Some intellectual property rights are not adequately protected under the three main intellectual property statutes, the Patent Act,1 the Trade-marks Act2 and the Copyright Act.3 Specialized legislation has been enacted to protect three types of obscure intellectual property: plant breeders' rights, industrial designs and integrated circuit topographies. A comprehensive statute has not been enacted to protect personality rights.4 The nature of the property in one's own personality (usually an image) is gradually being defined by Canadian courts since the 1973 watershed decision in Krouse v. Chrysler Canada Ltd.5
Many people have no idea what intellectual property rights would be protected by these areas of law, let alone why it is important to protect them. These intellectual property rights are obscure only in the sense that they are not well known in the legal and business communities. The products protected by these rights are anything but obscure because they surround us in daily life and account for billions of dollars of sales in North America each year. This paper will (i) describe each type of intellectual property in its commercial context, (ii) explain the legal nature of these rights and why specialized laws are necessary to protect these rights, and (iii) highlight issues for consideration during commercial (assignment and licensing) transactions.
[Note: The general issues to be considered in assignment and licensing transactions for the intellectual property rights described in this paper are similar to those discussed by others at the seminar with respect to other intellectual property rights. Therefore, discussion in the paper of due diligence (validity of rights, ownership etc.), warranties, representations and indemnities does not repeat the discussions already presented by other speakers. The same considerations as with other intellectual property rights also apply whether the transaction is an asset sale or a share purchase.]
Plant breeders' rights allow protection of new plant varieties produced by conventional plant breeding techniques or genetic engineering techniques.
For example, conventional cross-breeding may be used to produce a new variety of an ornamental plant such as an African violet. Ornamental plant cultivation is a lucrative business. The North American plant nursery industry generates sales well in excess of a billion dollars a year. The industry is serious enough that new breeds of ornamental plants are often given names that one might give to a child, such as "Agnes", "Marla" or "Kristin" or names that indicate some sort of hidden personality evident only to a breeder who has spent many hours in a greenhouse, such as "Primadonna", "Sweetheart" or "Leonardo da Vinci".
A new variety of African violet may have unique flowering properties such as year round blooming capability, profuse and quick production of flowers, long lasting and non-dropping flowers and unique flower colour (e.g. white with purple-violet edges). The violet may also have unique plant growth properties in its shape, such as strong, upright flower stems or oval to heart-shaped leaves; and growth characteristics, such as compact or vigorous growth or abundant foliage.
More direct human intervention is involved where a breeder discovers a plant having fruit with desirable characteristics and grafts a plant cutting onto a different plant. For example, a farmer may produce a new variety of a crop producing plant such as an apple tree which produces fruit which has desirable commercial properties such as greater yield, improved flavour, early maturation for harvest or distinctive colouration or shape.
Genetic engineering has also been used to insert genes in plants to produce new varieties with desirable qualities, such as increased root growth.
All of the above plants are examples of new varieties that may be protected under plant breeders' rights legislation. These rights allow control over the growth and reproduction of unique plant varieties by others. This prevents a competitor from obtaining the variety and selling the plant or its seed to others without authorization.
The Plant Breeders' Rights Office (PBRO)
Plant Breeders' Rights Office (PBRO) in Ottawa administers the Plant Breeders' Rights Act6. The PBRO examines applications to determine whether applicants are entitled to receive protection for a new plant variety. A successful applicant receives a certificate of plant breeders' rights. The PBRO publishes and distributes plant breeders' rights information in the Plant Varieties Journal and assists the public in obtaining documentation about registered plant breeders' rights.
The applicant may be the breeder, his/her employer, or a legal representative. The applicant must be a citizen of, a resident of, or have a registered office in Canada or an International Union for the Protection of New Varieties of Plants member country.
Eligible Varieties for Protection
The PBRA protects both sexually and asexually reproduced plant varieties having unique physical characteristics. Before a variety will be protected, the applicant must show that the variety is a new variety, which is (i) distinct, (ii) uniform and (iii) stable. The variety must also not be barred from registration by public sale7. In order to ensure that a candidate variety will meet all requirements, the applicant should ensure that all the characteristics of the variety are comprehensively described.
Grant of Rights
Once the PBRO is satisfied that all criteria under the PBRA have been met, a certificate of plant breeders' rights is issued to the applicant. The holder is granted the exclusive right to:
Limitations on Certificate Holders' Rights
Term of Protection
Plant breeders' rights are granted for a maximum of 18 years from the date of issue of the certificate.13 An annual fee must be paid to maintain the rights. The holder may surrender the rights in the variety at any time.
Maintenance of Propagating Material
The certificate owner is responsible for supplying the Commissioner with a sample of the propagating material of the variety, on request, throughout the term of protection.14 The Commissioner may request samples of propagating material at any time and the owner must provide the sample within 60 days of the request. The sample of the propagating material must exhibit the same characteristics described in the original variety description at the time when the rights were granted. The Commissioner may also inspect the facilities used for maintaining the variety. Failure to comply with these requests may result in the revocation of the rights.
A compulsory license may be granted to anyone who can demonstrate to the Commissioner that the holder of the rights in a particular variety has unreasonably refused to grant a license.15 The Commissioner may issue a compulsory license to ensure that:
The person to whom the compulsory license is issued will be required to compensate the holder of the rights.
Patents Do Not Protect Plant Varieties
Patent protection is only available for an "invention".16 In Canadian patent law, new plant varieties do not fall not within the definition of an "invention" because they are considered to be discoveries by chance, requiring good fortune in addition to skill and imagination (some protection may be available for the genetic elements inserted in a new genetically engineered plant variety).
The owner of plant breeders' rights may assign or license their rights to another person.17 An assignment of plant breeders' rights (and the change in applicant) will not be registered by the PBRO unless the assignment is provided to the PBRO within 30 days of the assignment. The unregistered assignment will be void against a subsequent assignee for valuable consideration without notice who is registered as the rights holder. There is no requirement to register licenses.
For licensors of plant breeders' rights, one general issue of importance in intellectual property licensing has critical importance in plant breeders' rights transactions. The licensor must maintain control over the use of the plant variety and seed. Compliance by licensees should be closely monitored. For example, sublicensing of plant breeders' rights should require prior written consent. The licensor should maintain the rights to make final decisions in relation to enforcement issues (market surveillance, stings (such as "buys" from unauthorized sellers) and initiation of a plant breeders' rights infringement action). Provisions dealing with the use of plant and seed inventory on termination of license should be inserted. State whether the seed or plants must be returned, sold or destroyed. Failure to vigilantly patrol plant breeders' rights can lead to enforcement nightmares after plant varieties have been reproduced through several generations or mixed with other types of seed.
Issues of particular importance to licensees or assignees of plant breeders' rights are:
Ensuring that the Licensee/Assignee will be able to make Full Use of the Plant Variety
Confirm that the variety continues to maintain the properties of the applied for variety (e.g. homogenous and stable in its essential characteristics after repeated reproduction).
A transfer of know-how or trade-secrets in relation to the growth of the plant may be required, for example, optimum growth conditions. State whether the disclosure by the assignor or licensor is a one time disclosure or whether ongoing assistance is required.
Was the new plant variety produced by genetic engineering techniques that are the subject of a patent application? For example, adding a gene to increase canola oil production may also cause physical changes in flowers that qualify the plant for protection as a "new variety" under the PBRA. It may be necessary to take an assignment or license of patent rights in the genetic elements to be able to use the plant variety without infringing a patent. (In the U.S., the plants themselves may be patented.)
Warranties, representations and indemnities used in patent transfers (in the event that the transferred intellectual property infringes a third party patent) should also be used with genetically engineered plant breeders' rights transfers in case the transferred variety infringes a patent. Copies of patents that could be infringed or any patent infringement opinions obtained by the assignor or licensor in relation to the plant and genes inserted in the plant should be requested.
Validity and Scope of Rights
Determine whether the pending application was opposed by a third party.18
Confirm that the plant breeder's rights grant was not revoked by the PBRO for reasons such as failure to provide a sample of propagating material to the PBRO or a subsequent determination that the plant was not distinct at the time of application or that the plant was statutorily barred from protection by a prior sale.19
Confirm that a compulsory license to use the variety was not applied for or granted to a third party.20 Determine whether the applicant made a request for an exemption from compulsory licensing provisions.
It is critical to ensure that the assignee or licensee is not buying an enforcement problem. If the new variety has been on sale for one or more seasons, it is possible that unauthorized farmers or seed vendors have collected and sold plant seed. Effective market surveillance by the owner prior to the grant of an assignment or license is essential to ensure that reproduction and use of the variety was controlled.
Similar Varieties Developed Independently
Plant breeders' rights may also have reduced value if another breeder has independently developed a similar variety. This similar variety can be made and used by another person without infringing plant breeders' rights.
Availability of similar varieties of the plant in Canada and the rest of the world should be reviewed (for example by reviewing commercial catalogs and government records (such as Canadian plant breeders' rights office records or U.S. plant patents or plant variety registrations)).
Industrial designs protect the appearance21 (shape and ornamentation) of an article. Look around any home -- the unique shape of a vacuum cleaner, a chair, table, flatware (especially ornate silverware handles) or food container may be protected by an industrial design. Even the cereal in your cupboard may have been the subject of an industrial design. Clothing and accessories, such as a belt buckle, sunglasses, a purse, sneakers and a hat may also be protected by an industrial design. The appearance of many other articles found in public places and work places may be similarly protected.
Industrial design rights can prevent the unauthorized taking of a unique design. This protection is essential in fast-paced industries where cutting edge design provides a competitive advantage. For example, leading sneaker and sunglass manufacturers change their designs one or more times each year. Significant effort is expended in design and market research. Once 'hot' new designs are on the market, very similar designs begin to appear in competitor's products within weeks. Industrial design protection can stop the outright theft of a design.
Industrial Design Office
The Industrial Design Office (the "IDO") in the Copyright and Industrial Design Branch of the Canadian Intellectual Property Office in Ottawa administers the Industrial Design Act22 The Industrial Design Office examines applications to determine whether applicants are entitled to receive protection for an industrial design. A successful applicant receives a certificate of registration of the design. The IDO publishes and distributes industrial design information and assists the public in accessing documentation about registered industrial designs.
The first proprietor of the design is entitled to apply for and secure registration of an industrial design. The author of an industrial design is the first proprietor of that design. Where the author made the design in the normal course of his employment, his or her employer is the first proprietor of the design.
Application for Registration
An application for registration must relate to only one design (designs showing close variants may be included). A complete application consists of two parts: (i) a written application and (ii) an illustration of the design. Since the aesthetic content of the sample or model must be immediately recognizable, great significance is placed on the illustration. Photos are also permitted although not preferred.
Requirements for Registration
Three conditions must be satisfied in order to obtain registration: the work must have aesthetic appeal and it must be original and novel.
The requirement for originality is not expressly stated in the IDA, however, the IDA states that a certificate of registration of an industrial design is, in the absence of proof to the contrary, sufficient evidence of the originality of the design.23 The applicant must declare that the design was not in use, to the applicant's knowledge, by any person other than the applicant at the time the design was adopted by the applicant.24 Originality is a question of fact for assessment, having regard for the nature of the subject matter. The Industrial Design Office has adopted a three prong test as to originality: (i) the applicant's design and the prior art design should not be examined side by side, but separately; (ii) the applicant's design is viewed as a whole; and (iii) any change (change relevant to a prior art design) must be substantial. Originality requires at least a spark of inspiration in creating an entirely new design or discovering a new use for an old one.
Term of Registration
An industrial design may be registered for a maximum of ten years from the issue date. A certificate is issued when the design is registered. A renewal fee must be paid to keep the design in force.
Effect of Registration
Registration gives the proprietor the exclusive right to make and use the design.26 A design not differing substantially from a registered design is an infringement. As with patents, the holder of an industrial design may assert rights against a person who independently creates a similar design but failed to apply the register the design first. The certificate, absent evidence to the contrary, is prima facie proof of the design, its originality, the name of the proprietor, the commencement and term of registration and of compliance with the IDA.27 Registrations are presumed to be valid if validity is challenged in court.
Prior to amendments to the IDA in June 1993, marking of an article bearing a registered industrial design was mandatory in order to be able to enforce that registration against third parties. At present, it is not mandatory that the article be marked. Marking is advisable since under the "innocent infringer defence"28 a court shall not award any remedy, other than an injunction, if a defendant establishes that he or she was not aware and had no reasonable grounds to suspect that a design was registered. This defence does not apply if the plaintiff applies the capital letter "D" in a circle and the name (or abbreviation) of the proprietor of the design to substantially all of the articles bearing the design.
Relationship to Patent and Trade-mark Protection
Certain designs also have functional aspects, for example, the shape of the handles on a pair of scissors may be considered to be ornamental. The handles may also have a functional element if they are more easily gripped by a person with arthritis. Patent protection may be available for the handle shape if its function is new, commercially useful and inventive.
Certain designs for the shaping of a product or their containers or packaging become so well known that they may be registered as a "distinguishing guise" trade-mark under the Trade-marks Act29 One well known distinguishing guise is the swirled Coca-Cola bottle.
Copyright Does Not Protect the Design of a Mass Produced Article
Copyright protection is not available when a design is capable of being registered as an industrial design and the article is manufactured in over 50 copies anywhere in the world.30
A registered design or pending application is assignable.31 The assignment must be in writing and may be recorded in the Canadian Intellectual Property office.
The IDA also allows the owner of a design to convey an exclusive right to make and use the design and to sub-license those rights to others throughout Canada.32 An exclusive license may be recorded in the same manner and time as an assignment. The consequences of not registering the assignment or license are not set out in the IDA. There is no requirement to register a non-exclusive license.
In industrial design transactions, the key issue for an assignee or licensee is the correspondence between the industrial design rights and the products sold prior to (or to be sold after) the transaction. Industrial design rights are typically construed more narrowly than other intellectual property rights. From a legal perspective, design owners should always use the design that they register (the marketing perspective is often different). An assignor or licensor may have built up goodwill by selling a product with a design that is different from the registered design. In this situation, it is possible that a competitor could make an identical copy of the product on sale without infringing the design. An assignee or licensee may be unknowingly acquiring an enforcement problem. If a design owner has varied a design, this design should be the subject of a new application and included in the transaction.33
Some designs also have functional aspects, as discussed above. A potential assignee or licensee of design rights that have functional aspects should inquire as to whether or not patent protection has been sought by the assignor or licensor. If so, the patent rights may need to be included in the transfer so that the assignee can use the design without infringing the patent. Since design rights are shorter in term and are almost always construed more narrowly than patent rights, the assignee or licensee should also consider whether taking a license or assignment of design rights alone is adequate to protect against theft of intellectual property.
Warranties, representations and indemnities used in patent transfers (in the event that the transferred intellectual property infringes a third party patent) should also be used with such design transfers in case the product infringes a patent. Copies of patents that could be infringed or any patent infringement opinions obtained by the assignor or licensor in relation to the design should be requested.
A potential assignee or licensee of design rights in a design which may be a distinguishing guise (see above) should inquire as to whether or not trade-mark protection has been sought by the assignor or licensor. If so, the trade-mark rights may need to be included in the transfer so that the assignee can use the topography without infringing the owner's exclusive right to use the trade-mark.
An integrated circuit topography is the three dimensional design of the interconnections and the elements in an integrated circuit product for conveying electricity. Well known integrated circuit products are semiconductor chips and microchips. Since electricity is not only a source of power, but also a form in which information may be transmitted, these chips are useful in many devices such as computers, telephones, cars, airplanes and television sets.
Integrated circuits may have hundreds, thousands or millions of electrical interconnections which convey instructions through electrical pulses. These interconnections are "integrated" into a firm substrate (chip) along with other electrical components, such as resistors and capacitors. The three dimensional component layout is the protected topography. In some cases, the circuit may not be accomplishing a new function, but the innovation and value arises in the method of connecting the components of the circuit. Arranging electrical circuits in different ways not only affects the physical appearance of the circuit, but it can produce desirable electrical conduction properties (for example, increasing or decreasing voltage). The arrangement of the circuit may also reduce the number of chips or components necessary to perform a function. A large amount of design and testing is needed to produce a chip having desirable properties. Integrated circuit topography rights allow a chip designer or manufacturer to prevent others from producing or selling a chip with a similar topography.
Protection for Integrated Circuit Topographies
The Office of the Registrar of Topographies (the "ORT"), a branch of the Canadian Intellectual Property Office, administers the Integrated Circuit Topography Act.34 The ORT conducts limited examination of applications to determine whether applicants are entitled to receive protection for a topography. A successful applicant receives a certificate of registration of the topography. The ORT publishes and distributes topography information and assists the public in accessing documentation about registered topographies.
The applicant is the creator of the topography or a successor in title. Where the author made the design in the normal course of his or her employment, the employer is usually the owner of the design.
Application for Registration
An application may pertain to only one topography. The application must include a description of the layers of the topography and any actual layers or integrated circuits deposited with the ORT.
Requirements for Registration
The topography must be filed by an eligible applicant within two years of the first commercial exploitation. Examination does not include a review of other basic requirements key to the validity of a registration, such as originality.35
Term of Registration
An integrated circuit topography may be registered for a maximum of 10 years from the earlier of the end of the year the application was filed or the first commercial exploitation.
Effect of Registration
Once the application is allowed, a certificate of registration is issued. Registration gives the owner the exclusive right to make and use the integrated circuit topography during the 10-year term.36 Registrations are presumed to be valid when challenged in court by and alleged infringer.37 Unauthorized use of a topography that incorporates the registered topography or a substantial part of the topography is an infringement.
Marking of integrated circuits is not mandatory. Marking is advisable since under the "innocent infringer defence" a court shall not award any remedy, other than an injunction, if a defendant establishes that, at the time of the act, the defendant was not aware and had no reasonable grounds to suspect that a topography was registered.38 This defence does not apply if the plaintiff establishes that substantially all of the integrated circuit products or their housings were visibly marked with a topography name that is substantially the same as the title on the register.
Relationship to Patent Protection
Integrated circuit topographies may produce functional differences in the operation of a circuit which may be protected by a patent if the function is new, commercially useful and inventive. In this situation, the two forms of protection are complementary. The patent protects functional aspects while the certificate of topography registration protects the three dimensional structural layout of the integrated circuit.
A potential assignee or licensee of integrated circuit topography rights should inquire as to whether or not patent protection has been sought by the assignor or licensor. If so, the patent rights may need to be included in the transfer so that the assignee can use the topography without infringing the patent. The assignee or licensee should also consider whether taking a license or assignment of integrated circuit topography rights alone is adequate to protect against theft of intellectual property in a particular microchip or semiconductor product (topography protection is narrower than patent protection and receives a shorter term).
Warranties, representations and indemnities used in patent transfers (in the event that the transferred intellectual property infringes a third party patent) should also be used with topography transfers in case the transferred topography infringes a patent. Copies of patents that could be infringed or any patent infringement opinions obtained by the assignor or licensor in relation to the topography should be requested.
Personality rights, in their broadest sense, include a number of areas of law. For example, they include the licensing and merchandising rights in the personality of a character created for a movie, such as "Ace Ventura" or "The Cable Guy", played by Jim Carrey. They also include privacy rights to prevent misuse or disclosure of confidential information.41 Personality rights are also protected by the tort of defamation which provides remedies for damage against one's reputation. This paper will focus on the basic proprietary personality rights of an individual.
Celebrities, particularly sports and entertainment personalities are obvious targets for unauthorized reproduction of their images. For example, associating a celebrity image with a product is an obvious way to improve sales. Proprietary rights in personality are not protected in an intellectual property statute but it is clear in common law that celebrities may prevent unauthorized use of their images in this situation. The typical Canadian also has rights in his or her own image, which may be used to prevent unauthorized reproduction. The extent of personality rights has not been clearly defined by the courts.
In Krouse v. Chrysler Canada Ltd.,42 the Ontario Court of Appeal recognized that an individual had a proprietary right in his or her personality and that there was a tort of misappropriation of personality. Krouse sued Chrysler for its promotional "spotter" device which had a CFL football action photograph on it. Krouse was the only identifiable player in the photo. The Court of Appeal felt that the identifiable use of Krouse was an acceptable cause of action only if the photo was an actual or implied endorsement of the product by Krouse. The Court found that there was no endorsement and no misappropriation of Krouse's personality.
In Athans v. Canadian Adventure Camps,43 it was held that the tort occurred where there was an unauthorized appropriation of the personality traits of another for commercial gain provided that appropriation is likely to cause the other an injury. In Athans, the defendant used a line sketch of a water skier, George Athans, in its promotional materials. In finding a misappropriation of personality, the Court recognized that Athans had, "...a proprietary right in the exclusive marketing for gain of his personality, image and name, and that the law entitles him to protect that right if it is invaded."44 The court agreed with Athans, even while finding that the public would not recognize George Athans and therefore would not draw the conclusion that Athans was endorsing the defendant's activities. According to the court, commercial use of the image of Mr. Athans without consent was enough to constitute the tort of misappropriation of personality.
The small number of subsequent Ontario cases have held that a commercial use or an actual or implied endorsement by the plaintiff is necessary for misappropriation of personality to occur.45 It is clear that consent to the use of one's personality is a bar to the tort of appropriation of personality.46
Copyright Protection of Personality
Copyright protection may or may not be available to the subject of a photograph. If the owner of copyright in a photograph is the person in the photograph, he or she can take action for copyright infringement against a person using the photograph without permission. In most cases, the copyright resides with the person taking the photograph (or his or her employer).
Personality rights may be licensed or assigned.47 Personality rights devolve to heirs, so a license or assignment should also bind heirs and successors.48 Most other types of intellectual property rights can be precisely defined, for example, by reference to a government registration number or technical aspects of the intellectual property. Personality rights are not subject to a registration system and the extent of personality rights have not been well defined by courts. Clear definition of the transferred rights is critical. In a licensing deal, the licensed uses (commercial or non-commercial) for an image or other personality right should also be clearly defined.
Copyright and trade-mark issues should also be considered. A license or assignment of copyright and moral rights may be needed from either the person with property rights in the personality or a third party (such as a photographer). Taking an assignment or license of personality rights does not grant the right to infringe a copyright. If the image of a living individual (or image that suggests a connection with a living individual) is being purchased for an intended use in a trade-mark, this type of trade-mark use is prohibited by Trade-marks Act.49
Disclaimer: This Newsletter is intended to provide readers with general information on legal developments in the areas of e-commerce, information technology and intellectual property. It is not intended to be a complete statement of the law, nor is it intended to provide legal advice. No person should act or rely upon the information contained in this newsletter without seeking legal advice.
E-TIPS is a registered trade-mark of Deeth Williams Wall LLP.