Canada Updates its Competition Act

I recently became aware of changes to the Canadian Competition Act (the Act) meant to modernize this piece of legislation, including to give it a little more teeth.

The changes at issue include the following, in case you hadn’t been following this (I hadn’t):

  • The act now prohibits “drip-pricing” by on-line retailers, as it may be tantamount to false (or misleading) advertising. This is familiar to anyone who has shopped on-line where you may be drawn to a particular source offering a what seems like a good deal, until you go through the whole process and realize fees and costs are successively tacked on, so that you end-up with a price that is substantially more than the “price” that attracted you in the first place.
  • Speaking of false (or misleading) advertising, the recent changes to the Act now allow courts to impose penalties that are no longer limited to fixed (capped) amounts. From now on, whenever a judge must impose a penalty on a given business for this, (s)he may elect to set the penalty according either to what profit the business derived from its misdeed, or better yet, on a percentage (3%) of its annual global revenue. Do I have your attention now?
  • Likewise, the recent changes also remove the cap on competition-related criminal penalties, instead providing that judges now have discretion under the Act as to the amount of penalties imposed on wrongdoers.
  • Anti-poaching agreements between employers are now a big no-no, as an unacceptable constraint on the working conditions of Canadian employees by what amounts to a form of cartel. As to this, one has to admit, if you allow business to agree between them to refrain from hiring from competitors, you’re seriously limiting the prospects of employees working in that industry.

The changes at issue came into effect on June 22, 2022.

U.S. Decision in Omni Medsci Illustrates Continued Need for Proper Drafting When Attempting to Assign I.P.

A recent cases handed down by the United States Court of Appeals provides a good example that, even today, in an age where courts have largely abandoned formalism, yes, some legal documents still need to reflect precise words to express certain things and make certain things happen.

The case at issue, Omni Medsci, Inc. v. Apple Inc., stems from a lawsuit by a company called Omni Medsci, Inc. (“Omni”) against the Apple corporation, for patent infringement. Omni thus sought to avail itself of certain remedies that American patent law affords patent holders, when a third party uses their invention, once it’s been patented, without first obtaining a license to do so.

Unfortunately for Omni in this case, Apple was diligent about making its homework, and obtained a copy of the 1992 employment agreement of a university researcher. The rub? This agreement, which purported to transfer the invention (patent) rights of this inventor to the University of Michigan (the “University”), did so by using language which was, shall we say, less than ideal. Indeed, the clause of the employment agreement at issue supposed to transfer the intellectual property (“I.P.”) rights over the work of this employee (to the University), tried to do so by a somewhat ellipical sentence, to the effect that I.P. which resulted from research by this employee “shall be the property of the University,”. That’s right, no active verb, no present tense, just a statement of (apparent) fact that his work would (eventually) belong to the University. Oh ho.

The court of appeals agreed with Apple that this fell somewhat short of actually expressing an intent to assign I.P. rights right then and there, including because of the future tense and the fact that nowhere were the verbs “assigning” or “transferring” used in the key sentence. Rather than using usual phrasings like “assigns”, “agrees to assign” ou “does hereby grant title to…”, the University elected to use relatively convoluted and obscure language to express what could have been expressed plainly by using simple words that would adequately one’s intent to actually transfer I.P. on the spot. For the court, such language does NOT express an intent to transfer I.P., merely some sort of promise to eventually assign the signor’s rights, nothing more.

This being the case, the University did not possess the I.P. over the invention (patent) at issue when it purported to assign it to Omni. Classic case of: you can’t transfer something you don’t have. As a result, Omni is not the owner of the patent at issue and, thus, cannot legally sue Apple for infringement thereof. Checkmate.

Even though it may be a U.S. decision, this case nevertheless provides us with an excellent example of the fact that, yes, even in 2021, certain words DO matter, and should be used when attempting to effect certain things. Even though courts may, by and large, no longer get hang-up on formalities in legal documents, there remain certain essential things that will be required once you get in front of a judge. Eh, what do you know? Proper legal drafting is still important, who knew?