It can — not the transfer of the mark into the buyer’s own name, which the Trademarks Act permits without difficulty, but an uncontrolled transition period where the old mark is licensed back to the operating business with no quality standards and no oversight, which the Act treats as a real risk to the mark’s distinctiveness.
Short answer
It can — not the transfer of the mark into the buyer’s own name, which the Trademarks Act permits without difficulty, but an uncontrolled transition period where the old mark is licensed back to the operating business with no quality standards and no oversight, which the Act treats as a real risk to the mark’s distinctiveness.
Section 48(1) of the Trademarks Act makes clear that a trademark, whether registered or unregistered, is transferable: “a trademark, whether registered or unregistered, is transferable, and deemed always to have been transferable, either in connection with or separately from the goodwill of the business” Moving an acquired mark into a holding company, or licensing it back to the operating business for a transition period, is ordinary and permitted on its face.
Section 48(2) provides: “Nothing in subsection (1) prevents a trademark from being held not to be distinctive if as a result of a transfer thereof there subsisted rights in two or more persons to the use of confusing trademarks and the rights were exercised by those persons” A licence-back during a rebrand transition, run with no documented standards and no inspection of how any location uses either the old or the new mark, is precisely the fact pattern that provision addresses — multiple locations exercising rights to use confusingly overlapping marks at the same time.
A licence-back can, in principle, keep the platform’s own position clean, but only on the terms section 50(1) sets: the use enures to the owner’s benefit only where “the owner has, under the licence, direct or indirect control of the character or quality of the goods or services”. With no standards set and no locations inspected, a business can be exposed on distinctiveness under s.48(2) and unable to rely on s.50(1) to show controlled use at the same time.
A real licence agreement for the transition period — signage standards, service-quality benchmarks, and a named point of accountability, actually enforced — is the s.50(1) control the Act asks for. “It’s temporary” is not an exception written into the statute; the length of the transition does not change what s.48(2) and s.50(1) require of it.
The full write-down this exposure produced, and the fix, is in Treadstone Academy’s Case Files: a three-brand roll-up whose uncontrolled 18-month transition cost $460,000 in carrying value before it was corrected and the same distinctiveness analysis running alongside a separate, franchisee-specific fair-dealing problem on the identical rebrand.
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