only those who made the original comments, but those who published hyperlinks to the comments.  The question referred to the court was whether a blogger could be liable for hyperlinks made to defamatory material, where no snippet of the material was republished.

Essentially the finding is that simply hyperlinking to defamatory material is not re-publication of that defamatory material. The tension in the various concurring reasons is how to differentiate between defamatory text republications and non-defamatory republications since links generally are accompanied by snippets of the article. The court chose to limit its reasons to a narrower issue and to follow a substance test that looks at whether defamatory material was technically reproduced, as advocated by Justice Abella, rather than a wider question and an intention based test (whether the defamatory republication was deliberate or merely passive), as advocated by Deschamps J.

It makes sense that the Court should only deal with the issue before it, and Abella J. expresses a valid point that it is foolish to try to address every scenario of hyperlink structure.   However, IP law always seems to be addressing yesterday’s issues (our current Copyright Act is written with VCRs in mind).  If I publish a link on Linkedin or the Facebook, it automatically reproduces part of the text.  I don’t get to control what part.  Though the court has given us some good guidance through general principles, it is unfortunate that it fails to comment on the common reality of the internet.

.xxx – Trade-mark Owners Worry About Triple X Domain

In December 2011, the land-rush registrations will begin for adult entertainment providers to start registering triple x domain names.  You can check out the first site of .xxx here (don’t worry – it’s work safe).

The triple x top level domain name is to become one of a number of new top level domains introduced by ICANN, the organization that runs the internet.  The two arguments for .xxx are: 1) it helps to segregate the smut from the rest of the web since the whole domain can be blocked by parents or search engines, and 2) we are running out of domains and need to make more room on the internet.

The move is part of a trend to allow more and more specialized Top Level Domains.  If you have an extra $185,000 you too can get a personalized TLD.  Companies like Microsoft or Coca-Cola may soon have their own TLDs (e.g. running.nike) where they can create infinite pages related to their products, and retain ultimate control over them.

ICANN rejected the xxx top level domain on a couple of occasions, but it was finally pushed through. It allows trade-mark holders to pre-register names so they cannot be taken.  This will prevent tdbank.xxx or futureshop.xxx from being used (unless those companies want to branch out).  Some brand owners see this as extortion, since they have to pay for domains they want blocked.  ICANN argues that it is a relatively cheap and effective method for preventing abuse.  In terms of the cost of legal enforcement, this lawyer says it’s a bargain.

The period that is almost complete is Sunrise A – which is for .xxx domain reservation by “members of the adult sponsored community” (a euphemism if I ever heard one) with either verifiable trademark rights or owners of exact matching domains TLDs.

Between September 7, 2011 and October 28, 2011 is the important Sunrise B period.  This is the limited time that intellectual property holders who are not “members of the adult sponsored community” who have verifiable trademark rights so they can block their domains in the .xxx TLD.  That domain name will be removed from the pool of domain names available for registration in future phases.  A helpful video about the sunrise periods is available here.

This is a great example of an instance in which registered trade-mark holders have superior rights to owners of unregistered common law marks.  The policy clearly sets out that unregistered marks do not qualify for protection.  Yet another reason that registering your trade-mark is worthwhile.

If you are a registered trade-mark holder, you have limited time to step up and permanently block your site (for a one time fee of $300), otherwise prepare to see yourcompany.xxx soon.

Image from University of Washington Library

Scale of Trade-Mark Strength – How to choose a strong trade-mark

Just got back from a terrific week-long trademark course put on by IPIC and McGill.  I liked the way they laid out the relative scale of strength answering the burning question on every marketer’s mind – How do I choose a strong trademark?

• COINED – Very Strong /Valuable
• Invented words – XEROX, KODAK, GOOGLE
• ARBITRARY – Strong/ Valuable
• Words/images without connection to THE wares or services, – APPLE, BLACKBERRY
• SUGGESTIVE – Medium/Good Value
• Words/images that allude to the wares or services but do not describe them – GREYHOUND, JAGUAR
• DESCRIPTIVE – Weak/ Low Value
• Words/images that refer to the character or quality of the wares or services, or an ingredient or aspect of them – COLD BEER, SPEEDY COURIER
• GENERIC – Worthless
• Words/images that are names of the goods or services in any language – CAFÉ, ESCALATOR, CRUISES

The mark you choose should be strong, not just for registration purposes, but for the purposes of value and enforcement.  Even a registered mark, if descriptive or generic, may not be sufficient to prevent others from using the mark in association with those services.

The most valuable marks in the world reside on the upper end of the scale.  Initially, you may be tempted to use a descriptive mark to telegraph to your clients what your services are.  However, money spent marketing for a mark that is not unique and protectable, is money thrown down the drain.  Goodwill you build in your mark will be lost.  It is best to use a creative suggestive, arbitrary or coined mark.

Scratchin’ and Mixin’ – Sampling and Arranging Musical Works

Lots of bands do covers and sample famous lines from well known musical works. Mash-ups and remixes are an emerging art form in their own right. So what is the legal status of sampling and arranging? What licences are required for an arrangement of another composer’s song?

Contrary to popular opinion, under the current Canadian Copyright Act, we do not have sampling rights. There is no “bright line” of how long of an excerpt you can take from another composition. The only test is whether there is a “substantial taking” of the original work. If a certain lick or phrase from a musical work is well known, taking that lick alone could be infringement because the test focuses on both quantity and quality. Basically, if the original is identifiable, and copyright has not expired, you risk a claim of copyright infringement.

Luckily in Canada we have collective agencies who sell inexpensive licences. If you want to sell CDs or MP3s of your arranged or sampled musical works, you must obtain a mechanical licence from the Canadian Musical Reproduction Rights Agency Ltd. (CMRRA). For performing the works, you must obtain a performance licence from the Society of Composers, Authors and Music Publishers of Canada (SOCAN).

To record and sell copies of a work with a sample or an arrangement you have made of another composer’s original music, you must obtain a mechanical licence. A mechanical licence includes the right to make and sell copies of a song or composition. In the case of a cover version or an arrangement, you are only licensing the right to the underlying composition. You become the owner of what you have added to the work, i.e. the new arrangement, but cannot print and sell the work without paying a royalty. It is similar to a translation of a book into another language, the copyright is layered such that the original author continues to own the original work, but the translator has the exclusive right to control the translated work. Mechanical licence rights are granted through various agencies who collectively manage copyrights. This allows for low royalty fees. Without such collective agencies, users would have the impossible task of tracking down composers and negotiating an individual licences with them. In Canada, mechanical rights for most composers are managed through the CMRRA. If you are altering the original composition, CMRRA will contact the composer or their agent for permission to alter the work.

The royalty paid to the CMRRA grants the right to sell copies. However, in Canada, performing rights are granted separately. Performance royalties must be obtained for each performance of the work. These royalties are generally paid by the venue in which you are performing. For example, almost all bars that have live performances will have a SOCAN licence.

New copyright legislation in Canada proposes to make exceptions for mash ups made for non-commercial purposes.  Here is an interesting article on this exception by Wendy Serres from IP Osgoode.   However, even if the new legislation is passed, musicians trying to make it big will still need to pay royalties when they are selling and performing their arrangements.

What mash up rights do you think should be permitted under the new legislation?  How do we encourage creativity, while still protecting the rights and integrity of the original composer?

“Go Canucks Go” – Trade-mark Infringement? Seriously?

As the Vancouver Canucks roll over all competitors on the way to an inevitable Stanley Cup victory (the power of positive thinking), an interesting story came up in the news.  A local car dealership was sent a demand letter advising that it must take down the writing “Go Canucks Go” from its front window.  The news story attributed this to a claim of “copyright infringement”, but it was more likely trade-mark infringement.   The Vancouver Canucks Limited Partnership owns a number of trade-mark registrations for word marks and design marks (including the awesome old skate logo).  Their portfolio includes the word mark CANUCKS in association with a number of wares, along with the service of “promoting athletics and providing entertainment through the medium of a hockey club and the playing of hockey games“.

Similar situations of legal demands have been reported in the past, such as a demand for $89,000 as damages from a Montreal restaurant near the Forum (I mean’Bell Centre’) who used an image of a shwarma man in a Habs jersey.

Most trade-mark lawyers would say the Canucks are obligated to police the use of their mark, lest they lose control and ultimately lose the mark.  However, if you ask a member of the general public they won’t see it this way.  Teams ask fans to rally behind them and take pride in the team – they encourage and profit from a feeling of communal ownership of the team.  For this reason it feels like they are breaking an unwritten agreement of sorts by objecting to displays of public support.

The Canucks Organization responded as follows:

Canucks Sports & Entertainment embraces the tremendous fan support and civic pride for the Vancouver Canucks throughout their 2011 Stanley Cup Playoff run. The Canucks are supported by the best fans in the NHL and encourage their passion and enthusiasm for the home team.

The Canucks and the NHL also respect the importance of exclusivity and corporate partnerships. In doing so, local businesses seeking to generate an unauthorized promotional association with Canucks Sports & Entertainment will be notified of any violations. Unauthorized activities may take the form of ticket and merchandise giveaways, themed events and storefront signage and displays that are so extensive and/or sophisticated that they create the false impression there is a commercial relationship between CS&E and the business owner.

Canucks Sports & Entertainment appreciates the continued support of our fans and community as we continue our quest in the playoffs.

The obvious condoned use that springs to everyone’s mind is the use by buses of GO CANUCKS GO on Vancouver bus electronic signs – Vancouverites would rather see team support than know where their bus will take them.  It leads one to wonder what difference the Canucks see between the car dealership use and the Coast Mountain bus use – do they see private use as commercial and crown corporation use as non-commercial?  Or is it just such a positive goodwill gesture that the Canucks see it as worth the risk to their trade-mark.  The Canucks also run big ads on buses, so perhaps there is an agreement worked out with Coast Mountain.

Apparently the dealership responded by altering GO CANUCKS GO  to GO __NUCKS GO.  I doubt this would have any real difference if they ended up in court. . . what do you think?

How to choose a trademark and brand name and how to determine if it is trade-marked

If you are trying to figure out if a name is trademarked, because you want to apply for a trademark for your own brand or want to know if your use of a brand name infringes someone else’s trademark, you should take the following preliminary steps:

1) Search for Canadian trade-mark registrations using the Canadian Intellectual Property Office’s online database.  The link is here.

2) Check the US trademark office to see if the mark has been registered there.  Their trademark search tool is affectionately called TESS.  The link to ask Tess is here.

3) You should also do a usage search by typing in both natural and exact phrase searches into google, yahoo and bing, to see if there is someone out there using the trademark.  They may be using it in another jurisdiction, or with different wares or services.  Depending on the use, you may still be able to use and register it.

4) In Canada, do a NUANS search.  NUANS searches show businesses that have registered the name as a business name, but not necessarily as a trade-mark.  The way to do a NUANS search is by going to this government website, or by getting a lawyer to do it.  There is a small government fee to do this search.

5) Check to see whether the brand name is available as a domain name for .ca and .com. You may not want to use it if the name is already taken.  You can do the search for free by conducting WHOIS searches in Canada and Worldwide.

I hope you will find this an easy guide that helps with the initial stages of choosing a good brand name and deciding what brand names you may want to register as trademarks.  A lawyer can help you through this process, but it will save you money and you will get better results if you have done your homework.  There are some further considerations like distinctiveness and descriptiveness, which are described in my earlier post here.

Contact me if you want to register a trade-mark in Canada, or if you want to discuss other issues dealing with trade-marks.

Aga Khan slaps down copyright infringers

Here is an interesting case with colourful characters, involving the Aga Khan as a plaintiff (he even showed up for a 15 minute discovery).  http://decisions.fct-cf.gc.ca/en/2011/2011fc14/2011fc14.html This is a copyright case in which the Aga Khan sought a permanent injunction to stop individuals from republishing unauthorized audio and written reproductions of his speeches and writings.  The case a good example of successful summary judgment, which is difficult to succeed on because of the high standard.  It also comments on the issues of express and implied consent.  Copyright litigators are often faced with allegations of implicit consent or laches from infringers.  This is a useful case for the principle that such consent must be clear and unambiguous.

Trade-marks Distinctiveness and Descriptiveness

The Trade-marks Act requires that marks be distinctive but prohibits them from being descriptive. What the H-E-doublehockeystick does that mean?.   This clip discusses what the trade-mark requirement is, and how to pick a strong mark that will pass muster.