Start-Ups: Intellectual Property Tools and Strategies for North America

Whether your company is based in North America, or is looking to enter North America, understanding – and leveraging — the available intellectual property (IP) tools and strategies can help grow your business. Most forms of registerable IP are national in scope, so companies based outside North America may have considered their IP needs in their home country, but this may not provide the coverage they need as they launch in Canada or the United States.

We sat down with Wilfred So, Senior Patent Agent, and Kevin Shipley, Partner and Head of Mechanical and Industrial Processes, and Avery Lee, Associate and Trademark Agent,  who are based in our Toronto office, to talk about IP strategies for start-ups. Particularly, how start-ups and businesses that are looking to launch in North America can ensure they have the right intellectual property strategy and IP tools in place to protect and commercialize their innovations when they enter this important market. 

Which IP tools and strategies should start-ups entering North America consider?

When you’re looking to enter a new market, it is important to ensure your unique product and service innovations, the parts of your business that distinguish you from your competitors and help win customers, are well positioned for protection against competitors. This can be achieved by having a clear IP strategy that incorporates one or more of the available IP tools and, including:

Patents: 

Patents, also called Utility Patents in the U.S., can be used to provide protection for new inventions and applies to the functionality of a product or service – meaning how it works or what it does. Applying for a patent or a family of patents can protect technology-based inventions (e.g., products, compositions, machines, and processes) in a market. Patents have a set life span and provide you with a 20-year exclusive right to commercialize your product and protect your ideas from being made, used, or sold by competitors without your consent. That is, a patent can allow you to stop others from using your claimed invention but is not a license or permission for you to operate your business (it is not like a hunting or fishing license that gives you legal rights to operate). 

In the vast majority of countries, your right to obtain a patent is based on the fact that you have developed a new (novel), invention that has not been publicly disclosed or shared. Therefore, in most countries around the world, the novelty of the invention is destroyed (along with your ability to obtain a patent) if a public disclosure occurs before filing a patent application. 

A few countries, including Canada and the U.S. provide a one-year grace period for an inventor’s self-disclosure of an invention, which allows your company to file a patent application within 12 months after the first public disclosure of the invention. However, this grace period is not available in most markets and does not apply to disclosures by third parties, so we typically recommend that a company aim to file patent applications before any public disclosure of the invention to ensure the invention’s potential novelty is preserved. This can be a challenge for start-ups with limited resources, or for inventions that originate as part of academic and scientific research by universities and hospitals, but proceeding in the right order (file, then disclose) is important.

Also, the global patent system operates under first-to-file rules, which means that most patent offices including in Canada and the U.S., will grant an exclusive right to the first company/person who files the application to register a patent, regardless of when the invention was created or by whom. If your company is the first to file, your application can act as a barrier to prevent others, who file applications later in time, from getting a patent registration for the same invention. Conversely, if your company is not the first to file, your patent application may be blocked from registration by the prior filings of a third party. That means that, in addition to keeping your invention a secret until the patent application is filed, it is also best practice to file the patent application as soon as feasibly possible.   

Designs: 

In contrast to patents which protect how an invention works, there is a different form of protection available to protect how a product looks. Design registrations (called Industrial Designs in Canada, and Design Patents in the U.S.) protect the form and visual appearance (e.g., the pattern, shape and/or ornamentation) of an article, which can be a physical object or a graphic user interface (GUIs) for software. The design registration is intended to protect visual/design features that are unique and cannot consist only of features that are dictated solely by a utilitarian function. 

Design registrations also have a fixed life span, which is shorter than the term of a utility patent and varies by country. A Canadian industrial design registration lasts the later of (i) the end of 10 years after the date of registration of the design and (ii) the end of 15 years after the filing date of the application. A U.S. design patent lasts 15 years from the date of the grant of the design patent. 

Similar to patents, designs in Canada and the U.S. enjoy the benefit of a one-year grace period, which allows your company to file a design application within 12 months after the first public disclosure by the inventor/author, if necessary. Similar to patents, designs in Canada and the U.S. operate on a first-to-file system. It is best practice to file design applications before any public disclosure takes place and to file as soon as feasibly possible to secure your place in the filing queue.

Trademarks: 

Not all IP relates to technical innovations. A company’s branding (e.g., words, logos, product packaging, and sounds) can be a very valuable IP asset that, when recognized by the public, carries meaning to its customers, which can drive revenue and commercial benefits for a company. 

In some businesses, the brand value and associated customer goodwill can be one of the most significant corporate assets, and its value can increase over time. If you do not want competitors to copy your business name, product name, logos, or the like, then you will want to take steps to protect the IP involved by using trademarks. 

In some jurisdictions, including Canada and the U.S., common law trademark rights can develop over time through consistent and proper usage and are primarily established by actually selling goods or services under that mark (without requiring formal registration). However, such common law rights are limited to the area (e.g., city, region, province, state) where a proven reputation associated with the mark can be shown, whereas among other benefits, registering a trademark extends the scope of rights across the entire jurisdiction. As such, registration should be considered for your key, valuable marks. You can take some steps on your own to help protect your brands, such as by using the “TM” symbol in your signage and marketing materials, and further protection can be obtained by applying for trademark registrations.

Notably, unlike patents, applying for a trademark registration does not require pre-filing secrecy, so your company can apply for a trademark registration after the mark has been used in public. Also, unlike patents and designs, the world is split between first-to-use and first-to-file systems for Trademarks. Canada and the U.S. follow first-to-use rules for registration, whereas the UK and EU follow first-to-file rules for registration. Registration of a trademark also requires (amongst other things) that the mark is distinctive, so it is a good idea to conduct a search for similar marks before you invest too much in using it, and apply for registration early in your business lifecycle, before copycats have a chance to adopt the mark. In the U.S., you must also provide proof of use (like a photo of the product with the logo) before a registration is officially granted.

Trade Secrets and Confidential Information: 

Patents, designs, and registered trademarks are public documents. This means that the details of your patent will become known to your competitors, and the protection it provides is in the patent rights and time-limited exclusivity it gives you. In contrast, another way to help control some of your proprietary information is to keep it confidential, and to take steps to preserve it as a trade secret. 

Developing valuable trade secrets does not happen by accident, and there can be different requirements and rules in each country to establish and protect confidential information as a trade secret. In the U.S. trade secrets are protected at the federal and state levels under the Uniform Trade Secrets Act (UTSA) and the Defend Trade Secrets Act (DTSA), while in Canada trade secrets are governed under contract law and common law. 

A key best practice for protecting trade secrets in any jurisdiction is having processes in place to closely manage and safeguard your company's sensitive and confidential information to ensure it remains within your control and used only internally with employees and contractors. The value of confidential information will be lost if that information becomes public. Even as a start-up, you should be considering how you handle sensitive information and who has access to it.  

We recommend that you establish a confidential information or trade secret policy – and ideally, actually apply the practices of your policy in your day-to-day operations. These can be useful tools to protect your ideas and innovations in place of, or together with patents, or while you are in the process of seeking patent protection.  

Freedom to Operate (FTO) Opinions and Searches: 

Your competitors will also have an IP strategy and will be using IP tools to protect their innovations and brands, which can create IP risks for you. For example, a competitor may have a patent that covers certain aspects of their product’s function or a design registration to protect its form. Using those features in your product, even without your knowledge, could lead to liability and patent infringement. Unforeseen patent infringement claims and lawsuits could be extremely costly and drain resources for a start-up or early-stage company.

To help reduce IP risks and surprises, you may consider conducting an IP search or landscape review to locate potentially relevant or overlapping patents and trademarks and obtaining an FTO or clearance opinion. A patent FTO is an opinion from a registered patent agent or IP lawyer that considers all existing patents registered or pending registration in the market that may be similar to the innovations you are seeking to commercialize. An FTO can be used to plan your market entry, design around potentially problematic patents and/or to identify and limit the risk of potential infringement allegations from your competitors. 

IP Contracts & Agreements: 

Another way to protect your ideas and IP rights is to put in place specific contractual clauses and agreements related to IP with your most important people, including founders, employees, contracts, vendors, suppliers, distributors and customers, to establish ownership, usage rights and requirements for confidentiality. These agreements should be executed at the onset of these relationships and be broad enough to cover and protect your IP rights for the duration of the relationship. 

Failure to address and include IP clauses in your contracts and agreements can lead to undesirable outcomes, such as leakage of confidential information and questions regarding ownership of new innovations (especially when dealing with outside contractors) and patents you may have filed and registered. Without proper IP agreements in place, you may not own what you think you own.

How can start-ups secure patent protection in North America?

Having IP assets, such as a patent or patent application in one country, does not mean your ideas are protected around the world. You may need to get advice on how to extend those IP rights in North America with additional patent fillings from a licensed patent agent, lawyer or attorney in Canada and/or the U.S.

In Canada, for example, patent applications can be filed with the Canadian Intellectual Property Office (CIPO) and rights can be granted for up to 20 years of protection and exclusivity. Similarly, patent applications can be filed with the United States Patent and Trademark Office (USPTO) with rights granted for up to 20 years of protection and exclusivity in that market. 

For those businesses who are looking to expand in both Canada and the U.S., there is a cost-effective strategy to establish a patent pending status in the U.S. which can cost only a few hundred dollars in government fees. This strategy includes filing a U.S. provisional patent application with the United States Patent and Trademark Office (USPTO), which provides you with a patent pending status for up to one year. The U.S. provisional patent application also establishes a priority filing date that is recognized by countries all around the world, including Canada*. The patent pending status process allows businesses to go to market across North America and share their ideas by filing a provisional application while preserving the options to proceed with non-provisional patent filings to obtain protection across borders as you later secure your IP rights.

*It’s important to note that a provisional patent application has a limited life span and will never become a granted patent. It must be replaced with one or more non-provisional patent applications to continue the patent application process (in your country of choice).

Marks & Clerk can support start-ups entering North America with advice on how to pursue patent protection, including FTO opinions and patent filings through our offices in Canada and through relationships with trusted best friend firms in the U.S. 

Does having a patent in Canada or the U.S. provide protection in other markets? 

While there is no such thing as a global patent or global trademark registration, there are agreements in place between most countries that relate to the creation and enforcement of IP rights across borders. 

For example, under the Paris Convention Priority, you can use your initial patent filing date (e.g., in Canada) to file in other countries for up to 12 months while maintaining your original filing date. For companies seeking protection across multiple global jurisdictions, the Patent Cooperation Treaty (PCT) enables you to file one patent application to initiate the process in over 150 countries. 

Most notably, for patents and designs, there is a limited period of time to file related applications in multiple countries, meaning, for example, that it is not possible to obtain a patent in Canada today, and then try to file the same patent in Europe several years later. 

Decisions regarding IP strategy can have global implications, and considering these as part of your commercialization plans early in the business/product lifecycle will help guide you. 

If you would like to discuss your IP strategy in North America, you can reach out to a member of our Canadian team.

Whether your company is based in North America, or is looking to enter North America, understanding – and leveraging — the available intellectual property (IP) tools and strategies can help grow your business.