An Update on Copyright, Industrial Designs and Breach of Confidence Developments in 2026

Since our last report there have been a number of developments in copyright, industrial design, and breach of confidence law. This update highlights notable decisions, legislative trends, and policy shifts shaping this environment. 

AI Developments

a) Canada

The government ran a further 30-day public consultation to shape a renewed AI strategy. Input was sought from October 1 to 31, 2025. An AI Strategy Task Force was named.

The Task Force was composed of representatives from across academia, industry, think tanks and NGOs, and asked to provide recommendations on members’ respective areas of expertise to inform the development of the new strategy. 

The summary of inputs states that key themes captured in the consultation included the need for:

• ethical, safety-focused research tied to democratic values

• transparent governance and risk-based regulation

• sovereign infrastructure and intellectual property protection

• national AI literacy and lifelong learning

• strong security frameworks and liability laws.

The Government has said that submissions received are informing the development of a renewed AI strategy that will help guide policy decisions and create an approach that reflects diverse perspectives, safeguards public interest and strengthens Canada’s leadership in responsible AI.

b) The U.S

On March 20, 2026, the White House issued a National Policy Framework for Artificial Intelligence in the US consisting of its recommendations for AI. The relevant recommendations are as follows:

• American creators, publishers, and innovators should be protected from AI generated outputs that infringe their protected content, without undermining lawful innovation and free expression.

  
  

•  Although the Administration believes that training of AI models on copyrighted material does not violate copyright laws, it acknowledges arguments to the contrary exist and therefore supports allowing the Courts to resolve this issue. Similarly, Congress should not take any actions that would impact the judiciary’s resolution of whether training on copyrighted material constitutes fair use. 

  
  

• Congress should consider enabling licensing frameworks or collective rights systems for rights holders to collectively negotiate compensation from AI providers, without incurring antitrust liability. Any such legislation, however, should not address when or whether such licensing is required.

  
  

• Congress should continue to carefully monitor the development of copyright precedents and enforcement in the courts and evaluate whether, due to novel AI considerations, additional action beyond that proposed here is needed to fill potential gaps or provide additional protections for content creators.”

  
  

Copyright in an Indexing System or Taxonomy

In The Construction Specifications Institute, Inc. v. Bibliotech Inc, (Unreported decision of the Federal Court of Canada, dated November 26, 2025) consideration was given to whether copyright could subsist in an indexing system or taxonomy. It was suggested that for copyright to subsist the taxonomy must be a way to organize information creatively (not simply alphabetically or chronologically), which is not the only way to represent the idea of the organization, and the copyright of the organization must be analyzed separately from the copyright of the work as a whole.

Further Benefits of a Copyright Registration

In addition to remedies under the Act, a copyright owner which has obtained a registration will frequently be able to exercise takedown rights on public websites because of contractual takedown policies implemented by the operators of such sites. The policies are specific to each website but there are commonalities which include a requirement to have obtained a registration. 

Injunctive Relief in the context of a Breach of Negative Covenants and Irreparable Harm 

When considering issuing injunctive relief in the context of a breach of negative covenants, a contractual provision by which the responding party has already agreed to be bound, irreparable harm and balance of convenience may become less of a factor. However, these issues cannot be ignored and must be considered by the court—even where the moving party has established a clear breach of a negative covenant. The fundamental question for the court is whether granting an interlocutory injunction is just and equitable given all the circumstances of the case. Vaultose Digital Asset Services Inc. v. Kunz, 2023 ONSC 5790 

In Chatters limited partnership v. Chatters Deerfoot Meadows Limited 2025 ABKB 536 it was said that such clauses provide substantial evidence but cannot override the court’s exercise of its equitable discretion.

Scraping 

A basic safeguard is the Robots Exclusion Protocol file or robots.txt which instructs automated bots how they may access a website and limits which parts of the site they may access, among other things. It is important to make sure the protocol is operational and aligned with the relevant terms of service.

Whether Canadian Copyright Subsists is Determined by the Canadian Copyright Act, without Reference to the Law of the Jurisdiction in which the Work is Created 

In GE Renewable Energy Canada Inc v. Canmec Industrial Inc 2024 FC 322 the author of the work in issue created it in France. In determining whether the law of France or Canada applied, the court said section 5 sets out conditions for the subsistence of copyright in Canada, including that the author be a citizen, subject or ordinary resident of a Berne Convention or other treaty country at the time of creation. There is no requirement in section 5 that copyright in the work be recognized in its country of origin. Whether Canadian copyright subsists in a work is a matter expressly dictated by the Canadian Copyright Act, without reference to the law of the jurisdiction in which the work is created. It is also clear that the Copyright Act is expressly intended to govern the works of foreign authors. This is consistent with the statement in Article 5(2) of the Berne Convention that the enjoyment and exercise of copyright is independent of the existence of protection in the country of origin of the work. 

Works Created in the Course of Employment

In Nexus Solutions Inc. v. Krougly, 2026 ONCA 199 the Ontario Court of Appeal considered the application of subsection 13(3). They said the exception was justified on the basis that where the employer has paid for the development of the work (including through compensating the author(s) for their work in developing it), and assumed the risks associated in its development, the “just reward” should accrue to the employer rather than the individual author(s). Allocating the reward to the entity that caused the work to be created is consistent with the principle that copyright should vest in the entity for whom the work was created and who paid for it. 

The exception is premised on the determination that the employer ought to hold copyright over works that were made by the employee as part of their responsibilities to the employer. The supporting rationale is that the employee was paid to make the work and did so in fulfillment of their agreed role with the employer. 

In this case the trial judge found that software created by Krougly was not developed in the course of his employment with Nexus even though he secretly developed it while he was employed by Nexus and the software competed with Nexus’s software. Krougly had not been assigned the responsibility of developing the software at issue and Nexus not had expended resources in its development. Other claims asserted against Krougly concerning his actions were not considered at the trial or on the appeal.

Concurrent Trademark and Copyright Rights

In Wanakome Inc v. Martin 2024 FC 688 an action was brought relating to an unregistered trademark and a related challenge to a copyright registration for an artistic work. The judge said that trademark rights arise through “use” in the marketplace over time and the generation of reputation and goodwill. Copyright, in contrast, derives through the expression of the idea, which forms the basis for the work. These rights need not be synonymous and the fact that there is copyright does not mean that there are trademark rights, or that there cannot be an interference with trademark rights, particularly where the copyright relates to an artistic work and the trademark in question is a word mark. In this instance both claims were dismissed. 

An appeal from the decision was dismissed. Wanakome Inc v. Martin 2026 FCA 12. The Court said an application to expunge a registration under subsection 57(4) of the Act, turned on the specific facts and the evidence. Based on the evidence, the Federal Court found that Ms. Martin was the author of the logo and that the copyright in the artistic work was validly registered. There was no palpable and overriding error that required overturning the Federal Court.

Industrial designs 

Since the definition refers to a singular “design” and “article”, a registered design must be limited to one design applied to a single finished article or set, or to variants applied to a single finished article or set. Safestand Limited v. Weston Homes PLC [2025] EWCA Civ 374 (U.K.C.A.) where this issue is discussed as well as assistance of expert evidence in an appropriate case to educate the court concerning the relevant design field.

It was also said it was possible to register a design for a modular product provided that it was the design for a single product. It remains to be seen whether such a modular design would be considered a “kit” under the Canadian Act.

Partial Industrial Design Protection for Websites and Apps 

It appears that websites and apps can be partially protected by way of industrial design registrations.  Applications have been successfully filed for computer interfaces including graphical user interfaces, icons and animations and other unique computer-generated design elements. However, to date no specific guidance has been provided by CIPO.

Breach of Confidence

In Behold Control Equipment Inc. v. Race Mechanical Systems Inc., 2025 ONSC 7129 it was concluded that disgorgement damages were available in breach of confidence cases based on Atlantic Lottery Corp. Inc. v. Babstock, 2020 SCC 19, [2020] 2 S.C.R. 420 where the Supreme Court said that damages quantified as disgorgement of profits may be available for breach of contract in exceptional circumstances.

To ensure your rights are fully protected, reach out to us for a detailed review of your situation and potential remedies. 

To stay informed visit my blog and subscribe to my bi- monthly newsletter discussing the latest decisions and law concerning trademarks and copyright.

If you have questions, please contact me at  jmckeown@LN.Law

John McKeown

Loopstra Nixon LLP.  

130 Adelaide St W Suite 2800Toronto, Ontario, M5H 3P5Canada

 jmckeown@LN.Law

437 290-5960

This article is of general nature and is not intended to provide specific legal advice as individual situations will differ. Specialist advice should be sought about your specific circumstances. Copyright © John Mckeown, All rights reserved. To unsubscribe to the IP Update please send me an email at jmckeown@Ln.Law

Please feel free to share this post