Anonymised, illustrative composite. On a registered mark, an uncontrolled licence is a defect in what gets assigned. On an unregistered one, it is a defect in whether there is an asset to assign at all — and to whom it actually belongs.
At a glance
A buyer agreed to acquire the assets of a three-location regional food-service brand for $3,100,000, with $680,000 of the price allocated to the brand name, logo, and associated goodwill. The business had grown under a name and logo the founder devised twenty years earlier and never filed with the Canadian Intellectual Property Office — a common gap in a business that grew organically rather than through a franchise or licensing programme.
By the time of the sale, two of the three locations were run by a second family-owned company, brought in as an informal partner eight years earlier, using the same name and logo under nothing more than a handshake understanding with the founder. No licence agreement existed, and the founder had never inspected or set standards for how the second company ran its locations.
Diligence returned no CIPO registration for the name in any class. That is not automatically fatal — the Trademarks Act protects real, unregistered rights through the tort of passing off — but it changes what the buyer’s counsel actually had to prove, and from whom. On a registered mark, the registration itself is the asset, transferable by the registrant regardless of who controls the underlying use. Here there was no register entry to point to. The whole of what the buyer was paying $680,000 for depended on demonstrating that a specific, identifiable business owned distinctive goodwill in the name — and, given two independently-run companies had both used it for years with no formal connection between them, it was no longer obvious that only one of them did.
$680,000 of the $3,100,000 price was allocated to brand and goodwill, against $1,900,000 for tangible assets and $520,000 for the customer and supplier relationships specific to each location.
Resolving the ownership question required confirmatory releases and assignments from both operating families, negotiated as a $40,000 holdback split evenly between them — priced not as compensation for a competing ownership claim either family was formally asserting, but as the cost of removing the risk that one of them later did.
Section 48(1) of the Trademarks Act answers the transfer-mechanism question the same way for both kinds of mark: “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.” An unregistered mark is not harder to assign than a registered one as a matter of form. That was never the problem in this file.
The problem is what stands behind an unregistered mark in the first place. Section 7(b) of the Act prohibits directing public attention to goods or services “in such a way as to cause or be likely to cause confusion in Canada… between his goods, services or business and the goods, services or business of another” — the statutory form of the common-law tort of passing off, and the only legal protection an unregistered mark has. That protection attaches to whoever’s goodwill the public actually associates with the name, as a question of fact, not to whoever happens to hold a piece of paper. A registered mark carries a register entry establishing a right independent of that factual question, even where a licensing failure weakens the strength of the underlying use, which is exactly the gap a related file in this hub worked through on a mark that was registered. An unregistered mark has no equivalent fallback: if the goodwill was never distinctly built by, or controlled by, the nominal seller, there may be no protectable right for that seller to assign at all — and given fifteen years of parallel, uncoordinated use by two separate companies, the goodwill in this file was genuinely unclear as to source.
That distinction is not a technicality specific to this transaction; it is the ordinary difference between a registered and an unregistered right. As Treadstone Law’s own guidance on passing off puts it, addressing a competitor dispute rather than an acquisition, “because there is no registration to point to, proving passing off tends to be more evidence-intensive than a registered-trademark claim: you need to show your reputation actually exists in the specific market… not just that you used the name first.” The same evidentiary gap that makes a passing-off claim harder to win against a competitor makes an unregistered mark harder to clear title to on a purchase — the seller has to establish the same thing the buyer needs to rely on.
Rather than litigate which company’s goodwill the name actually belonged to — an expensive and genuinely uncertain question neither side wanted to test — the deal closed with confirmatory assignments and releases from both operating families, each disclaiming any competing claim to the name in favour of the buyer. The buyer filed a fresh CIPO trademark application in its own name concurrently with closing, which does not resolve any historical ownership question but starts building a registered right, with all of s.48(1)'s formal transferability, going forward from a clean date.
Had the buyer taken an assignment from the nominal seller alone and the second family’s company later asserted its own claim to the name — plausible, given fifteen years of genuine, visible use at its own locations — the buyer could have found itself having paid $680,000 for a right it did not fully hold, against a rival user with a real factual claim of its own and no registration on either side to settle the question quickly.
The tell was not the absence of a registration by itself — many real, defensible brands are never registered. It was the absence of any documented control relationship between the two companies using the name, which is what would have let one of them clearly claim the goodwill as its own use, enured to it, the way a licence would for a registered mark. Multiple related but formally unconnected operating entities sharing one brand name is a common small-business pattern, and it quietly produces exactly this ambiguity about who, if anyone, is in a position to sell the name.
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