Canada: Trade-Mark Due Diligence

Last Updated: August 3 2011
Article by Stuart Ash

Effective due diligence is one of the best ways to avoid costly and disruptive surprises when acquiring or licensing trade-marks, allowing the purchaser or licensor to determine whether it wishes to proceed with the transaction, for what price, and on what terms and conditions. Effective diligence can also identify deficiencies with the target marks and gaps in the target's trade-mark coverage and protection, bringing to light important contractual limitations on the target's use of the marks and potential infringement liabilities.

While general due diligence checklists are often helpful in generating basic information required for trade-mark due diligence, they are generally not designed to address key trade-mark issues and rarely provide answers to specific questions that the purchaser may have regarding the target marks.

Identification of Rights

In an acquisition, the target typically provides a list of trade-mark registrations and applications as part of its disclosure. The accuracy of the target's trade-mark disclosure can often be checked by comparing it against owner searches conducted by trade-mark counsel. In transactions where the target has affiliates or subsidiaries that use the target marks (including foreign subsidiaries and affiliates), care should be taken to ensure that all relevant names are searched.

Searches can also be conducted against key marks if it is suspected that title to the target marks has not been updated in the relevant IP offices. Consideration should also be given to identifying and listing unregistered target marks. Information regarding such marks (and the goods and services they represent) can often be found by reviewing the target's website and printed materials, including product literature, press releases, public filings (for public companies) and annual reports.

Trade-mark counsel should also request a list of the target's domain name registrations (if not provided) and verify the status of such registrations by checking relevant online records.

Ascertaining Ownership

Ensuring that the target owns the assets it proposes to transfer or license is a fundamental task of due diligence. Online databases can often be used for verification, but local counsel may need to be engaged where office records must be searched by hand or where data is only available in a language that trademark counsel does not speak. Ownership or attribution statements in the target's online and printed materials can also be useful sources of information regarding ownership of target marks.

Trade-mark counsel may request copies of assignments and other documents on which the target bases ownership of marks acquired from another party. Care should also be taken to clarify ownership of marks where the target has affiliates or subsidiaries that use them: related companies often fail to properly document the ownership and use of "shared" intellectual property. Untangling the ownership of marks in such circumstances can be difficult and often exposes licensing issues.

It is similarly important to ensure that the purchaser acquires title to the target marks free and clear of encumbrances. While some IP offices allow for the recordation of security interests, many jurisdictions do not require (or allow) parties to file security interests against trade-marks or other registered intellectual property. Trade-mark counsel should therefore work closely with transaction counsel to identify any liens, security interests or other encumbrances that might transfer with the target marks (especially in circumstances where the target itself or some assets of the target are not being acquired by the purchaser).

Agreement Review

Agreements establishing trade-mark rights and agreements that may limit or restrict the use of marks should be reviewed to identify ongoing obligations that may be acquired by the purchaser and restrictions or limitations on the target's use of its marks.

Agreements should also be reviewed to ensure that they are transferable to the purchaser (with or without consent) and that the parties to the agreement are in compliance with their obligations. Subject to any materiality thresholds, ongoing obligations (e.g., payment or minimum performance specifications) should be noted and brought to the purchaser's attention. Material restrictions on the target's usage of its marks (including restrictions on the goods and services in association with which the marks can be used, or territorial limitations and restrictions on the manner of use of the marks), and onerous or unusual termination, indemnification or choice of law provisions should also be brought to the purchaser's attention in a timely fashion.

Evaluate Pending Litigation

The target usually provides a list of existing or pending litigation and opposition proceedings as part of its initial disclosure. In many jurisdictions, searches of court and IP office records can be conducted online to verify that there are no further pending claims or proceedings.

In jurisdictions where centralized electronic searching is unavailable, local counsel may need to be retained to search records by hand. The target can be asked to provide a brief description of each pending proceeding (both by and against the target), and to provide the opinion of its counsel regarding its likelihood of success, in addition to key documents relating to proceedings.

The purchaser may also wish to have the target provide information about past litigation and proceedings as well as threatened or anticipated litigation or proceedings. Counsel can review documents regarding the disposition of such proceedings, including judgments and orders (if any), and settlement agreements can be reviewed to identify continuing obligations or restrictions on use or limitations of the marks.

The purchaser should also ask the target to provide information relating to actual or suspected infringements of its marks, and actions it has taken (if any) in response to allegations or complaints of third parties or in respect of potential infringement of the target marks.

Coverage and Enforceability

Where the trade-marks are material to the transaction, trade-mark counsel may wish to review the scope and coverage of the target's marks as well as the enforceability of the target marks. Initial searches of relevant registries and online searching can be helpful in identifying whether there are similar marks registered or in use by others in relevant jurisdictions. Such searches can be particularly useful in identifying potential bars or obstacles to the purchaser's intended use of the marks post-closing.

A review of the target's website and printed materials can confirm whether the target has secured registration of its key marks in relevant markets, and whether its existing registrations cover its current usage of the marks.

Not all of the issues may be relevant or appropriate in all transactions. Every deal is different, and the level of trade-mark due diligence required varies from transaction to transaction. Numerous factors can have an impact on the amount of diligence that is deemed necessary and feasible in any given transaction.

It is always important to keep in mind, however, (in any transaction) that relying on checklists alone (including the issues identified in this article) can lead counsel to miss relevant or important items, or lead to a focus on issues of no importance to the purchaser. Those conducting diligence should always strive for at least a basic understanding of the transaction, and inform themselves about the business of the target and the goals of the purchaser or licensor.

Diligence counsel should also remain actively engaged with transaction counsel throughout the course of the transaction. Due diligence is an iterative process: the target's disclosure of information often leads to further questions, and issues in a transaction (including the structure of the transaction itself) can also change during the course of negotiations. Keeping these points in mind can help trade-mark counsel increase the effectiveness of IP due diligence and add significant value to the transaction.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Events from this Firm
29 Nov 2017, Seminar, London, UK

Join us at 4 More London for this breakfast seminar on Wednesday, 29 November 2017 to gain a greater understanding on this debate. Coffee and breakfast will be from 08:30 with the discussion commencing at 09:00. We will finish and have you on your way by 10:00.

7 Dec 2017, Seminar, London, UK

Would you like the opportunity to hear more about the potential disruptive effect that blockchain is going to have in the energy sector? If so, please join us on 7 December where Jo-Jo Hubbard, a leading light in this area, will explain all.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.