INFORMATION FOR INVENTORS SEEKING PATENT PROTECTION

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1 INFORMATION FOR INVENTORS SEEKING PATENT PROTECTION WHAT IS A PATENT? A patent is a legal instrument which enables its owner to exclude others from practising an invention for a limited period of time. A patent thereby offers the owner a limited monopoly in the marketplace for the invention. A patent is granted in a particular jurisdiction (for example Canada or the United States) and normally has a term not exceeding 20 years from the date the first application is filed. The underlying principle of the patent system is that in exchange for the limited monopoly, the patent owner gives the technology of his invention to the public after the expiry of the patent. WHAT IS PATENTABLE? With only a few exceptions, anything which is new, useful, and not obvious is patentable. A Canadian patent issued under the Patent Act as amended in 1989, grants certain statutory rights, as indicated above, to an invention in Canada for a period not exceeding 20 years from the date the application for patent was filed, contingent on payment of annual maintenance fees. A separate patent must be obtained in each country where protection is desired. Most countries have periods of protection of about the same length as that given in Canada, also usually subject to payment of periodic maintenance fees, although a few of the developing countries have relatively short patent terms, e.g. 10 years. WHAT IS THE EFFECT OF PUBLIC DISCLOSURES? If you want to protect your invention in virtually any country of your choice outside of Canada and the United States of America, it is absolutely essential that a patent application be filed in at least one country before the invention is disclosed publicly or published anywhere in the world. If for some reason you must disclose the invention before filing, provision must be made for such disclosure to be made in confidence to the other party or parties, usually through a non-disclosure agreement. Once an application for patent is filed in one country (which may be Canada, if desired), the provisions of an International Treaty (to which most industrialized countries of importance subscribe) come into effect. Under this treaty you then have up to one year to file in such countries and, if you file applications in these countries within the one year period, your rights are preserved between the date of your first filing and the date of filing in such other countries. The provisions of another treaty, known as the Patent Cooperation Treaty (PCT), may be beneficial in certain cases where filings in a number of foreign countries are under consideration. The treaty provides certain delays, including deferral of filing costs, and may afford a better basis for decisions regarding patent protection in such countries. We will be happy to supply further information on request. To protect your invention in Canada, the Patent Act requires the filing of a patent application before any public disclosure of the invention takes place except that a grace period of one year will apply to public disclosures by the inventor himself or persons who obtained knowledge of the invention from the inventor.

2 Early filing within the one year grace period is strongly recommended, however, as the patent will be awarded to the first person to file rather than the first person to make the invention. In the United States of America, you may file a patent application up to one year from your first printed publication anywhere in the world. If you have publicly used, sold, or offered for sale the invention in the U.S.A., then the one year period runs from the date of such public use, sale or offer for sale. An earlier filed Canadian patent application does not avoid these time limits. It follows from the above that if you are uncertain as to whether you wish to file your application for patent, by all means keep your invention secret until you file the first application following which you will have almost a full year to choose the other countries in which you would like to file. SEARCHES We can carry out various types of searches for you in an effort to locate information which may be of importance to you in connection with the further development and protection of your invention. Preliminary novelty searches should be carried out before going to the expense of preparing and filing a patent application. The patentability of your patent application and the validity of any resulting patent can be adversely affected by pertinent prior art existing anywhere in the world. Since it would be impractical to attempt to search everywhere, we ordinarily recommend that preliminary searches be carried out in the Canadian and U.S. Patent Offices and/or in a computer data bank, depending on circumstances. Although all preliminary novelty searches are carried out with the greatest of care, we cannot guarantee that all references of interest will be located mainly owing to the fact that the Patent Office does not always classify the issued patents in the correct locations; furthermore, pertinent patents may be missing from the appropriate search files. Pending patent applications are not available for search purposes in the United States. However, we would note that pending Canadian applications filed after October 1, 1989 as well as European and many other foreign applications become available for search purposes 18 months after filing. Infringement searches should also be considered before you commit a great deal of money to a particular development, e.g. before you go into full commercial production or use of a machine or process. A patent does not give you a positive right to go ahead and do something; you are free to go ahead with the commercial development of your invention only if it does not infringe the valid patent rights of others. An infringement search is substantially different from and more costly than a patentability search since we are obliged to look closely at the claims of relevant patents which are still in force so that we can determine the scope of protection which they give. However, if you infringe even one valid claim of a competitor's patent you can be in serious difficulty so the cost of the infringement search may well be worth it in the long run. State-of-the -art searches are sometimes requested by prospective inventors who have in mind only a general idea of what they want, and who wish to see what has been done in a particular field of endeavour before proceeding further. These searches are often helpful in formulating general approaches to problems to be solved and may save much development time in the long run.

3 Many inventors are quite disappointed when, after having spent a great deal of time, effort and money on a project, they find that others have done essentially the same thing years earlier. This type of search helps to avoid this type of occurrence. It is important to note that for all of the above types of searches, our investigations are generally carried out through the patent literature. Other publications such as trade journals and technical publications are not searched unless a special request is made in which event steps can be taken to carry out further searching at selected facilities, such as the library of the National Research Council. Index Searches can be carried out either separately or as a supplement to any of the above-noted searches when we are given the name or names of inventors, companies or organizations in whose names the various patents may have issued or to whom the patents may have been subsequently assigned. These searches are often very useful in cases where an inventor or a company has received word that a certain individual or company has been working on a particular line of development. If the correct name or names are given to us we should be able to locate any patents standing in such names. Again, as with the preceding searches, the accuracy of such searches is dependent upon the degree of accuracy with which the Patent Office has identified and indexed its issued patents so in very important cases a cross-check by way of one of the three types of searches noted above, depending on the circumstances, should be considered. DOCUMENTATION It is recommended that all original drawings, sketches and written descriptions relating to an invention be retained in a safe place and that they be signed and dated by the inventor and also disclosed to another party (on a confidential basis) who is capable of understanding the invention, which person also signs and dates all of the pages of the description and drawings as having been reviewed and understood on the relevant date. We can do that upon receipt of the material from you. The above is not intended to be comprehensive discussion of the various points raised but we hope that this brief discussion will alert you to a number of considerations of some importance and we trust that you will feel free to query us on anything that is not entirely clear to you. Should you wish to proceed with patent protection, please complete the accompanying form and return it to us. It will provide us with some of the basic information we will require. FEES General Our service fees are based upon the amount of time required to complete a matter, subject to predetermined minimum fees for certain matters. Time spent includes considering correspondence and materials received therewith in the mail and by facsimile as well as telephone conferences and the like and preparing memoranda to our file to record same. We require an advance payment of our anticipated fees and disbursements to reimburse us for the monies we will be expending on your behalf. Any advance payments we receive from you will be placed on account until a bill is rendered.

4 Patentability Searches A typical charge for conducting a preliminary patentability search in the Canadian or United States Patent Office, studying four or five of the most pertinent patents uncovered and rendering an opinion is $1,500-$2,500. The actual cost will depend on the amount of time required to study the material you provide to determine the principle of the invention, instructing our searchers, reviewing the search report, patents and rendering our opinion. The amount of time required will depend on the complexity of the invention, the volume of patents which must be considered and the volume and quality of the information you provide. The amount of time should also depend on the number of countries in which you wish to obtain patent protection. Generally, speaking, the more extensive the filing program contemplated, the more extensive the search should be. As a general rule, the search fees should be roughly to 15%-25% of the estimated cost of preparing and filing applications in all countries of interest. We are generally able to provide a search report within 2 to 3 weeks of the date of receipt of instructions to proceed and the required retainer, unless greater urgency is needed. Upon our receipt of your instructions and any material describing your invention, we will be able to provide you with an accurate estimate of the searching cost. Preparation of Patent Applications The costs involved in preparing a patent application consist of our fees plus disbursements. Our fees for preparing a patent application covers studying all material in detail, preparing a detailed description of the specific embodiment(s) of the invention and claims covering the invention, selecting and assembling the drawings, tables, charts, etc., if any, consultation with you if required and providing a draft patent application for your review and approval, and revision of the draft if required. Since the latter could be time consuming if important new matter must be added to the first draft, it is important that you provide us with as much information as possible at the outset. Disbursements include the preparation of formal patent drawings and official government fees such as the filing fee, assignment registration fee(s) and examination fee. The average cost of formal drawings is $100 per sheet. Generally speaking, the total cost of preparing a patent application in Canada is in the range of $5,000 to $15,000 depending on the complexity of the application and the nature of the subjectmatter. Normally, we would be able to provide you with an assessment of the anticipated costs upon receiving details of your invention. Filing of Patent Applications Once a patent application has been prepared, it must be filed in the patent offices of the jurisdictions where protection is sought. The costs associated with filing an application include government filing fees, foreign attorney fees, and translations (if necessary). The cost of filing an application in another country is generally in the range $2,500 - $12,000 plus any necessary translation but the total cost of filing in some countries such as Japan could be as high as $20,000 or more in some countries. The total cost of filing an application in Canada for a small entity is around $1,000.

5 Examination of Applications Many countries, including Canada, most European countries, Australia and Japan, require the filing of a request and the payment of an examination fee before an application is taken up for examination. After filing of the request, the application is assigned to an examiner who examines the application with regard to form and merit. The examiner conducts his own search and issues an "Examiner's Report" or "Official Action" citing one or more prior patents against one or more of the claims in the application. There is seldom a case where an Examiner's Report is not issued. The cost of reviewing and responding to an Examiner s Report will vary depending on the nature of the objections but you can expect the cost of responding to each office action to be in the range of $300, for responding to a formalities objection by the Canadian Patent Office, to $2,000 or more, for responding to complex substantive matters raised by the United States Patent and Trademark Office. Issuance of Applications Once an application is allowed, all countries require the payment of an issue or final fee before the application is formally granted as a patent. These fees vary from country to country. In Canada, the cost of obtaining the grant of a patent is approximately $600 including our fees. These costs will be reduced if you meet the requirements of a small entity. Maintenance of Applications and Patents Most countries now require payment of fees on a regular basis to maintain an application/patent in force. These fees vary from country to country. In Canada, maintenance fees are payable on an annual basis. The annual maintenance cost for a small entity is approximately $150 including our fee. Maintenance fees become more expensive over the term of the patent. Retainer As you will appreciate, we cannot undertake responsibility to act on your behalf in any patent matter until you have retained us and provided any necessary instructions. Usually a clear direction in writing from you is required, stating what action you wish us to take. Also, agreement must be reached on the funding of the expenditures and fees required for such patent actions with an advance payment to cover our anticipated fees and disbursements. IP-OTT-1/ Revised January 2001 Borden Ladner Gervais LLP 2000 CALGARY 1000 Canterra Tower 400 Third Ave. SW Calgary, AB T2P 4H2 (403) Fax: (403) KITCHENER 22 Frederick Street Suite 515 Kitchener, ON N2H 6M6 (519) Fax: (519) ipinfo@blgcanada.com OTTAWA World Exchange Plaza 100 Queen Street Suite 1100 Ottawa, ON K1P 1J (613) Fax: (613)