The Law of Trade Secrets in the Province of Québec
THELAWOFTRADESECRETSANDCONFIDENTIALINFORMATIONINTHE
PROVINCEOFQUEBEC
by
FrançoisM.Grenier
*
LEGERROBICRICHARD,Lawyers
ROBIC,PatentandTrademarkAgents
CentreCDPCapital
1001Aquare-Victoria–BlocE–8
thFloor
Montreal(Quebec)H2Z2B7
Tel:514-987-6242Fax:514-845-7874
info@robic.com–www.robic.ca
INTRODUCTION
ThissectionwilldealwithcomplementarycommentsontheLawofTrade
SecretsandConfidentialInformationasitisappliedintheProvinceof
Quebec.Nomajordifferencesexistinthebasiclegalprinciplesappliedin
theProvinceofQuebecascomparedtotheotherCanadianprovinces.
However,inviewofthedifferencesinthelegalsystem,thebasisuponwhich
theselegalprinciplesarefoundedaredifferent.
SECTION1:INTRODUCTIONTOTHELEGALSYSTEM
TheProvinceofQuebecpresentsauniquelegalsystembasedontheduality
whichhasalwaysmarkeditshistory.TheQuebecActof17741
,established
EnglishCommomLawasthefundamentalbasisofthelegalsystembut
providedthatallmattersrelativetopropertyandcivilrightswouldbe
decidedaccordingtoFrenchcivillaw.Stilltoday,publicandcriminallaws
aregenerallygovernedbytheCommonLawprinciples,leavingprivatelaw
tothereignofthecivilsystem.IntellectualpropertyinQuebecisgenerally
governedbyfederalstatutelawsupplementedbycivillaw.Tradesecretsin
Quebecareregulatedbythecivillawprinciplesaspertainingto”Property
andCivilrights”2
.
*
©LEGERROBICRICHARD,1993.
Lawyer,FrançoisM.GrenierisaseniorpartnerinthelawfirmLEGERROBICRICHARD,g.p.and
inthepatentandtrademarkagencyfirmROBIC,g.p.Thisdocumentconstitutestheinitial
versionoftheQuebecchapterdealingwiththelawoftradesecretsinCanadaand
publishedbyCBCunderthetitleWorldwideTradeSecretsLaw(looseleaf)Itwasmeantfor
discussionanddoesnotconclusivelystatetheopinionoftheauthororthemembersofher
firmonthesubjectmatternordoesitprovideanexhaustivereviewthereof.TheSchedulesto
thismaterialarenotreproducedhere.Publication141.
SECTION2:TRADESECRETSANDCONFIDENTIALBUSINESSINFORMATIONAS
DEFINEDBYSTATUTEORCASELAW
1.TradeSecrets
Nostatutespecificallydealingwithtradesecretswaseveradoptedeitherin
CanadaorinQuebec.EquityandCommomLawruleshavenoapplication
whena”civillaw”problemarisesintheProvinceofQuebec3
.Inreality,aswill
beseenlater,equityandCommonLawprinciplesareoftenimportedinthe
civillaw,thecourtsgenerallytryingtofindintheCivilCodeanalogous
principlesorbroadarticlesallowingtheapplicationofaspecificCommom
Lawprinciple.Clearly,theCivilCodeitselfdoesnotdealspecificallywith
tradesecrets.Thelawrelatingtotradesecretsandconfidentialinformationis
entirelyjudgemade4
.
Sincenostatuteexisttodefinewhatatradesecretis,thecourtshave
attemptedtodelimitthescopeofthenotion.Twoimportantcasesdecided
inQuebec,proposedadefinition.InRICrainLimitedv.AshtonPress
ManufacturingCo.Limited5
,Mr.JusticeChevrier,relyingondefinitions
offeredinAmericancases,generallydefinedtradesecretasfollows:
“Whataretradesecrets?(…)
1st:Atradesecret…isapropertyright,anddiffersfroma
patentinthatassoonasthesecretisdiscovered,eitherbyan
examinationoftheproductoranyotherhonestway,the
discovererhasthefullrighttouseit(…)
2nd:Atradesecretisaplanorprocess,tool,mechanismor
compoundknownonlytoitsownerandthoseofhisemployees
towhomitisnecessarytoconfideit(…)
3rd:Thetermtradesecretsasusuallyunderstoodmeansa
secretformulaorprocessnotpatented,butknownonlyto
certainindividualsusingitintocompoundingcertainarticlesof
tradehavingacommercialvalue,anddoesnotdenotethere
aremereprivacywithwhichanordinarycommercialbusinessis
carriedon(…)
4th:Atradesecretmayconsistofanyformula,pattern,device
orcompilationofinformationwhichisusedinone’sbusiness,and
whichgiveshimanopportunitytoobtainanadvantageover
competitorswhodonotknoworuseit.Atradesecretisa
processordeviceforcontinuoususeintheoptionofthebusiness.
Thesubjectmatterofatradesecretmustbesecret(…)”
Inthesecondcase,PositronInc.v.Desrochesetal.6
,Mr.JusticeBiron
proposedthefollowingdefinition:
“Tradesecretsareusuallyformulas,manufacturingprocesses
uniquetoitsownerandwhichhavebeenrevealedconfidentially
toanemployee.Thisisnotexperienceacquiredbyan
employeebut,moreexactly,knowledgeor”savoir-faire”
belongingtotheemployerandrevealedbyhimforthesole
purposeofpermittingtheemployeetoproducewhatthetrade
secretenableshimtodo.Includedinthiscategoryarechemical
formulas,recipes,manufacturingtechnologies(…)”.[translated]
OneofthemostimportantCommonLawcaseonthesubjectoftradesecrets
isFaccendaChickenLtd.v.Fowler7
,andthereasoningthereinwasadopted
andfollowedbyMr.JusticeBironinPositron8
wherehedescribedthethree
categoriesofinformationthatanemployeecanacquireduringthecourseof
hisemploymentandtheprotectiontowhicheachcategoryisentitled:
“Firstthereisinformationwhich,becauseofitstrivialcharacteror
itseasyaccessibilityfrompublicsourcesofinformation,cannot
beregardedbyreasonablepersonsorbylawasconfidentialat
all.Theservantisatlibertytoimportitduringhisserviceor
afterwardsto
anyonehepleases,evenhismater’scompetitor.Anexample
mightbeapublishedpatentspecificationwellknowntopeople
intheindustryconcerned[…]Second,thereisinformationwhich
theservantmusttreatasconfidential,eitherbecauseheis
expresslytolditisconfidential,orbecausefromitscharacterit
obviouslyisso,butwhichoncelearnednecessarilyremainsinthe
servant’sheadandbecomespartofhisownskillandknowledge
appliedinthecourseofhismaster’sbusiness.Solongasthe
employmentcontinues,hecannototherwiseuseordisclosesuch
informationwithoutinfidelityandthereforebreachofcontract.
Butwhenheisnologerinthesameservice,thelawallowshimto
usehisfullskillandknowledgeforhisownbenefitincompetition
withhisformermaster;and[…]thereseemstobenoestablished
distinctionbetweentheuseofsuchinformationwhereits
possessortradesasaprincipal,andwhereheentersthe
employmentofanewmaster,eventhoughthelattercase
involvesdisclosureandnotmerepersonaluseoftheinformation.
Ifanemployerwantstoprotectinformationofthiskind,hecando
sobyanexpressstipulationrestrainingtheservantfrom
competingwithhim(withinreasonablelimitsoftimeandspace)
aftertheterminationofhisemployment[…]Third,however,there
are,tomymind,specifictradesecretssoconfidentialthat,even
thoughtheymaynecessarilyhavebeenlearnedbyheartand
eventhoughtheservantmayhavelefttheservice,theycannot
lawfullybeusedforanyone’sbenefitbuttheirmaster’s.An
exampleisthesecretprocesswhichwasthesubjectmatterof
AmberSizeadChemicalCo.Ltd.v.Menzel[1913]2Ch239(2
3
).”
Thecourtshaveofferedawideandopendefinitionwhichindicatesa
tendancytoincludeinthenotionoftradesecretavarietyofinformations.
However,itisclearthatonlyinformationwhichcannotbeobtainedinany
otherwaythanfromthebusinesssourceusingthisinformation,asopposedto
theproductputonthemarketbythatsource,willbeconsideredatrade
secret.Forexample,intoday’stechnicalfieldssuchaselectronicor
computerengineering,competitorsoftenanalyzemarketedproductsto
understandtheirfunctionningandultimately,duplicatethem.Inaccordance
withthedefinitionsadoptedbyQuebeccourts,noviolationoftradesecretsis
involvedinthisproceedure.
2.Confidentialbusinessinformation(customerslist,supplierslist,etc.)
Frequently,theterms”tradesecrets”and”confidentialinformation”areused
interchangeably.However,inQuebeccourtcases,theterm”tradesecrets”is
generallyusedformanufacturingprocessesandrecipiesandtheterm
“confidentialinformation”isgenerallyusedtodescribeinformation
convenientlycompiledthroughouttheyearsbyanindividualoracompany,
suchasaclientslist,amarketingstrategybasedonclients’preferences,
supplierslist,pricinginformationsorthefinancialpositionofacompanywhich
partiallybecomeknownonthemarketplacebythemerefactofbeingin
business.
Evidently,notallsuchinformationuponwhichanemployeewillcomeacross
inthecourseofhisworkisconfidentialandevenwhenitis,itwillnotbenefit
ofanyprotectionsubsequenttotheruptureoftheworkingcontractandthe
absenceofanimplieddutyofconfidentialityappliedtosenioremployeesor
ofarestrictivecovenantaswillbeseenlater.Onlythoseinformationswhich
areinessencesoconfidentialthattheyareassimilatedtotradesecretsand
becomepartofthethirdcategorydescribedintheFaccendacase,will
enjoyalegalprotection9
.
ThereisgreatconfusioninQuebecjurisprudenceastotheprotec-tionto
whichconfidentialbusinessinformationisentitled.Docu-mentssuchaslistof
clientsareconfidentialandanemployeeisnotentitledtocopysuchalist
andtakeitwithhimuponleavinghisemployment.However,intheabsence
ofarestrictivecovenant,hemaysolicitasmanyclientsasheremembers
fromthislist.
SECTION3:CIVILLAWANDTHEPROTECTIONOFTRADESECRETAND
CONFIDENTIALINFORMATION
AsspecificallyemphasizedinPositron1
0
,mattersrelatingtotradesecretsare
decidedintheProvinceofQuebecinaccordancewithcivillaw.Inthe
absenceofawrittencontractualdispositionforbiddingthedisclosureanduse
ofTradeSecretsorconfidentialinformation,sections1024,1053,1065and
1484oftheCivilCodewillbeapplied.Theyreadasfollows:
Art.1024.Theobligationofacontractextendsnotonlytowhatis
expressedinit,butalsotoalltheconsequenceswhich,byequity,
usageorlaw,areincidenttothecontrat,accordingtoitsnature.
Art.1053.Everypersoncapableofdiscerningrightfromwrongis
responsibleforthedamagecausedbyhisfaulttoanother,
whetherbypositiveact,imprudence,neglectorwantofskill.
Art.1065.Everyobligationrendersthedebtorliableindamages
incaseofabreachofitonthispart.Thecreditormay,incases
whichadmitofit,demandalsoaspecificperformanceofthe
obligation,andthathebeauthorizedtoexecuteitatthe
debtor’sexpense,orthatthecontractfromwhichtheobligation
arisesbesetaside;subjecttothespecialprovisionscontainedin
thisCodeandwithoutprejudice,ineithercase,tohisclaimfor
damages.
Art.1484.Thefollowingpersonscannotbecomebuyers,eitherby
themselvesorbypartiesinterposed,thatistosay:
Tutorsorcurators,ofthepropertyofthoseoverwhomtheyare
appointed,exceptinsalesbyjudicialauthority;
Agents,ofthepropertywhichtheyarechargedwiththesale
of;
Administratorsortrustees,ofthepropertyintheircharge,
whetherofpublicbodiesorofprivatepersons;
Publicofficers,ofnationalproperty,thesaleofwhichismade
throughtheirministry.
Theincapacitydeclaredinthisarticlecannotbesetupbythe
buyer;itexistsonlyinfavoroftheownerandothershavingan
interestinthethingsold.
a)Contractlaw(non-disclosureagreement,userestrictions,etc.)
Generally,undertheCivilCode,anycontractnotcontrarytopublicorderis
validandbecomesthelawoftheparties.Contractswithrespecttonon-
disclosureanduserestrictionsarethereforevalidandenforceable.Restrictive
covenantswithrespecttonon-competitionafteremploymentmustbe
reasonableandrestrictedintimeandspace.
b)Equitabledoctrinewhichcreateimpliedobligationofconfidentiality
(fiduciarydutiesofbusinessparters,etc.)
InPositron,Mr.JusticeBironrepeatedtheprinciplethatonlysuperiorofficers
andexecutivepersonnelofacompanyare,outsideofanycontractual
obligations,heldtoanimplicitfiduciarydutyrequiringloyalty,goodwilland
absenceofconflictofinterest.Thisprinciplewasspecificallyanalyzedbythe
SupremeCourtofCanadainCanadianAeroServiceLtd.v.O’Malley1
1
.Mr.
JusticeLaskinexpressedhisviewsonthematterasfollows:
“Inmyopinion,thisethicalruleprohibitsanyexecutiveorsuperior
officertousurpforhispersonalprofitortoprovideanotherperson
orcompanyinwhichheisapartner,abusinessopportunitythat
hispresentcompanyisactivelypursuing;thisprohibition
continuesevenafterhisresignationorshenitisreasonableto
suspectthathisresignationisinfluencebyaprojecttoacquire
thebusinessopportinitypursuedbythecopmanyandwhenitis
hispositioninsidethecompanythatbroughthimtoknowofthe
businessopportunityonwhichhethenactedupon.”[translated]
TheQuebecCivilCodeformallyrecognizestheaboveprinciple.Section1484
prohibitsappropriationbyadministratorsortrusteesoftheproperty
administeredforothers.InMontourLtéev.Jolicoeur1
2
,Mr.JusticeGuthrie
acknowledgedthat”…thelegalconceptsuponwhichtheCanaerodecision
isbaseddonotformpartofthecivillawofQuebec.”.However,headded
thattheethicalyardstickestablishedbyMr.JusticeLaskin”…canbeusedin
mesuringtheobligationoftheprudentadministratorreferredtoinarticle1710
C.C.”.
c.Theemployer/employeerelationship
i)Covenantnottocompete
Covenantnottocompete,ifreasonableandlimitedintimeandspace,will
beenforcedbythecourts.Intheabsenceofsucharestrictivecovenantor
othercontractualobligationsprohibitingandemployeefromcompetingwith
hisformeremployer,sections1024,1053,1065and1484oftheCivilCodewill
constitutetheapplicablelegislation.
TheCourtofAppealestablishedinLangeCanadaInc.etal.v.Platt1
3
,that
theknowledgeonexperienceacquiredbyanemployeeinthecourseofhis
employment,apartfromtradesecretscommunicatedtohim,cannotbe
subjecttorestraintafteremploymentisterminatedandmaybeusedbythe
employeetotheprofitofacompetitor.
InPositron1
4
,Mr.JusticeBironwrotethatonecannotforgettheexperience
acquiredwhileattheserviceofanemployerandaddedthatitisnot
forbiddentousethisgeneralknowledgerelativetotrademethodsand
organizationtothebenefitofanotheremployer.Anemployeewhichhasnot
signedacovenantnottocompeteshouldnotbeheldtothesame
obligationsasonewhodid.However,anex-employeemustnotusedthe
propertyofhisemployer,beitmaterialorintellectual.
Whenanemployeehassignedacovenantnottocompete,heisheldto
explicitcontractualobligations.TheSupremeCourtofCanadainMaguirev.
NorthlandDrugCo.1
5
,hasestablishedreasonablelimitstosuchcontractual
obligationsnottocompete:
“Theinformationandtrainingwhichanemployerimpartstohis
employeebecomepartoftheequipmentinskillandknowledge
oftheemployee,andsoarebeyondthereachofsucha
covenant.Thecovenantinanyeventmustnogofurtherthanis
reasonablyadequatetogivetheprotectionthatistobe
afforded;ifitgoestoofaroristoowide,eitherastotimeorlace
orscope,itwillnotbeenforced;andifbadinanyparticular,itis
badaltogether(
15)
.”
ii.Impliedduties
Theinformationcollectedbyanemployeeduringhisemploymentwillbe
moreorlessconfidentialdependingonthenatureoftheinformationitself
and,thewayitshouldbetreatedwillvaryonthecircumstancessurrounding
theiruse.
FaccendaChickenLtd.v.Fowler1
6
establishesthethreecategoriesof
informationaccessibletotheemployee.First,thetrivialthingswhichiswithin
thereachofanyinterestedindividualdonotrequireanykindofprotection.
Next,theconfidentialinformationdescribedinthesecondcategoryof
Faccendamustremainsoduringtheentiretimeduringwhichemployment
existsbecausethereisanimplicitloyaltyclauseinanyleaseandhireofwork.
Thisprohibitsanemployeetogiveprivilegedinformationtoacompetitor.
However,oncetheemploymentisover,theuseofskillandknowledge
acquiredwiththeformeremployerisallowedevenwhenindirect
competition.
Finally,theonlykindofinformationsprotectedevenaftertheterminationof
workwithanenterpriseareinformationslikenedtotradesecrets,whichare
propertyoftheemployer.
Asmentionedearlier,thePositroncaseimportedtheseprinciplesinQuebec
caselawontradesecrets.
iii)TheSpringboardTheory
Inthefieldofprotectionofconfidentialinformationandtradesecrets,itis
importanttomentiontheemergenceinQuebecoftheSpringboardtheory.
ThistheoryhasbeenexpressedasfollowsinTerrapinLtd.v.BuildersSupplyCo.
(Hayes)Ltd.1
7
:
“…apersonwhohasobtainedinformationinconfidenceisnot
allowedtouseitasaspringboardforactivitiesdetrimentaltothe
personwhomadetheconfidentialcommunication,and
springboarditremainsevenwhenallthefeatureshavebeen
publishedascanbeascertainedbyactualinspectionbyany
memberofthepublic…Thepossessoroftheconfidential
informationstillhasalongstartoveranymemberofthepublic…
Itis,inmyview,inherentintheprincipleuponwhichtheSaltzman
casereststhatthepossessorofsuchinformationmustbeplace
underaspecialdisabilityinthefieldofcompetitiontoensurethat
hedoesnotgetanunfairstart.”
Whenconfidentialinformationortradesecretshaveleakedtoacompetitor,
theapplicationoftheSpringboardtheorywillprotectthe”headstart”ofthe
ownerofthisinformationandtradesecretsandwill”setback”thosewho
illegallyobtainedaccesstotheinformation.
TheQuebecSuperiorCourtinPositron1
8
clearlyrecognizedtheexistenceof
thistheoryintheCivillaw(throughtarticle1053oftheCivilCode),but
criticizedthefactthatitisappliedtoobroadlyandtoooftenwithout
discernment:
“…theCourtconcludesthattheSpringboardtheorytriesto
counteradishonestconductortoprohibitanactioncontraryto
theproverbial”reasonableman”behavior.Oursection1053of
theCivilCodeallowstheapplicationofthistheoryinourlaw,but
onlyinthislimitedcase.ThisCourtisnotpreparedtogofurther.”
[translated].
ManycasesinQuebechaveappliedthistheoryinaveryvagueand
imprecisemanner1
9
.Ineffect,thecourtshaveusedtheSpringboardtheory
asanequitymeasurewhentheimmoralbehaviorofthedefendantwas
shocking.Accordingtocertainauthors1
9
,inmanycaseswherethetheory
wasapplied,therealissuewasabreachinthefiduciarydutyofakey-
employeeasdescribedinCanadianAeroServicesLtd.v.O’Malley.
v.Remedies
InQuebec,basedonsections1053and1065oftheCivilCode,theremedies
usuallyseekedinacaseofillegaluseofatradesecretorofconfidential
informationareessentially:
-apermanentinjunction
-damages
-deliveryupofalldocumentscontainingconfidentialinformations.
NorecoursesinequityareavailablebeforetheQuebeccourts.
vi.WrittenproceduresandtheprotectionofTradeSecretsandconfidential
informations
InQuebec,nojudgementhasdelineatedtowhatextentaplaintiffneedsto
describetheconfidentialinformationortradesecretsinhiswritten
procedures.AccordingtotheCodeofcivilprocedures,theminimalcontent
ofthestatementofclaimshouldinclude:
1.anallegationthattheplaintiffpossessesatradesecretorconfidential
informationandaprecisestatementofthereasonswhyitshould
qualifiedassuch;
2.anexplanationofthecircumstancesinwhichthedefendanthasbeen
exposedtothisinformationandanexplanationoftheillegalusemade
thereof;
3.theremediessought.
Thecourthasadiscretion,inthesecircumstances,toorderthatallpleadings
andportionsofthediscoveriesrelatingtothetradesecretsorconfidential
information,otherwisepublic,besealedandkeptconfidential.Thissolution,
farfrombeingperfect,allowsminimalprotectionoftheplaintiff’sproperty.
**********
1.QuebecAct,14Geo.III,c.83(1774)(U.K.)
2.VaporCanadaLtd.v.MacDonald,(1976)7N.R.477;PositronInc.v.
Desroches,1988R.J.Q.1636;seealsoSection92(13)oftheBritishNorth
AmericaAct,30-31Vict.,c.3(1867)(U.K.)
3.VilleSaint-Laurentc.Marien,[1962]S.C.C.580,at587
4.VAVER,David,”WhatisTradeSecret?”,TradeSecrets,TheLawSociety
ofUpperCanada,Ed.byRogertT.Hughes,Toronto,1990,pp.1-41,at4
5.[1949]C.P.R.143,at149
6.[1988]R.J.Q.1636,at1653
7.(1986)1AllE.R.617,at623
8.Supra,note6,at1653
9.Supra,note7,at624
10.Supra,note6,at1650-1651
11.[1974]S.C.C.592,at607
12.[1987]R.J.Q.1323,at1327(Que.S.C.)
13.(1973),9C.P.R.231(Que.S.C.)
14.Supra,note6,at1652
15.[1935]S.C.C.412,at417
16.Supra,note7,at623-624
17.[1967]R.P.C.375,at377
18.Supra,note6,at1658
19.SeeLangeCanadaInc.v.Platt,(1973)9C.R.P.231(Que.S.C.);Santé
NaturelleLtéev.ProduitsdenutritionVita-formInc.,(1985)5C.P.R.548;
MontourLtéev.Jolicoeur,[1987]R.J.Q.2482(Que.S.C.)
20.GUAY,François,”Laprotectiondessecretsdefabriqueetdes
informationsconfidentielles”,Développementsrécentsendroit
commercial,ServicedelaformationpermanenteduQuébec,Ed.
Yvon-Blais,Cowansville,1993,pp.167-204
ROBIC,ungrouped’avocatsetd’agentsdebrevetsetdemarquesdecommercevouédepuis1892àlaprotection
ROBIC,ungrouped’avocatsetd’agentsdebrevetsetdemarquesdecommercevoué
depuis1892àlaprotectionetàlavalorisationdelapropriétéintellectuelledanstousles
domaines:brevets,dessinsindustrielsetmodèlesutilitaires;marquesdecommerce,marques
decertificationetappellationsd’origine;droitsd’auteur,propriétélittéraireetartistique,droits
voisinsetdel’artisteinterprète;informatique,logicielsetcircuitsintégrés;biotechnologies,
pharmaceutiquesetobtentionsvégétales;secretsdecommerce,know-howet
concurrence;licences,franchisesettransfertsdetechnologies;commerceélectronique,
distributionetdroitdesaffaires;marquage,publicitéetétiquetage;poursuite,litigeet
arbitrage;vérificationdiligenteetaudit;etce,tantauCanadaqu’ailleursdanslemonde.La
maîtrisedesintangibles.
ROBIC,agroupoflawyersandofpatentandtrademarkagentsdedicatedsince1892tothe
protectionandthevalorizationofallfieldsofintellectualproperty:patents,industrialdesigns
andutilitypatents;trademarks,certificationmarksandindicationsoforigin;copyrightand
entertainmentlaw,artistsandperformers,neighbouringrights;computer,softwareand
integratedcircuits;biotechnologies,pharmaceuticalsandplantbreeders;tradesecrets,
know-how,competitionandanti-trust;licensing,franchisingandtechnologytransfers;e-
commerce,distributionandbusinesslaw;marketing,publicityandlabelling;prosecution
litigationandarbitration;duediligence;inCanadaandthroughouttheworld.Ideaslive
here.
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