Crowdfunding : A Great Way to…Jeopardize Your Intellectual Property

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CROWDFUNDING:AGREATWAYTO…JEOPARDIZEYOURINTELLECTUAL
PROPERTY

V
INCENTBERGERONANDSTEVENBENTO*
ROBIC,
LLP
L
AWYERS,PATENTANDTRADE-MARKAGENTS

Thisarticleisthesecondinathree-partseriesonparticipatoryfinancingor
crowdfunding,asocialphenomenonthathaswindinitssails.
Eventhoughthisfinancingsolutionappearstobesimpleanduserfriendly,thehasty
sharingofinformationonaCrowdfundingplatformcarriestwomajoryetrarely
discussedrisks:havingone’sideascopiedbyathirdpartyandjeopardizingthe
criteriaforpatentabilityofthoseideas.Indeed,itisrare,attheinitialstageof
developmentofacompanyoraproject,forthecompany’sIPorprojectstobe
adequatelyprotected,especiallywhenitcomestosmallbusinessesorstart-ups(see
preceedingarticle:http://newsletter.www.robic.ca/nouvelle.aspx?lg=EN&id=311].

Consideration1:Whatinformationshouldyoudisclosepublicly?

Beforeaddressingthelegalanalysis,itisimportanttounderstandtherealityofthe
companyortheindividualbehindaprojectfinancedbycrowdfunding.Eventhough
protectingthevariousIPelementsisanassetforallprojects,thepersonorcompany
mustoftenoperatewithastrictmanagementoftheirfinancialresources.Alltoooften,
theprojectinitiatorwilltendtoplacemoreofanemphasisonthedevelopmentofthe
productorserviceratherthanonitsprotection,which,insomecases,canturnoutto
beaseriousstrategicmistake.
Comparedtoaprivateandconventionalfinancingmode,crowdfundingisnotreally
madeforconfidentialityagreementsbecauseitspurposeistoshareyourprojector
ideawithpeople.So,whatevertheIPstrategycontemplated,oneshouldbearin
mindthatthesharingofsensitiveinformationconcerningtheproductsandservices
orthecommercialstrategyofacompanyislikelytoattracttheattentionof
competitorswishingtoenterthesamesegmentofacovetedmarket.Assuch,itis
essentialtocarefullyselecttheinformationdisclosedpubliclyinordertopreventthird
partiesfromcopyingone’sbusinessmodelorproduct.

©CIPS,2015.*FromROBIC,LLP,amultidisciplinaryfirmofLawyers,andPatentandTrade-markAgents.Published
intheSpring2015(Vol.18,no.4)Newsletterofthefirm.Publication068.193E.

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2
ThepersonorcompanyusingCrowdfundingmustthereforefindtherightbalance
betweenprotectingtheirIPassetsanddisclosinganadequateamountofdetailsto
createthekindofpublicexcitementthatraisessufficientfunds.

Consideration2:Theinherentrisksrelatedtodisclosinganinventionthatmay
bepatentable

TheCanadianPatentActstipulatesthatfollowingtheinvention’spublicdisclosureby
theinventor,thelatterhasoneyeartofileaformalpatentapplication,failingwhich
hewillseepotentiallypatentablesubject-matterbecomepriorartandtheinvention
couldloseitsnoveltyvalue,whichisaconditionforitspatentability.Althoughthis
one-yeargraceperiodisallowedinCanadaandintheUnitedStates,thisisnotthe
caseinmostotherlegalsystems.Thepublicdisclosureofaninventionbyaninventor
willthereforerenderitunpatentableinmostcountriesthroughouttheworld,exceptin
CanadaandintheUnitedStates.
Unfortunately,thiscancreateacatch-22fortheinventors:ontheonehand,they
mustdisclosetheirinventiontoraisefundstofinancetheproject,andontheother,
theyrisklosingpatentapplicationprotectioniftheypubliclydisclosetheinvention.
Onepossiblesolutionistofileapatentapplicationpriortotheinvention’spublic
disclosure.Then,afterfilingthepatentapplication,theinventioncanbepublicly
disclosedandsponsorscanbetoldthattheyarehelpingtofinanceapatent-pending
product.
Itshouldalsobenotedthatourcommentsonthepublicdisclosureofapotentially
patentableinventionalsoapply,withtherequiredadjustments,tothepublic
disclosureoftheproduct’svisualfeatures,whichmaybeprotectedbyindustrial
design.
Consideration3:WhoseTrade-Markisit?

InCanada,itisnotnecessarytoregisteratrade-markinordertobenefitfromsome
protection,albeitaminimalandgeographicallylimitedone.Thatbeingsaid,only
registrationcangrantanownerexclusiverightstouseatrade-markthroughoutthe
entirecountryinassociationwithitsproductsorservices.Itisrecommendedto
registeratrade-markquicklysoastoavoidissueswithanidenticaltrade-markor
confusinglysimilartrade-marksubsequentlyadopted.

Anotherimportantpointtoconsideriswhetherthetrade-markthatwaschosenbythe
companycanbeconfusedwithatrade-markthatisalreadyinuseorregisteredbya
thirdparty.Insuchacase,thecompanycouldbesubjecttoalegalactionfortrade-
markinfringement.Preliminarysearchescanbedoneinordertodeterminewhether
aparticulartrade-markcanbevalidlyregisteredorusedonthemarket.Thepublicity

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generatedbyCrowdfundingallowsforthevisibilityandinfluenceofacompany’s
trade-marktobegreatlyamplified.Bettersafethansorry!

Conclusion

Onecannotdenythataneweraisuponus,anerainwhichitwillsoonbepossible–
withtheavailabilityof3Dprinters,forexample–toeasilyandinexpensivelycopy
ideasthatarepubliclyavailable.Itisthereforeimportanttodevelopastrategyto
manageone’sIPassetsbyensuringtheirprotectionaswellastheirprofitability.
When,atthebeginningofaproject,thefinanciallimitationspreventthe
implementationofanIPprotectionstrategy,itisneverthelessimportanttoensurea
modicumofprotectionandtobeespeciallyvigilantwithregardstotheinformation
thatismadepublic.
Bottomline:Crowdfundingisagreatwaytoraisecapitalforsmallbusinesses,butit
mustbedonecarefullyinordertoavoidbeingcopiedorlosingpotentialIPprotection!

Inthenexteditionofournewsletter,wewilldiscusstherevisedlegislationproposed
bytheAutoritédesmarchésfinanciersandthemannerinwhichitcouldimpact
participatoryequityfinancing,forinstancewiththecreationandoperationofequity
crowdfundingportals.

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utilitaires;marquesdecommerce,marquesdecertificationetappellations
d’origine;droitsd’auteur,propriétélittéraireetartistique,droitsvoisinsetde
l’artisteinterprète;informatique,logicielsetcircuitsintégrés;biotechnologies,
pharmaceutiquesetobtentionsvégétales;secretsdecommerce,know-howet
concurrence;licences,franchisesettransfertsdetechnologies;commerce
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agroupoflawyersandofpatentandtrademarkagentsdedicatedsince1892to
theprotectionandthevalorizationofallfieldsofintellectualproperty:patents,
industrialdesignsandutilitypatents;trademarks,certificationmarksand
indicationsoforigin;copyrightandentertainmentlaw,artistsandperformers,
neighbouringrights;computer,softwareandintegratedcircuits;
biotechnologies,pharmaceuticalsandplantbreeders;tradesecrets,know-
how,competitionandanti-trust;licensing,franchisingandtechnology
transfers;e-commerce,distributionandbusinesslaw;marketing,publicityand
labelling;prosecutionlitigationandarbitration;duediligence.
®/MD

COPYRIGHTER
TM/MC

IDEASLIVEHERE
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ILATOUTDEMÊMEFALLUL’INVENTER!
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LAMAÎTRISEDESINTANGIBLES
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®/MD

NOSFENÊTRESGRANDESOUVERTESSURLEMONDEDESAFFAIRES
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