Intellectual Property 101

A lot of business owners are not familiar with Intellectual Property - Therefore, our firm, Andrews Robichaud wrote this article to give you a quick overview of the different type of IP.

INTELLECTUAL PROPERTY 101

Trade-marks

Trade-marks are words, symbols, slogans or any other indicia that are used by businesses to distinguish their businesses, wares and/or services from those of others in their marketplace.

Success in business is closely linked to the image and message a business projects. Brand names have the ability to stand out and dominate in a marketplace, and are often the subject of market research and design that can be as important as the underlying actual product or service.

The best form of protection for such important business assets is through trade-mark registration. The registration of trade-marks in Canada and other countries provides clear legal title to these important business assets, and gives the business owner an exclusive claim and monopoly for the words, logos, symbols, sounds or slogans that form the heart of the business marketing and message. These registrations add significant value to the underlying business and act as a “net” for capturing and preserving the growing goodwill of the business.


Copyrights

Copyrights provide significant protection for important original business and personal knowledge based, creative assets or “works”, including literary (e.g. books, marketing literature, software), artistic (e.g. artwork, photographs, logos and designs), musical (e.g. records, tapes, cd’s, dvd’s, scores) and dramatic (e.g. films, television, plays). These copyrights foster creative effort and the orderly exchange and commercialization of ideas.

Copyright registrations are the official acknowledgement of one’s claim of copyrights. As in trade-marks, copyright registration provides the holder with legal title and represents a valuable asset. The certificate of registration is evidence that the work is protected by copyright and the owner is the proper holder of that copyright. There are also several legal benefits that arise from registration, including many which are strategically important in enforcing the exclusive copyright claims against third party infringers.


Patents and Designs

Patents cover new inventions, or new and useful improvements to existing inventions. These inventions can be in the form of processes, composition of matter and articles of manufacture. Patent registrations provide inventors and owners with a monopoly on their invention for a specified period of time, and are often one of the principal cornerstones for the development and growth of a business. If an invention is not properly patented, then anyone is free to use it and profit by it.

Industrial design registrations cover the visual features of design, ornamentation, shape or pattern or any combination thereof, which are applied to articles of manufacture. Businesses often invest significant time, money and effort in adding visual appeal to their products, and can establish an exclusive monopoly on the design by properly registering the design. Such registrations again can be very valuable assets, and, like patents, if they are not properly protected and registered, they will be freely available to anyone to utilize.

FIGHT FOR THE CURE

I am a supporter of the Ottawa Regional Cancer Foundation - I am proud to announce that my friend Matt Whitteker from Final Round Boxing Ltd. will be hosting the first annual Fight for the Cure on March 28, at the Westin Hotel in Ottawa. Proceeds from the event are in support of the Ottawa Regional Cancer Foundation. This exciting evening will feature a served meal, cocktails, special guest speaker and the entertainment for the evening will be live amateur boxing. CTV's Terry Marcotte and former Deputy Mayor Walter Robinson will be featured in a "White Collar" exhibition bout. For table, sponsorship or event information please visit Final Round. As mentionned before, I strongly believe in the importance of giving back to our community, Therefore join us for this great event! See you all on the 28th.

Want to save tax : Hire your family

Lately, I came across this excellent article written by Tim Cestnick, managing director of WaterStreet Family Wealth Counsel:

If your New Year's resolution is to improve your financial situation in 2008, start with some tax savings. Here are three strategies that could save you thousands in 2008.

Hire your kids

If you're not self-employed, consider setting up a home-based business - even part time. This will allow you to pay your kids for working.

Consider an example where you're able to earn sufficient part-time income to pay your child $5,000 to help. If your child has little or no other income, he's likely to pay no tax on that $5,000. In your hands, that $5,000 might have faced tax at as much as 46 per cent (which varies by province).

In this example, you would save $2,300 in taxes. If your child is heading to post-secondary school and can use that $5,000 to help pay for education, you will have effectively deducted part of your child's education costs.

You can also hire your adult children (18 or older in the year) to look after the younger ones (16 or younger in the year) and deduct the amount paid to your adult child as child-care expenses provided you otherwise meet the tests to deduct child-care expenses.
Similarly, consider paying your adult child to help in a move. If you're going to hire movers, why not make it a family member? The amount paid may be deductible as a moving expense if you meet the tests for deducting those costs. All of these ideas will create RRSP contribution room for your child, which will help save tax in the future.

Deduct common expenses

There are certain things you're likely paying for that may not currently be deductible on your tax return. I'm thinking of mortgage interest, property taxes, insurance, vehicle costs, computer expenses, subscriptions, meals and entertainment, and more. A part-time business earning even a few thousand dollars in revenue each year can open the door to deducting a portion of these costs.

Just another good reason to consider part-time self-employment in 2008. And if you have no idea what type of business to create, consider a multilevel marketing business selling candles, jewellery, cosmetics, sports equipment - whatever. It may not sound exciting, but these are generally legitimate businesses that provide an opportunity to earn some revenue.

Hire an assistant

If you're an employee who could use the help of an assistant, and have some flexibility to negotiate with your employer, consider coming to an agreement with your employer that will require you to hire and pay for your own assistant. If you're able to then hire your spouse, even on a part-time basis, to assist in your work, you'll be able to deduct the compensation paid to your spouse directly against your employment income.

It's a direct transfer of income from you to your spouse. You'll need your employer to sign Form T2200 annually as proof of the arrangement, and I'd also recommend a letter signed by your employer confirming the agreement. Make sure your spouse is actually doing some work to justify the compensation.

Some basic tax planning - income splitting

I met with an entrepreneur yesterday - great business - she's an owner-manager. Her business is picking up and the husband will now join her to expand into new market. After reviewing her minute book, I explained her that she had only one class of share. I further explained her that in order to maximize her income tax splitting, it would beneficial to change her share structure and to create several classes of shares. Her husband will acquired shares of a different class. The rational is that she would able to split the income between her husband and her by declaring a dividend to for each class of shares. By way of example, let's say that company XYZ have $100,000 in retained earning at the end of the year, the company could pay a dividend of $100,000 to the wife. However, with that new structure, the company could declare a dividend of $70,000 to the wife and $30,000 to the husband. Obviously, the income taxes to be paid would be quite different in these 2 scenarios. Please keep in mind that some special rules exist, such as the attribution rule, but if planned in conjonction with your accountant, these kind of strategy are more than worth it. I recommend you to consult your accountant and your lawyer to learn more.

Business Owners: The importance of teamwork & planning

Today, I would like to share with you, an excellent article from my friend Milan Topolovec, President & CEO of the TKGroup:

What can business owners learn from the Ottawa Senators?

Business owners – no matter the size of the company - face a difficult dilemma: by constantly responding to client needs and the daily issues associated with running a business, they have very little time to actually build their own organizations, putting themselves and their family at risk.

Like the shoemaker's children of yore who often went barefoot while "father" tended to the needs of the villagers, the modern-day business owner's family often does not get the full benefit of his or hers' hard work. Fortunately, there is now a way to have your cake and eat it too. And really isn't that why you work so hard to get ahead? To give your family and yourself the finer things in life?

There are several common mistakes that business owners make that we would never allow our clients to make. These mistakes are costing us time, money and often times, our health. Fortunately, they are easy to fix once you recognize them.

For the next few minutes you are going to appoint yourself to look at your business with the same objectivity you would a new client's. Look at your business as a spectator might watch an Ottawa Senators game, only I want you to look past the players on the ice and instead observe the business machine that makes the Senators' franchise hum.

A successful hockey franchise like the Ottawa Senators relies on more than just the natural talent of its players to make it financially sound. It also depends on an intricate balance involving coaches, contracts and office healthy living to keep the team focused on their quest for the Stanley Cup. I am going to show you how to do the same thing for your business for a fraction of the cost. Ready?...

Coaches and Contracts

Start by asking yourself this simple question - "is my business properly structured to win? Is it ready to take full advantage of the planning opportunities available to capitalize growth and minimize risk?" Well, winning begins with planning and thorough planning really begins when you create a personal team of advisors. You need to draft the following players for your all star line-up: accountant, lawyer, real estate professional, banker, doctor and insurance specialist. I'll tell you what positions each play in a minute, but first let's deal with a myth many business owners have.

Many business owners incorrectly believe that to get experienced and proven specialists is expensive. Forget the fact that it's the best investment you will make in your business, experience need not be costly. How do you find people that can help you? By asking for referrals from successful people you already know and trust and by doing a little research on your own.
Using the hockey analogy, the accountant, lawyer, and real estate professional are forwards helping you establish your dominance on the ice and score goals. On defense is your banker and doctor who keep you physically and fiscally healthy.

Your insurance broker is the goalie – the one player who's on the ice all the time, watching the subtleties of the game guarding your net to keep your assets safe. You need your goalie the most when the game is tied; you're down two players and the puck is in your end. That's when the pressure is on and every move counts. It is up to them to hold the line and keep the bad guys from scoring.

It's the same for your insurance broker. It takes years of practice and skill to ensure your company has the right structure and the correct protection. For example, I am sure you have a shareholder agreement for your company but where did you get it and are you covered if a key player becomes injured and cannot return to work?

A few of the key clauses you need to include are shareholder buyout provision on death, disability and/or retirement. Only a trained professional can tell if your shareholder insurance will cover a shareholder buyout in the case of death, disability or critical illness. Is this risk covered in your company? Also, do you have: Errors in Omissions Insurance, Directors and Officers Liability Insurance, Critical Illness Insurance and Disability Protection and life Insurance?

You need a specialist who is knowledgeable not only about the product, but also who knows how to make the most of the legal, as well as the accounting structures which are best for your situation. You should also look for an individual who represents a number of companies and ask him or her which ones are best suited to your needs.

We have had occasion to assist our clients in the multi-million dollar sale of their company, without penalty, due to proper advanced planning. You should be in a position to reap all the possible benefits available to you while growing your company ... it is also imperative to have an exit strategy in place.

Integrated financial planning takes into account your corporate structure and requires the completion of an insurance audit. It also brings your accountant and your lawyer into the process together.

When was the last time you sat down with your family members to let them know what you are doing in the business? If you're like most people - never. Your family needs to be on familiar terms with your business plans. What would happen to your ideas if you died or became ill? Who would know how to keep the ship sailing through sometimes rough seas? They must be written down.

When was the last time you had all your advisors in one board room taking care of your needs? Again, chances are - never. How can you expect to get the best results when they work in isolation? They need to work as a team.

Our approach is always to work with a client's existing legal and accounting advisors. When needed, we will introduce them to specialists who provide only the services needed to meet their stated objectives.

You should always look to engage specialists, those who are experts in their field. Fortunately, Ottawa has some of the best specialists in Canada, people who are recognized nationally and internationally and if you want the best advice these are the people you engage to work with you. The billable hourly cost will actually decrease as there are not as many conversations, emails or meetings taking place when everyone is on the same page.
Where can you find these exceptional resources? There are many places. TiE Ottawa, Innovations Alliance, Mind Trust and Café are just a few. Identify a group where you will be motivated to attend the regular scheduled meetings.

Your Health

What are your personal needs? Have you ever asked yourself that question?
As business owners we are accustomed to taking care of someone else's needs and often overlook our own. How many times have we said, "This year I will work out on a regular basis?" Well, I must have the most expensive golf membership in the world because I don't take time to go on a regular basis. Yes I admit it. This year I am committed to once a week.

As I mature - or as my kids remind me - get old, I am finding that when I do take time for myself, I am in a better mental state. The question begs to be asked, why do I not take more time for myself? Of course the easy answer is guilt.
As business owners, I think we tend to believe the ideas ingrained in our own psyche – longer hours at work equates to greater success. As successful men and women – fathers and mothers - we owe it to ourselves, our clients, our families and our corporations to take care of our needs for relaxation too.

As business owners we are expected to be all knowing, strong, flexible, caring etc. Who have you got to be there for you when you do not know which way to turn? Having friends who are objective and supportive is essential to sometimes just knowing that you aren't losing your mind.
You may have a mentor who is helping you on your journey. You may want to get an "active" Board of Directors to be the guiding light for you and your company. Maybe you could also tee off next to an Ottawa Senator. After all, by golfing in the summer they keep themselves in great shape and get mentally prepared for the next season. Whatever it takes, do it. You will feel great.

Your Actions Always Tell The Truth

Today, I would like to share with you an excerpt of Larry Winget’s new book You're Broke Because You Want To Be: How to STOP Getting By and START Getting Ahead :

“Money is a dead giveaway of what is important in anyone’s life. What do your bank statement and credit card statements say about you? I was working with one family when I asked the father if he loved his son. He said of course he did. I told him he didn’t. I told him he loved his cigarettes more than he loved his son because he spent more on his cigarettes than he did making sure his son had a secure future. I then took his cigarettes from him, threw them on the floor, and stomped them flat with my cowboy boot. He was pissed! I loved it…”

/

A lot of people only talk, but real one takes action.

Put it in writing....

As lawyers, we are train to put it in writing... most of our clients come to see us to ensure that they have a written copy of the deal. Actually, I had a client who came to see me this morning - briefly, he had a deal with one his business partner regarding the profit sharing of a contract, however; they never took the time to write properly the terms of the deal (as he said, they were trying to save money on lawyer ...) . They actually got the contract - You are probably asking yourself ... so what's wrong ??? In addition, they did almost $200,000.00 of profit on this deal. As you might imagine by now, the business partners did not agree on the final figures relating to the profit sharing AND THEY HAVE NOTHING ON PAPER.

I advice my client that he have a strong position, however, in order to succeed; he will need to spend a substential amount of money and spend the next few years in Court. He could try to settle and hopefully his soon to be "former" business partner will accept. However, it is really unsure, all this situation could be avoid, PUT IT WRITING !!!! In order to save costs, please draft the general terms of any agreement and ask your lawyer to review it.

In the event that you do not have enough money to spend... keep it simple, stupid (KISS) draft a one pager outlining the terms of of your deal/contract, and both parties shall sign it - just make really simple sentence to ensure that it is clear.

I do agree that sometime it is inconvenient and long, but remember once it is on paper, IT IS MUCH EASIER TO PROVE THE EXISTENCE OF THE DEAL AND/OR CONTRACT...

Has we say in French: "les paroles s'envolent, les ecrits restent"