IT services contracts often contain disclaimers that protect companies that provide software and professional services for implementing or integrating IT systems. Subject matter of the dispute Is such a contractual waiver valid under the civil law of Quebec in the event of a breach of an essential obligation? In the recent case 6362222 Canada Inc. v. Prelco Inc., the Supreme Court of Canada held that the waiver in question was freely negotiated between the parties and was the result of compromises on both sides. It must therefore be respected. The respondent „Prelco“ instructed the appellant „Créatech“ to provide software and services for the implementation of an integrated management system whose purpose was to manage and track all the information on operational services found in a large number of databases. Due to the many recurring problems during the implementation of the system, Prelco decided to terminate its contractual relationship with Créatech and hired another company to make the system operational. Prelco then claimed damages from Créatech, while Créatech filed a counterclaim for the outstanding balance of Prelco`s project. This marked the beginning of a long legal battle that ended in the Supreme Court. In its decision, the Supreme Court considered various arguments that, according to Prelco, would have excluded the application of the disclaimer clause. The Court rejected these arguments.
Reaffirming the primacy of freedom of contract The Supreme Court of Canada has held that the Civil Code is intended to ensure the freedom of contract of the parties and to strike a balance between the concept of public order and the principle of freedom of contract. However, when considering the applicable legal principles, the judges found that the principle of respect for the contractual will of the parties contains exceptions, for example in cases of gross negligence or wilful misconduct, where economic forces are unbalanced (e.g. a contract between a trader and a consumer), where liability contracts and other types of contracts, such as Designate the contracts mentioned in the Civil Code, or if the exclusions cover liability for bodily injury or pecuniary damage. Conclusion From this decision, it appears advantageous for computer service providers or other service providers to opt for the Quebec regime in contracts where the parties negotiate a limitation or exclusion of liability. In the third and final entry in this three-part series of articles, we share with you the latest intellectual property (IP) related errors (bugs #10 to #13) that we regularly see in startups. We hope you find it useful for your business. Be sure to read our first and second entries in this series, where we review errors #1 through #5 and #6 through #9, respectively. Happy reading! Part 3 of 3 Mistake #10: Let`s Assume Your Invention Is Not Patentable A common mistake entrepreneurs make is to assume that their technology is not patentable. This often applies to computer-related inventions such as software. While there is no complete ban on patenting software in Canada, many inventors believe that software is not patentable.
This is probably due to the fact that many patent applications for computer-implemented inventions are initially rejected because the patent office considers that the invention in question is merely a disembodied sequence of mental steps and/or a mathematical formula (none of which is considered patentable subject matter). However, it is important to remember that even if some types of subject matter are not patentable in Canada (e.g., disembodied mental steps and mathematical formulas, as noted above), this does not mean that the technology comprising that non-patentable subject matter (e.g., software) is fully patentable. Often, this simply means that another aspect of the technology should be at the heart of the patent application. For example, for computer-implemented inventions, one strategy to increase the likelihood of patentability is to formulate the patent application in such a way as to emphasize that the computer hardware is essential, or to formulate the application in such a way that it is clear that the invention produces a result that contains perceptible effects or changes (for example: This can be as simple as generating different groups in a Classification Method). It should also be noted that many inventors have the false impression that a new technology must be anything but revolutionary to be patentable. However, improvements to existing technologies are also patentable provided they are sufficiently new and inventive. Therefore, it is important to speak to a patent attorney to properly determine if and how your invention can be patented. Mistake #11: Believing that your patent automatically gives you the right to use and/or commercialize your invention A common misconception about patents is that they give the owner the right to use and/or commercialize the patented technology without fear of infringing third-party patents. However, what a patent actually does is that it allows its owner to prevent others from using and/or commercializing their patented technology. It is not a shield against possible infringement of the property rights of third parties. For example, if you receive a patent for a technology you are developing, it does not necessarily mean that you have the right to use or commercialize that technology. In particular, if your technology contains patented technology owned by another company, that company may actually prevent you from using or commercializing your own invention.
This is an important aspect of „patent protection“ that all entrepreneurs should be aware of. Mistake #12: Don`t educate and train your employees on the criteria for recognition as an inventor or owner of an invention Many types of intellectual property disputes can arise within a company. Most often, they are the result of misunderstandings, such as: an employee believes that he is the inventor of an invention when he is not; An employee believes that, as the inventor of an invention, he or she is necessarily entitled to consideration (monetary or otherwise); the invention belongs to them and not to the company; they are free to use the invention, for example if they leave the company to become competitors; or An employer believes that their company can use the specific results of the work of a previous job seeker. It`s easy to imagine how chaotic such problems can become! An ounce of prevention is definitely worth a pound of cure. Learn! Also, clarify these issues with new employees as soon as you hire them and indicate in writing who owns the intellectual property rights developed during employment. A short training session before such problems arise can correct the file and avoid conflicts based on unrealistic expectations. Mistake #13: No IP Protection Strategy After reading this three-part article, we hope you now have a better understanding of how important it is to develop an IP strategy for your business.