Protecting IP Ownership and Rights in Canada: 6 Things Employers Need to Know

Your company’s intellectual property is your competitive edge. But IP law is complex—and this complexity multiplies exponentially when navigating IP law across international borders.

If you’re hiring in Canada or growing your team there, it’s vital to ensure others can’t claim ownership of—or profit from—your company’s inventions, designs, trademarks, copyrights, and trade secrets. But IP rights in Canada are labyrinthine: they’re governed by federal laws, but also by regional and provincial rules. And if you fail to protect your company’s IP rights and ownership, it can lead to costly legal disputes, loss of market share, and damage your brand’s reputation.

Read our primer to learn more about how to protect your company's IP rights and ownership (note: our guide is for informational purposes, and isn’t intended to provide legal advice).

1. NDAs are enforceable in Canada

In Canada, the courts have historically upheld non-disclosure agreements (NDAs) as enforceable, legally binding contracts. But there are a few important caveats:

• NDAs must meet legal requirements for being reasonable, specific, and not outside the public interest.

• Some cities and provinces in Canada have made moves toward banning NDAs that prohibit victims of abuse, harassment, and sexual misconduct from speaking about their experiences.

2. To govern your ongoing relationships with employees and contractors, you need a PIIA

A Proprietary Information and Inventions Assignment Agreement (PIIA) is a legal contract between an employer and an employee or contractor. PIIAs typically include confidentiality and ownership of intellectual property provisions, and sometimes also include non-competes or non-solicits.

Most importantly, a PIIA typically includes an inventions assignment clause, in which the employee or contractor agrees that any IP they create, discover, develop, invent, or improve upon while employed with the company is owned by the company.  In other words, it ensures these are assigned to and owned by the company, not the employee or contractor.

3. IP assignment agreements are enforceable

In general, PIIAs are enforceable in Canada for both employees and independent contractors. There are some caveats, depending on the type of IP and its governing law (the Copyright Act, Patent Act, or Industrial Design Act).

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For copyrights:

• The creator of the IP must have created it during the course of their employment. This generally means they created it on company time using company resources, rather than during their free time using their own resources.

• There must be no agreement saying the employee retains ownership of the copyright to their own work. In Canada, such an agreement doesn't necessarily need to be in writing, and in some contexts can even be presumed (for example, a professor generally retains the copyright to their own work, even if it's created during the course of their employment with an academic institution).

For patent rights:

Patents (and patent applications) for employees' inventions may belong to their employer if the employer has an express agreement to that effect with the employee (through a PIIA) or if they can prove the employee was "hired to invent." This means:

• The employee was hired for the express purpose of inventing

• They had previously made inventions

• The employer put forth incentives to encourage them to invent

• The employee's conduct following the invention suggests the employer owns it

• The invention is the product of the employer instructing the employee to solve a specific problem

• The employee asked for the employer's help to make the invention

• The employee was using confidential company information when they made the invention

• It was a term of the employee's employment that they could not use ideas they developed to their own advantage

For industrial design ownership:

Industrial design cases are rare in Canadian courts, so there isn't as much case law around them. But Canada's Industrial Design Act states that the author of an industrial design is the first owner of the design, unless it is executed for another person in exchange for good and valuable consideration. An employee's salary could be considered good and valuable consideration.

4. Contractors own the copyright to their work unless you override this in a written agreement

As you may have noticed above, PIIAs are enforceable for copyright only if an employment relationship exists. So how do companies in Canada protect their copyrights when working with independent contractors?

Under Canadian copyright law, contractors automatically own the copyright to their work, unless a client overrides this with a written contract. The contract must include:

• Background IP owned by each party before entering into the work arrangement

• Rules for IP generated during and within the work arrangement

• Rules for IP that may be generated after the work arrangement ends

5. You have to localize IP ownership clauses to Canada

Canada's IP protection laws are different from many other countries' (including the US). Notably, Canada doesn't have a "work for hire" regime like the US does. This is why it's critical for companies doing business in Canada to localize their IP ownership clauses to ensure they comply with Canadian laws.

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6. You should include a waiver of moral rights when protecting a work in Canada

In Canada, an author of a work is granted moral rights to their works of authorship, which include the author's right to maintain the integrity of the work, and to be cited as its author. Moral rights cannot be assigned, even if an agreement exists that makes the author's employer the owner of their work. For this reason, all contracts should include a waiver of the author's moral rights.

Frequently asked questions about IP law in Canada

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