Intellectual Property

Intellectual property, property created through human intellect or creativity, is one of the most valuable assets of many businesses. However, its inherent value can be ephemeral; an idea and its application can in many instances be appropriated almost effortlessly. Proceeding without having proper mechanisms in place can therefore be perilous.

The following scenario is fictitious, but it is an example of what happens all too frequently to consulting engineers.

Big Design-Builder Corporation (“Big Design-Builder”) has been retained by Bridge Owner Limited (“Bridge Owner”) to design and construct a bridge over a body of water. The bridge is to be located within a popular eco-tourism area. A final plan is eventually prepared and accepted by Bridge Owner.

The plan is submitted to the local environmental conservation agency for approval. After an environment assessment, however, it is determined that the erection of the proposed bridge would have a dire impact on the fragile riparian habitat on the shores. The agency would approve the project if the bridge length was extended considerably from that originally proposed. The resulting costs threaten to place the project well beyond the budgeted amount, however, and the project is placed on hold.

Meanwhile, Structural Engineers Inc. (“Structural”) have developed a new girder design that, if adopted, would reduce the additional costs associated with the expansion of the bridge. Having indirectly learned of the underlying cause of the project’s interruption, Structural submits a proposal to Bridge Owner outlining the technology it has developed and includes some drawings for the proposed bridge.

Not having received a response three weeks later, Structural contacts Bridge Owner and is told that the company’s services will not be required. A few months later, Structural learns that the project has resumed and that Big Design-Builder has begun construction of the bridge. Upon further investigation, Structural discovers that the bridge’s design incorporates the new girder design technology it had developed and relies heavily on the drawings it had provided. It also discovers that Big Design-Builder is using its technology on two other projects overseas.

Although Structural may have a remedy against Bridge Owner for breach of confidence, its rights vis–vis Big Design-Builder are less clear. Furthermore, Structural may have compromised some of its rights in the new technology it developed. Indeed, the technology may no longer be deemed to be a trade secret, and any right it may have had to obtain a patent in the technology may have been jeopardized with respect to certain countries.

What could Structural have done to avoid this happening?

Common law, national laws and international conventions all offer certain exclusive rights as well as enforcement mechanisms to protect intellectual property rights. In the present situation, Structural may have had the benefit of intellectual property rights in both its proposal and in the underlying technology. Structural may have had the benefit of a copyright in the proposal, including the drawings, and may have filed a patent application in the hope of obtaining a patent in the new technology it created.

If it can be shown that Structural’s proposal was the subject of a copyright, copyright protection would arise automatically and any unauthorized reproduction, whether in whole or in a substantial part, would infringe this copyright and would provide Structural with a remedy against the person making the reproduction.

However, if Bridge Owner or Big Design-Builder made no copy of the proposal and simply relied on the document provided by Structural, no copyright infringement would arise; copyright protection does not extend to the underlying idea, merely its expression. Furthermore, Structural would have no legal remedy simply because of the fact that the bridge was built in accordance with its drawings.

Other intellectual property rights, such as patents, arise only after the completion of a formal registration process. In the present example, had Structural filed an application for a patent in the technology (or its key parts) prior to the disclosure, it could have benefited from protection made conditional upon the eventual issuance of a patent.

Nothing prevents parties from seeking additional protection beyond that provided under intellectual property regimes such as those created by copyright and patent laws. Contractual protection is often used as a complement to protection under intellectual property regimes and, in some cases, is the only form of protection available in the situations faced by consulting engineers.

Indeed, where a party’s right to exclusivity under intellectual property regimes is questionable, or where a business does not wish to go through the formal process sometimes required to obtain such protection because of cost, timing, limited scope of protection, etc., contractual protection is usually the preferred course.

In pursuing this kind of contractual protection, Structural, prior to disclosure, might have attempted to have Bridge Owner sign a non-disclosure and confidentiality agreement (an “NDA”) preventing Bridge Owner from using or disclosing the proposal and its contents. This is not always an easy task; Bridge Owner may be reluctant to restrict its scope of permissible activity. Because of this concern, exception is usually made in non-disclosure and confidentiality agreements for information that is already in the public domain or that is legitimately in the recipient’s possession from other sources. Even with such compromises, however, a non-disclosure and confidentiality agreement may provide useful protection.

In the absence of contractual protection, Structural is left with certain measures that may discourage the other parties from appropriating its intellectual ideas. Structural could, for example, have provided Bridge Owner with the materials in a sealed envelope with a clear statement on the envelope that the materials contained in it were confidential and proprietary to Structural, that Structural reserved all rights in them, and that unauthorized use or disclosure was strictly prohibited. The scope of protection offered to Structural under this scenario is murkier than that offered under a well-drafted non-disclosure and confidentiality agreement. Furthermore, Bridge Owner may be reluctant to accept such an envelope, particularly if doing so might be considered to offend the terms of the proposal call documentation. That notwithstanding, the envelope is a simple technique that might have enhanced Structural’s position legally.

In addition to the first two approaches, and as a last resort if they are unavailable, Structural could have ensured that its proposal, including the drawings, contained a clear statement that it was confidential and proprietary to Structural and that reproduction and disclosure thereof was prohibited. The statement would have at least served to put Bridge Owner on notice that Structural was asserting that the proposal contained trade secrets.

Similarly, the copyright symbol “(c)” followed by “Structural Engineers Inc., 2002. All rights reserved.” might have been added to the proposal documentation, including the drawings. Likewise, if a patent application had been filed with respect to the technology or the key parts thereof, the statement “Patent Pending” could have appeared as a footnote to the introductory paragraph of the proposal describing this technology.

No system of protection is perfect. Whether the rights be provided under intellectual property regimes or under contractual protection mechanisms, there will always be an underlying risk of unauthorized disclosure and misuse of proprietary information. Assessing the integrity of the party who will be receiving the information still remains one of the most important steps to undertake before disclosing it.

Bruno Soucy is a lawyer at the firm of Blaney McMurtry LLP in Toronto. He specializes in intellectual property and technology law. Tel. 416.593.2950, e-mail bsoucy@
blaney.com.