with Laurier Mandin, Andreas Schwabe and Erika Murray
Life in the information age has transformed what we mean by “products.” A product used to be anything you could taste/touch/feel. Today, information about a product is just as, or more valuable, than the product itself. Securities laws and Intellectual Property (IP) law are all about the legal protection of information. Episode 7 puts a spotlight on IP.
Intellectual Property is Erika Murray’s speciality. As a a lawyer, a professor, executive, innovator, and tech startup founder she’s an expert on IP related issues. She holds a law degree as well as a PhD in Chemical engineering. Erika Murray is the Director of Innovation and IP Services at PCK Intellectual property in Toronto – PCK is one of North America’s leading IP firms that services large multi-national companies, small to medium enterprises, and start-ups.
Graphos CEO Laurier Mandin and Andreas Schwabe talk with Erika about what businesses need to know about Intellectual Property.
Andreas: I’m Andreas Schwabe, and this is Product: Knowledge, the podcast about creating and marketing products that improve people’s lives.
Andreas: Most people think of their product as a “thing,” but we live in the information age. A physical product is one thing, but information about that product has its own equal and sometimes even greater value. Intellectual property is a huge topic in business but in this episode, we’re starting at the beginning with a top level overview.
Andreas: There are several types of intellectual property that businesses need to think about. Everyone is familiar with copyrights, trademarks, and patents, but intellectual property also includes trade secrets, industrial design, and even the design of integrated circuits. Erika Murray is a lawyer, a professor, executive, innovator, and tech startup founder. She holds a law degree as well as a PhD in chemical engineering. Intellectual property is Erika’s specialty with expertise in patents, industrial designs, and trademarks. She is the director of innovation and IP services at PCK Intellectual Property in Toronto. PCK is one of North Americas leading IP firms that services large multi-national companies as well as small to medium enterprises and startups. Erika Murray joins me and Graphos CEO Laurier Mandin by phone to make sense of what can be legal minefield.
Andreas: So, everyone has heard of copyright and trademarks and patents, and we’re going to get to those in a sec, but give us a general overview of what is intellectual property.
Erika: Intellectual property does encompass each one of those. So, copyrights, trademarks, and patents, but essentially, intellectual property is something that you create whether it’s an artistic piece of work, a brand that your company owns, a logo, or patent which focuses more on the innovation. It’s basically that you produce and you create, whether you’re a single individual or a company, and you should, by rights, have ownership in what you develop.
Andreas: What are the major types of intellectual property?
Erika: I mean, I guess, categorically, copyright, patents, and trademarks. It could be divided in that way.
Andreas: Okay, how about design? Where does design fall?
Erika: Good question. When we say patent, there are design patents and as well as utility patents. Classically, we call a patent, what most people know as a patent, it has claims, it has a description, it’s a complex document. A design patent, or also known in Canada as an industrial design, is more focused on the look and feel and shape of something. We can use as an example the Listerine bottle has a unique shape. It’s bulky versus the Colgate bottle has an hourglass shape, so each one of those companies would have protected those shapes through an industrial design, or also known as a design patent. It essentially protects the look and feel, or the mold, what was manufactured.
Laurier: It’s cool that you mentioned those because I automatically think of the design patent of the Coca-Cola bottle, right? It’s neat to know that it extends well beyond the soft drink market into mouthwashes and other products that can be recognized by the shape of their bottle on a shelf.
Erika: Right, so it’s not protecting the functionality. It’s not how, for instance, the lid attaches to each of the bottles. It’s purely the look and feel design patent. Generally, when companies are manufacturing, they essentially file their AutoCAD drawings, and that’s what we protect is the production, the look, shape, and feel. It’s not the utility aspect of whatever they’re producing.
Laurier: How substantially different does a bottle have to be from another product packaging in order to qualify as a distinct enough to be patented?
Erika: To be a design patent … That’s a very good question, and the answer is, in the design patent space, not much distinction actually. That’s why we say, you generally file your design patents with us when you already have your final CAD drawings because it’s that that we seek to protect. If you go, or if another company changes that shape, outside of the edges, makes it slightly different shape, there are ways that those companies can get around design patents more easily than a utility patent. So, design patents have narrower scope of protection.
Laurier: I’m thinking through the eyes of one of our clients that’s developing a new product, and there are so many different aspects to what can patented. How do you even recommend that a client approaches going through that process, and should they be patenting the idea first, or the function, or the design, or should all of those things be brought together in a series of patent applications?
Erika: Basically then you come down to patent strategy, budgeting, and our firm, PCK Intellectual Property, really takes a focus on your business and your priorities. If you are manufacturing and you have a unique shape and feel to your product, let’s use just Listerine because it’s easy for everyone to conceptualize. If you are Listerine, and your bottle is on shelves, and it sits on shelves, and it’s very distinct than the bottle next to yours, and you wouldn’t want anyone having a shape like that and you’re a more simple consumer product, the first priority would be filing your design patents. Very importantly, design patents, unlike utility patents, number one, are very cheap to get compared to utility patents. To file a design patent, for instance, in Canada, we just require your AutoCAD drawings, and it’s $1500 to get that protection if it’s approved.
Erika: If your product is focused on the mold, the design, the look, and feel, and you wouldn’t want anyone coming and copying that, then it would be very important to file that as a priority. If your product is more innovative and focuses on the functionality, so we’ll use just a simple, the cover. If you’ve created a new type of cover that clips on to various bottles in various industries, the clipping element that you seek to protect, then we would focus on filing a utility patent. But, to answer your question, it’s what is your business, where are you making the money, and What can you prioritize and afford to protect at the time?
Laurier: Yeah, and what are the most important things to protect, I would presume, right? Because the design patent to me, if it’s not protecting the utility, that may not be the most important thing to protect if someone just has to redesign it and take your great idea and switch it around 30% visually and rip it off.
Erika: Right, so again it comes down to what market are you in? Where are you manufacturing? Where are you producing? In the design or the manufacturing space, it’s also very important for design patents that you haven’t had a public disclosure. Oftentimes we see clients, they go over to China. They get everything manufactured. They come back. They start selling. Something becomes unique in the marketplace about the look and feel of that manufactured product. They want to get a design patent, and quite frankly, it’s too late, because they’ve already had that public disclosure. Had they sought advice and kind of a IP strategy early on, they would have realized, “Oh, we should be filing our AutoCAD drawings and getting a design patent before we even go to China and start the manufacturing process.”
Andreas: That brings us to the next question, which is, really why is managing or controlling intellectual property important? What are those big pitfalls if you don’t? What are the risks?
Erika: Yeah. I mean, it’s like anything. Sometimes hindsight is always 20/20 and you learn as you go, as I said, a new company, right? If you’ve had five companies then you know all of this, right? Really your rights are important because they not only set your business apart from competitors, but they block people out. They can be sold, licensed, and they ultimately provide you with that revenue should you be acquired. But, it protects people from infringing on your intellectual property. Going back to the simple case of the bottle or the functionality having a unique type of capped clip on a bottle, it would block out competitors, stop them from using, making or selling. You could possibly earn royalties, or licensing. So, once you have issued patents, if a company comes along and wants to use your product, they can’t just simply use it. They would have to obtain a license from you. You can also help with strategic alliances, so partnerships, right?
Erika: If you don’t own your IP, then no one’s going to be interested in taking you seriously because, essentially, they could just do it themselves. When you own your intellectual property, and then you have stakes in the ground. When you sell your business, that becomes part of your valuation or your portfolio. They’re intangible assets, but they definitely go within your company as a value or an asset on your sheets.
Andreas: It sounds like you’re saying, I mean, ultimately it doesn’t sound like this is a size of business issue. If you have a big business, it’s not like intellectual property is more important because if you’re a small company starting up, your intellectual property can form the foundation of the growth of your business.
Erika: Yeah. Certainly, right? I mean, there’s less and less a storefront. If you’re starting a business where you’re a convenience store, so, I mean, maybe you have a trademark or a brand, a unique business name for a convenience store. But generally, most businesses that are starting up these days have some elements of novelty to their business, to their business model, to their branding that should be protected. Now, we work with multi-national companies as well as SMEs or start ups, and of course, when a start up is getting off the ground, it doesn’t really make sense to file intellectual property out the yin-yang so to speak. But, it is definitely advisable to have it on your roadmap to know, “Okay, when I reach this stage or when I have this type of innovation or when people start knowing my brand, my trademarks in the marketplace, it’s certainly time to start protecting those assets apart of your business.”
Laurier: Can you give us an idea what a patent strategy might look like for a startup business that has a physical product and they’re thinking they’re going to launch it in one country, lets say Canada, but long-range they’re imagining that this product might sell worldwide? How should they approach that because they don’t have a huge budget for IP protection and yet they’re at significant risk, I presume?
Erika: Right. So, in the consumer marketplace, like we talked, if it’s manufacturing, the first thing generally what they do is they design and then they get customer reviews and experiences. They do that whole discovery element. The first thing really would be, a design patent once they have that final product that they’re about to go manufacture and bring to market. First thing would be considering in the manufacturing space and the consumer product space, would be the design patents, okay?
Erika: Now, IP strategy would look something like this, okay? How many products are you producing? How many various molds? Do you consider that this is your final version? How many more versions are you coming out with? What is your current revenue stream, if any? Perhaps do an initial filing once you get a revenue or an ROI of a certain amount, maybe 20, 30 thousand, then you should be considering, perhaps a utility patent filing. Especially if there’s anything innovative about your product, so just because you’re manufacturing something doesn’t mean there’s no functionality there, right?
Erika: The first step in the utility patent process is filing a US provisional patent as part of your strategy. You would file the US provisional patent, and then you have a year to focus on your business and the developmental and growth before we actually even have to formalize that utility patent application. Then thirdly, it would be looking at your branding and your trademark. Oftentimes companies startup, I’m not saying it’s not important to file your trademarks right away. It can be, but generally people actually change their names, change their logo, change their design, so the good time to file your trademark would be once you have that final logo, that final slogan and designs, you’re stamping it on your products, people are starting to know your name, and you don’t want anyone else in Canada, for instance, or the US, or anywhere in the world, to use your trademark.
Bryn: You’re listening to Product Knowledge. The podcast about creating and marketing products that improve people’s lives.
Laurier: So, how do those registrations work going into other countries? I know with patents, there’s something—is it called a PCT?
Erika: Right. So all, and I should be careful here, a copyright’s a bit different but both utility patents, design patents, and trademarks, the three elements we’re talking about here today, they are what we call IP rights, which are need to be obtained jurisdiction by jurisdiction. Now, without sounding like a lawyer that means that you need to file in each country. There’s no such thing as a worldwide patent or a worldwide trademark. Each government has its’ own patent system. They’re all very much the same, but if you want to get patent protection or trademark protection in Canada, we need to file in Canada for you. We also then, if you want to go to the US, we need to file in the US.
Erika: You asked about PCT, okay? PCT is a means in which you enter your utility patent national phase, meaning you plan to enter more countries than just say Canada and the US, so you’re going PCT. Now, oftentimes people say, “Oh, I have a worldwide patent. It’s a PCT.” There isn’t, again, no such thing as a worldwide patent. When you go PCT, you still need to pick your countries. For instance, you go PCT and you want to do Canada, US, some countries in Europe, as well as Japan and China, is generally what we see.
Laurier: Fantastic. You answered all the questions I was kind of rolling into that before I could get to them and then you did it very smoothly. That was wonderful.
Andreas: Are there any specific industries or business segments that should be more preoccupied or be preoccupied with intellectual property?
Erika: I wouldn’t say any. I mean, what we see a lot of is medical devices, a lot of machine learning, electronics, cosmetics. In manufacturing it could be rubber composition, tires, nanotechnology, softwares, telecommunications. It really doesn’t matter. Oil and gas. The list really goes on. I think each industry though, would be more prone to say, file utility patents and very complex utility patents, say in the software space as an example. A lot of other industries may be focused more on their branding or their trademarks. If they are an online marketplace, as example, they may have a lot of clever branding and marketing that they would seek to protect, but there may not be nothing there on the patent side. Then, we would focus heavily on their trademark protection.
Laurier: Let’s talk for a moment about copyright. Imagine that I … and copyright is something that we don’t have a copyright protection office. As far as I know, a formal process that’s typically followed by brands when, let’s say, I’ve got content I’ve written for a client’s website, and we’ve got a lot of really innovative wording in there. They’ve got a competitor that keep on knocking off and taking their wording and then almost copying and pasting it onto their own website. What can someone do to protect that kind of thing?
Erika: They should focus their energy elsewhere. I don’t know. The reason, I mean, it’s like a vast world out there. So, how a copyright works and we don’t do a lot of … Yes, we will do the work, but there isn’t a lot of copyright work to be done. The reason is because as soon as someone produces, publishes a book, or a painting, or content written on a website, that author creator is considered the copyright owner just from making it.
Erika: They have “protection” even without filing it with the government or paying a lawyer to file it or help them with the copyright aspect. They have protection in just producing the work of art, and they have that protection for life plus 50 years of the author. So, that’s long, long time they have protection.
Erika: The element you’re getting at is enforceability. Are you really going to “sue someone” for copying paragraphs off your website? Now, you could but that would cost you time, resources, and money and probably your money should be better spent focused on your business or elsewhere.
Erika: It’s a different scenario, the painter who originally did the work of art, the Mona Lisa, or something like that. If you produce something that’s … a book and it’s a top seller, then of course it makes sense then, to start enforcing your copyrights and suing people, right? We can send cease and desists and all of that kind of stuff, but mainly our work is in trademarks. So, the branding, utility patents and design patents because copyright, you have the rights. Very difficult to enforce, and the value, or the business return on suing people is just not there unless you have something extremely amazing that you produced.
Laurier: Woud a wiser approach in the case of a website, for example, be to register certain taglines and snippets of text as trademarks, and then you have something that is more defensible?
Erika: Yes, so like your brand and your logo. Snippets of text, I just don’t want to. Not all snippets of text would be registrable or would make sense. Slogans, for trademarks you can even protect the smell, so in the perfume space, for instance. If there’s a certain smell associated with your product, or sound, so the lion that roars at the beginning of the movies, that sound is a trademark in and of itself. Focus on the big value that you wouldn’t want someone to copy.
Laurier: Yes, even colors when you think of Tiffany’s or Birks …
Erika: Exactly, so it’s when consumers in the marketplace really start to become love your brand, love everything about it, know it as you, then, I mean, you should’ve already filed and protected, but definitely should be considering it.
Andreas: Where do companies start? So, I have a product and I’m thinking of taking it to market, where do I begin with intellectual property?
Erika: Again, you should consider it. Where do you start if you’re just day one? I always say start on how do you make money. If you can’t figure out how to make money, you don’t have a viable business, right? So, start with figuring out how to make money. Once you’re making money or once you are one the trajectory of making money, then you would start by doing, potentially, a trademark search. All too often we see people choose names for their business or for their products, so if I’m selling hamburgers, I do not want to come up with a name with hamburger in it, but believe it or not, people will do this. Have an understanding of how you pick your name and your branding of your products, would be step one. So, your trademarks and your branding strategy.
Erika: Step two would be, again, once you focus on your business, if you solved a problem. So, you go to manufacture, you go to create a medical device or cosmetics, it doesn’t matter. Usually you’re innovating, otherwise what’s new about your business? When you’re doing that innovative process, I encourage people to keep a journal, an innovation journal. They essentially, through that journal, realize, “Wow. The past two weeks, we’ve created XYZ, and it was difficult to create because it didn’t exist. We didn’t know how we were gonna do it or accomplish it.”
Erika: That’s where the IP lies, so you keep that journal, and before you have a public disclosure, before you have a sale, or before you go make a big presentation, or a pitch to investors, or generally you should be filing and protecting your IP because only Canada and the US have that one year grace period where you can have a disclosure. But, most of the rest of the world, once you have a sale, or what’s called a public disclosure, presentation, an offer for sale even, the governments in the rest of the world consider that you let your IP be offered to the world, therefore you lost your rights. For instance, you can’t get protection in China, a massive market.
Laurier: It’s in the public domain at that point, and just because you’ve talked about it or published it?
Erika: Exactly, Now, you can have a general idea of something and loosely talk about it likely doesn’t constitute a public disclosure, but if you’ve gone off somewhere and you showed drawings and how you would do it, that’s a public disclosure. The law is very clear now that even at an offer for sale. There’s a company who came up with very unique Christmas tree lights, and they hadn’t yet filed their patent, but they went to a trade show. They had their Christmas tree lights strung all over a Christmas tree there, and afterwards, they went and filed their patent. Well, another company tried to invalidate their patent a number of years later, and oftentimes it’s issues like this that come up a number of years later. Their patent was invalidated because they found at that Christmas show, that trade show, the Christmas lights were shown and offered for sale, and therefore they didn’t have rights to the intellectual property. Their patent was invalidated.
Laurier: So, that’s where having a nondisclosure agreement could be really helpful, right? Where you’re not going to talk to anybody about your new idea until they’ve signed and agreed not to disclose it, and that also gives you some evidence that you’re not releasing this idea in the public?
Erika: Correct, yeah. Before you, even if we see a lot of mistakes happen like this, where manufacturing agreements don’t have appropriate IP clauses, and they don’t protect the innovator and the company. Essentially, it could be viewed at law as having a public disclosure. Now, you can’t go to a trade show and ask everyone to sign NDAs. It just wouldn’t really be feasible, right? We get clients ask us all the time like, “We need NDAs.” It’s sometimes easier to just file your US provisional patent application and not have to worry about having NDAs.
Laurier: So, file the application before you talk to anybody about it before you start having those discussions with friends in the bar because there’s no real clear point at which you’ve crossed that line from the size of group you’ve been telling to it being a public disclosure…
Erika: Correct. Now, usually when you’re talking with friends in a bar, you don’t really have a business or the innovation yet, so sometimes business owners or inventors do come to us at that too early of a stage where they, “Oh. I have an idea where I’m going to make a new type of vacuum, and the vacuum is going to hover and not touch the ground.” It doesn’t matter, but that’s not enough for us to really file something for you, right? You would need to understand how is it going to hover the ground, and what is going to be the technological innovations here of this vacuum, right? If you’re just talking to your friends at the bar about a concept of what your business is going to look like or your product, that’s much different than having, say, the technological advantages already figured out. Once you have that, then yes, we should be looking at protecting it.
Laurier: Let’s talk about that a little bit, so at what point is the right time, let’s say, if my process is going to take me from the idea to maybe some sketches to some more detailed drawings, to a prototype, or 3D renderings? At what point do I kind of get to that place where I should be taking this to my IP lawyer and starting to actually pay for it?
Erika: I think at the point where, and there’s no clear answer here, right? I don’t want this to be taken as legal advice per se, right? So, this is just general information to everyone. It’s case by case. I think all patent lawyers, or most, would be happy to have a conversation even the earlier the better, right? I mean, most professionals should and ought to tell you that it’s too early and this is what you need to do and come back. But, if you’re already at the stage of basically you have something to disclose to the world that your competitors would find valuable and innovative, then you definitely should be filing it.
Laurier: When you get to the point that you have an idea and it looks like it might be something, that’s when you call Erika?
Erika: I would say that is beyond a something, but yes. Call me earlier than later, and I’d be happy to have this discussion to kind of see where the company is at and what are the next steps.
Andreas: That’s it for this episode of Product Knowledge. Special thanks to Erika Murray for joining us and really helping clarify the issues around intellectual property. You can catch us on Facebook, Instagram, LinkedIn, and twitter @graphoscanada. You can also visit our blog at blog.graphos.ca, and we’d love to hear from you, subscribe, like or review. Share the podcast with a friend or colleague. You can reach us at [email protected]
Andreas: Product Knowledge is the podcast about creating and marketing products that improve people’s lives. I’m Andreas Schwabe.