Intellectual Property

Intellectual Property Risks and Risk Management - "Intellectual property" refers to a group of rights in different kinds of intellectual works, like inventions, software, and trade secrets. Intellectual property rights play a key role in the acquisition, implementation, and operation of smart city tecnologies, and careful management is necessary to manage risks associated with these rights.

Copyright

In Canadian Law, copyright protections arise when original literary, dramatic, musical, and artistic works are fixed in a material form. While computer programs are generally included under the “literary works” category and therefore protected by copyright, the status of data is more complicated. Data that is a part of an “original compilation” – defined by the Copyright Act as a work “resulting from the selection or arrangement of data” – are protected by copyright. As a general rule, though, works that are obvious or merely mechanical exercises are not. Whether data contained in an original compilation will be protected, then, will largely depend on if the author used an exercise of skill and judgement in the process of assembling the compilation.

Depending on who holds the copyright of the data (or if it is copyrightable at all), risks arise in the use and sharing of that data. If data could possibly be copyrightable, smart cities may need to seek licenses or assignments if they want to utilize it, which could come at significant cost. Moreover, smart cities could essentially be “held hostage” if the data is integral to its operations. Individuals or private companies which hold the copyright to that data could make extreme demands in exchange for its use.

Data Ownership

Smart city initiatives often call for partnerships between public entities and private companies in order to produce and make use of the data they need, but these relationships raise complex issues of who owns the data that results from them. If the smart city is no longer satisfied with the partnership, they may seek out another company or vendor to work with instead. This presents a problem if the initial partner claims ownership over the data already collected or analyzed over the course of the partnership, as the municipality would no longer be able to use and share that data freely. Examples of data that could arise from these types of partnerships include arrival times for public transportation; depending on how that data is obtained.

Confidential information Rights (Trade Secrets)

Although municipalities and government entities often will collect the personal information of citizens, they don’t always have the right to do whatever they please with that information. The Privacy Act and Provincial Privacy laws all govern what government institutions can do with the confidential information they hold, while the Personal Information Protection and Electronic Documents Act (PIPEDA) and other provincial laws in Alberta, Quebec, and British Columbia apply to the private sector which undertakes “non-core commercial activities”. This is relevant when smart cities enter agreements with private entities – often, if not always, the data that both parties hold can’t be used or shared freely.

Patent rights

Patent law grants inventors a time-limited monopoly on their inventions. While software usually is not patentable (and is protected by copyright instead), new inventions which use software to function may be allowed to be patented. Moreover, many of the technologies that smart cities seek to use may be subject to patent protections. Novel sensor hardware, inventive connectivity mechanisms, and new information processing methods are all examples of patentable subject matter that smart cities will have to be aware of if they seek to use them.

Because smart cities seek to use standardized and interoperable technology in order to communicate and interact with one another, use of patentable technologies may pose a problem. For example, patents can sometimes stifle innovation by preventing one technology from being able to interface with a competitor’s similar technology, or may require a license for use or repair of the patented invention. If there is no alternative and the license is refused or too costly, the smart city could be left without a technology they desperately need.

Trademark rights

In discussions about licensing, it is inevitable that issues of trademark – which seeks to protect against unauthorized use of a branded product or service – will be raised as well. Branded technologies, systems, or other means that a smart city seeks to use may be more costly, and trademarks also raise issues of interoperability and standardization. Like patents, vendors may prevent marketing of their trademarked products from claiming compatibility with other trademarked products; especially in the case of licensing issues.

Using Contracts: Licensing and Acquisition

Licensing is essentially a form of permission – it allows for the use of a copyrighted, patented, or trademarked intellectual property, typically for a negotiated cost. On the contrary, assignment amounts to an owner giving certain rights to someone else; again, typically for a negotiated cost. Where issues of ownership or licensing exist, the best way to address those issues is to simply address them at their source. When smart cities are negotiating a contract with a vendor, contractor, or other third party, they should likely consider addressing:

• Licensing or assignment of copyright, if the data produced may be copyrightable,

• Ownership of the data that is produced, if the municipality is not the sole producer or analyzer of the data,

• How federal and provincial privacy laws apply to the data, its use, and how it is shared,

• Licensing of the technology if it is patentable,

• Licensing if use of a trademarked technology is necessary, and

• Warranties and representations or ownership and/or non-infringement to avoid future disagreements.

Education: Understanding IP Liabilities

Also of importance is that municipal employees who are planning to use Intellectual Property to implement new technologies and services understand the liabilities associated with those IPs. While this may be more obvious with clearly patented or trademarked subject matter, it becomes more complicated when considering data or analysis generated from a partnership that is wholly new. Municipal employees must therefore approach every new partnership from a perspective that considers potential issues of IP like those outlined above. Early consultation with those versed in IP law will also likely prove helpful, as will general familiarity with potential IP difficulties.

Resources

Guides and Toolkits

Canadian Intellectual Property Office, “Plan your IP strategy” - Summary of considerations when developing an IP strategy that is aligned with an organization’s goals, including commercialization, ownership and working with third parties.

Bereskin & Parr, “The Licensing and Commercializing of Intellectual Property” - A more in-depth look of licensing IP, including common terms found in licensing agreements, and a discussion of developing and exploiting technology in joint ventures.

Other Resources

[“IP in business transactions: Canada overview”](https://ca.practicallaw.thomsonreuters.com/3-505-4642?transitionType=Default&contextData=(sc.Default)&firstPage=true&bhcp=1), (Practical Law) - Overview of the various IP rights in Canada, licensing and assignment of such rights, and related issues in a M&A context.

Office of the Privacy Commissioner of Canada, “The Application of PIPEDA to Municipalities, Universities, Schools, and Hospitals” - Brief explanation of the application of PIPEDA to non-core commercial activities of municipalities, universities, schools and hospitals (the “MUSH” sector).

Canadian Intellectual Property Office, “IP foundations series” - Primer on intellectual property, particularly patents, trademarks and industrial designs in Canada.

Teresa Scassa, “Smart Cities: Data Ownership and Privacy Issues” - A brief discussion of the ownership of data arising from smart cities and its alignment with principles of open government.

Compute Ontario & Orion, “Building Ontario’s Next-Generation Smart Cities Through Data Governance, Part 4: The Future of Ontario’s Data” - The final report in a series summarizing the findings of a study about smart cities, including the roles of various stakeholders and the technologies involved, with a particular focus on data governance.

MaRS Discovery District, “A Primer on Civic Digital Trusts” - Primer on a form of data governance called data trusts; also extensible to other digital assets and referred to as “civic digital trusts” in the article.