Atlanteknology - Technology News for Atlantic Canada

Intellectual Property Licensing - Do it right or else...

There is a 13 January 2006 decision from the Federal Court that nicely highlights why it is important to craft proper licensing agreements with respect to the use of your software.

In the case of Mapeze Inc. v. Destination Ontario Inc. the plaintiff created software which provides geographic information systems and mapping capabilities. It licensed the software to the defendant through a Memorandum of Understanding. Unfortunately, the parties disagreed about what time period the Memorandum of Understanding covered (among various matters they parties disagreed about).

Subsequently, the defendant developed its own internet-driven map based GIS interactive mapping solution and the plaintiff sued the defendant for copyright infringement and passing off (which is like trade-mark infringement).

Subsequently, the plaintiff made an application for summary judgment (this sort of application is filed when a party, in this case the plaintiff, believes that the other party has no case and the matter should be disposed of quickly).

The judge dismissed the application having examined copies of the software as well as experts' reports filed by both the plaintiff and the defendant concerning the similarities between the two software products. The judge felt that there were a variety of issues which required a trial including the nature, timing and scope of the purported license as well as the exact quality and quantity of copying by the defendant of the plaintiff’s software.

All of which is yet another reminder that you do yourself a disservice (in many ways) by taking shortcuts at the front end and not clearly identifying the parties' respective rights and obligations in a well-crafted license agreement. I do not suggest that such a document will eliminate disputes but it is infinitely more preferable, in my opinion, when the parties know, with great certainty, what their rights and obligations are at the beginning of a contractual relationship as opposed to fighting about those rights and obligations in court where the terms of the agreement were vaguely drafted.

War driving

Here is an article about a guy who was charged and fined $250 for using the Wi-Fi connection of a not-for-profit agency by parking on the street and using his laptop computer.

According to local officials, "...Our residents need to know that it is a crime, punishable by up to a year in jail, to access someone else’s computer, wireless system or Internet connection without that person’s approval.”

This follows a report out of Ontario where the Ontario Provincial Police charged a 25-year-old man last week under Section 326 of the Criminal Code of Canada - "Theft of Communications."

FYI, section 326 says:

326. (1) Every one commits theft who fraudulently, maliciously, or without colour of right,
(a) abstracts, consumes or uses electricity or gas or causes it to be wasted or diverted; or
(b) uses any telecommunication facility or obtains any telecommunication service.

(2) In this section and section 327, "telecommunication" means any transmission, emission or reception of signs, signals, writing, images or sounds or intelligence of any nature by wire, radio, visual or other electromagnetic system.

There have also been arrests in Florida and the UK.

I have reviewed some posts made on various blogs and am stumped by the uproar and outrage that some have expressed. Someone buys and owns some infrastructure (router etc) and buys Internet access (through their ISP). The thought that some might believe that using the person's connection is not acceptable/legal mystifies me. I have heard people say that if you do not password protect your connection, if you do not take steps to maintain protection systems etc, you invite the theft and therefore it is ok.

The fact is that this is theft. If you partake of this sort of activity (and you are acting fraudulently, maliciously, or without colour of right (ie. you do not have permission), you should be prepared to face the music if you are caught.

SR&ED Tax credits - Not so scary

I attended an information seminar on Scientific Research and Experimental Development (SR&ED) Tax Credits put on by PricewaterhouseCoopers last week. I wanted to expand on my earlier post on the topic. 

Specifically, I wanted to expand on eligible costs, eligible projects, and the filing process.

Eligible Costs

The following costs can be reimbursed: wages, subcontractor payments, materials consumed or transformed, overhead, third-party payments (for example, payments to industry associations for services rendered), as well as capital assets (owned or leased) used in the process. The list is broader than I had originally thought and, I suspect, broader than many readers may have imagined. 

Eligible Projects

The basic test to determine whether your project qualifies for the tax credit is whether the project has some technological uncertainties, whether there are technological advancements, and if the project is done in a systematic manner by experienced personnel.

If you are a producer or manufacturer and are experimenting with new materials to lower costs, analyzing more durable materials, or changing the structure of a product to make it better, you may be eligible for the tax credit.

If you are looking at ways to design new equipment to manufacture items more quickly and/or with higher quality, or trying to revise your processes to consume less energy/pollution, you may be eligible for the tax credit.

If you have designed new or improved software for some particular application you may be eligible for the credit.

When you see the word “technological” do NOT assume that you need to be in a high tech industry or biotech or anything of the sort to qualify. If you own a body shop and created a new way to weld exhausts, and this was a systematic process – you may qualify.

Procedures

The application for the tax credit is filed with the entity’s tax return. Once filed it will eventually be reviewed by the Halifax Tax Office, which is the centre for Atlantic Canada in terms of the tax credit. Expect an audit if it is your first claim or if the claim is large.

There are a variety of forms which must be filled out and information which must be provided and I will leave this to someone considerably more experienced than myself to describe. Having said that, the filing requirements do not appear to be too onerous especially if you have experienced help assisting you.

Conclusion

As I said before, I suspect that there are numerous entities out there which could probably claim SR&ED tax credits but do not  - principally because they do not think their projects would qualify and/or they believe the process is too complex or cumbersome. I urge you to reconsider and seek some professional advice. You may be missing out on an excellent opportunity to save some money.

(Thanks to Chris Sullivan of the Halifax PricewaterhouseCoopers' office for the presentation.)

High School tech courses

Here is an interesting story out of the USA. It seems that high school students at a school in Rome, New York, are going to be the first to participate in a computer-security course developed by the school in collaboration with the USA Air Force and a local university.

The course covers topics including data protection, network protocols and vulnerabilities, firewalls, data hiding, and wireless security. Designed in part to encourage students to pursue college degrees and careers in computer security, the course is, according to the article, considerably different from the kind of computer course available in some high schools in the USA, exposing high school students to material not seen by many university students until well into their university career.

According to the article the course will be available across the USA by 2008.

A fantastic programme in my opinion. Nova Scotia should jump on board. Call your contacts at the NSTU, the government, and school board.

The water cooler - who knew?

Who knew the information discussed around the company water cooler could be so useful?

Coemergence Inc. did ((link on sidebar) and so, apparently, does KMWorld Magazine, which selected Coemergence as one of the 100 companies that matter the most in knowledge management in its March issue.

Nicely done.

Trade-mark Treaty Conference convened in Singapore

Some 400 participants from about 180 countries are currently attending a three-week long conference in Singapore under the World Intellectual Property Organization. The conference, which opened on Monday, is supposed to culminate in the revision of the Trade-mark Law Treaty  (circa 1994).

Why should you care?

"If successfully adopted, the proposed Treaty will introduce greater regularity and streamline administrative procedures across member countries for the registration of trade-marks. It will allow us to take advantage of advances in digital and [other] communications technology to reduce the costs of trade-mark registration," the Deputy Prime Minister and Law Minister of Singapore said, at the opening of the conference.

The skinny - anticipated additinoal savings in time, energy and money to register a trade-mark across various jurisdictions.

Stay tuned for more details.

Tech East

So I found out about this website today.  Tech East.

Great site. I recommend it!

From the "about us" page of the site:

Tech-East.com was founded in September 2003 to serve the technology communities in Nova Scotia, PEI, New Brunswick and Newfoundland. With thousands of visitors coming to Tech East we are The East Coast Tech Connection! This site fills a void in our region, as there are no technology communities that focus solely on the technology industry on the East Coast.

Protecting Intellectual Property - The nuts and bolts

Here is the link to an excellent (and brief) article talking about the protection of intellectual property. Essentially this article boils down what I have been saying for years into 12 paragraphs.

The nuts and bolts? They are these:

1. Protecting your intellectual property is critically important, especially if it is your biggest asset;

2. Sometimes you can accomplish your goals without resorting to a patent; and

3. It all boils down to what makes sense from a business standpoint, having considered all the risks.

Taxation and software

I recently read a case from the British Columbia Supreme Court called Coreco Inc. v. British Columbia which I think I will share with you.

The case revolved around the taxation/valuation of software when a British Columbia company sold its assets (the bulk of which was a software product) to a Quebec company.

The purchasing company (the Quebec company) was assessed a social service tax of 7% on that portion of the purchase price allocated to the software.  The assessment was based on the definition of "tangible personal property in the Social Services Tax Act (the Act) of British Columbia.  The Act defines tangible personal property to include "software". The assessment amounted to just over 450,000.

The Quebec company appealed, attempted to argue various things including:

1. that the software as defined in the purchase and sale agreement was not software for the purposes of the Act; and

2. that the software was purchased for the purposes of "leasing" and therefore was exempt from taxation.

One the issue of whether the software sold was software within the meaning of the Act the Quebec company relied on the fact that it purchased the source code as opposed to object code.  The Quebec company also relied on a 1998 amendment to the Act which stated that source code was exempt from taxation.  The court rejected the argument on both fronts. 

On the issue of leasing, the Quebec company relied on a provision of the Act stating that property used only for leasing is exempt from taxation.  However, the Court noted that the Quebec company’s lawyers had confirmed that the company had copied and used copies of the software in British Columbia and Quebec and also that there was no evidence the property had been leased.  The analogy that the company made between licensing and leasing was rejected.

Many will be aware of taxation issues. For those who were not - yet another matter to ponder when purchasing/selling/leasing/licensing software from entities which are not resident in your jurisdiction.

Atlantic Canadian start-ups

I keep going back to the November 2005 (Volume 12 No. 9) issue of Progress magazine. It is, without doubt, my favourite issue to date. I want to mention a couple of companies referenced in the issue. The first is Q1 Labs which is a fascinating story of success. A brief summary: in the summer of 1999 a student at the Fredericton Campus of the University of New Brunswick, Canada (Chris Newton) decided to analyse the performance of the University's network. Eventually this inquisitiveness turned into a company with 76 people and 30 million dollars in funding (to date). The company now has its headquarters in Waltham, Massachusetts and sales offices in London, England and seven USA cities. I encourage you to peruse their website and to read the November 2005 issue of Progress magazine for a much more thorough description of this company’s incredible story. Needless to say it is an excellent example of what can happen when the pieces come together.

While I'm at it I should note a couple of other success stories that I had not yet mentioned. Rutter Inc.  out of Memorial University (Newfoundland, Canada) is a leader in the development, manufacturer in support of degraded products in solutions including voyage data recorders, marine certified electronics interfaces, high resolution radar processing etc. 

Also out of Memorial University is North Atlantic Biofarma (I could not find a website). The company has, among other things, developed a new medicinal use for seal oil and seal by-products. The company is developing a seal oil based total parenteral nutritional emulsion to deliver much needed nutrients to traumatic and post surgery patients. It has filed patent applications in various jurisdictions and is currently conducting pre-clinical and clinical trials. I think it is also important to note that the company has received support (both financial and otherwise) from the Atlantic Canada Opportunities Agency, the Canadian Centre for Fisheries Innovation, and the National Research Counsel Industrial Research Assistance Program. Well done!