(This article was originally published in the Spring/Summer 2001 issue of Cardinal Connection, the newsletter published for clients of Cardinal Law.)

Sue Smith* came to see us with what she thought was a simple problem. She wanted us to incorporate her company, Software ‘R Us, which develops and sells computer software that keeps track of inventory for small businesses. She had some offers from large companies to buy out her company but these companies told her, rather vaguely, that they did not like the way her intellectual property had been handled. Sue thought that by incorporating her company her dilemma would be solved.

Practical Solutions to Legal Problems

First we had to identify her real legal problems. We found out that Sue did not have any agreements with her software developers and she had recently received a legal letter complaining about her company name from lawyers who represented a large toy company.

We explained to Sue that the body of law protecting intellectual property is comprised of several distinct categories of law. The main ones are copyright, trademark and patents. Although there are some common elements throughout, we explained the differences to her, which were more important. We explained that each area – copyright, trademarks and patents – has a system for protecting and registering ownership. The federal government has set up an Intellectual Property Office to handle these registrations. Each has a different application process for registration, resulting in important distinctions about what Sue could protect and how she would protect it.

Trademarks

We told Sue that her company name, Software ‘R Us, was an unregistered trademark, and that a trademark generally is a name or symbol placed on a product or associated with a service, that distinguishes it from similar products or services. We told her that since the large toy company had already spent a great deal of money establishing its registered trademark, their letter indicated that they felt that the public would wrongly identify Sue’s software as somehow being associated with the large toy company. It did not matter whether or not Sue would actually win a lawsuit if the large company decided to sue her. We analyzed Sue’s use of the name and determined that what did matter from a practical perspective was that in this case it made sense for Sue to find an alternative name. With a new name she could get a registered trademark for her own company and have her products stand out from those of her competitors.

Sue found out from us that for each territory, such as Canada or the United States, a company must register the name or symbol it uses as a trademark on its products or services. She also learned that although she did register her company name with the British Columbia Registrar of Companies, it did not mean she had a registered trademark. We told her that a company name is just that, a name that identifies your company to the public. A trademark is different. We helped her register and protect it.

Patents

Sue had invented a special scanner that identified products on the assembly line. We advised her that a patent would be most suitable to protect her invention. Sue was pleased to find out that once registered, a patent becomes a 20-year monopoly on the product that no one else can use, sell or make, unless they have a licence from the patent owner. Having the idea for the invention was not enough, though. Sue had to prove that her invention was new, useful and not previously obvious to those working in that area. Then she had to make application for the patent.

Since a patent application requires a Patent Agent who knows both patent law and engineering concepts that relate to the invention, we assisted Sue in working with the Patent Agent best qualified to protect her.

Copyright

Sue’s next problem came in the area of copyright. She had some great ideas that she wanted to prevent anyone else from using. We explained to her that copyright does not protect ideas; it protects the expression of ideas.

One idea she had was for software that would keep track of decreasing inventories and automatically order additional supplies from their manufacturers. We told her the idea itself was not enough to create protection in copyright. She had to have the expression of the idea. We advised Sue not to disclose the idea to anyone, but to begin work on writing the software program itself. Once it was finished, the software program was protected under copyright, as it expressed her idea in a way that satisfied the Copyright Act. We told Sue that copyright could protect not just the computer software itself, but also the photographs on the cover of her software containers and the music and video clips on the CD-Rom she produced.

We also told Sue to send a copy of the software to herself by registered mail. The envelope or package, having been date-stamped by Canada Post, became a sealed “evidence container”, since she might use it in court to prove the time of creation. We told her, “Once it comes back from the post office, don’t open it!”

Another problem Sue had with copyright came from the fact that she hired independent contractors to develop her products. We told her that she should have a written agreement with all the people who write code for her. That way she can ensure she has complete control and ownership of the intellectual property created by her employees or independent contractors. This eliminated the difficulties that arose when employees left her company or independent contractors were no longer under contract.

We prepared an employment agreement that saved Sue time and money in disputes over ownership of copyright materials. It also made her company more desirable to purchasers, since she had agreements in place that indicated who owned the intellectual property in her company.

* Sue Smith is a fictional client based on several past cases.