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Protection of Intellectual Property (Page 2)
DISCLAIMER - The information provided here is of a general nature and may not apply to any specific or particular situation. It is not to be considered as a legal advice nor presumed to be indefinitely up to date.
Software start-ups may obtain protection of computer code under the Copyright Act. Computer programs, both in source code and object code and whether on paper, magnetic medium or semiconductor chip, will enjoy protection for the period of the life of the author plus 50 years. Copying computer code is copyright infringement. Even non-literal copying of a program’s structure, such as flow of algorithms and organization modules, is an infringement. However, the features of a program, ideas, methods and principles are not protected and can be copied. Therefore, copyright of a program user interface and its screen layout could not be obtained. Copying semiconductor topology is also copyright infringement and semiconductor start-ups may obtain protection under Integrated Circuit Topography Act, which gives ten (10) years of protection from the earlier of the date when the application for protection was filed or when the topography was first commercially used.
The Copyright Act extends moral rights to computer programs (i.e. the right of
an author to claim authorship and to prevent any distortion or alteration of the
work or its association with products that would prejudice his reputation).
Canada has decided not to follow the lead of countries like the United Kingdom
where moral rights are denied to authors of computer programs.
Finally, the Copyright Act provides for penalties for infringement. Every person who knowingly makes for sale or hire any infringing copy of a work in which copyright subsists, or who offers such copies for sale or hire, or who imports such copies into Canada, will be guilty of an offence and liable on summary conviction to a fine not exceeding $25,000 or to imprisonment for a term not exceeding six (6) months or to both, or on conviction on indictment to a fine not exceeding $1,000,000 or imprisonment for a term not exceeding five (5) years or to both.
2. Trade Secrets
As in the U.S., there are a number of significant advantages to using trade secret law to protect intellectual property in Canada.? Copyright protects only the expression of a work and not the underlying ideas and logic. Because trade secrets have no statutorily defined time limits, they can protect information indefinitely. Moreover, trade secret protection can be achieved inexpensively. However, to be effective, a trade secret protection regime must involve both internal provisions to ensure the confidentiality of the trade secret, including appropriate measures to limit access to the information, and external measures to limit the manner and extent of distribution. In summary, the entrepreneur must generally keep the information secret.
For many startups, customer lists, pricing information and marketing strategies may be subjects for trade secret protection. Trade secret law in Canada is granted at Common Law. Unlike the United States, there is no trade secret legislation. Under the Common Law, trade secret protection may be invoked against parties to a confidentiality agreement or against third parties by use of the tort of breach of confidence. This tort is founded on the equitable principle enunciated by Lord Denning of the British Court of Appeal in the case of Seager?v. Copydex 'that he who has received information in confidence shall not take unfair advantage of it. He must not make use of it o the prejudice of him who gave it without obtaining his consent'. To be successful in an action for breach of confidence an entrepreneur has to establish several things: (1) he must show that the information itself has the 'necessary quality of confidence about it', (2) he must show that the information has been provided to the person against whom the action is brought in circumstances that create or imply an obligation of confidence and (3) he must show that there has been unauthorized use of the information to his detriment.
Companies potentially can protect anything of economic value as a trade secret anywhere in the world, but Common Law protection is unreliable. Even the entrepreneurs who properly guard their proprietary and confidential information can lose their trade secrets. Someone may develop the same product or information independently or through reverse engineering. Resigning employees can use the trade secret information that became part of their general skills and knowledge. Finally, non-compete restrictions through the employment contract may not be enforced if they unreasonably restrict an employee’s mobility.
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