A thumbnail guide to IP rights for fintech companies in Canada

A thumbnail guide to IP rights for fintech companies in Canada

Intellectual property rights

IP protection for software

What intellectual property rights are available to protect software and how do you obtain these rights?

Canada has a robust IP framework. As in any other country, fintech innovations are generally protected through patents, copyrights and trade secrets. Canadian IP databases can be used to search for filed or registered trademarks, copyrights and patents.

Patentable inventions include products, processes or machines. Computer code in written form automatically has copyright protection. However, if a computer program provides a new solution to a technological problem and changes how a computer works, the software-implemented invention may be patentable.

IP developed by employees and contractors

Who owns new intellectual property rights developed by an employee during the employment relationship? Do the same rules apply to new intellectual property rights developed by contractors or consultants?

The owner of the invention has the right to patent it unless there has been a transfer of the invention and associated IP rights. Express contractual language should be used in employment agreements as a best practice to protect IP created by an employee. Except for some specific provisions, there is a presumption that employees are entitled to ownership of a patent for any invention they create in the course of their employment. Employers will be considered the owner of the invention and the resulting patent rights if there is an express contract stating this and if it can be proven that the employee was employed with the express purpose of inventing or innovating.

In the absence of express terms, the employer is the first owner of the copyright to works that an employee creates in the course of his employment. For contractors or consultants, the courts will look at different factors. For work created outside working hours and/or using own resources, the central factor is the subject of the copyrighted work.

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Joint ownership

Are there any restrictions on a co-owner of intellectual property’s right to use, license, charge or transfer its right to intellectual property?

In general, patent co-ownership can be changed by the parties through written mutual agreement. Co-owners of a patent cannot, however, dilute the other co-owner’s interests in the patent.

An applicant cannot withdraw a patent application without the consent of the other co-applicants. Likewise, once the patent is registered, an owner cannot license the patent rights to a third party without first obtaining the consent of the other co-owners.

For assignment, however, a co-owner may transfer his own interest in a patent in the absence of the other co-owner’s consent unless this would dilute the co-owners’ rights.

Trade secrets

How are trade secrets protected? Are trade secrets kept confidential during court proceedings?

There is no formal process for protecting a trade secret, or any statute or law governing trade secrets in Canada. Trade secrets law is developed from common law, or in Quebec, civil law, and includes some provisions of the criminal code.

The courts will use several factors to assess whether an action involves the misuse of a trade secret and how to compensate the owner for the misuse. Companies may also use non-disclosure or confidentiality agreements or clauses and encryption or password protection to protect trade secrets.

Brand building

What intellectual property rights are available to protect branding and how do you obtain these rights? How can fintech companies ensure they don’t infringe on existing brands?

Brand names and logos can be registered as trademarks for 10 years and renewed indefinitely. Companies should protect their IP with registrations and documentation to control ownership and use of their IP rights, including permitted use under license and collaboration agreements with third parties.

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In order to ensure that a fintech company does not infringe third-party trademark rights, freedom to conduct searches may be conducted to determine whether there are any prior third-party rights that may constitute an impediment to the use or registration of a mark, or both. Such searches are strongly recommended before starting to use a brand, as it can be expensive to have to switch to another brand once an investment has been made in an original name.

Remedies for IP infringement

What remedies are available to individuals or companies whose intellectual property rights have been infringed?

IP rights holders, not CIPO, are responsible for enforcing their IP rights. Remedies for infringement include seeking damages incurred as a result of the infringement, the profits earned by the infringer, a reasonable royalty and partial court costs or attorneys’ fees. In addition, a ban can also be applied for. In lieu of the above remedies, copyright owners may be compensated through statutory damages (this is a remedy exclusive of copyright infringement claims).

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