Three Intellectual Property Issues and Solutions in the Digital Economy

The digital economy is driven by digital infrastructure, the adoption of digital business processes, and the exchange of electronic goods and services over the Internet. The digital economy, worth $11.5 trillion in 2016, is predicted to grow to about a quarter of global GDP by 2025. While the digital economy represents significant business opportunities for innovative firms and budding entrepreneurs alike, some critics have observed that the Internet has made enforcement of Intellectual Property (IP) rights more difficult and infringement of IP rights much easier. These challenges can impact the commercial viability of businesses that create or license IP. 

Copyright
The rise of the digital economy has led to the digitization of music, films, and books, drastically altering the mode of distribution of these copyrighted works to the public. In Canada, copyright owners possess the exclusive right to produce, reproduce, and perform in public all or a substantial part of their copyrighted works. Copyrighted works must be original and include literary, dramatic, musical, and artistic works. Compared to physical copies of copyrighted works, copyright owners may find it challenging to restrict unauthorized third-party access and distribution of digital copies of their works. 

The challenges introduced by the digitization of copyrighted works highlight the value of copyright registration. In most jurisdictions, copyright arises without registration; however, registration can provide several benefits. In Canada, for example, copyright registration serves as evidence of copyright subsistence and ownership and may allow a successful plaintiff to obtain relief that would otherwise not be available. More broadly, copyright registration can assist copyright owners in having infringing content removed from third party platforms such as web hosting or social media platforms.

Trademarks
The digital economy has seen a prolific rise in e-commerce, with many businesses selling online to foreign clientele and without a brick-and-mortar store in that foreign jurisdiction. A trademark indicates the origin of the trademark owner’s goods and services. In Canada, the owner of a registered Canadian trademark possesses the exclusive right to use its trademark in association with the goods and services with which it is registered and can restrain third party use of confusingly similar marks. 

Businesses may choose to protect their brands through registered trademarks in the foreign jurisdiction in which they operate or, in some jurisdictions, through unregistered trademarks that carry common law rights. To successfully assert common law rights in Canada, an unregistered trademark owner must prove (a) the existence of goodwill or reputation in its trademark, (b) deception due to misrepresentation, and (c) actual or potential damage. However, without a brick-and-mortar presence and/or extensive sales in Canada, foreign businesses may face difficulty establishing goodwill. 

Accordingly, acquiring registered trademark rights can be especially important in e-commerce. Start-ups that have yet to launch or formally adopt a trademark should consider trademark registrability before doing so. For example, trademarks that are descriptive of the goods and services with which the mark is used are often not registrable. Trademarks that are identical to or that strongly resemble another mark already registered or applied-for in that particular jurisdiction may also be unregistrable, especially if the marks are associated with overlapping goods and services. 

Patents
Patentable inventions in Canada must be of a patentable subject matter, novel, useful, and non-obvious. Canadian patent holders generally have the exclusive right to make, use, and sell their patented invention in Canada for a maximum period of 20 years. The digital economy has led to rapid growth in the volume of patents in the technology sector, creating “patent thickets”, or clusters of overlapping patent rights. Patent thickets give rise to two issues. First, the numerous patents result in fragmentation of patent ownership rights, which makes coordination of licensing challenging. Second, the patents often overlap and are interrelated, blurring the lines of ownership and making it difficult for patent holders to enforce their patent rights.

Individual businesses in select industries may find the above-noted challenges daunting to deal with. While not a complete solution, one approach is to attempt to identify patent thicket issues as early as possible. This includes developing an awareness of not only your competitors’ technology and associated IP rights, but also the IP rights of non-practicing entities. You may also wish to anticipate the need for future spend on patent issues—including the costs of licensing arrangements, designing around existing patent rights, and possible disputes—and maintain cash for this purpose. 

Considering the above issues that affect your IP rights in the digital economy is crucial for implementing a sound IP strategy for your business. If you would like to protect your creative works and inventions in the digital economy and turn them into value-generating assets, consider consulting an intellectual property lawyer.

Christopher Heer is the owner and founder of Heer Law. He is an intellectual property lawyer, registered patent agent, registered trademark agent, and is also certified as a specialist in intellectual property law (patent) by the Law Society of Ontario. He believes that intellectual property rights add tremendous value to businesses by enabling them to raise capital, build asset value, and grow faster under the protection that these exclusive rights give them.

Co-authored by Michelle Huong