IP Insights

Making Room for IP Strategy in the Boardroom

While IP and innovation strategy is a topic worth a periodic look by a board in any corporate context, the degree and nature of IP issues faced by a company and the importance of IP as a strategy topic can vary based on a large number of factors, including [to name just a few]:

  1. Industry – companies in some industries will rely more heavily on IP plans and strategy than others and companies in IP-intensive industries will most appropriately see IP strategy and issues visit the boardroom more often;
  2. Competitive landscape – if the corporation is involved in a business vertical where intense competition relies upon IP protection and IP-based product or service differentiation, occasional review of the execution by management of the development of the corporation’s own IP portfolio, and knowledge and anticipation or avoidance of competitive IP hurdles, is appropriate;
  3. Innovative positioning of the corporation in relation to peers; and
  4. Importance of IP assets of the corporation to the profitability of product or service lines.

The approach taken to IP issues, and the importance of the IP assets of the company, fits within the larger context of enterprise strategic planning and management and the board should work together to ensure that the risk profile of IP strategy is in line with the remainder of the corporate structure and plans.  The sufficiency of IP clearance and avoidance measures and protective considerations in the new product development workflow of the corporation is also a strategic area in which the Board should gain reasonable assurance of management’s plans and operations.

Related to product development and other business development plans of the corporation is the general position which the corporation elects to undertake with respect to their IP portfolio and the IP assets of competitors. One analogy to consider is the placement of the corporation, in terms of the type of IP position taken, along a spectrum anchored at one end by a purely defensive strategy, centred around freedom to operate and avoidance of third party IP rights, to the opposite end of the spectrum in which a corporation elects to take a more offensive strategy centered around intensive capture, development and exploitation of IP assets to either provide more aggressive exclusionary or competitive options or to add value to the company through increasing the size and depth of the IP portfolio.  This analogy of “pinning” the corporation to a point along a strategy scale oversimplifies the issues but is demonstrative of one thinking approach which might be taken both by management in development of an IP strategy as well as by the board in providing oversight and critique of same.

Insofar as the directors bear responsibility to assist management in crisis management and have a responsibility as custodians of the brand of the corporation, the board should be advised when brand-threatening IP issues such as large scale IP litigation or the like arise. Using IP litigation as an example, given the costs as well as the materiality of the potential economic outcome either in terms of damages awarded against a defendant or as a potential revenue item for a plaintiff corporation, management should work with the board to ascertain and provide appropriate ad hoc or periodic reporting in this area.

Even in terms of product development and similar issues, if certain new product pipeline items have potential IP clearance hurdles associated with them such as proximity or threat of action from third parties based on pre-existing IP, if those threats approach or exceed the predefined risk appetite or parameters desired by the board, there should be opportunity for the board to consider these items and provide guidance.  These types of issues might occur more often in an “innovation intensive” enterprise, and this is not to suggest that the board should insert their decision making in place of management, but both the board and the executive of the corporation should condition themselves to have a constructive look at these types of items should they arise, and as important as the discussions themselves to identify the existence of the issues to trigger appropriate followup.

The list of IP and innovation capture issues outlined above is only indicative of some of the areas in which directors might consider seeking feedback and assurance from management in the corporation – there are many ways in which boards can satisfy themselves that they are applying appropriate stewardship and risk management principles to the IP portfolio, assets and position of the company, including for example through assigning various IP issues into the ongoing enterprise risk management and monitoring matrix.

Every corporation has and creates IP assets – occasional strategic review and oversight of IP initiatives by the board of directors is appropriate and important.  The best likelihood of success for IP initiatives which require wide cultural adoption begins with tone at the top, and it will be important throughout a corporation to see and feel that the cultural requirements for an IP capture plan, tech transfer strategy or the like is adopted by and driven down from the highest levels of the corporate hierarchy into the operational corners below.  This begins with and includes initiative, direction and buyin at the board table.

Directors should provide their varied insight and perspective to the development of IP plans at a strategic level, and insofar as the board will ultimately bear responsibility for the value which is or is not generated in the corporation from IP decisions it is also important to gain a level of assurance on management’s development and execution of intellectual property strategy and plans.

Furman IP can help you to develop and implement strategic management of the IP elements of your corporate strategy.  Let’s chat if you have questions!

Counterfeiting: What Is It and What Can You Do About It?

Whenever I hear the word “counterfeiting” I think about the scene in the desert in To Live or Die in L.A., where they show up to shut down the counterfeiters only to find nothing left but a washing machine.  The far less gritty definition of counterfeiting though, related to counterfeit merchandise and services, is something that impacts many of us on a regular basis.

What is counterfeiting, you ask?  There are many different definitions – this one from Wikipedia is good as any to outline the term:  “…Counterfeit products are fake replicas of the real product. …The word counterfeit frequently describes both the forgeries of currency and documents, as well as the imitations of clothinghandbags,shoespharmaceuticals, aviation and automobile parts, watcheselectronics (both parts and finished products), software, works of arttoysmovies.[1] Counterfeit products tend to have fake company logos and brands.”  Counterfeit goods are copies of your legitimate products.  They are sold by others to trade on your goodwill or other IP rights.  In many cases as the notoriety of your company and your brands increases, so does the temptation for people to copy or trade on the goodwill and value of your IP rights and planning to deal with counterfeit products is one area in which many companies can benefit from the deployment of some resources.

What types of products or services might be copied? Virtually anything – everything from the widely anticipated counterfeit consumer fashion goods such as clothing or the like, through to construction materials, safety products and others (I spoke once to a fellow who found out he had a copycat furnace in his house!).  Services can also on occasion be copied  – for example the copycat Apple store in China in which by reports the staff all thought they were working for the real company.  Appreciating the scope of the counterfeiting problem, you might ask yourself what you can do to minimize or avoid its impact on your business.  As with many IP-related business decisions, the resources you dedicate to awareness and enforcement in the counterfeiting area will vary but a starting point is to understand some of the options that you have at your disposal to detect or fight back against these problems.

Grey market goods are products manufactured by you but which are not authorized for sale in a particular market – for example if a distributor in one country to whom you ship product moves it for sale in another market in which you have another exclusive distributor. The product itself is legitimate, but is not authorized for sale in that territory. There are steps which can be taken to provide the best possible legal scenario to deal with grey market scenarios, although a good measure of common sense and positive working relationships with all your channel partners is often the best way to minimize these situations!


One of the first key elements for a business seeking to implement an anticounterfeiting program is to establish rigorous monitoring in the markets of interest. The monitoring program can become more complex as the geographic footprint of your business expands into multiple countries. Your staff or local distributors in corners of the market can provide feedback and periodic information about what they see in the marketplace, and in certain cases you may also wish to retain local legal counsel or investigative help to proactively monitor activity or particular parties in the marketplace to identify when counterfeit goods or services are entering the market. The best information possible results in your best ability to enforce your rights.

 A related issue in terms of monitoring or establishing an enforcement framework is to ensure that any contracts that your company enters into with local companies, manufacturers, distributors, agents and the like establish the proper relationship of those companies to assist you with monitoring and enforcement as well as to minimize the ability of those companies to themselves become sources of grey or black market goods in the marketplace.  Establishing this documentary framework is something that you can work on with your counsel, to ensure that the extent possible you have created precedent documents and contract templates that you are using that support your monitoring program. You will also potentially need to rely on local legal counsel in the market of interest to ensure that the contract language which is created is best enforceable Oreos most efficiently drafted for the local legal framework of that country.


Once you have implemented a monitoring program, or a counterfeit or infringement matter comes to your attention, you next need to develop an enforcement strategy.  You will typically have many different options at your disposal to try to stop it.  Depending upon the jurisdiction and severity of the situation, you may have a civil remedy at your disposal (ie. you could sue the counterfeiter or the vendor of the counterfeit goods for infringement of your IP rights), or in some countries and circumstances there is even a criminal avenue by which a criminal case of counterfeiting can be reported.  In Canada there are civili and criminal options available to consider although most rights holders would at present likely find themselves in the civil route for enforcement of their rights.  You can and should rely on your IP lawyer to give you some help to understand and frame your enforcement approach, since the decision is complicated by the type of business, the country or jurisdiction, the severity of the counterfeiting or infringement, and other factors.  Depending upon the level of enforcement that you elect to undertake as well as the potential geographic dispersion of your market again, you may even wish to leave standing enforcement instructions with your local counsel or representatives so that they can upon detection of the presence of counterfeit merchandise simply proceed with enforcement without the need to delay and hopefully in that fashion most quickly intervene.

Border control:

One of the primary means in many countries to exclude infringing products from the marketplace are customs and border enforcement mechanisms which exist allowing for the seizure or destruction of infringing goods at the national borders by customs officials. Many export markets, including the United States, have such a scheme in place, and they provide one of the simplest means of local market enforcement where available. In order to use these border control mechanisms it is most often the case that you will need to have registered  your trademarks or other IP rights locally, so given the time involved in completing those registration steps it is best to be prepared in advance. Canada does not currently have such a simple border control mechanism in place, but there is currently federal legislation pending.  The availability and accessibility of border control programs varies  and again there is the need to rely on local legal advice to make sure the best possible approach is taken  to interface the governmental border control mechanisms in particular jurisdictions with your own civil or criminal enforcement program.

Copy protection:

Some of the measures which can be taken to minimize the possibility or impact of a counterfeiter on your products and operations include maintaining tight control over your manufacture and distribution channel through appropriate contracts, as well as in some cases copy protection or detection of origin schemes can be implemented, so that with your brand or legitimate products, their source or authenticity can be verified.  There are many different types of copy control or  rights management systems which can be implemented from very simple to very sophisticated. In terms of sophisticated systems, for example, in polymer manufacturing, trace ingredients have been placed in plastic to allow for tracking of the origin of the plastic. In computer software everyone is aware of the various types of digital rights management or license management schemes which are typically implemented with respect to software programs. There is a strong vendor support industry in this area and to the extent that your company wishes to incorporate some type of a copy protection or  control mechanism into your day-to-day distribution plan you can find a lot of good help in this area.

To summarize, there are a number of steps which can be taken to best prepare to deal with possible counterfeit or copycat presence:

  • Ensuring proper distribution or channel contracts, dealing with IP ownership;
  • Registration of selected trademarks, patents or other IP rights;
  • Awareness of local law and requirements for use of customs interdiction or other local enforcement mechanisms;creation and implementation of a internal policing mechanism to detect counterfeit merchandise or services, including building awareness amongst your personnel; and
  • Implementation of copy protection or other schemes to help with identifying original product.

Companies addressing some of these issues in their market development plans will be best positioned to protect, exploit and maximize their own IP positions as their businesses grow. You know what they say about an ounce of prevention…

Public Authority Trademarks in Canada – Legislative Reform

On June 9, 2014 Bill C-611 (a private members bill) was put before Parliament with the intention of amending section 9 of the Trademarks Act,which deals with official marks. Section 9, and official mark protection thereunder, is the primary purview of governments and governmental authorities within Canada allowing for streamlined access to broader protection for public authorities and official marks than is available in most circumstances to regular trademark applicants. Currently, official marks are not subject to any opposition proceedings or renewal terms, and do not have to meet many of the typical requirements for trademark registration under the Act. The superior rights which attach to these types of advertisements and official marks have been attractive to those public authorities qualifying for their use in the past, but are somewhat idiosyncratic in Canadian trademark law as well as internationally, for the large majority of parties who cannot use them.

In 2013, the Standing Committee on Industry, Science and Technology recommended that the Government introduce amendments to the portions of the Trademarks Actdealing with official marks so as to “avoid stifling innovation and distorting markets”. Halifax MP Geoff Regan tabled his private member’s bill, the purpose of which “is to clarify what constitutes a public authority under section 9, as well as to create a review and objection process to ensure public marks do not unduly restrict the market”. The specific changes proposed by Bill C-611 are as follows:

  • Added definition of “public authority” – the term is not defined under the current legislation.
  • All public authority marks will be subject to a 10-year term, with the option to renew for a further 10-years, subject to a further opposition period.
  • The Bill’s transitional provisions state that all existing marks as of the coming into force of the amendments would be subject to an opposition period as well as a 10-year term. spike in opposition proceedings as a result.
  • Added objection process– within 3 months of the registrar giving public notice of the adoption and use of a mark by a public authority, any interested person can file an objection on the basis of:
    • lack of use;
    • the body is not actually a public authority;
    • the mark is confusing with a previously registered mark, or is identical or nearly identical to a registered trademark and may significantly undermine the ability of the trademark owner to fully exploit the mark;
    • the mark is a generic term; or
    • the granting of the mark does not serve the public interest.

Section 9 will continue to exist in its current form for the foreseeable future, as it was largely unaffected by the massive overhaul of the Trademarks Act in Bill C-31 earlier this year. However, regardless of the outcome of this particular bill, the text of it provides a catalyst for ongoing discussion around the future and scope of official marks in Canada, both for public authorities enjoying and urging their continued use, and other brand owners and parties in the market who wish to level the playing field by curtailing or eliminating their use.

IP Considerations in New Product Development

Businesses of any size will create products with IP embedded in them, and considering the IP-related issues at the appropriate times in product development will benefit the business.  There are many different intellectual property asset classes which might be considered or created during these processes, both in terms of evolutionary line extension or new platform development – these include patentstrademarkscopyright and trade secrets.  The legal issues and associated fact gathering and decisions can be grouped into a number of headings, as follows:

  1. Avoidance:  are there any third party intellectual property rights that you might encroach upon or infringe with your proposed development, and if so can they be avoided;
  2. Clearance:  is the intellectual property aspect of the asset you are creating protectible, pursuant to any legislative IP schemes; and
  3. Protection: if there are protectible IP aspects of the project is there a wish to do it, andwhat is the timeline and plan for doing so.

Keeping it Under Wraps:

One IP-related concern which should be kept top of mind in product development is the importance of confidentiality.  It is best to avoid public disclosure of new ideas until final decisions around patenting and other IP issues have been made, so as to not negatively impact the patentability of the new product or process [international patent laws for example, in varying degrees, prohibit the valid patenting of inventions which have been disclosed to the public in advance of patent filing]   As well as the need for appropriately timed confidentiality around projects in their earlier stages, if IP protection for a particular project relies in whole or in part on trade secret protection, it will be necessary to document and maintain long term confidentiality around the ideas or information in question.

In addition to keeping the actual product prototyping or development process under wraps, it is important to remember to consider using non-disclosure agreements to cover external product testing and other third party involvement in product development projects, to minimize the triggering of public disclosure timeframes and otherwise minimize the possibility of third party misappropriation of your IP.

Understanding the Playing Field:

IP searches of various types can be used for many purposes, including IP clearance and even simply for competitive market assessment and technical landscape awareness.  You can use patent searches and other similar information to identify other companies working in a technical field, or who might be marketplace competitors.  Sometimes it might even be the case that you simply want to see the work of others to catalyze your technical development work, subject to avoidance of infringement of third party IP rights.  Building an IP searching step into the appropriate spot in your product development workflow can serve many purposes, and is highly recommended.

Defensive IP Considerations:

A first group of specific IP questions which can be asked and answered in the course of product development relate to “defensive” strategy considerations.  For example, are there third party patents or other IP rights which might be infringed by your new product – and if so, is it possible to avoid them or how will those questions be resolved.  When it comes to branding and marketing questions, it is also desirable to ascertain if there is the possibility of trademark infringement by your product if the desired name or trademark is used.  Consideration of defensive issues such as these is a step best installed early in the ideation process, between conceptualization and finalization of ideas, as that is the ideal time to make adjustments if necessary to avoid IP legal hurdles which might arise.

Offensive IP Considerations:

Another group of IP questions and opportunities which arise for consideration can be considered as more “offensive” in orientation.  Where defensive IP issues center around clearance and freedom to operate awareness vis-a-vis third party rights, once it is determined that there is a clear, or at least an understood, path through the existing competitive IP landscape, the next set of questions centers around whether or not there are protection or exclusionary opportunities which exist that you may wish to take advantage of.  For example, is the new technology something that could be enhanced in value by seeking to patent certain aspects of its functionality?  Will you seek to protect the trademarks or brands developed?  Is it necessary to inventory and properly protect new trade secrets or confidential business information of your business related to the product or service offering?

If a decision is made to seek to protect the IP rights in one or more aspects of the new product development, it will also be desirable to budget the economic resources and timeline in the overall business plan to ensure smooth coordination of your IP strategy with market entry.

When to Conduct IP Diligence in the New Product Development Process:

If your company conducts new product development on an ad hoc basis, I would encourage you to consider looking at an IP diligence checklist  before a final go/no-go decision has been rendered on other aspects of the process.  In a more institutionalized ideation process, it is important to consider the appropriate gate points in your process at which to insert IP decision point.

My suggestion is that the two groupings of IP decisions, related to defensive and offensive IP clearance outlined above, can logically be attached at two different points in the process:

  • Searching and defensive IP clearance issues:  I suggest it is appropriate to consider clearance and freedom to operate issues early in the ideation process, before a development path is solidified.  If there is a competitive patent blocking a development, or which might at the least shape the approach taken to the product development path, it is better to know this as soon as possible in the process rather than after a significant number of cascading decisions are made behind the initial development.  This will aid in minimizing wasted effort where IP hurdles exist, as well as creating maximum business opportunity and catalyst in the remainder of the new product development process by gathering in competitive IP information as soon as possible; and
  • Offensive IP protection considerations:  Considering the creation or existence of your own proprietary IP assets are questions which it actually makes some sense to consider a bit later in the process once a rough technical or product path is known and the decision process is moving past technical feasibility into marketing and production planning.  Opportunities for exclusionary or protective measures can be considered early in the process but are most fully fleshed out when the new product idea is reasonably complete.

Wherever or however you decide to consider IP issues in your new product development process, it will deepen the decision-making context and quality of your results.