Managing your VR/AR IP portfolio during COVID-19

Roch: Hi everybody. Thank you for coming to our webinar today. My name is Roch Ripley. I am a partner and lead the Vancouver office's intellectual property group at Gowling WGL and I'm here with my partner, Scott Foster, who heads the litigation group in our Vancouver office. We're going to be talking today about how to manager your VR/AR IP portfolio during a crisis. In particular, during the present crisis, but there is nothing in here that isn't applicable to crisis situations generally. So hopefully it will be a useful topic regardless. Before we get into the subject matter there is, of course, a legal disclaimer. The presentation today isn't intended as legal advice. It's a high level overview. It's impossible to cover all the relevant details and available rights and remedies will depend on the unique facts of each situation. If you need specific advice please consult with your qualified legal counsel before making any decisions or taking any action. As you know the situation is extremely fluid and changing on a daily basis. Things evolve. Your best course of action could also evolve. Please follow up to date and reliable sources for your information. I'll also mention now that you do, through Zoom, have an option to ask questions. The questions you ask will be seen by us only so please feel free to ask and don't be concerned or shy about other people seeing those questions.

I'd like to start first by asking us all to imagine a world where COVID-19 isn't the front page of every newspaper and isn't at the forefront of everyone's mind. Very similar to where we were at this time last year but with one important difference. The difference being that the world and industry have a greater appreciation and understanding of the importance of VR/AR technology. Because that's where I think we're going to be, eventually. It may be 1 year. It may be 2 years but eventually the crisis will pass. But what will not pass is the understanding that we live in a world that, by virtue of technology, allows us to do things and to interact with each other, virtually. In order to achieve the full benefit of that we need to make use of the VR/AR technologies. I think we're seeing that now, day in and day out. We see it in the retail space. A shout out to Alex's article, "How AR can be the answer to plummeting retail sales during a lockdown." And it's not going to be just during the lockdown. I'm sure these technologies are going to be prevalent after as well. Work from home. Scott and I are presenting from home. That is going to be as prevalent as after. We'll go back to our offices but not to the same degree. Personal services. Even gyms are now more virtual. I could have gone on and on. Health care, teaching, you name it the sector has been impacted. So, when this crisis passes there's going to be much more, I think, of an appreciation and need and interest in these VR/AR technologies. So that leads us to our topic today. We're going to be talking about how during this crisis you can manage your IP rights so that when it passes and the world is ready again to engage, at full tilt, at a level even greater than before the crisis in these technologies. You won't have inadvertently shot yourself in the foot or done something that can permanently prejudice your IP position. I'll be talking about patents, designs and trade secrets and Scott will be talking about copyright, trademarks and litigation.

In terms of context, like I said, the crisis will pass. It hasn't yet so we understand that cashflow now can be uneven or uncertain. Even if cashflow isn't uneven or uncertain right now it can be prudent, just in any crisis, to conserve cash for expenses, payroll or liquidity. The crisis has an indeterminate but it will so you don't want to do anything now that permanently harms you, going forward, and hurts your competitive position when things do go back to normal. Any investor or acquirer is going to examine the actions you take during this crisis to defer costs, to assess whether those actions have resulted in any kind of hangover, so to speak, that could prejudice your evaluation. We certainly don't want that to happen especially if the world is taking a greater interest in your technology afterwards.

One complicating factor about giving a presentation for VR/AR is that the industry is very, very diverse. It's diverse in terms of sectors. We saw it a few slides ago. Health care, education, retail. It's diverse in terms of technology. It covers everything from a relatively simple IOS app that uses ARKit to very complex hardware/software platforms that are licenced and sold to millions of people worldwide. The presentation can't, in detail, cover all those situations but we will be identifying particular examples as we give the presentation in an attempt to give it some life. If there's a particular situation that you want to talk more about we encourage you to ask in the questions.

Another characteristic of the industry is that it's worldwide. There's no jurisdictional limitation to who is interested in VR/AR technology. Quite the opposite. One reason why it is so important is because it connects us across borders. The implication that has, for the law, is that it raises jurisdictional issues. Even though intellectual property rights are to a great degree harmonized, they are not entirely harmonized, and there are important differences between jurisdictions. You want to be aware of those when you're making decisions now to make sure that an action you take that may be fine in one country, like Canada, doesn't end up prejudicing your rights in the United States. Because certainly an investor would take notice of that.

So who are we talking to? I think, by and large, this presentation we are directing towards privately held companies, SMEs, with a view to generate in preserving value for future investment or acquisition. Now, because of the diversity of the industry, of course there are companies that don't fit this bill. You're going to have start-ups that are just very, very nascent and you're going to have massive companies, like Facebook or Microsoft, that are working on their own technologies. But we're shooting here for, I guess, that big middle where you've got a company that you're not public, you've got a good product, you've been operating for a while, you've got some developed technology and you want to preserve those rights. If you're a giant company like Facebook or Microsoft, feel free to contact us, we will give you your own customized presentation, but this presentation right now is for that big fat middle of the industry.

The overarching them of the presentation is that a failure to protect your IP means that you've donated your technology to the public. Now, that's something I think that often is unappreciated. You can have a fantastic product. It may have taken hundreds or thousands of hours and dollars to create. But if there are no IP rights in it there's nothing to stop any competitor, or any person out there, from taking the product, copying it, competing with you and shaving dollars off your margins and using the hard work you put into the product, for their own gain. That's the importance of IP rights, and in particular, during a crisis, if you're trying to save time or money, you may inadvertently take an action that prejudices your rights. Which means you're protected today but you may not be protected tomorrow, which of course, would be a terrible position to be in. But there are smart and subtle ways that you can save costs and time without permanently, at least inadvertently, prejudicing your rights. If you need to do that at least go in eyes wide open.

I'm going to start with patents. Patents protect functionality. They can protect hardware, software, a mixture of both. So in the VR/AR context you can protect hardware such as headsets, goggles, swim goggles. You can protect software, for example, rendering, engines, applications. You can protect a combination, for example, an integrated device. You can have goggles or a headset with integrated firmware. Patents protect functionality in all those forms. In order to get a patent your innovation has to be new. No one else can have done the same thing. But new also applies to your own disclosures. So that's why the best practice is that you file a patent application for an invention before you publicly disclose or commercialize that invention. Because if you were to sell or commercialize or publish your invention, and then try to patent it after, your filing isn't new relative to your own disclosure. If you file before any disclosure, commercialization you're basically going to be fine around the globe. But filing costs money. It takes time and it may not be possible in the current crisis. If that is the case, you should know that certain countries offer what are called patent grace periods, that permit you to patent an invention, even after you publicly disclose or commercialize it. You may be able to being commercializing a product without incurring up front patenting costs or, after the fact, if you have commercialized without turning a mind to patenting, that doesn't necessarily mean you won't be able to patent after the fact. Now, they can be a little tricky. One, the downside is that grace periods don't protect you from third party filings. They only protect you from your own disclosure. So if you delay filing, and during that period you delay a third party files for their own patent, they may beat you, well they would have you beaten you to the patent office, and by virtue of that may be entitled to get that patent instead of you. Also, grace periods are an area of law where there's a lot of variation between jurisdictions. So most countries don't have. Importantly, those that do include countries like Canada, the United States, with its 20 trillion dollar economy, at least that's what is was before COVID, and Australia. Each of them offer a 1 year grace period for patents. Some countries only offer shorter periods. Some countries offer only 6 months. You need to remember that if you want to take advantage of a grace period it's not going to be 1 year or 6 months across the board. Some jurisdictions that offer them only offer them under extenuating circumstances. So, in Canada and the US you don't need to justify why you're using the grace period. But in Europe, for example, you do. In Europe you can get a 6 month grace period for breach of trust. So for example, you may have disclosed your invention confidentiality to a third party and that third party breaches the terms of a confidentiality agreement. That may get you access to the European grace period. In some places you also need to disclose that you're using a time of filing and actually apply for and provide proof. In Japan and Mexico, for example, you need to positively invoke the grace period when you file. It's not enough just to have in the back of your mind this is a grace period filing. You need to declare it. Also, in some places you need to actually file in the country you want to invoke the grace period for whereas, in other countries you can defer costs by filing in a different country first and then filing in that country later. I'll get to that a little bit later when we talk about provisional applications but it's something to remember in terms of stringing along costs. With grace periods you may be able to get an initial grace of 6 months or 1 year but you may not be able to further string that along by using tools like provisional applications which I'll discuss a bit afterwards.

So provisionals, which I just mentioned, they allow you to secure a filing date relatively inexpensively. Why is that important? Well, I mentioned that in order to get a patent your invention has to be new. The question naturally arises, new relative to when? The answer is your filing date. The benefit of a provisional application is that they're relatively inexpensive to actually file. Now there's a difference between preparing the application and filing it. Right now I'm just talking about the filing costs. The cost of filing provisional at the US patent office is only a few hundred dollars and you can compare that to a regular or non-provisional application. That is an order of magnitude more, so a few thousand dollars in fees. The downside is that provisionals aren't examined. So you are saving that money up front but the cost is your deferring examination and consequently patent grant. So you do need to make that decision. Is saving the money through the decreased filing costs worth a deferral in examination in grant? If you're more aggressive you can also, perhaps, save on drafting costs by filing a provisional that may not fully flesh out and describe the invention you want to protect at the end of the day. Now, this is quite risky and it's something that I see done often but I don't know if people necessarily appreciate the implications of doing it. For example, here when you file a provisional that gets you, by virtue of International convention, 1 year of deferral at the end of which you need to file a non-provisional or a regular application. So here you can file a provisional at day one, and I've used an example that AR augmented retail store, and that's directed to save money. This hypothetical person prepared it only for a store that sells clothing, let's say, where you can vary fabric. But maybe you can't vary sizing. Or you can't vary clothing type. And then during the course of that year deferral the patent application actually deploys the store. The store goes live. The store goes live with it's full suite of functionality. So not only can you change fabrics but you can change sizing. You can change clothes. Then at the end of that year the patent applicant files a non-provisional application in Europe, claiming protection for the retail store with it's full suite of functionality. Now, this is sort of a classic example where that European patent application may not result, in fact I would say with the facts I've given, wouldn't result in broad protection for the store, generally. Because the first filing only discloses a store where you can vary clothing by fabric. The full suite of functionality wasn't described in the first filing, and in Europe and other jurisdictions like China, they apply quite a strict test when it comes to how much you're allowed to generalize your invention. So here, the way to get around this would've been to file, as a US provisional, a full application up front. That would've gotten you, not the cost deferral in terms of drafting, but the cost deferral in terms of filing and then the European application would have been valid, or rather not invalid, at least by virtue of your own disclosure. This is an example where jurisdictional issues come into play as well. So using the example on the screen, where the provisional is narrow and the European application is broader, and arguably invalid, the ... wouldn't have been an issue for this reason in the United States because of the grace period. So you can end up in a situation where you inadvertently have to track, for the same application, claims of different scope in different jurisdictions which can be a real pain to explain to investors.

PCT applications are another tool for deferring costs. So here, building on the example I just gave, you can file a US provisional application at day one and let's presume, again, it's a relatively narrow application directed at an AR augmented store where you can vary clothing by fabric type. You get your year of cost deferral. At the end of that year you file what's called a PCT application, Patent Cooperation Treaty, which gets you two things. It gets you another year and a half of cost deferral before you have to actually file in jurisdictions like Europe or the US, Canada, and it also gets you roughly 4 months from filing, an initial patentability opinion from a patent examiner. So before you actually spend the money that year and a half later you'll have in hand a search opinion from an examiner telling you what he or she things of the patentability of your technology. So in this example, we've got the narrow US provisional, the PCT is a fully flexed out application, the AR store with all it's functionality, after the PCT filing the store goes live, and then after the store goes live this person has filed nationally. For example, Europe, the US, what have you, and here because the PCT application was on file before the store goes live, there's no issue with respect to the store going live prejudicing patentability.

I mentioned grace periods earlier in the talk. By filing a PCT, the general rule, if you need to file in an actual country to get the benefit of a grace period, the PCT is deemed to be a filing in that actual country. So if you have a grace period filing, you file the PCT, that's deemed to invoke the grace period. Now, contrast that with the US provisional, that may not necessarily be deemed to invoke the grace period. So, again, a good example of this is Canada and the United States. In Canada, to get the benefit of the grace period, you actually need to file a Canadian application. In the US, you don't. You can rely on a non-US filing to invoke the grace period. Every so often we'll get people trying to file in Canada based on the US rules and the answer is it's too late. So, if they'd filed a PCT that would have entitled to them to the grace period in both countries, not just one.

Extensions of time are another way to defer costs. So, many IP offices around the world, right now, are offering COVID related extensions. Just yesterday the Canadian office announced an extension of its extensions to the end of May, and as indicated, that it may further extend deadlines as the need arises. The US also has extensions in place until June and these offices talk to each other and coordinate. It is a pretty good chance now that if you have IP deadlines, not just patent deadlines, but IP deadlines before an IP office somewhere on the world, then you may be able to benefit from COVID related extension and you should check that out. Apart from COVID, as a general rule, lots of offices also offer extensions of time in the normal course. Now you're not usually going to get something like a year but you may, by virtue of paying a few hundred dollars, be able to buy a few months of time and that may be what you need.

Culling. A crisis can be a good time to revisit your portfolio. You may have filed a suite of applications for a product that went live 3 or 4 years ago and that product hasn't done like you had hoped it would. So, it may be a good time now to cull, or let those applications go abandoned, which would at least save you maintenance fees which typically have to be paid annually for every patent application you filed. You can even decide to cull before filing. You may have a whole list of innovations that you're considering patenting, and of course, when you go through them and weigh them by technical and commercial merit, you're in a crisis, the threshold you apply may be a little higher than normal. So you may decide to keep some of those innovations a trade secret, or try to keep them a trade secret, as opposed to filing for them. We'll be talking about trade secret protection a little more.

Commercialization without publication. I mentioned earlier you need to have an invention that his new to get a patent for it. You may be able to commercialize an invention in a way that doesn't publish it thereby allowing that invention to retain its novelty so that if you want to patent, even after commercialization has started, that can still be an option. For example, you may have a service, for example, 3D rendering. Now, maybe your initial plan was to package this software up and ship it which would have been a public disclosure, most likely, but you may be able to pivot and offer that software as a service. People can log in, perhaps use a set of API's, supply with you data, receive the output of the rendering without actually knowing how the rendering takes place. Now in some jurisdictions that may allow you to still patent the software after it goes live. Something you need to be very careful about, the United States in particular, treats commercialization quite harshly when it comes to patenting. So I would certainly, if this is a technique you're thinking of applying, revisit before the expiry of any grace periods, whether or not you should be filing applications. Of course this is not going to work for all types of products. If you're selling goggles, or another piece of hardware, it is pretty much impossible to commercialize on a large scale without actually disclosing or selling that piece of hardware.

One thing I want to mention before we leave patents is one thing not to defer is papering ownership. So, if you are paying developers or contractors to create for you, you want to make sure that you have, in writing, ownership clauses that say the ownership vests in your company. This can be something that's very difficult to correct after the fact. Especially if you're about to get a round of financing in, and it's discovered that you don't own all your IP, and the person who does is fully aware that you're about to get some money in. Suddenly the IP is much more valuable to them and it could cost you a lot more than if you deal with it from the outset.

So designs, designs protect the appearance of articles. So you may have, for example, a headset or handset that is novel in appearance, as opposed to function. What I said in respect of grace periods, and PCT applications, and extensions of time and culling are they have analogs in the design work. Just like with patents designs often benefit from grace periods in particular jurisdictions. Now keep in mind that patent grace periods and design grace periods, even for the same jurisdiction, often are not the same. If you are relying on a patent grace period check also what the design grace period is for that country and do not presume it's the same grace period. The design version of a PCT is called the Hague Convention. So you could file a Hague application in contrast to a PCT and extensions of time in culling what I said for patents applies here to. There is no provisional application for a design so that's not going to work. You can't commercialize without publishing a design. The entire value proposition of a design is that people like it because they can see it and it's esthetically pleasing. By definition, if you commercialize it, it is available to the public. In the US only, one thing to remember is that you can actually start the design patent process with a utility patent. So for example, going to the headset or handset example I used, you may have a utility patent protecting how the headset or handset works. In the figures for that utility patent you've depicted how it looks and it's a novel design. During the lifetime of the utility patent application in the US you can actually file a design patent application claiming the benefit of the utility. That doesn't work anywhere else but if you're in the US it's something to keep in mind.

Trade secrets, now. This is the flip side of patents. So, whereas with patents you need to actually publish how your invention works in order to get protection for it. For trade secrets, the value of lies in the secrecy. You need to keep it secret in order to retain protection for it. The secret information doesn't have to be technical in nature like it typically is for patents. You can keep as secret business plans, or customer lists, or non-technical information that nonetheless is valuable. You need to take reasonable steps to keep information confidential in order to qualify for trade secret protection. So reasonable steps can include, or should include, confidentiality language papered in agreements with employees and contractors, other people who may have access to your information. IP and physical security, you don't want to let anybody wander through your premises of course, and you want to make sure that your systems, to a certain degree are protected from electronic intruders, and appropriate confidentiality policies. If someone is coming in for a tour, for example, you don't want to allow them to have unfettered access to all areas of your business and, as a general rule, you only want to share information on a need to know basis. If you don't do this you may find a court doesn't actually recognize what you thought was confidential information as confidential because it will conclude you did not treat it as such. Now the benefit of keeping information as a trade secret is that once you have this framework in place the incremental cost of protecting new information is low. It falls in to the existing framework. Now that's in contrast to patents, where the incremental cost of protecting an invention is relatively high, because you have to prepare and file an application for it. Again, I want to emphasize that for trade secrets you can't put smoke back in the bottle, as a general rule, so again this is something where you can't defer certain aspects of your spend. If you want to rely on trade secret protection, you want to make sure you've got that framework in place, because if a court finds that you're information isn't confidential, it's not going to then find that it magically has become confidential again.

Now I'm going to transition to Scott to allow him to talk about trade secrets. Scott, I just handed control to you.

Scott: Thank you, Roch. Yes, it just takes a few seconds. So thank you, Roch. This is a nice transition part of the presentation because I'm going to talk about trademarks and copyright, and many of the things that Roch has explained apply in terms of extensions offered by various trademark offices, and they're the same as the patent office. Canada's got a comprehensive intellectual property office that deals with patents, designs, copyright and trademarks and so when one is extended we've seen that everyone's been extended. So I'll be able to go through that quite briefly. Where I'm going to focus on at the end is the issue of litigation. I'm not going to go into it in very much detail because we don't need it for today. But what I want to convey to you is that, again, the courts and the government has recognized that this COVID crisis is a very, very significant event and what they're doing is they're making it easier for companies or litigants, ... litigants and personal litigants, to get access to the court at the right time. Whereas, previously there was very strict deadlines, we've now seen a relaxing in that. The emphasis that I want to convey now is that business can carry on as usual. If you want to keep filing your trademarks, your copyrights, even your patents, you can do that. There is no obstacle to that. The trademark office is open, the copyright office is open. However, if money is tight or you want to take some time to think about the direction of your company, you can use this time to decide what IP you want to focus on and delay some costs where necessary to achieve the balance you need from your revenues versus your outgoings. I am going to see if I've got control of the webpage which I think I do now.

I'm going to start with the trademarks and then I'm going to go to copyright and then I'm going to deal with just general litigation. We all understand what a trademark is. I've listed here, on my slide, the top six, I think, trademarks by brand, value in the world as reported by Forbes last year. It's a very interesting website. If you look down you'll see most of the brands you know are on the list. There's no doubt we all recognize these brands. One of the goals of any company is to get strong brand recognition. You want to use that recognition to help you drive sales and further your business. So that's something that a trademark does. If you put your trademark on something a customer will know that you stand behind that. They bought product A last year, product B is out, offered now, they enjoyed the experience they had with product A so they'll go with product B. So trademarks are incredibly important in technology industry. It helps you to distinguish your product from a competitors product. Particularly in crowded fields. It also is a shortcut for a consumer because consumers might not know, there are sophisticated consumers, but a lot of consumers, like myself, will know more about the brand and the general technology then the specific differences. So if you've got strong brand recognition in your field you have a commercial advantage over others. The benefit also of having a trademark is that you can stop competitors, or counterfeiters, from trying to use your trademarks to sell false or fake products to their customers, or to your customers pretending that they are you. One of the real benefits I see as a litigator is a trademark can be used to stop counterfeiters and competitors from using similar or identical trademarks in your industry and stealing your customers away. The other real benefit of trademarks are they are an asset of a company. If you have a registered trademark for your important name or brand and you've taken the time to do that, it shows one, you're a sophisticated company and when a company approaches you to try and acquire you, or you're going to try and do an IPO in a few years time, being able to show a sophisticated trademark portfolio, or even just that you secured the one most important trademark for your business, shows value to the transaction and shows value and sophistication in the way you run your business. So trademarks are useful. That's the long and the short of it. They're also valuable but they do cost money. So want to talk to you a couple of opportunities you have to defer some of these costs or actually not even incur some of the costs.

I'm just trying to move the slide on now, Roch. There we go. Okay. So, one of the things you can do is you can delay applying for an application. This is a simple thing to do. You won't have to incur any costs because there are costs with getting a trademark registered. You have to file an application at the trademark office. It takes a couple of years, sometimes, to get your trademark through the office, if you are successful in getting it through. And there's fees that you pay the intellectual property office to file and at the various steps in the prosecution of your trademark. So all in all it costs around 7 or $800.00 to file your trademark application. If it's a very simple application and it goes through very smoothly you might have to pay $2,000.00 over the span of about 1 to 2 years. So it's not a significant cost but it is a cost. If you decide not to file a trademark application then you don't have to pay any of those costs. That's an immediate saving from your balance sheet. Great. But I just want to highlight a couple of risks of this. The first one is that if you delay filing an application and someone else in Toronto, who you've never heard of, files a similar or identical application to the one that you're currently using, the mark you're using in Vancouver, when you come to register in a couple of years you might find actually you can't, because someone else is ahead of you on the register. The costs of getting that taken off the register, if even you can get it off the register, are significant because you're going to have to go through the courts. Here we're talking about the balance between deferring some costs now, and carrying some risk in the future, that by delaying someone else will get a steal on you. So you just want to be careful here and I wouldn't recommend this for any key core brands, like your company name or your primary logo, but if you've got secondary or third or tertiary levels of trademarks that sit under your house brand, these are ones you should probably consider deferring if you are short of money for the time being.

On the slide you'll see there's a second bullet point which is common law rights. Common law rights are a trademark right that's been around for quite literally thousands of years. The earliest examples are blacksmiths who made really good quality swords, and they put their initials on the swords that they had made, and in battle some swords broke and the good swords didn't break, and obviously in battle you want to have a good sword, so that blacksmith's initials became an important of mark of respect and quality. So people started going to buy their swords from that blacksmith rather than someone else. The essence of a trademark is something that helps you to display to your customers that you made this product or you endorse this product. As I said earlier, you can get a registration for it. However, you don't need to. Just through your use of a trademark over time you can acquire goodwill and a reputation in your brand or your mark. That goodwill or reputation has been enforceable and protectable for a long time. Long before we even considered registered trademarks. It's a simple process whereby, if you can convince a court that someone else trading in your area is using a similar or identical name or trademark to your reputation, and they are stealing your customers because of that, or your customers are getting confused and you're losing trade, you can actually take steps through the court to have that ... use the infringer stop. I did a trial on this 3 or 4 years ago and we were successful in convincing the court that someone was passing off on our client's trademarks. You don't have to pay the registration fees to get a registered trademark. You can rely on this common law of right. There are two downsides as far as I see it to the common law right. The first one is that it only protects, in Canada, where you have a reputation. So if you're only known in Vancouver your rights are only enforceable in Vancouver. If someone happens to start with a similar name in Toronto, and no one in Toronto would be confused between that use and your use, then your rights don't extend that far. That's different to a registered trademark because once you get a registered trademark it applies across the whole of Canada. Even if you only operate in Vancouver, if someone in Nova Scotia starts using an infringing trademark, you can take steps to stop them even though you've never ever been to Nova Scotia, or have no customers in Nova Scotia. So that's the first risk of relying on the common law right. You really just get protection in your geographical location. The second one is, like the first example I gave you with registered trademarks, is that while you're relying upon your lovely common law rights and reputation in Vancouver, someone actually files an application in Toronto, they're based in Toronto, and they file an application and they get a registered trademark for your very name or brand, and lo and behold they actually turn up on your doorstep a few years later and try to stew you for infringement saying you're infringing their trademark. This happens. It's not a are occurrence. It does happen quite frequently. Obviously there are steps you can take and the law does not allow someone to stop you using a trademark if you've used it before them, but then you are in an expensive legal fight, and I can tell you they are expensive, that you would not necessarily be in if you just took steps to register your trademark. So if I summarize trademarks by saying you can defer some of the costs. Certainly if time and money are limited at the moment. The only thing I would say is don't do it if your primary or important trademarks, and be prepared to carry the cost savings, balance that with the risk that you might not be able to register your trademarks later. But there are certainly cost saving opportunities available through those two options.

Now, the penultimate thing I want to mention on trademarks is the Madrid Protocol and I'm going to deal with this very briefly. This came into effect in Canada in June 2019 and essentially it is a system to allow you to file for trademarks abroad. So outside of Canada using a simple process that is a little like the PTC system that Roch mentioned for patents. In effect you file one application to an institution called WIPO in Geneva and they will prosecute the trademarks, to take steps to put them into every trademark office around the world that you've selected. It's generally seen as a cost effective way compared to doing it individually with each country. And, indeed, that's what you had to do in Canada before the Madrid Protocol came into effect, which was you had to contact each foreign office individually and take steps in each office. So that is one way to save some costs if you're going to file for trademarks abroad and that's a nice opportunity in Canada now.

The last point I'm going to make on trademarks is very simple. It's the same as what Roch has said. The trademark office has extended all the deadlines that fell between March 16^th and now to June 1^st, so you can save money by not needing to take any steps there. If you want to, someone's moving my slides a little, if you want to cull your trademarks now's a good opportunity to look if there's anything that you don't want to spend money on.

Roch: Scott, sorry, that was me. <laughter> A question came and it was relevant so as I was unmuting I inadvertently distracted you. Here's the question. The question is how much does it cost to trademark for just Canada?

Scott: Okay. Assuming it goes through very easily, the cost of an application in Canada is it depends on how many classes of goods and services you pick for your trademark. The cheapest is if you pick one class of goods or services and a class of goods or services is a defined type of goods or services that you put in your trademark application. If it's a very simple application with one class of goods or services, you could expect the cost to be about $1,600.00, and that includes government filing fees and legal fees or trademark agent fees. It obviously gets more expensive if you make more complicated applications, or if some person challenges your application at the trademarks office through a process called opposition, then it becomes unknown and uncertain. But those are about the standard fees.

I'm just going to move on now. We're running out of time. Roch, are you able to move on the slide? There we go. Thank you, Roch.

Roch: No, you did that.

Scott: Okay. I did that. Thanks, Roch. So, we all know what copyright is. We hear about books, movies, music, copyright is a wonderful thing that will apply in the VR/AR field extensively, because copyright automatically is generated when anyone creates software code, a visual user interface element, an API structure, a product guide, a manual, all of these things are subject to copyright protection. The great thing about copyright protection is you do not have to take steps in Canada to register it or pay any fees to get your rights. Indeed, because of various conventions, like the Berne Convention, the Universal Copyright Convention, the Rome Convention, and so on and so on, your rights in Canada are immediately enforceable in about a hundred plus countries around the world. So that's great. However, there is one thing which is worth doing, which is considering whether to file an application to register your copyright. Let me just compare it with America. If you don't register your copyright in the United States you cannot take steps to enforce it in the court of law. However, in Canada you can take litigation steps without having a registered copyright certificate. However, there is a defense in the Copyright Act for a defendant who pretends, or maybe it's true that they had no idea that you had copyright in your product or design or code, whatever it is, there is an argument they can make at trial that you shouldn't be able to get damages from them, which is really money, for the loss you suffered and should only be able to get an injunction stopping them from further infringements. So that can sometimes have a deterrent effect on whether you bring litigation or not. The fact of registering makes it very difficult for someone to say that they didn't know you had copyright. It costs about 6 to $700.00 to file an application for a copyright registration certificate in Canada. Here you want to be careful though in the sense of you could end up filing a thousand copyright applications every week. Every time your code is updated or your API structure changes. So there are certain aspects of copyright protected works that are probably not worth seeking registration for. Those are ones where you're constantly updating the work. However, if you create a product manual that you're going to rely upon for the next 3 years, that's a good example because by the time you get your certificate you'll have a couple of years more protection for your work, and you'll have a certificate that says you own the rights in that work. Don't necessarily apply for everything but if you want to register some copyright, think carefully, and you can save some money. But if you don't want to register, and you haven't got any interest in ever litigating in the United States, you don't need to take any steps and you can save money there.

Just like Roch said, and I'm going to be brief now, copyright ownership is important just like patent ownership is important. The Copyright Act has some quirky provisions in it that companies fall foul of quite regularly. The first provision is that the person who authors the work owns the work. Great. So I create so me work at home, I own it. The next provision is if I do that in the course of my employment, my employer owns the work, subject to any agreement to the contrary you have. That's fine. Your employees are creating work for you. Make sure your contracts expressly state that as well so there's no doubt that they are creating work for your company and then you own it. However, if you enter into a contract with an independent contractor, or a third party who isn't an employee, and they create anything for you, whether it's the most important of your code or a product manual that's really essential to you, unless that contract with that third party says that the copyright they create belongs to you, they own it. As you can imagine, the courts in Canada are littered with judgments where someone has spent a lot of money paying a third party to create a very important thing for them, they pay the money and then it turns out the third party actually owns the IP and they can't believe it. Again, you end up in court spending hundreds of thousands of dollars, wasting your time having to fight these lawsuits to get something that you could have owned automatically if you'd put it in a contract. So be careful there and don't ever, even now during COVID or when things get good, don't ever neglect your options here to make sure you own your intellectual property.

I'm now going to just briefly talk about litigation because I can talk about this briefly and then we've got time for some questions. Since COVID kicked off, really in Canada in early March, the courts have been closed except for very urgent matters. Most intellectual property matters are not considered urgent by the court. What they consider urgent is life or death, a child about to be taken out of the country, someone about to be deported to a country where they may be in mortal danger or insolvency matters because it's an unfortunate fact to say, and it's true, companies are struggling at the moment and insolvencies are happening quite regularly. The courts are closed, which is great, in the sense of you don't have to take steps that you would normally do. You can wait and defer your costs. However, if you have something really important, like you found out that a developer has stolen your software code or a competitor has hacked your account and has stolen something, or even a competitor is using your trademarks to destroy your business, you can get into the BC court and the Federal court on an urgent matter now. But if nothing's urgent you can delay it for a bit and not worry. The same thing applies to limitation periods. Now, probably you've heard these terms before, limitation periods. Basically it's a time limit from an event happening to when you have to start a piece of litigation and if you miss that time limit your claim is barred forever. They can sometimes have very drastic consequences in litigation because your case is over you can never bring it. The good news is the BC government took active measures to suspend all limitation periods under all BC enactments so those time limits are not running. So if you had a cause of action that's running, and time was getting towards the end of that 2 year window, in BC, you don't have to do something until the Minister gives you fair warning that you'll need to do it in the future. Two words of warning. If you are worried about limitation periods monitor when, or get your lawyer or agent to tell you when those limitations will come back on line, and the second thing is that a lot of intellectual property rights are not BC based statutes. They're Federal statues and the suspension of the limitation period is only under BC statutes. So if you think you have an IP issue that you need to deal with through the courts speak to your IP lawyer to make sure that the limitation period for your particular cause of action is not about to run out. So, with the very last point to make before I hand it over to Roch, the deadlines in the trademark office that were suspended until June 1 also apply to trademark opposition and cancellation proceedings. So if you were defending one of those, or bringing one of those, you can defer those costs until June and maybe later if the extension happens. That's a nice way of saving some costs just at the short term.

That is a run through of copyright, trademarks and litigation. The last point we want to make is here. I think the slide is very self-explanatory. I'll briefly mention it. Even before COVID, what you spend your money on was a question of how much money have I got, and what do I need and what do I need most? And certainly the same applies now. We hope that we've given you some understanding of where you can save costs, and where you can't, and certainly the risks of trying to save costs. If you are prepared to proceed, and you have the money to proceed with some of these steps, you don't have to wait for the courts to re-open or for the trademark office to re-open. It will accept trademark applications today. It will accept them tomorrow. You just have the benefit of deferring it. So, balance everything. The cost versus the benefit for your business and what your main goal is you're trying to achieve. Use the tools at your disposal to figure out what you can successfully delay and what you shouldn't delay. I'm going to hand it to Rock because he's probably got a couple of comments he wants to make on this slide and then we'll take questions if you have some questions.

Roch: Thanks, Scott. I think we can jump straight to the questions. There are a few, well several, and we're running out of time so we'll go straight there. I will just preface though we do also have an IP outreach program we're deploying with the AR Association, Vancouver Chapter, so if you have a detailed question and want an hour consultation, that's something you can talk to Dan and Alex about and they can refer that request to us.

Some of the questions that have come up, one, as a Canadian company we have access to R&D grants through IRAP and NSERC. We're working with a UK based company that would like to take advantage of our status as a Canadian company and co-develop IP with us and fund the development. IRAP and NSERC require the IP to stay with a Canadian company. How can we structure IP ownership so the UK company also owns the IP while complying with IRAP and NSERC policies? My answer this, I've actually coincidentally the last couple of months had two clients also deal with similar IRAP policies. I don't know the IRAP and NSERC policies chapter in verse, but I will say that co-ownership generally is difficult to pull off properly. Scott and I were, coincidentally, just on a webinar an hour ago where co-ownership can vary dramatically jurisdiction by jurisdiction. I don't really recommend clients do it if there's another option. If you do do it, it usually should be accompanied with a pretty comprehensive contract that governs how rights and enforcement and what have you are going to be governed. So in situation like this I would consider having the Canadian own all the IP, and then give the UK company rights of your licence, as necessary. The answer will depend, of course, on the particular facts but I would start with a licencing arrangement as opposed to co-ownership which I'm really not a fan of embracing.

Scott: Yeah, Roch, if I can just add one point to that. I agree with you. Co-ownership is a very challenging thing in intellectual property because it in the litigation sphere the courts have said co-owners have to act sometimes together and they can't do things separate. So you could end up, just like a bad relationship, you can end up falling out over time and the IP becomes the deadlocked asset in the middle. One way I've seen, in general but not I don't know if it applies to the IRAP and NSERC position, is that you have one company own all the IP and then you deal with the control of that company, or the ownership of that company through shares and the joint venture at the level above. It's more about who owns the company rather than who owns the IP and who controls the company. Now, this might not satisfy the conditions that something be owned by a Canadian company. I cannot give you an answer on that. On that you'd have to speak to a commercial lawyer about. But through a shareholders agreement and the issuance of shares in sort of a joint venture type vehicle, you can probably control or share the asset in a way that isn't splitting the intellectual property into two different ownerships.

Roch: There are two questions here that are related so I'll read them both and then answer them. One, as a service provider looking to become a product company in the future how would we structure our service agreement to share the IP with the client? What are the common pitfalls to look out for and what if we sell the IP to a competitor of the client? And then the related question, do you have advice on service companies working on a project for a client but you decide the IP is worthwhile and developing further, do you own the IP or do they? Well, depends what the contract says. That is the answer. For a situation like this I would say, again at a 30,000 foot level, if you are a service provider and you provide a similar service to many different clients, typically the way I would structure that is the contract says the service provider owns those stock components it has to re-use over and over in order to be able to conduct business. Even if those stock components are created by virtue of any particular client retainer. Now, the client needs to have licence rights to use the IP that is created and you have to agree with the client that that's the way the situation is going to work. Some clients may want to commission you to create something that they will own. That may be appropriate for certain circumstances. But if they're coming to you, and it's one of many similar retainers and you know full well that you need to be able to re-use that work product in order to do your job, I would say the starting position is you own and then licence, and deviation from that certainly happens, and it comes to commercial terms that the parties agree to. Scott, do you have anything you want to add?

Scott: No, that was perfect, Roch.

Roch: Well, let's just end it now. Never mind. Let's not end there. Another question here. We've got time for one or two more. If working at an institution that open sources its code would a third party participating in its creation without a contract ever preclude the ability to open source it? Would they be able to not only claim ownership but exclusive rights that would prevent open sourcing? I think what the question is getting at is, if you're at an institution where the institution open sources the code but the third party doesn't sign a contract and participates in the project, can the third party impose its own terms? I think the general answer to that is going to be no because usually what happens is the third party will take an existing code base that itself is open sourced, make a modification to that existing code base and then the entire code base is governed by the open source terms. If the third party were to say, "I'm not going to allow my improvement be governed by the open source terms.", that argument doesn't usually work because in order to make the improvement they themselves had to download the original code base by virtue of an open source licence. If you're in a situation where the code being contributed to an open source repository is entirely original then, yeah, it's up to that third party, as a general rule, to decide what terms are going to govern that code. The question's a little fuzzy when it comes to the relationship between the institution and the third party. I mean if the third party's an employee of the institution then the employer is going to be able to dictate terms in that regard. But if they're just someone on the internet then, yeah, it's their call what their original code, what terms has it's licence pursuant to.

Scott: Yes, Roch, I agree. It's all about the nature of the relationship and what the wording says in the agreements or the licences between them. The essence of open source is that if you work on it, you sign a licence agreement, which means that you contribute to it is also open source. So you wouldn't be able then to say I own that, the intellectual property and the code I contributed. But if you weren't after sign something like that, and you weren't bound by any restrictions, in theory under the Copyright Act, you would have, as the author of that part of the code, have ownership of that part of the code.

Roch: Well, I think that brings us to 1:00 o'clock. In fact a little after. If you have any more questions, by all means, our contact information is on the screen. You can email us or call us. You can also reach out to Dan or Alex about the IP outreach program. I'd like to thank you all for attending. Everyone stay health and stay safe.