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Protect your company's intellectual property

08 September 2015 by National Bank
Man with his hand open and an idea pictogram drawn above

Like any other type of business owner, SME entrepreneurs need to make protecting their intellectual property a top priority. The four major types of intellectual property are governed by separate pieces of legislation.

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Whenever you are dealing with intellectual property, you must consider what type it is. Your Rights, Your Business – Your Intellectual Property, a pamphlet published by the Quebec Bar Foundation, will help you do this.

Intellectual property belongs to the owner

First, you must ensure that you, in fact, own your inventions, your trademark, the source code for your software, the content of your website, etc. "When you assign a task to a sub-contractor, the service contract must specify that intellectual property rights and moral rights be transferred to the business," explained Frédéric Letendre, a lawyer and trademark specialist at BDSL. "You will also need a clause regarding the protection of personal information."

Entrepreneurs must also avoid claiming ownership of images, music or text on their website under the pretext that they belong to the public domain. "Just because something is online doesn't mean it's free," explained Mr. Letendre. Potential investors will carry out a thorough background check on you. In order to avoid any risk of potential legal action, they will ask you for proof of your property rights and ensure that you are not infringing on anyone else's rights.

The importance of keeping archives up to date

Intellectual property is based on the concept of "first come, first served." That is why it is so important to keep the following items (in both paper and digital form) in your archives: drafts that led to the design of a logo or invention, emails exchanged during the approval phase for website content, various prototypes that led to the final product, invoices, receipts, work orders and proofs of sale that could be used to determine when you used a given image or brand. "Also, if an entrepreneur wishes to benefit from the federal tax credit program for research and development, some of this documentation may be required," added Mr. Letendre.

A patent gives you exclusive rights to use an invention

You don't need to follow any particular procedure to register a copyright; you simply need to have created a design, written the source code or taken a photo in order for you to have a right to it. However, you must apply for a patent in order to have exclusive rights to use your invention. Although the process tedious, it can be worth it in the long run as it protects your invention from being copied in any way.

Before registering the invention for a patent, you will need to conduct a search for existing patents. "If the market justifies the development of an idea, you must first determine whether that idea exists already. You cannot protect a pre-existing idea, as it belongs to the public domain," explained Daniel Girard, co-founder of CVTCORP. He speaks from experience, since his company was essentially founded on intellectual property.

In the early 2000s, when they were still students, Daniel Girard and Samuel Beaudoin set out to improve the performance of continuously variable transmissions, a form of technology that optimizes power generation, as well as farming and industrial equipment. Their first prototypes didn't work at all, so they decided to buy a patent that had been developed at their university, and to which the university owned the rights. They continued their research and succeeded in creating an operational prototype, then another and another. They were so successful that they now own 21 patent families, some of which are registered in most G7 countries.

To patent or not to patent, that is the question!

"We don't systematically patent all of our ideas in every country," explained Mr. Girard. "That would be pointless and much too expensive. We choose the country in which the product is more appropriate for the market." Does that mean that it isn't always a good idea to patent an invention? That's Mr. Girard's opinion, and Mr. Letendre agrees wholeheartedly: "Patents aren't the answer to everything. For one thing, not everything can be patented. And just because something exists, it doesn't mean it should be automatically patented." Sometimes, being first to market, i.e., outwitting the competition, is a better strategy. Entrepreneurs should be careful, though. Presenting a prototype to a potential client as part of a lean startup exercise could compromise an eventual patent application. "This would be considered public disclosure and the entrepreneur could lose his or her patent rights," warned Mr. Letendre.

You should consider your intellectual property rights as soon as you create an SME or start-up. An expert in the field could point out any relevant issues and help you make informed decisions.

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