Features Contracting
Licence to innovate

Innovation is a hallmark of the glass industry. As unprecedented challenge after challenge is routinely presented in the designs of countless architects, glass fabricators and glazing contractors rise to the occasion with innovative solutions spanning windows, doors, curtainwall, window wall, spandrel, other facade components and glass itself. 

Often, likely very often and for very good reasons, those solutions are placed in a folder after a project is complete, never to be used again. Perhaps someone pulls out a folder from a past project once in a while to get some insight into tackling a new challenge – but even if innovations are used again by the same company, the innovator could be ‘leaving money on the table’ as they say, with past work. That is, the innovative process or product could be licensed for use to other glass companies in exchange for appropriate compensation.

Protection and licencing of intellectual property (IP) has certainly happened in the past in Canada’s glass industry and is happening right now in Canada and beyond. However, company leaders who have been through the process are understandably reluctant to share hard-earned knowledge about how to proceed. So we turned to Nathaniel Lipkus at Osler, Hoskin & Harcourt LLP, a well-known business law firm based in Toronto, for advice. Lipkus is an IP litigator and strategist with an emphasis on patent and commercial IP issues. He is also a registered Canadian patent and trademark agent. He has represented numerous companies in a wide variety of industries in patent proceedings across Canada and is also familiar with the U.S. legal framework.

Economic justification
First, a company must determine that it’s financially worthwhile to pay the costs and put in the time to secure IP and then license a product or process. “From the very start, there needs to be an economic justification,” Lipkus notes. “Thorough research is in order. The hoped-for profits also depend on the business strategy with the IP, which helps dictate the type of IP that’s appropriate.”

Copyright is one type of IP protection. A design that’s written down and used during a paid contract, for example a drawing of how an installation was completed, is automatically copyrighted. That is, you own the rights to your own work automatically. Copyright can also be filed, says Lipkus. It’s not expensive to do so and provides a little more IP protection, but other types of IP protection are stronger. 

Another of these types is, of course, a patent for a distinct process or product. “If a company or individual has an innovation that is distinctly new, useful and inventive, and they want to keep it exclusive after disclosing it publicly, they would have to apply for a patent,” Lipkus explains. “There are cases where companies don’t file a patent because their invention is very likely going to be obsolete by the time the patent is obtained. Software with a short shelf-life is a good example of this. It’s a case of ‘why bother with the expense and effort?’ But a lot of software firms and other kinds of companies have decided it is worth the bother, because you never know if obsolescence will actually occur or if an invention might be used in new and lucrative ways down the road that are not foreseeable at the time.”  

And just because a patent application is filed does not mean a patent will be granted. Lipkus explains it’s basically a necessity to hire a patent agent as they are professionally trained in everything involved with interacting with the patent office. He says there will often be a debate between the applicant and the patent office about novelty or inventiveness of an idea, for example, and negotiations over the scope of the patent as well. 

“The cost to prepare and file a patent, depending on how well-organized the inventors are, how complex the invention is, whether there are multiple inventions in the same patent and so on, is ordinarily over $10,000 in Canada plus government fees, with further costs over time,” Lipkus says. “Obtaining a patent is a multi-year process, even though you can assert some rights immediately with filing of the application. And patents can be filed in one country or many countries, but although the general requirements are similar, the process is different in each country and there are obviously separate costs for each country.”

But having a patent in place does not mean that the patent will not be infringed upon. Settlements can be reached, but they take money and time to achieve. If the case goes to court there will be more expense.  

A trade secret is another type of IP protection. It’s a process or list of raw materials (like the Kentucky Fried Chicken 11 herbs and spices) that company leaders wish to keep confidential inside the business. It takes effort to secure a trade secret, says Lipkus, and it’s an ongoing issue that must be managed properly over time. New people can become aware of the trade secret, which can cause it to lose protection, and there must be contracts in place that ensure a trade secret is treated as such. 

Licensing
The next step after IP protection is to license the IP. “There are many types of licences, for different purposes, and IP can be licenced singly or in a bundle,” Lipkus explains. “Are you wanting to sell the right to commercialize a product, or the right to use a technology or process, or are you seeking another arrangement? After that’s determined, and you find someone who is interested in a license, your IP lawyer will ensure all parties involved understand and agree upon the nature and scope of the IP and the terms under which it will be used. This includes permitted uses, geographic scope, fields of use, representations and warranties, right to sublicense or subcontract, technical support, responsibilities to defend and pursue claims of infringement and rights regarding future developments relating to the licensed intellectual property.”

Financial terms must also be worked out. Again, Lipkus explains that your IP lawyer is critical in ensuring the parties involved in the transaction are properly compensated for the use or transfer of IP through the most appropriate arrangements. 

“This may involve forms of royalty support, initial fees, milestone payments based on events, sales goals or time and/or equity participation and protecting the parties’ interests in the event of insolvency,” he says. “Companies must understand exactly what IP forms part of the business deal and how those rights integrate with the subject matter of the deal and the intentions of the parties. The commercial terms must properly reflect these considerations.” Having licensed a process or product design, you must also put a system in place to monitor whether the terms of the license are being observed. 

Whether you pursue IP protection and licensing of some type for your product or process innovation is a big decision. As parting advice, Lipkus reiterates the need to do as much research as possible on your own before you begin incurring professional expenses. 

“It can be very lucrative to market something new,” he notes, “but the process is complex and of course not without risk. For the right innovations, it’s definitely worth it.”  •