10. Intellectual Property

Trade Secrets

A trade secret is a formula, process, device, or other business information that is kept confidential to maintain an advantage over competitors. A trade secret is, in short, secret information. This information may include a process, formula, pattern, program, device, method, technique, or compilation. For many companies, lists of suppliers, costs, margins, and customers are all trade secrets. Soft drink recipes, the Big Mac’s special sauce, and even the combination of wood that is used in the burning process to make Budweiser beer are all trade secrets. Additionally, Google’s algorithm for conducting web searches is a trade secret.

Elements of a Trade Secret:

  1. Is not generally known or ascertainable;
  2. Provides a competitive advantage;
  3. Has been developed at the owner’s expense & is used continuously in the owner’s business; and
  4. The owner intends to keep it confidential.

Trade secrets are unlike patents in that with a patent, the inventor must specifically disclose in the application the details of the invention. Thus, the inventor has not protected the secret of the invention. However, in exchange for this disclosure, a patent owner has a legal monopoly over the property for a specified period of time. Even if others discover how the invention works (which often is not difficult because patent applications are public record), they are prohibited from making, using, or selling it without the patent holder’s permission. After the patent expires, the patent holder no longer has a property right to exclude others.

Trade secrets can last forever if the owner of the secret keeps it a secret. If someone uses lawful means to uncover the secret, then the secret is no longer protected. Therefore, some companies would rather not make their confidential information public knowledge through a patent application in return for a temporary monopoly. Instead, they choose to protect the confidentiality of the information or product internally with the hope of a longer period of protection. For example, Google protects its search algorithm as a trade secret to maintain a competitive advantage in the market for as long as possible.

A claim for misappropriation may be brought when a trade secret has been wrongfully obtained, such as through corporate espionage or bribery. Generally, misappropriation occurs if the secret was acquired by improper means, or if the secret was disclosed or used without permission from the secret’s owner. Damages may include actual loss and unjust enrichment not captured by actual loss. Additionally, in cases of willful or malicious misappropriation, double damages may be awarded, as well as attorney’s fees.

Industrial Designs

An industrial design is about how something looks. It protects a product’s unique appearance, not what it is made of, how it is made or how it works.

Industrial designs can be found in many everyday products, such as the unique contour of a car hood, the graphical user interface on a phone or the specific shape or pattern of your favourite shoes.

Industrial design can give a product a competitive edge in the marketplace. To sell a product, there are multiple factors to consider, including price, functionality, reputation and its aesthetics. Consumers are often drawn to an eye-catching product and so accordingly, manufacturers put a lot of money and know-how into their industrial designs. An effective design will appeal to the consumer and even create an emotional connection between the consumer, the product, and the brand and can influence consumer behaviour, ultimately supporting the marketing and sales of the product. This is why a novel design is considered to be valuable intellectual property.

In Canada, you can secure these rights by registering your industrial design with the Canadian Intellectual Property Office. The Industrial Design Act confers exclusive right for the three-dimensional features of shape and configuration as well as the two-dimensional features such as pattern and ornament, including colour, applied to a finished article. A registered industrial design provides the owner with an exclusive right to prevent others from making, selling and importing for commercial purposes in Canada an article that embodies a design which is the same, or substantially similar to the registered design. You may obtain protection for the design of the entire finished article, or part of it. In Canada, this exclusive right can last for up to 15 years.


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Business Law and Ethics Canadian Edition Copyright © 2023 by Craig Ervine is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License, except where otherwise noted.

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