Crowdfunding in BC? Your pool of potential investors has grown!

In response to a funding gap for early stage businesses, Canadian securities regulators opened up regulations to allow crowdfunding in 2015. Within this framework, many companies have sourced equity from everyday investors through registered dealers or exempt market dealers. Since then the commission has actively sought recommendations from businesses and stakeholders in BC’s tech industry on how to make this exemption more beneficial to participants. Results from these discussions have now materialized into updates to the legislation. (It does pay to respond to surveys!)

Last week the BC Securities Commission announced that it has amended the crowdfunding rules (BCI 45-535 Start-up Crowdfunding Registration and Prospectus Exemptions) to allow issuers based in BC to extend the reach of their crowdfunding campaigns. BC based issuers may now access investors in Alberta as well. This change aims to increase the number of potential sources from which the issuer may seek to raise funds and offer additional opportunities for investors in Alberta.

The BCSC’s amendments also raise the individual investment limit from $1,500 to $5,000, provided the investor has obtained suitability advice from a registered dealer.

With the rise of fintech and a quickly evolving landscape from traditional sources of fundraising, we are happy to see the BCSC’s agility and attention to these fast paced updates.  For more information, check out the BCSC’s crowdfunding page or reach out to us!

Startups @ McMillan: TechCrunch Disrupt 2017

We’ve just returned from TechCrunch Disrupt San Francisco with a habit in flavoured sparkling water and an update on the buzz worthy topics from the valley.

We heard from the founder of Ethereum, Vitalik Buterin, who mused on the possibilities of new applications for decentralized ledgers. Though the rise in Initial Coin Offerings is clearly here, Vitalik explained his vision for the wider application of blockchain technology beyond creating new currencies to areas like healthcare and social networks. While companies will undoubtedly migrate towards applying blockchain technology to their features, Vitalik advised that it does not make sense for every company but rather that “a good block chain application is something that needs decentralization and some kind of shared memory.” We look forward to seeing how entrepreneurs come up with new and useful applications.

There was a considerable amount of discussion on the merits of Artificial Intelligence as supporting human capacity or humans supporting AI. For example, in issues of discrimination and bias, could AI assist humans by enabling hiring based on metrics and not biases? Alternatively, although AI could assist a doctor with running through thousands of known symptoms, it cannot replace a doctor’s intuition or feeling of “surprise”… yet. Kevin Durant made clear that he would prefer if AI slowed down a little bit, at least in terms of AI-powered referees.

In terms of growth, Yuri Milner told the crowd that he believes that the consumer internet is still on track for the same amount of growth in the next ten years as we have seen in the past ten years. He foresees healthcare and transportation related industries as being the biggest movers. Flying cars here we come.

The startup competition found finalists from varying sectors: Oneva, which enables employers to offer a wider range of benefits including child and elder care; Matic, which aims to simplify the process of finding homeowners insurance; futurefamily, working to simplify affordable female fertility testing on a wide scale and now offering male fertility testing; Colormass, which offers a B2B platform for companies to create online photo shoots to merchandize their products; and Augmedics, which creates AR headsets for surgeons. Pi, the winner of the competition, has created technology for a much stronger wireless charger.

Now it’s time to see what Vancouver has to offer. Check out our event for Vancouver Startup Week.

A Startup’s Guide to the Patent Process

You have created a new invention.  It may be a game-changer in your industry; or it may be a minor (but important) improvement on an existing product or process.  Either way, you want to seek protection for your invention.  While the patent process can be highly technical and quite involved, don’t let that scare you.

Below is a summary of the typical steps in pursuing a patent to help get you familiar with the process.

1.     Performing a Prior Art Search and Patentability Analysis

In order for an invention to be patentable, it must be at least novel, inventive, and useful.  With that in mind, the first step typically undertaken in the patent process is the performance of a “prior art” search.  This is a search of the existing patent literature and other publicly available literature.  The purpose of a prior art search is to uncover any document (“prior art”) that may pose a problem to the novelty, inventiveness, or utility of your invention.  A patent agent or a patent searcher typically performs a prior art search.

If prior art documents are located, a patent agent will typically be engaged to analyze the relevance of these documents to the invention.  If a prior art document fully discloses your invention, then the invention cannot be considered new and therefore would not patentable.  If two or more prior art documents can be combined to arrive at your invention, then the invention is not inventive and therefore not patentable.  This search isn’t just about documents published by others, but is also about documents that you may have published yourself.

No prior art search is 100% comprehensive.  For example, patent applications generally enjoy an eighteen (18) month confidentiality period from the date of filing.  That means a prior art search of the existing patent literature will not capture patent applications that were filed within the past 18 months.  Also, any public disclosure around the world may be used to challenge the patentability of an invention, and this includes documents that are published in other languages or other jurisdictions.  However, a properly completed prior art search will still give you a good idea of the state-of-the-art in your particular industry and the likelihood that your invention is patentable.  A prior art search is therefore an invaluable investment regardless of its findings or outcome.

2.     Drafting a Patent Application

Assuming you are satisfied following the prior art search, you will then have to draft a patent application.  A patent agent is typically engaged for this exercise.

As succinctly stated by the Supreme Court of Canada, “[t]he patent system is based on a ‘bargain’, or quid pro quo: the inventor is granted exclusive rights in a new and useful invention for a limited period in exchange for disclosure of the invention so that society can benefit from this knowledge”.  The “disclosure of the invention” crucially important in the patent application itself.  Put in another way, a patent application may be thought of as an instruction manual for your invention.

A patent application is typically broken down into the following sections: (i) abstract; (ii) technical field; (iii) background; (iv) summary of the invention; (v) brief description of drawings; (v) the detailed description; (vi) the claims; and (vii) drawings.  While each section has a unique role in a patent application, particular emphasis is often placed on the “detailed description” and “claims” sections of a patent application.

The “detailed description” section of a patent application is, as the name suggests, a detailed disclosure of your invention.  In other words, a comprehensive description of: (i) what your invention is; and (ii) how it works.  The “claims” section defines the boundaries of the patent protection scope that you are seeking.  The “detailed description” and “claims” sections go hand-in-hand, and the subject matter forming the claims must be supported by the description of the invention set out in the patent application.  It is important to draft both of these sections correctly.  The value of your patent application primary resides in these two sections.

While conceptually simple, the actual mechanics of drafting a proper patent application are not straightforward.  Care and diligence in drafting a patent application are required in order to ensure that an invention is properly disclosed and that the legal requirements governing patents are followed.  This is again where the value of an experienced patent agent cannot be understated.

However, you can greatly assist your patent agent in the drafting process by providing him or her with easy to understand details regarding your invention.  Diagrams and other drawings are always helpful.  In order for your patent agent to draft a proper patent application, he/she must understand the invention as well as the inventor does.

3.     Filing your Patent Application

So, your patent application has been drafted.  Now it’s time to file it with a patent office and secure a filing date.

The patent system works on a “first to file” basis.  In other words, the first party to file a patent application for an invention gets first rights to prevent others from using that invention.

While many applicants will often submit the first filing of their patent application in their home jurisdiction, this may not always be the case for various commercial reasons.  In addition, there may be other regulatory issues which impact where the first filing may occur, such as: (i) the nature of the invention; (ii) who the inventors are; (iii) where the invention was conceived; or (iv) who the applicant is.  For example, in applications where there are multiple inventors with different citizenships, where the invention itself was conceived in a foreign jurisdiction or one or more jurisdictions, or where the subject matter is of a sensitive nature, care must be taken to ensure that the first filing is executed in the right jurisdiction.  An incorrectly filed patent application may result in loss of patent rights in some jurisdictions or other penalties.  Indeed, nothing in the patent system is as straightforward as it seems.

4.     Protecting your Invention in more than one Jurisdiction

Each jurisdiction has its own patent regime, and patent protection in one jurisdiction does not extend into another jurisdiction.  In other words, you must submit a patent application to the patent office of each jurisdiction that you want protection in.

Typically, you will have one (1) year from the date of your first filing to decide where else in the world you’d like to seek patent protection for your invention.  To seek patent protection in those other jurisdictions, you would simply submit a patent application for your invention to those jurisdictions and inform them of the details of your first filing.  If, at the one year mark, you are still undecided as to where you’d like to seek protection for your invention (e.g. you require more time to do market research or to investigate the commercialization potential of your invention), you may push off that decision by an additional 18 months by filing an “international” application with the appropriate receiving office.  However unlike the patent applications discussed above, the “international” application is just a time holder and never becomes a granted patent.  At the end of the lifetime of the “international” application (i.e. typically 30 or 31 months from the date of first filing), you must select the jurisdictions that you want to pursue patent protection in and file a patent application in those jurisdictions accordingly.

Choosing the jurisdictions to seek protection for your invention in is very much a business decision.  For example, it may not be business savvy to seek patent protection for your invention in a jurisdiction that you won’t ever do business in.  On the flip side, it may make sense to seek patent protection for your invention in a jurisdiction that you intend to do the most business in down the road, even if you have no immediate plans.  Discuss with your business partners and patent agent as to what may be right for your business.  Like any business asset, your patent applications should be pursued in line with your business strategies and goals.

5.     Prosecuting your Patent Application

After a patent application has been submitted to a patent office of a particular jurisdiction, that patent office will review the patent application to ensure that it complies with the applicable laws.

If the patent office discovers one or more defects in your patent application, the patent office will issue an official letter called an Office Action which summarizes those defects.  The Office Action will also provide you with a deadline to address those defects (either by argument or by amending the application).  You must respond in good faith to all issued Office Actions in order to keep your patent application alive in the jurisdiction.

Assuming that you are able to overcome any and all defects identified by the patent office, your patent application for your invention will be allowed in that jurisdiction.

6.     Bringing your Patent Application to Registration and Subsequent Maintenance

A patent application is brought to registration by paying a government fee by a set deadline.  In order to keep your registered patent in good standing, you will typically have to pay a fee by certain prescribed dates (e.g. an annual fee, a fee every 3.5 years post-grant, depending on the jurisdiction).  If such fees are not paid on time, then your registered patent may lapse, and your invention may become unprotected in that jurisdiction.  If you maintain your registered patent in good standing, then you will enjoy the fruits of your labour and investment for the duration of the patent protection period (i.e. typically 20 years from the deemed filing date of the patent application in that jurisdiction).

If you have any questions regarding the patent process, or think you may have a patentable invention, please do not hesitate to contact us.  We would be delighted to assist you in realizing your business goals.  Please note that this article is intended to be an overview of the patent process, and is not a detailed description of the patent process or a how-to DIY guide.

 

Fundamentals of Funding #VSW2017

Startups @ McMillan is proud to once again be a sponsor and event partner of Vancouver Startup Week.

VSW_Logo_transparent

From fintech to pharma, software to services, every startup worries about funding. Join us at McMillan’s offices as we host a panel of distinguished professionals experienced in funding startups of all shapes and sizes. From government grants, to incubators, to angels and VCs, growth equity and debt financing, learn what you need to know about seeking funding in today’s markets.

Tuesday, September 26, 2017
When: 1:00 pm – 3:00 pm
Where: Offices of McMillan LLP, Suite 1500 – 1055 West Georgia Street, Vancouver

Speakers:

Clockwise: Janelle Goulard, Director of Health Investment, Pangaea Ventures; Cari Mai, Business Development Professional, Ayming; Saleh Tousi, CEO, Smartt; Noah Shipman, Vice-President, Investments, Vistara Capital 

If you are already attending VSW events, add our event to your Schedule now.  Don’t have VSW tickets yet?  Use our special code for 30% off at checkout: 30-McMillan-KB
We look forward to seeing you!
EDIT:
We’re excited to announce that we have added a fifth expert to our panel: Peter-Paul Van Hoeken, CEO, FrontFundr!
peter-paul