Intellectual Property and Damage Quantification

• Author: Jeffrey Harder, Joelle Gott, J. Kevin Wright, & Paul R. Albi
• Pages: 847-882

847

Chapter 30

Intellectual Property and

Damage Quantif‌ication

jeffrey harder, joelle gott, j. kevin wright, &

paul r. albi

A. TECHNOLOGY

1) Technology Assets

Technology or technological assets arise from ideas that are developed into

practical applications. While it may be expensive to develop technology, the

resulting commercial benef‌its may far exceed the costs.

One of the purposes of intellectual property law is to encourage invest-

ment in the development of technology by granting certain rig hts of exclu-

sion to the creators (i.e., authors, inventors) of the technology. These rig hts

allow the creators to derive benef‌it not only from their immediate direct use

of the technology, but also by preventing others from exploiting the creation

without t he creator’s consent. Intellectual property rights may enable the

creator to sell (assign) the technology or license others to use the technology

or its fruits. High-tech companies increasingly depend on these r ights to

safeguard their technology and exclude competitors.

Intellectual propert y refers to an intangible product of the intellect that

has commercial value, with t he distinguishing feature that it is protected

under law. Intellectual property rights are sp ecif‌ic legal ri ghts which cre-

ators or their assigns may hold and exercise, but they are not the intellectual

works themselves.

Intellectual property may be v iewed as a subset of the broader concept

of intang ible assets. Other intangible assets include intellect ual capital (a

848 jeffrey harder, joelle gott, j. kevin wright, & paul r. alb i

combination of human capital intellectual asset s and intellectua l property)

and intellect ual assets (codif‌ied or physical desc riptions of specif‌ic know-

ledge to which a company can assert ownership rights, not all of which

are protected by law). Not all intellectual assets are protected by law. As an

illustration, the relationship between a business and its c ustomers is not

recognize d per se as a form of intellec tual property (although the goodwill

in the business derived from such relationships and represented in trade-

marks of the business may be protected). The following diagram depicts the

relationship between various types of intangible assets:

Identif‌iable Intangible A ssets — Conceptual Framework

The focus of this chapter is on the protection of technology assets, be-

ing intellectual property protection, its infringement, and the remedies and

approaches to quantif‌ication of monetary remedies that are available in the

Canadian courts.

2) Intellectual Property Rights in Canada

Intellectual property may be recognized or created through legislation and

through jurisprudence. With certain exceptions, the e xclusive rig hts con-

ferred by intellectual property laws can generally be transferred, licensed,

or mortgaged to third parties.

The scope of any particular form of intellectual property right depends

on the statutory or common law scheme in effect in a jurisdiction. Some

rights, such as patents, are created by application made under a statute. By

def‌inition, they come into effect only when granted according to t he statu-

tory scheme and they only have effect within the geographic jurisd iction of

the legislative body that created the statute.

Other forms of intellectua l property may be created without makin g an

application under a statute. Common law trade-marks and copyright rights

Intellectual Capital Intellectual Assets Intellectual

Property

Human Capital

Organizati onal Capital

Customer Cap ital

Distribu tor Capital

Supplier Capi tal

Contracts

“Codif‌ied” Kn owledge

and Know-Ho w

Permits and Li cences

Trad e- mar ks

Non-competes

Plant Breed ers’

Rights

Industria l

Designs

Patents

Trad e

Secrets

Copyrights

Integrat ed Circuit

Technology

Intellec tual Property and D amage Quantif‌icat ion 849

are examples. Nevertheless, legislation may be relevant or even essential

to the enforcement of such rights. For instance, cer tain provisions of the

Canadian trade-mark legislation apply equal ly to registered and unregis-

tered trade-marks. Simi larly, while one does not have to apply or register

to a government body in order to enjoy copyright rights, the existence and

enforcement of copyright is governed by federal legislation.

In Canada, most statutory intellectual property rights are established

through federal as opposed to provincial statutes, with the Canadian In-

tellectual Property Off‌ice (CIPO) being responsible for administering the

majority of these federal statutes.

Intellectual property may be divided into seven areas: patents, copy-

rights, trade-marks, trade-secrets, industrial designs, plant breeders’ rights,

and i ntegrated circuit topography. Each is described brief‌ly below. While

there are conceptual dif ferences among and between these rights, differ-

ent rights may be associated with the commercialization of a given product

or ser vice. A business mi ght manufacture a machine according to a pat-

ent covering certain parts and internal t rade-secrets covering other par ts.

The machine may then be marketed in association with one or more trade-

marks, including packaging, which itself displays copies of original designs

in which copyright subsists. The business may be successful in warding off

or at least constraining competition by relying on a combination of these

rights.1

a) Patents

The inventor of a new, non-obvious, and useful device, substance, or process

may apply to CIPO for a grant of a patent under the federal Patent Act.2 Pat-

ent laws are designed to encourage private investment in and disclosure of

innovative devices, substances, and methodologies. Patents may be granted

in many f‌ields of science including matters of mechanica l, electrical, and

chemical eng ineering, pharmaceuticals, and computer technology includ-

ing, in some cases, computer programs.

1 There may be other l imits on the extent to which a pa rty may properly leverage t he benef‌it

of one form of intellect ual property wit h another. For instances, the federa l Competition

Act, R.S.C. 1985, c. C-3 4, as amended, allows for orders to be m ade to alleviate a substan-

tial lessenin g or prevention of competition arisin g from a practice of anti-compet itive acts

amounting to an abu se of dominant position (ss. 78 & 79). A company that enjoys a dom i-

nant position result ing from ownership of patents which h ave expired might tr y to extend

that dominance by l icensing a trade-mark assoc iated with the once patented process. For an

illustration of t he types of issues that may a rise, see Director of Inve stigation and Researc h v.

The NutraSwe et Company (1990), 32 C.P.R. (3d) 1 (Comp. Trib.).

2 R.S.C. 1985, c. P-4, as amended.