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What are patents?
Successful business are built on innovative ideas. These ideas are protected by the government through patents. If you want to have an assured protection for your idea you may want to explore the option of patents. A patent is a document that provide a time-limited, legally protected, exclusive right to make, use and sell an invention.[1] They apply to newly developed technology as well as to improvements on existing products or processes defining an invention. In Canada a patent lasts for 20 years from the date it is filed and protects the inventor’s rights in Canada.[2] To patent an idea in Canada, you will have to file a patent application with the Canadian Intellectual Property Office. The CIPO will then determine whether your idea meets the requirements for patentability. In order to be patentable an invention must be (1) a matter that can be patented, (2) novel, (3) useful, and (4) inventive and non-obvious.[3] Patentable Subject Matter In Canada only “inventions” are patentable.[4] Inventions are defined in the Patent Act as: [A]ny new and useful art, process, machine, manufacture or composition of matter, or any new and useful improvement in any art, process, machine, manufacture or composition of matter. [5] These five categories of invention – art, process, machine, manufacture and composition of matter – have been further defined by the Canadian Intellectual Property Office and by the courts. “Art” has been defined broadly as a process that (a) is not a disembodied idea but has a method of practical application, (b) is a new and innovative method of applying skill or knowledge; and (c) has a result or effect that is commercially useful.[6] A “process” is the application of a method to a material or materials.[7] A “machine” is the mechanical and/or physical embodiment of any function or mode of operation designed to accomplish a particular effect, wherein the parts of the machine cooperate to accomplish the effect.[8] “Manufacture” refers to “a non-living mechanistic product or process” and as being the process of making technical articles or materials by the application of physical labour or mechanical power, or the article or material made by such a process.[9] Lastly, a “composition of matter” is defined as a combination of ingredients or substances as a chemical union or physical mixture.[10] Most inventions, 90% of patents in fact, are not breaking entirely new ground, but are instead improvements on existing arts, processes, machines, manufacturers and compositions of matter.[11] Improvements upon these categories of inventions are also patentable.[12] According to the Patent Act you cannot patent a scientific principle or an abstract theorem.[13] There aer a number of other excluded or contentious subject matters, including some methods of doing business,[14] methods of medical treatment or surgery,[15] or fine arts[16]. Novelty In order to be patentable an invention must be new and inventive. The definition of “invention” in the Patent Act makes “new” a requisite.[17] In order to be “new” under the Patent Act the subject matter of a patent application: must not have been made public by the applicant (or someone who obtained their knowledge from the applicant) for more than one year before applying; must not be made public by someone independent of the applicant; and must not already be subject to an earlier patent application.[18] Essentially, in Canada the first applicant to file a patent is the one entitled to obtain the patent and any public disclosure of an invention before filing can prevent you from obtaining a patent.[19] The Canadian Patents Database is searchable online and can be used for determining novelty by checking for any possible conflicts with already existing patents. It is also best to file for a patent before, or very soon after, public disclosure. Usefulness or Utility An invention must be “useful” according to the Patent Act.[20] In order to be useful the invention must work or be advantageous for its designated purpose – it has to function and it has to fulfil some purpose.[21] This usefulness must be established through demonstration or by sound prediction at the time of the patent application. Utility can be established by sound prediction when “utility can be predicted in advance of complete testing”[22] This can be shown when (1) there is a factual basis for the prediction, (2) the inventor articulates a sound line of reasoning for the desired result to be inferred from the factual basis, and (3) there is proper disclosure of this information.[23] Inventiveness of Non-Obviousness In order to be patentable, an invention not have been obvious to a person skilled in the art or science to which the invention pertains before the patent application is filed.[24] Non-obviousness is determined in a four part test where you (1) imagine a “person skilled in the art” the patent application’s subject matter is concerned with, (2) identify the inventive concept of the claim in question, (3) identify the differences between the “state of the art” at the time and the claim, and then finally (4) decide whether the differences identified could constitute ‘steps’ to the invention claimed that would have been obvious to the “person skilled in the art” or was inventiveness required.[25] Generally, there is a halo of obvious solutions or improvements surrounding any old invention or problem. An invention must stretch beyond this limit in order to be inventive. Conclusion If all of these requirements are met your idea is likely to be patentable. But it’s important to keep in mind the potential downsides to patenting your invention. Patents are expensive. Filing fees alone are hundreds of dollars and you must pay maintenance fees for the entire 20 years of the patent.[26] While small entities have a discount, these fees can easily add up. The patent application process is also complicated and can take considerable time. The Canadian Intellectual Property Office recommends you retain a registered patent agent to help with the complexities of patent law, which can be another expense difficult for a small business to swallow. There are other protections for your ideas at law that might fit better you may want to consider before patenting, such as trademarks or copyright, some of which are protected at common law and don’t require a registration. Overall, patents are a powerful option for protecting inventions but you should first be sure that your idea qualifies and that a patent won’t be more trouble than it’s worth for your business. Kiara Brown is a member of the BLG Business Venture Clinic, and is a 3rd year student at the Faculty of Law, University of Calgary. References [1] Canada, Canadian Intellectual Property Office, “What is a patent?” (Ottawa: CIPO, 1 December 2015) [What is a patent?]. [2] Ibid. [3] Ibid. [4] Patent Act, RSC 1985, c P-4 [Patent Act] (The Patent Act defines patents as letters patent for an invention at s 2). [5] Ibid. [6] Progressive Games, Inc v Canada (Commissioner of Patents), [1999] FCJ No 1623 at para 16, 3 CPR (4th) 517. [7] Canada (Commissioner of Patents) v Ciba Ltd [1959] SCR 378 at 383, 18 DLR (2d) 375. [8] Canada, Canadian Intellectual Property Office, Manual of Patent Office Practice (Ottawa: CIPO, 29 October 2018) at 12.01.03 [MOPOP]. [9] Harvard College v Canada (Commissioner of Patents) 2002 SCC 76 at para 159, [2002] 4 SCR 45. [10] David Vaver, Intellectual Property Law: Copyright, Patents, Trade-Marks, 2nd ed (Toronto: Irwin Law, 2011) at 294. [11] Canada, Canadian Intellectual Property Office, “A guide to patents” (Ottawa: CIPO, 26 September 2018) [Guide to patents]. [12] Supra note 5. [13] Ibid. [14] Amazon.com Inc, Re 2011 FCA 328 at para 59-63, [2011] FCJ No 1621 [Amazon]. [15] Supra note 8, MOPOP at 12.03.02. [16] Supra note 14, Amazon at para 58. [17] Supra note 5. [18] Ibid at s 28.2(1). [19] Supra note 1, What is a patent?. [20] Supra note 5. [21] Supra note 11, Guide to patents. [22] Apotex Inc v Wellcome Foundation Ltd 2002 SCC 77 at para 69, [2002] 4 SCR 153 [Apotex]. [23] Ibid at para 70. [24] Supra note 5 at 28.3. [25] Supra note 22, Apotex at para 67. [26] Canada, Canadian Intellectual Property Office, “Standard fees for patents” (Ottawa: CIPO, 8 August 2019)
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Security Interests
If you are selling consumer goods that cost a lot, say over $1000, getting customers to put up the whole purchase price at once can be a barrier to sales. If you choose to sell on installment however, you might be left unable to get your customer to continue to pay. If the customer is solvent, you can enforce compliance with the sales contract itself. However, in case of an insolvent customer, which will often be the greatest instance of problems, a security interest in the property provides you will at least get the property back. A security interest means that you maintain an element of ownership of the property until it is fully paid for. These interests in Alberta are regulated by the Alberta Personal Property Security Act, RSA 2000. This blog takes a short look at what security interests are in an installment context, and how you can use them. For more detailed advice, feel free to reach out to the clinic! In order to create a security interest in the first place, you should write a contract that says that it creates a security interest. The security interest coming into force is called attaching. Generally, the security interest attaches when purchase price is paid and the purchaser takes possession of the goods.[1] In order for the security agreement to properly attach, certain procedural steps have to be taken, including giving the purchaser a written copy of the contract.[2] To be effective in bankruptcy, security interests must be perfected prior to the bankruptcy. Registration can perfect the security, so long as the interest has been validly attached.[3] To be perfected by registration, the security interest must have attached, and the process under the act for registration must have been completed, but those steps can have happened in any order.[4] Generally this involves registering a financing statement. Financing statements may be registered before the security agreement is actually made.[5] When registering, it is very important that you have the correct legal name of the debtor and the correct description of the goods. It is useful to get the birth certificate of the debtor. It is also best if there is a serial number for the exercise equipment, and that security interest is included in the registration.[6] In the reserve of the registration process, you must discharge the security interest once the goods have been completely paid. In the case of security interest solely in consumer goods, the security interest must be discharged not later than one month after all obligations under the security agreement have been performed, unless the registration lapses before then.[7] When the purchaser is in default, meaning not having paid their installment, you, the secured party, can notify the purchaser/debtor of their obligation to pay, and apply any money taken as collateral to the pay off the remaining price of the goods.[8] Reasonable collection expenses can be deducted from money collected in either of these ways.[9] The secured party also has the right to seize the collateral or otherwise enforce the security agreement by any method permitted by law.[10] The law relating to contracts of sale applies to security interests created in installment purchase agreements.[11] In Alberta, the Sale of Goods Act regulates these kinds of sales. Under that act, and under the common law, you can sue the purchaser for the price of the goods if they do not pay. [12] This remedy is available to you in addition to the remedies available from your security interest. You must however, choose one or the other. You can seize the property, or you can sue for the purchase price, you cannot do both, subject to certain exceptions. Finally, these kinds of sales, when made to a retail consumer, are regulated by the Consumer Protection Act. Under this act, consumer sales contracts cannot be harsh or unfairly one sided, and cannot be entered into if you as seller know the purchaser cannot pay.[13] In particular for installment sales contracts, the total price of the goods must be made clear, and must be more prominent than the cost of individual installment payments.[14] Online sales are in particular regulated by the Internet Sales Contract Regulation 81/2001. Once a customer has entered into an online sales contract, the seller must provide the customer with a written or electronic version of the contract within 15 days of the signing.[15] This copy of the contract can be sent by email, fax, or mail to an address provided by the purchaser.[16] If you do not provide the customer with all the information required by the regulations or give the customer an explicit opportunity to accept or reject the contract, the customer can cancel the contract up to seven days after signing it.[17] If you do not provide the customer a copy of the contract, the customer can cancel the contract up to thirty days after signing it.[18] Finally, if you do not deliver the goods within 30 days of the date of delivery written in the contract, or within thirty days of the signing of the contract if no delivery date is specified, then the customer can cancel the contract.[19] The court can intervene to stop any of these cancellations if they would be inequitable.[20] In the case of a credit agreement for purchase, which would include the kind of installment purchase plan discussed here, the Consumer Protection Act allows a customer to pay off the complete balance of the price at any point.[21] If the consumer pays off their debt early, the seller must also return a portion of all non-interest finance charges.[22] This gives you a basic idea of some of the considerations in selling consumer goods on installment in Alberta. Matt Hammer is a member of the BLG Business Venture Clinic, and is a 3rd year student at the Faculty of Law, University of Calgary. References [1] PPSA s12. [2] PPSA s11. [3] S25. [4] S19. [5] S43(4). [6] S30(6)(b). [7] S50(2). [8] S57(1). [9] S57(2). [10] s58(1)(a). [11] s15. [12] Sale of Goods Act, s39. [13] Consumer Protection Act, s6(3). [14] Consumer Protection Act, s6(4). [15] Regulation, s5(1). [16] Regulation, s5(3). [17] Regulation, s6(1)(a). [18] Regulation, s6(1)(b). [19] Regulation, s6(2) and (3). [20] Regulation, s7. [21] Consumer protection act 68(2). [22] Consumer Protection act 68(3) and 68(4). CALGARY's START-UP COMMUNITY: AN OUTLINE OF SERVICES AND SUPPORT
INTRODUCTION Calgary has many resources and opportunities to support entrepreneurs at all stages in their ventures’ development. Community supports exists for all the hurdles that growing ventures must overcome, whether your business is at the conceptual stage and you need help getting it off the ground, or your venture is growing fast and you need advice or support with bringing employees onboard, marketing your product or service, or finding the right investors. This blog post provides a non-exhaustive rundown of places and services in Calgary that can support entrepreneurs on their journey.. RESOURCES FOR STUDENTS School provides a unique opportunity to learn theory and develop skills across a variety of disciplines, and to network and collaborate with like-minded people, in and out of the classroom. While these opportunities can help students come up with novel and creative business ideas, often a little more help is needed to take an idea from concept to reality. Many post secondary institutions in Calgary provide resources to help students get their ideas off the ground.
COWORKING SPACES In addition to providing a means to keep overhead costs down and maintain flexibility in the early stages of a company’s growth, coworking spaces allow entrepreneurs to connect with one another, sharing skills, costs, connections and ideas. There are many coworking spaces across the city, forming a diverse range of entrepreneurial communities.
FOR THE LADIES
MORE RESOURCES
Nothing in this post quite right for you? Don’t worry, there’s more. Click here and here for more extensive lists of resources, events, spaces, meetup groups, and accelerator programs Getting to know the community is the best way to identify which spaces and programs can provide the advice, support, people or partnerships to elevate your business. Lastly, please remember that the BLG Business Venture Clinic is always happy to help. Fill out a request form here and we will get in touch to find out how we can help. Melanie Bowman is a member of the BLG Business Venture Clinic, and is a 2rd year student at the Faculty of Law, University of Calgary. Contractor or Employee?
Introduction In a start-up, it is often necessary to hire workers. To avoid legal obligations to employees, entrepreneurs will often characterize these workers as independent contractors. However, defining a worker as an independent contractor does not automatically make that worker an independent contractor. Rather, whether a worker is an independent contractor or employee is determined by examining the substance of the relationship between the worker and employer.[1] There are various common-law tests available to examine the substance of this relationship. Importantly, no particular common-law tests is determinative about the legal status of the worker.[2] Regardless, this blog will provide a brief overview of the primary common-law test used by courts, the fourfold test. Four-fold Test In Montreal v Montreal Locomotive Works Ltd et al, (“Montreal Locomotive”),[3] the House of Lords articulated the fourfold test. In summary, the fourfold test requires examining whether (1) the alleged employer is exerting control, or has the power to exert control, over the worker, (2) whether the worker owns the tools of his trade, (3) whether the worker has the chance of profit, and (4) whether the employer has the risk of loss.[4] Control Test Control is the right to give orders to a worker regarding where, when and how work is performed. Workers required to follow such orders are more likely to be employees. Independent contractors typically determine the hours, place and method of work for themselves. Examples of control include the employer’s right to:
Ownership of Tools A worker who owns and supplies the tools, materials, licenses and contacts required to perform agreed work is more likely to be conducting his own business and be considered an independent contractor. A worker who is supplied with these things by an employer is more likely to be part of the employer’s business and considered an employee. ”Tools” is a catchall term used to describe a wide variety of items and resources required to perform work, including:
Chance of Profit and Risk of Loss Exposure to profit or loss on a work contract is indicative of an independent contractor. As a business owner, an independent contractor makes expenditures on equipment, workers, advertising, licenses, or other resources. Having contracted for a particular volume or quality of work, his return is affected by how efficiently he can meet that volume or quality. In contrast, employees typically invest only their time in performing work. They are usually paid wages or salary and do not run a risk of loss if work is not performed efficiently. Likewise, they are typically not entitled to share in increased profits resulting from their work. Conclusion In conclusion, entrepreneurs must be careful whenever retaining a worker. Although the entrepreneur may be under the impression, they are retaining the services of an independent contractor, they may in fact have hired a new employee. Sunny Uppal is a member of the BLG Business Venture Clinic, and is a 3rd year student at the Faculty of Law, University of Calgary. References [1] Kaszuba v. Salvation Army Sheltered Workshop (1983), 83 C.L.L.C. 14,032 (Ont. Div. Ct.) [2] 671122 Onatrio Ltd v Sagaz Industries Canada Inc, 2001 SCC 59 at para 46 [Sagaz Industries]. [3] [1947] 1 DLR 161. [4] Montreal (City) v Montreal Locomotive Works Ltd (1946), [1947] 1 DLR 161 at p 169 [Montreal Locomotive]. Huawei and Start-ups
Chinese telecoms giant, Huawei, has faced much international scrutiny in the past months due to allegations of skirting US sanctions. Its CFO, Meng, remains under house arrest in Canada awaiting extradition to the US and this has strained an already worsening relationship between Canada and China. One allegation against Huawei in particular might be of concern to entrepreneurs; that Huawei exploits its partnerships with start-ups to steal proprietary technology. Enter Akhan Semiconductor Inc. – a US start-up developing diamond-infused smartphone glass to make screens more durable than the leading and well-known competitor, Gorilla Glass. Akhan founder, Adam Khan, hoped to license the glass to phone manufacturers. Initially, Akhan felt very fortunate to have a behemoth like Huawei agree to partner with them. According to analysts, this partnership fit well with Huawei’s evolving business model that hopes to emerge from the traditional stigma of poor quality “Made in China” products, and to enter the premium smartphone market to become a global market leader – and using superior glass technology to those used in Apple’s iPhones or Samsung’s Galaxy line is a good way to begin cementing that image. But any hope Akhan had for a mutually prosperous partnership with Huawei was quickly dashed when they received back a sample of their diamond glass that was initially sent to Huawei for some basic testing. According to their agreement — and per the industry standard practice – the glass sample was essentially loaned to Huawei and was to be returned in the same pristine state it was given to prevent any possible reverse engineering of intellectual property. However, the glass was returned shattered and it was suspect that impermissible tests were conducted upon it. When Akhan attempted to reach Huawei to discuss this matter, perhaps a bit unsurprisingly, Huawei officials assumed no responsibility and shifted blame. Akhan has since agreed to help the US FBI in their case against Huawei. It is unfortunate that tech start-ups have to be so vigilant in their approach to partnering with global players like Huawei, even as they take all reasonable measures to safeguard their interests as Akhan seemed to have done. A lesson here might to not underestimate the unscrupulousness of one’s business partners. David Kim is a member of the BLG Business Venture Clinic, and is a 2nd year student at the Faculty of Law, University of Calgary. |
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