Author: Debbie Malek

Canada’s Trademark laws will see major changes in June 2019

Posted on by Debbie Malek

It has been announced on November 14, 2018 in the Canada Gazette (Part II, Volume 152, Number 23) that amendments to the Canadian Trade-marks Act will be coming into force on June 17, 2019. On the date of this announcement, the new Trademarks Regulations, which also will be coming into force on June 17, 2019, have been published. By virtue of these changes, there will be notable impacts on Canadian trademark regime in many aspects including registration process, and Canadian Trademark law will be in line with major international trademark treaties such as the Singapore Treaty on Law of Trademarks (Singapore Treaty), the Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks (Madrid Protocol), and the Nice Agreement Concerning the International Classification of Goods and Services for the Purposes of the Registration of Marks (Nice Agreement).

Some of the important changes to Canadian Trademarks law are summarized below:

  • Expanded definition of “Trademark”: The definition of “Trademark” will be expanded to include “a word, a personal name, a design, a letter, a numeral, a colour, a figurative element, a three-dimensional shape, a hologram, a moving image, a mode of packaging goods, a sound, a scent, a taste, a texture and the positioning of a sign”;
  • Increased Government Filing and Renewal Fees: Filing fees and renewal fees will increase and will be charged on a per class basis:
    1. The Government filing fee will be $330 for the first class and $100 for each additional class (currently the fee is $250, regardless of how many classes you file in).
    2. The Government renewal fees will be $400 for the first class and $125 for each additional class (currently the renewal fee is $350, regardless of how many classes you renew in). For  trademarks with multiple classes, there is a significant cost savings to renew before June 17, 2019, and even for trademarks with only one class of goods and services there is still a small saving of $50.To illustrate with numbers: the cost of renewing a trademark with 6 courses after June 17, 2019 will be: $400 (1st class) + ($125 x 5 additional classes) = $1,025 in government fees vs. $350 in government fees if renewed before June 17, 2019.
  • Adoption of the Nice classification system: Goods and services in a trademark will need to be classified according to the Nice Agreement classification system, as in many other countries;
  • Date of first use will no longer be required: Identifying the date of first use of a trademark in Canada will be removed from the application;
  • Declarations of use not required for a “proposed use” application: Applicants will no longer be required to file a declaration of use in order for the application to proceed to registration;
  • Ability to divide and merge applications: A trademark application can be divided to expedite the registration process, especially when there is opposition to certain goods or services. Divided applications and registrations can be merged later;
  • New registration period: The registration period for trademarks will be shortened from 15 years to 10 years and the renewal of a trademark registration will be required every 10 years. Terms for existing trademark registrations will remain 15 years; and
  • International filing through a single application: Canada will be joining the Madrid Protocol. As such, will be able to file a trademark application in multiple countries (that are members of the Madrid Protocol) through a single application.

Recommendation given the new legislation: if you have clients who are considering filing trademarks, especially multi-class applications, there could be significant cost savings if filed before June 17, 2019. As mentioned above the current Government Fee for filing regardless of how many classes you file in is $250, however, after June 17, 2019, the government filing fee will be $330 for the first class and $100 for each additional class. The same is applicable for renewals, it is recommended to renew before June 17, 2019, especially multi-class applications, as renewal fees will be going up, $400 for the first class and $125 for each additional class. Even if you renew now, before June 17, 2019, the new term (10 or 15 years) will be calculated from the actual renewal due date NOT when you paid the renewal fee.

For more information, please contact:

Randy Marusyk, Co-Managing Partner
T: 613-801-1088
E: rmarusyk@mbm.com

Co-Author: Hyun Woo Choi, Articling Student

 

This article is general information only and is not to be taken as legal or professional advice. This article does not create a solicitor-client relationship between you and MBM Intellectual Property Law LLP. If you would like more information about intellectual property, please feel free to reach out to MBM for a free consultation.

The Price of Privacy: Canada’s Top Court Rules, ISPs must disclose the identity of illegal downloaders at a “reasonable” cost

Posted on by Debbie Malek

The Supreme Court of Canada sided with Rogers Communications in a recent 9-0 decision ruling that requires companies seeking to pursue copyright violators to remunerate internet service providers (ISPs) for looking up names of subscribers suspected of illegal activity.[1]

The Internet has long protected the identity of users participating in file sharing networks facilitating the rapid sharing of copyrighted content. The Government of Canada enacted the “notice and notice” regime as part of the Copyright Modernization Act in 2012 to deter online copyright infringement while balancing the rights of interested parties. Under the “notice and notice” regime, a rights owner is able to forward notice of alleged infringement to an ISP, the ISP is then obliged to forward the notice of infringement to the alleged wrongdoer. The “notice and notice” regime is “the first step in a process by which rights holders can go after those they allege are infringing… Then the rights holder can use that when they decide to take the alleged infringer to court.”[2] An ISP is not required to disclose the identity of a user who has received a notice of infringement under the “notice and notice” regime. ISPs are only required to disclose the identity of an individual who has received notice of infringement from a rights holder under a Court granted Norwich order, an extraordinary remedy that enables a rights holder to discover the identity of infringers from an internet intermediary like an ISP.

The recent ruling of Canada’s top Court in Rogers Communications Inc. v Voltage Pictures creates a new precedent allowing ISPs to charge rights holders for the costs associated with pursuing copyright violators in compliance with a Norwich order.

Voltage Pictures, the production studio behind I Feel Pretty and Oscar winning films including Dallas Buyers Club and The Hurt Locker, first brought the matter to trial in the Federal Court in 2014.[3] Voltage put forward a reverse class action and moved to compel Rogers Communications to provide the personal information of alleged infringers at no cost.[4] Rogers was originally ordered by the Federal Court to disclose the identity of the alleged infringer to Voltage and Voltage was ordered to pay Rogers $100 per hour, plus HST, for the time spent assembling the information. The decision was appealed to the Federal Court of Appeal, where it was found that Rogers was entitled to reasonable costs of the actual act of disclosure but the remainder of associated costs incurred by Rogers in compliance with a Norwich order was not recoverable.

As a result the recent Supreme Court decision, ISPs can now charge a “reasonable amount” for the efforts associated with looking up subscribers suspected of illegal activity under a Norwich order. However, the steps untaken by an ISP to comply with a Norwich order that overlap with an ISP’s obligations under the “notice and notice” regime may not be recoverable. The determination for what constitutes a “reasonable cost” was sent back to the lower court for a final decision. As a result of this Supreme Court decision, the amount of costs associated with identifying internet users suspected of illegal activity may impact the way in which rights holders pursue infringers. The traditional method of suing many internet users for copyright infringement at once may become cost prohibitive for rights holders like movie production studios upon the determination of what an ISP can reasonably charge for compliance with a Norwich Order.

For more information please contact:

Scott Miller, Co-Managing Partner, Head of the Litigation Department
T: 613-801-1099
E: smiller@mbm.com

Co- Author: Lisa Crimi, Articling Student

 
This article is general information only and is not to be taken as legal or professional advice. This article does not create a solicitor-client relationship between you and MBM Intellectual Property Law LLP. If you would like more information about intellectual property, please feel free to reach out to MBM for a free consultation

 

Another Win for MBM – Increased Cost Awards by the Federal Court – The New Normal?

Posted on by Debbie Malek

Successful litigants in Canada’s Federal Court are experiencing a positive shift in the quantum of costs that are awarded by the Court. For years, cost awards have been based on a tariff which typically provides only modest compensation of a party’s actual legal fees. In the past, awards in excess of the standard set by the tariff were considered uncommon.

The recent decision of Weldpro Limited v Weldworld Corp et al (2018 FC 312), where the respondents were successfully represented by Scott Miller and the MBM litigation team, confirms there is an emerging trend by the Federal Court to award costs at a higher level of compensation than the standard level set by the tariff in the right circumstances.

In Weldpro, the applicant made a claim for passing off contrary to paragraphs 7(b) and (c) of the Trade-marks Act. In addition to naming the corporate respondent as a party, the applicant pursued the corporate respondent’s director, Mr. Kocken.

The Court’s decision was entirely in favour of the respondents. In awarding costs to the respondents, the Court took into consideration that there was no shared or split success in the case and that while the issues at play were relatively straightforward, the applicant unnecessarily complicated the proceedings which, on their face demonstrated little chance of success. It was also remarked that the applicant failed to advance the best available evidence and that the allegation of personal misconduct against the corporate respondent’s director was little more than a bald assertion that was not pursued in any fashion in the course of the hearing.

In departing from the standard level of compensation set by the tariff, the Court awarded the respondents a fixed sum amounting to about 23% of the actual legal costs, using the tariff only as a rough guide.

Notably, the award included reimbursement of Mr. Kocken’s travel expenses to attend the hearing. The Court provided that being named as a personal respondent understandably triggered Mr. Kocken’s desire to be present at the hearing.

The Weldpro decision establishes the ongoing opportunity for a winning party to receive an award of increased costs from the Federal Court. Further, litigants should be aware that cost consequences may result from a claim for personal liability against an individual party if such allegations are unfounded and unaddressed at the hearing of the matter.

 

For more information please contact:

Scott Miller, Co-Managing Partner, Head of the Litigation Department
T: 613-801-1099
E: smiller@mbm.com

Co- Author: Erin Creber

 
This article is general information only and is not to be taken as legal or professional advice. This article does not create a solicitor-client relationship between you and MBM Intellectual Property Law LLP. If you would like more information about intellectual property, please feel free to reach out to MBM for a free consultation

Intellectual Property Considerations in the New CPTPP & NAFTA Negotiations

Posted on by Debbie Malek

When the United States pulled out of trade negotiations for the Trans-Pacific Partnership agreement (the “TPP”), many considered the agreement to be dead. However, Canada and the other ten countries originally part of TPP negotiations have managed to breathe new life into the agreement.

At the World Economic forum in January 2018 in Davos, Canadian Prime Minister Trudeau announced that Canada and the other ten TPP countries had reached an agreement on a revised TPP,[1] now renamed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (the “CPTPP”). Member countries are working towards signing the agreement by early March 2018.[2] While the new CPTPP will be different in a number of ways, of particular importance are the changes that were made to the agreement’s intellectual property (IP) provisions following the departure of the US from negotiations.

During the original TPP negotiations, the US had insisted for certain IP provisions related to patentable subject matter, patent term adjustment, copyright term of protection and technological protection measures (TPMs), among others, to be strengthened. At the time, many of these provisions were considered one-sided and quite controversial because they would require other TPP member countries to undergo extensive and expensive legislative reforms, including Canada. In agreeing to the reworked CPTPP, Canada has endorsed the suspension of a number of these IP provisions. A list outlining the suspended IP provisions can be found here.[3]

With this new CPTPP as a backdrop, it will be interesting to see how Canada will now approach the negotiation table with the US for a revised NAFTA. It is expected that the US will attempt to negotiate for IP provisions similar to those in the original TPP.[4] Whether Canada will push back against the US for IP provisions more in line with those in the new CPTPP, only time will tell.

 

For more information, please contact:

Randy Marusyk, Co-Managing Partner
T: 613-801-1088
E: rmarusyk@mbm.com

Co-Author: Robert Di Battista

 

This article is general information only and is not to be taken as legal or professional advice. This article does not create a solicitor-client relationship between you and MBM Intellectual Property Law LLP. If you would like more information about intellectual property, please feel free to reach out to MBM for a free consultation.

 

[1] https://globalnews.ca/news/3989224/commentary-tpp-deal-a-win-for-trudeau-and-a-win-for-canada/

[2] http://www.macleans.ca/politics/ottawa/canada-tpp-members-agree-to-revised-deal-without-the-u-s/

[3] http://dfat.gov.au/trade/agreements/tpp/news/Documents/annex-2.pdf

[4] http://www.michaelgeist.ca/2018/01/dont-make-tpp-mistake-canada-needs-maintain-progressive-approach-ip-nafta

The Impact of Changes to Canada’s Trademarks Act on the Pharmaceutical Industry

Posted on by Debbie Malek

The Canadian trademark regime is set to experience a significant overhaul once major amendments to the Trademarks Act take effect. The amendments are expected to come into force in 2019 and are designed to allow Canada to implement the Nice Agreement, the Singapore Treaty and the Madrid Protocol. While the amendments will have an impact on all Canadian trademark owners and any business seeking trademark protection, they will present unique challenges to the pharmaceutical industry specifically.

Registration Regardless of Use

One of the most significant changes to the Trademarks Act involves removing the requirement that a trademark must be used prior to registration. Under the new practice, a trademark application will automatically proceed to registration upon expiration of the opposition period. Currently, it is possible to file a trademark application on the basis of “proposed use” or “intent to use”. However, an application based on proposed use cannot proceed to registration until the applicant files a declaration attesting to use of the mark in Canada.

Companies seeking to protect a proposed drug name not only have to comply with the trademark registration process, but also have to seek the approval of any proposed drug name from Health Canada as part of drug approval process, in accordance with the Food and Drug Regulations. Health Canada’s assessment of a drug name is performed from a health and safety perspective. Factors considered by Health Canada include the similarity of existing and discontinued drug names and the potential to mistake one drug name for another, resulting in medication errors. There is no guarantee that a drug name used and allowed internationally will be approved for use in Canada.

The Health Canada approval process can be lengthy and there can be no sale of the product – and consequently no use of the drug name – while approval is pending. This means that pharmaceutical applicants are often forced to request multiple extensions of time to file declarations attesting to use of a mark, and may even lose their applications if there is no use of a mark prior to the final deadline to file the declaration.

The new trademark laws will allow owners of pharmaceutical trademarks to obtain registered trademark protection prior to the completion of the drug approval process, thereby eliminating the need to file (or request extensions of time to file) declarations attesting to use. The result is a more rapid and streamlined trademark registration process.

That said, use will remain an important consideration for trademark owners since a registration will be susceptible to a non-use cancellation proceeding beginning three years after the date of registration. If there is no use, and an owner cannot establish “special circumstances” justifying the lack of use, the registration will be cancelled. However, it is possible that non-use due to pending Health Canada approval may be considered a “special circumstance” sufficient to justify maintaining the registration despite no use of the mark in Canada.

Non-Traditional Trademarks

Current Canadian trademark law permits registration of a limited number of non-traditional trademarks such as colour, shape and sound. The amendments to the Trademarks Act will allow applicants to seek trademark protection for a wider variety of non-traditional trademarks including holograms, scents, tastes and textures. However, with the changes will come an additional level of scrutiny as it will be necessary to show distinctiveness of a trademark at the date of filing if the Canadian Trademarks Office does not consider the mark to be inherently distinctive. At present, there is no requirement to prove distinctiveness of marks consisting of colour, shape or sound.

To prove distinctiveness of a mark, an applicant will have to file affidavit evidence and/or survey evidence establishing the reputation and distinctiveness of its trademark across Canada. If proof of distinctiveness is only demonstrated in parts of Canada, the resulting registration will be restricted to those provinces and/or territories in which distinctiveness has been established.

Pharmaceutical companies have historically faced unique challenges when seeking registered trademark protection of colour, shape and sound marks. The recent case Canadian Generic Pharmaceutical Association v Boehringer Ingelheim Pharma Gmbh & Co. KG (2017 TMOB 47) confirms the additional hurdles faced by the pharmaceutical industry in proving distinctiveness of a product having a particular shape and colour. Not only must it be shown that an ordinary consumer associates the trademark (without markings) with a single source of manufacture to a significant degree, but that association must be established for a substantial body of consumers which, for pharmaceutical products, consists of physicians, pharmacists and patients.

Given that there is presently no requirement for proving distinctiveness of colour, shape and sound marks, it is advisable for trademark owners to consider seeking protection now, while the more lenient trademark regime remains in effect.

International Registration of Trademarks

Finally, the amendments to the Trademarks Act will allow Canada to adhere to the Madrid Protocol, an international trademark registration system. The Madrid Protocol simplifies the filing of corresponding trademark applications in foreign countries once an applicant has a home country application or registration.

Currently, Canadian companies seeking to obtain registered trademark protection in various countries outside of Canada must file trademark applications in each jurisdiction. With the implementation of the Madrid Protocol, it will be possible to file corresponding trademark applications in multiple foreign jurisdictions and countries through a single “international” application. Similarly, foreign applicants seeking international trademark protection will have the opportunity to designate Canada under the Madrid Protocol.

Canada’s adoption of the Madrid Protocol will permit trademark owners, including those in the pharmaceutical industry, to realize the advantages of this simplified international filing system. Not only will applicants have easier access to trademark protection in foreign jurisdictions but the more efficient, centralized application process will result in financial savings.

Summary

The upcoming changes to Canadian trademark law, including the implementation of the international treaties, will help to modernize Canada’s trademark system and bring the country in-line with international standards. Trademark owners should ensure that they understand the implications of the new legislation and adjust their trademark protection strategies accordingly.

For more information, please contact:

T: 613-567-0762
E: trademarks@mbm.com

Author: Erin Creber, Associate, Trademark Agent

 

This article is general information only and is not to be taken as legal or professional advice. This article does not create a solicitor-client relationship between you and MBM Intellectual Property Law LLP. If you would like more information about intellectual property, please feel free to reach out to MBM for a free consultation.

The Impact of Expanded Regulations Under CETA on Geographical Indications and Your Brand

Posted on by Debbie Malek

Trademarks are a part of our everyday life. A trademark protects a combination of letters, words, sounds or designs that distinguishes one’s goods or services from those of another in the marketplace. There are specialized trademark rules, including those relating to Geographical Indications (“GIs”) that have the potential to impact specific industries. For example, recent changes in GI law could significantly alter how a wine, spirit, agricultural product or food producer approaches their branding and marketing efforts.

A GI[1] is an indication that identifies a wine or spirit, or an agricultural product or food, as originating in a specific territory. The GI must also be associated with a particular quality, reputation or other characteristic of the wine or spirit or the agricultural product or food that is attributable to its geographical origin. Essentially a GI can add value to your product as it certifies that the product possesses certain qualities or reputation, because of where the product was created. We are all familiar with some common GIs including Champagne (an alcoholic drink produced from grapes grown in the Champagne region of France); Port (a Portuguese fortified wine produced exclusively in the Douro Valley in the northern provinces of Portugal); and Cognac (a variety of brandy named after the town of Cognac, France, produced in the surrounding region).

Prior to Canada-European Union Comprehensive Economic and Trade Agreement (“CETA”)[2], which came into force on September 21, 2017, GIs were used to protect only wines and spirits. CETA implementation has resulted in amendments to the Canadian Trademarks Act (“Act”) that expanded the protection afforded by the Act to a wider range of products to which GIs (including translations of these GIs) can now apply. Certain agricultural products and foods are now afforded the same protection. The amendments have automatically granted GI status to a number of products including Brie de Meaux, and Huile d’olive de Haute-Provence, providing them with legal recognition, and exempting them from objection and cancellation proceedings.

Certain more commonly used GIs have been afforded a more limited type of protection (such as Feta, and Asiago).[3] Users of these particular marks will be exempt from cancellation proceedings if they have been using the mark for 10 years (starting before October 2013), have previously had indications granted, or currently have an applied-for or used trademark on file. As a producer of these products, there is some risk in relying on this exemption. The specific GI use must qualify as trademark use as defined by the Act, otherwise you will not qualify for the exemption. You will also be able to continue to use the more common GIs if they are accompanied by a qualifying term such as “kind”, “type”, “style” or “imitation”.[4] The geographical origin must also be clearly displayed on the packaging in which it is distributed.

A third category of commonly used GIs such as Parmesan, Black Forest Ham, and Valencia Orange can be adopted, used or registered as a trademark without penalty.[5] Additionally, these GIs can be used in comparative advertising that is not placed on labels or packaging, or in the instance that consent was given by the ‘Responsible Authority’.[6]

The implementation of CETA has also provided the Federal Court with exclusive jurisdiction to order the removal of a GI, a procedure which did not previously exist. Moreover, there is a process by which a ‘Responsible Authority’ can apply to have a new GI added to the GI List[7] and includes the following steps:

1. Filing a request with the Trademark Office;

2. Trademark Office reviewing your request;

3. Trademark Office putting out public notification of the GI;

4. Going through an objection proceeding (if a proceeding is initiated[8]); and

5. Entering the new GI on the Official GI list.

If you reference a GI on any of your products, it is important you understand how these rules can impact your business. Contacting an experienced professional who can help you in this understanding could end up being the difference between protection of your brand, and the loss of it.

For more information, please contact:

T: 613-567-0762
E: trademarks@mbm.com

Author: David Lotimer, Associate

 

This article is general information only and is not to be taken as legal or professional advice. This article does not create a solicitor-client relationship between you and MBM Intellectual Property Law LLP. If you would like more information about intellectual property, please feel free to reach out to MBM for a free consultation.

[1] Defined in Section 2 of the Trade-marks Act, R.S.C., 1985, c. T-13, (the “TM Act”).

[2] See http://www.international.gc.ca/gac-amc/campaign-campagne/ceta-aecg/index.aspx?lang=eng for additional information on the Comprehensive Economic and Trade Agreement.

[3] See Section 11.15 and Schedule 6 of the TM Act.

[4] See Section 11.17 of the TM Act.

[5] See Section 11.18 of the TM Act.

[6] Defined in Section 11.11(1) of the TM Act.

[7] View the current list at http://www.ic.gc.ca/cipo/listgiws.nsf/gimenu-eng?readForm.

[8] See Section 11.13 of the TM Act.

CETA agreement and the Canadian patent landscape

Posted on by Debbie Malek

On September 21, 2017, The Canada-European Union (EU) Comprehensive Economic and Trade Agreement (CETA) came into force.

Three areas part of the CETA agreement relating to a range of issues in Canadian patent protection are worth noting:

1. Certificate of Supplementary Protection Regulations

2. Regulations Amending the Patented Medicines (Notice of Compliance)

3. Amendments to the Patent Rules

1. Certificate of Supplementary Protection Regulations: the Certificate of Supplementary Protection Regulations (CSP Regulations) were created to provide additional protection for patent-protected pharmaceutical products. The new Certificate of Supplementary Protection (CSP) regime will provide additional period of patent-like protection for drugs containing a new medicinal ingredient or a new combination of medicinal ingredient. The CSP Regulations provide various timelines, requirements and procedures needed to carry out the regime and are defined in sections 104-134 of the Patent Act. The additional protection term under CSP can be calculated as the difference between the patent filing date and the Notice of Compliance date, reduced by 5 years, up to a maximum of 2 years (i.e. CSP term = [Notice of Compliance date – Patent filing date] – 5 years, with a cap of 2 years). The additional protection period under this regulation will take effect from the patent expiry date.

2. Regulations Amending the Patented Medicines (Notice of Compliance): These amendments were made to address a number of issues described below and to meet Canada’s obligations under CETA:

  • to resolve a number of problems by replacing summary prohibition proceedings with full actions to determine patent validity and infringement;
  • to expand the scope of the PMNOC Regulations to cover relevant Certificate of Supplementary Protections by providing an additional period of protection for new patented pharmaceutical products;
  • to help expedite proceedings by introducing a limited number of procedural rules, while still leaving the Court broad discretion to manage proceedings;
  • to address concerns about how damages arising from delayed generic drugs market entry are currently addressed; and
  • to remove barriers that may prevent innovators and generics from litigating certain patents outside the PMNOC Regulations prior to generics entering the market.

3. Amendments to the Patent Rules: Based on the recent amendments, section 29 of the Patent Act is being repealed and those provisions under the Patent Rules that refer to appointment of the representative under this section of the act are also being removed. The repealed provisions under the Patent Rules are section 78, clause 94(2)(b)(ii)(I), subparagraph 94(3)(b)(vi) and paragraph 148(1)(d). As a result, information regarding appointment of a representative is no longer required for completion of a patent application or the national phase of a patent application. To reflect the change, Form 1 (Application for Reissue) and Form 3 (Petition for a Grant of Patent) are also replaced to delete references to representative appointment required under section 29 of the Patent Act.

For more information, please contact:

Randy Marusyk, Co-Managing Partner
T: 613-801-1088
E: rmarusyk@mbm.com

Co-Author: Hyun Woo Choi

 

This article is general information only and is not to be taken as legal or professional advice. This article does not create a solicitor-client relationship between you and MBM Intellectual Property Law LLP. If you would like more information about intellectual property, please feel free to reach out to MBM for a free consultation.

New LCBO Subsidiary to Control Cannabis Sales in Ontario

Posted on by Debbie Malek

In response to the imminent legalization of recreational use of cannabis in Canada as proposed by the Parliament in Bill C-45, the Cannabis Act, the Ontario government released a detailed plan on distribution system and usage regulations of recreational marijuana in a document titled “Ontario’s Safe and Sensible Framework to Federal Cannabis Legislation” on September 8, 2017.

The centerpiece of this proposal is to create a subsidiary of the Liquor Control Board of Ontario (LCBO) to hold monopoly over cannabis retail and online sales in Ontario. This approach, as Attorney General Yasir Naqvi said, will focus on ensuring “a safe and sensible transition” to federal legalization. However, the LCBO operated subsidiary will be the single buyer of marijuana producers and the exclusive distributor to consumers. This inevitably puts it at a dominant position to make decisions on market entrance credentials, quality controls, retail prices and geographical accessibility. Private investors will not be allowed to open and operate cannabis retail stores and consumption premises in Ontario for the time being. The monopoly will also make smaller marijuana producers difficult to compete with powerhouses as Aphria Inc. (TSX: APH) and Canopy Growth (TSX: WEED), two of the country’s biggest marijuana producers.

WHAT ARE THE KEY ELEMENTS OF THE PROPOSED FRAMEWORK?

  • The LCBO will establish a new subsidiary to exclusively oversee the distribution of cannabis in Ontario through retail stores physically separate from existing LCBO liquor stores and an online order service.
  • Approximately 150 retail stores will be opened by 2020, including 40 in July 1, 2018 and another 80 by July 1, 2019. The stores will run similar to tobacco sales as behind-the-counter model and there will be no self-service.
  • The locations of these retail stores will be determined in consultation with municipalities. The guideline is to target areas with illegal marijuana dispensaries to crush black market.
  • The LCBO operated website for online orders will be available by July 1, 2018. It will make recreational marijuana accessible to residents far away from retail stores.
  • Pricing and taxation decisions will come later. The anticipated profits will be modest, especially at the beginning stage with necessary infrastructure and personnel training costs.
  • The use of recreational marijuana will only be permitted in private residences. The consumption of any form of recreational cannabis in public places, workplaces or when inside a motor vehicle will be prohibited.
  • The Ontario Government will explore the feasibility and implications of introducing designated establishments where recreational cannabis could be consumed.
  • Cannabis dispensaries currently operating in Ontario are not and will not be legal retailers. These shops will be shut down through a coordinated and proactive enforcement strategy with municipalities and police forces.
  • Ontario will set the minimum age for possessing or consuming recreational cannabis at 19, same as the current alcohol restrictions. The Government of Canada in Bill C-45 proposed the age of 18. Other rules and restrictions for distribution of cannabis will be strictly in keeping with federal rules and regulations.

HOW WILL THIS FRAMEWORK AFFECT CANNABIS INVESTORS, PRODUCERS AND CONSUMERS?

  • The safety concern is legit and marijuana should still be a tightly controlled substance after its legalization. However, the proposed monopoly model may not benefit interested parties except the Ontario government, LCBO and labour unions. This framework may deter potential investors, hamper smaller producers and drive consumers to black market.
  • Private-owned retail stores and cannabis lounges will not be allowed in Ontario according to the proposed framework. For investors, the investment opportunity is limited to marijuana production. Therefore, if some other provinces and territories present less stringent rules and regulations, Ontario would be less attractive to potential investors.
  • For marijuana producers, the monopoly model strongly favours giant corporations who have financial resources, lobbying power and business expertise to strike a supply contract with LCBO. Smaller producers may face obstacles to put their products on the shelves of legal retail stores, same as what happened to small craft brewers in Ontario under the current alcohol distribution monopoly.
  • The shut down of currentprivate-owned stores selling cannabis and business premises will make many people lose the only source of income. If the new LCBO subsidiary is not able to accommodate these people into the system, many of them may not leave cannabis business and choose to go underground. That, in return, will significantly increase the law enforcement costs and endanger the public.
  • For consumers, forty stores at the beginning stage made accessibility a big concern, especially for those who are unable to travel without assistance and having difficulty to put an online order. Furthermore, if the retail prices in legal stores are significantly higher than the black market, many consumers may simply pick the cost-effective way. It is hard for the law enforcement to tell illegal marijuana products from those purchased from legal retail stores

 

For more information, please contact:

Randy Marusyk, Co-Managing Partner
T: 613-801-1088
E: rmarusyk@mbm.com

Co-Author: Yang Wang

 

This article is general information only and is not to be taken as legal or professional advice. This article does not create a solicitor-client relationship between you and MBM Intellectual Property Law LLP. If you would like more information about intellectual property, please feel free to reach out to MBM for a free consultation.

Intellectual Property Licensing: A Win-Win Agreement

Posted on by Debbie Malek

There are several benefits associated with protecting your valuable intellectual property (‘IP’) through registration. Owners often view registration of their patents, trademarks, copyright and other IP as a way to prevent third parties from using their proprietary idea, brand name or computer code. This is a valid consideration; however it is not the only benefit to an IP owner.

Licensing IP can be a very valuable additional income source to a business, and can be the conduit by which lucrative partnerships are created.

The World Intellectual Property Organization (‘WIPO’) categorises a licensing agreement as “a partnership between an intellectual property rights owner (licensor) and another party who is authorized to use such rights (licensee) in exchange for an agreed payment (fee or royalty).”[1] In this way, a licensor is able to obtain monetary gain from his or her IP by providing permission to a licensee to use that IP. The specifics of this permission can be particular to suit the needs of the parties.

Some factors to consider include:

Exclusivity – a license to use IP may be exclusive to one licensee. Exclusivity is often viewed favourably by a licensee as it provides surety that other competitors will not be able to use the IP for their own business purposes. Alternatively, the license agreement may stipulate that the license to use the IP is non-exclusive. This may be favourable to the licensor as it provides them with an opportunity to enter into several different licensing relationships using the same IP, potentially deriving multiple income sources for use of the same technology.

Jurisdiction/Territory – a licensing agreement can be jurisdictionally specific, in other words, you may select the specific territory, region, area or country in which the license will be valid. Some companies elect to negotiate a worldwide license allowing the licensee more freedom to use the IP in the jurisdiction of their choice. Others limit the IP use to a specific country in order to prevent the licensee from entering into their own market.

Transferability/Sublicensing – it is possible for a licensor to provide a licensee with the ability to sublicense the IP themselves. The licensor may require that such sublicensing be approved, and structured such that sublicense fees will be paid to the IP owner. The licensor may also elect to provide a non-transferable license, which allows the IP owner to keep complete control of which parties are able to legitimately use the IP.

Term – the term of the licensing agreement can be a defined length, renewable, based upon other conditions (such as licensing fees, production targets, licensor election, etc.), or perpetual. A conditional term can act to motivate a licensee to achieve certain business targets that ultimately provide financial benefit to both the licensee and licensor.

Fees – license fees come in many forms including upfront payments, recurring annual or monthly fees, royalty based, or a combination of these options. It is possible to create a license fee payment structure that mitigates risk and rewards strong performance, or penalizes poor performance. A fee structure (like term structure) can act to motivate a licensee towards success in their own business.

Field of Use –the rights granted to use the IP may be limited to a specifically defined field. In this way the licensee is only able to use the IP for a particular commercial purpose and the licensor will maintain the right to directly exploit or license the same IP in a different field of use.[2]

Type of Licensed IP – the type of IP licensed will also impact how the license agreement is developed. The permitted use and control of a patented technology can be significantly different to the permitted use and control of a trademark, and the obligations on each of the parties to the agreement need to reflect the particular licensed IP.

Ownership of Licensed IP Developments – once a licensee is able to use a licensor’s IP, it is important to consider how developments and improvements to the licensed IP will be controlled, particularly when it comes to ownership. It is possible to impose conditions upon the license that require all developments of the licensed IP to be owned jointly by both parties to ensure the spoils of newly created IP is realized equally.

The benefits of IP licensing are several and apply to all parties involved. A licensor may be able to form partnerships to expand the reach of their own business, or may secure an additional income stream. A licensee may expand their business by utilizing technology they were not previously able to use. There are many other options to further address the factors discussed above, and the specifics can be manipulated to better suit each particular licensing relationship.

When developing an IP License Agreement, consider consulting a trained IP specialist with experience negotiating and formulating these agreements. With his or her help, it is likely both you as an IP owner and the licensee of your IP will find yourselves part of a win-win agreement.

 

For more information, please contact:

T: 613-567-0762
E: trademarks@mbm.com

Author: David Lotimer, Associate

 

This article is general information only and is not to be taken as legal or professional advice. This article does not create a solicitor-client relationship between you and MBM Intellectual Property Law LLP. If you would like more information about intellectual property, please feel free to reach out to MBM for a free consultation.

 

[1] ‘Licensing of Intellectual Property Rights; a Vital Component of the Business Strategy of Your SME’, World Intellectual Property Organization, http://www.wipo.int/sme/en/ip_business/licensing/licensing.htm.

[2]‘Fact Sheet – Commercialising Intellectual Property: License Agreements’, European IPR Helpdesk, www.iprhelpdesk.eu, November 2015.

 

Are you trying to decide whether to register your Industrial Design in Canada?

Posted on by Debbie Malek

A Canadian Industrial Design registration protects original visual features of shape, configuration, pattern or ornament, or any combination of these features, applied to a finished product. Industrial designs are commonly used to protect the outside shape and design of a wide variety of mass produced articles from light fixtures to kitchenwares. Industrial Designs do not protect functional features, they only protect a product’s appearance.

When you register your Industrial Design, you gain exclusive, legally enforceable rights in Canada for five years from the date of registration, and extendable to 10 years with payment of a maintenance fee. You may sell your rights or license others to make, use and sell your design.
In Canada there is a one year grace period to file an Industrial Design application after you make your design public anywhere in the world. It is still recommended to file an Industrial Design application as soon as possible since the design must be original and cannot closely resemble another person’s previously released design.

A Canadian Industrial Design application typically includes multiple views of the “finished article” representing the product in an assembled state. The views can be shown in photographs, but more commonly line drawings are used to ensure the design features are clearly captured. While only one view is required, please note that only features of the design included in the views provided are protected. Typically 6 views are recommended: top, bottom, front, back, left side, and right side. In some cases a perspective view is included, and identical views (e.g. identical left and right side views) may be represented by one of the two identical views.

…Outside Canada…

If you also plan to sell your products outside of Canada, then you might consider filing a Design Patent in the United States or a Community Design in the European Union. The first design application may support a priority claim in foreign countries as long as corresponding applications are filed within six months of the filing date of the first design application. For instance, a Design Patent may be filed in the United States, and within six months an Industrial Design application may be filed in Canada and claim the benefit of the earlier U.S. filing date. Using priority filings can simplify the process of filing multiple design applications in different countries.

So Should You Register An Industrial Design?

Registering an Industrial Design in Canada is an investment to help protect the appearance of your products. Obtaining an Industrial Design in Canada is much less expensive and time consuming than obtaining a patent making this an economical and effective form of industrial protection. While Industrial Designs only protect the look of a product, and not its function, in many cases the outer form of a product is part of its identity and marketability.

If you have any questions about Canadian Industrial Designs or are ready to start an Industrial Design application, please do not hesitate to contact us. We are always happy to help.

For more information, please contact:

T: 613-567-0762
E: general@mbm.com

Author: Etienne de Villiers, Of Counsel

 

This article is general information only and is not to be taken as legal or professional advice. This article does not create a solicitor-client relationship between you and MBM Intellectual Property Law LLP. If you would like more information about intellectual property, please feel free to reach out to MBM for a free consultation.

 

 

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