Key Estate Planning Considerations for Individuals with Intellectual Property (Part II: Trademarks)
This is the second entry in a three-part blog series about the interaction between estates law and intellectual property law. Part I introduced Ontario’s succession law regime, and provided an analysis of estates law vis-à-vis copyright law. Part II will apply this analysis to trademark law. Finally, Part III will examine this area in relation to patent law, as well as provide some concluding thoughts and considerations.
In the previous blog entry in this series, we looked at Ontario’s succession law regime. We also applied this regime to the provisions in the Copyright Act that related to the assignment of one’s copyright after their death. This week, we will take the same approach and apply it to trademark law, which definitely has some considerations that distinguish it from copyright law.
A trademark is a combination of letters, words, sounds or designs that distinguishes one company’s good or services from those of others in the marketplace. A trademark is mostly a business-related form of intellectual property, as it often signifies a company’s goods, services, reputation and brand.
A trademark can be registered in the name of an individual, or in the name of a corporation. As opposed to copyrights, which are more related to works of art and entertainment, trademarks pertain to the operation of a business. As such, it may make more sense for a variety of reasons, including from an estate planning perspective, to register a trademark in the name of a corporation. In doing so, a testator could transfer the shares of that corporation to a beneficiary, and that beneficiary would in effect own the trademark because they control the corporation that is the registered owner of said trademark.
The Trademarks Act is the key piece of legislation in this respect, and it contains multiple provisions relevant for the purposes of estate planning. The first is Subsection 48(1), which allows for the transfer of trademarks, whether registered (in which case CIPO requires a fee of $100) or unregistered. On that note, as with copyrights, trademarks also do not need to be registered. By the same token, registration of a trademark is prudent, as registering a trademark help more effectively enforce trademark rights against third parties.
Unlike copyrights, however, the ownership of a trademark is not subject to the same types of term limitations. As per Subsection 46(1) of the Trademarks Act, the registration of a trademark is valid for an initial period of 10 years, and can be renewed for any number of subsequent 10-year periods as long as the owner pays the renewal fee ($400 for the first class of goods or services to which the request for renewal relates, and $125 for each additional class). However, the registration must occur within six months after the expiry of the initial or renewal period (although there are certain avenues for extending this timeline).
All that being said, individuals planning their estates should be weary of the common law rule against the partial assignment of trademarks. The Exchequer Court of Canada held in Great Atlantic & Pacific Tea Co. v. Canada (1945),  Ex CR 233, 5 CPR 57 that if a person owns a registered trademark for use in Canada in association with certain goods, they cannot validly assign the trademark unless they also assign the whole of the goodwill of the business carried on by them in Canada in association with such wares. As such, an individual should avoid assigning a trademark to one beneficiary and the business with which said trademark is associated to a different beneficiary.
This principle only further supports the notion that registering a trademark in the name of a corporation and then gifting the shares of a corporation to a beneficiary is an effective way of managing a trademark for the purposes of estate planning. Trademark assignment can be a complicated legal area, so it is best for a testator not to separate the trademark from the business with which it is associated.
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Demetre Vasilounis assists clients with a variety of wealth management and estate and family planning issues. Demetre regularly drafts wills, powers of attorney, domestic contracts, deeds of trust, and other documents relevant to succession planning. Demetre’s practice has a specific focus on the management of digital assets, including online accounts, cryptocurrency, and various forms of intellectual property.