BUSINESS VENTURE CLINIC - Blog

Startup Breakups: Protecting Against Co-Founder Conflict

Sun, 12 Apr 2026 16:36:47 GMT

Written by Urouj Rashid
JD Candidate 2027

Note: The below information does not constitute legal advice. No guarantees are made as to accuracy, completeness, or applicability to individual situations.

Startups tend to start in the same way, with a high degree of optimism, passion, and often teamwork. This passion for pursuing a new business idea serves as the motivator for going on to fulfil larger goals, accompanied by the quiet belief amongst the group that their shared passion, vision, and overall alignment today with last forever.

When ideas go from the talking stage to the execution stage, these partnerships, which often are made of the closest of friends and partners no longer see eye to eye. When the pressure builds, as it most often does in business start-ups, relationships personal and professional are tested, turning the conversation away from business and towards company “politics”. Co-founder disputes are not rare outliers, rather they are one of the most common points of contention in early-stage companies.

Like any relationship that has a falling out, it doesn’t often happen all at once. Falling out of co-founders happen overtime, with relationships eroding as the business starts to grow, whether it be through differences in opinion, strategic visions not aligning, contributions becoming uneven, or commitments changing to name a few. While this can seem manageable at first, such differences quickly begin to impact business decisions, with disagreements resulting in delays and increased conflict. While the emotional aspect may seem to take center stage given the emotions and individuals that may be involved, it really comes down to lack of clarity relating to business structure and governance. It is important to pre-meditate and navigate these areas of potential conflict because the alternative is decision making and negotiating in high stress situations when communication is difficult, trust is low and willingness to cooperate is overshadowed by personal incentive.

Given their good intentions and commitment to the business idea, startups often fail to adequately consider the legal mechanisms and consequences that govern the relationships between co-founders and what safeguards would be in place to protect against them. In the event of a falling out amongst co-founders, the legal consequences primarily depend on the terms set out in the shareholder agreement, supplemented by the applicable legislation.

Shareholder agreements are contractual agreements that may supplement or modify rights that are afforded to individuals under corporate structures.[1] Having a comprehensive shareholder agreement, whether it is structured as a simple voting agreement, or a more complex unanimous shareholders agreement amongst other options, is essential to define how shareholder relationships will work and how founders fit into that structure. The quality of a shareholder agreement is highly relevant if and when co-founder relationships begin to deteriorate. While all business partners are subjected to corporate legislation and general fiduciary duties owed under common law, a well-drafted shareholder agreement would provide clear guidelines for the available legal pathways to use in conflict resolution. [2] The absence of such provisions would leave co-founders without a clear structure to navigate conflict and less efficient and company specific mechanisms for resolving deadlock outcomes.

While the specifics of what is included in each can change from one agreement to another, common provisions that well-drafted shareholder agreements could include, but are not limited to, drag-along rights, tag-along rights, and buyout mechanisms that provide structured exit pathways and prevent minority shareholders from blocking value-maximizing transactions.[3] But before including them, it is important to understand what each is and if it would be relevant to include in your start up agreements.

As a primary method for resolving situations where co-founders disagree about exit opportunities, drag along rights are an important provision. Specifically, they are designed to prevent minority shareholders from blocking any attractive exit transactions and enabling shareholders to sell their shares on the same terms when the majority want to sell to a third party.[4] Ie. When some of the co-founders receive and wish to accept an acquisition offer but are opposed by others, drag-along rights allow the majority to proceed with the transaction without being restricted by the minority dissent. Most commonly, drag along provisions establish a threshold percentage of shareholder approval, upon the reaching of which all shareholders are obligated to participate in the transaction of interest. This clause comes into play when shareholders meet this threshold agree to the sale of shares to the third party, at which point they are required to provide minority shareholders with written notice with details of the transaction, and obligate them to participate in it on the same terms agreed upon.[5] Drag along rights are not only meant to protect the majority shareholders’ interests by allowing them to make deals they all agree upon without being limited to the whims and desires of minority shareholders but also make the company structure more attractive to investors. [6] Ultimately, such a clause allows more structured methods to avoid negative consequences for co-founders that may become spiteful, but of course the caveat is that minority co-founders risk having to liquidate their investment against their will.

Another provision that is important to consider in shareholder agreements are tag along or “piggyback” rights. These are intended to protect minority rights and provide non-selling minority shareholders with the option to sell their shares on the same terms (ie. Piggyback) and conditions as selling shareholders, and the third-party purchasers are required to extend their offers to all shareholders as well.[7] In doing so, minority shareholders are protected from being left in unfavorable conditions should there be a change in company control after a sale, which is an important consideration or start up and early-stage companies.[8] Such a clause ensures that all shareholders can benefit equally and are protected from being overlooked in significant transactions.

While both offer protection to different classes of shareholders, majority vs minority interests in the event of the sale of shares, they are not competing clauses and both provisions can co-exist in a shareholder agreement. Well-drafted provisions would allow the start up to better protect its shareholders and simultaneously attract more investors by reflecting consideration and stability amongst the founding team.

[1] Bryce C Tingle, Start-Up and Growth Companies in Canada: A Guide to Legal and Business Practice, 3rd ed (Toronto: LexisNexis Canada, 2018). [Tingle]

[2] Practical Law Canada Corporate & Securities, “Unanimous Shareholder Agreement for Incorporated Joint Venture (AB)”, Practical Law (3 July 2025).

[3] Tingle, supra note 1

[4] Practical Law Canada Corporate & Securities, “Drag-Along Rights Clause (Shareholder Agreement) (AB)”, Practical Law (13 June 2025).

[5] Ibid

[6] Practical Law Canada Corporate & Securities, “Shareholder Agreement: Drag-Along Rights”, Practical Law (13 June 2025).

[7] Catherine Lovrics, ed, Startup Law 101: A Practical Guide (Toronto: LexisNexis Canada, 2017) at [pinpoint].

[8] Practical Law Canada Corporate & Securities, “Shareholder Agreement: Drag-Along Rights”, Practical Law (Thomson Reuters), online: Westlaw.

Society vs. Non-Profit Company: Which Incorporation Route Makes Sense?

Fri, 10 Apr 2026 21:43:00 GMT

Written by Urouj Rashid
JD Candidate 2027

Note: The below information does not constitute legal advice. No guarantees are made as to accuracy, completeness, or applicability to individual situations.

If you’re looking to start a business venture and feel overwhelmed by all the information out there, you are not alone. Often, meaningful initiatives become victim to the complexity associated with getting started. In this two-part series, we aim to remove some of this complexity in getting started by turning your idea into a more concrete entity. Starting with an introduction to societies and non-profits, I will provide insight into the difference between the two, and some considerations when deciding which may be the best fit, with the next part focusing on incorporation.

On of the main considerations on this journey of building a not-for-profit organization, the focus, rightly so, is often on the mission: the people you want to serve, the gaps you want to fill with your service, or the change you hope to create. While the mission and values of an organization cannot be ignored, an important practical question remains: what legal structure makes the most sense to the idea?

Two commonly used options are incorporating as a society or as a non-profit company. While both can help launch a not-for-profit organization, they are not the same: they have their own processes and are structured slightly differently, each is governed by different legislation, and comes with its own pros and cons. As such, before you can get to working towards realizing your mission it is essential to choose the right fit. While this may seem like the boring side of this otherwise passionate journey, it is important to realize this step isn’t merely about the paperwork, it is about ensuring that the legal structure chosen is the one that will best support the organization’s core purpose, intended activities, and long-term goals.

Starting with the Basics
At its most basic level, incorporation is the process of creating a separate legal entity.[1] [2] Once incorporated, an organization exists as a separate “person” from those incorporating it and can act in its own name. In doing so, it can own property, enter contracts, and carry on its work as an entity distinct from the individuals behind it. [2]

There are several ways to incorporate a not-for-profit, and the right path depends on what the organization is trying to do. This is why it is worth pausing at the outset to consider not just how to incorporate, but which type of incorporation best fits the organization being built.

Non-Profit or Charity?
One of the first distinctions to understand is the difference between a non-profit organization and a charitable organization.

A non-profit organization is commonly incorporated under provincial legislation.6 7 Depending on the organization’s purpose and proposed activities, different Acts may apply, and the best option is usually the one that aligns most closely with the organization’s intended work and the community it hopes to serve. A charitable organization follows a different pathway. Charity registration is not handled at the provincial level. Instead, it must be done through the Canada Revenue Agency. [2] [10] This means the organization’s purposes must meet the CRA’s requirements for charitable status. That said, where the intention is to proceed as a non-profit rather than a charity, the more relevant question is which non-profit structure is the better fit.

There are a number of ways a non-profit can be organized, including societies, non-profit companies, religious societies, agricultural societies, and cooperatives. Of these, two of the most common options are societies and non-profit companies. Each offers a legitimate route forward, but they are designed with different types of organizations and their subjective goals in mind.

Society
In Alberta, a society is incorporated under the Alberta Societies Act.[1] For many organizations, this is the most familiar and accessible option. It is generally simpler, less expensive, and often well-suited to groups focused on community service, recreation, culture, advocacy, or charitable work.

Five members are required to form a society, who typically go on to become the board members. [1] [2] The society must be formed for a purpose that is social, recreational, cultural, or charitable in nature and intent.

One important point, however, is that a society is not meant to operate as a business. While societies can have some business-like qualities, such as own property, entering contracts, or overall functioning as a legal entity, incorporating as such would not be the right option if you intend to sell goods or services. That said, if you truly intend to operate as a society not only would this not be an issue, but it would also align with the mission. The only time this restriction may become problematic is if your intent or expectation is to generate ongoing revenue through operations.

There are additional steps to consider when incorporating, such as obtaining a NUANS report to support that the intended name for the society is available as well visiting an authorized Level 2 Corporate Registry service provider to incorporate formally.

Non-Profit Company
A non-profit company, on the other hand, provides a structure more suited for organizations that ARE intending to be involved in business or trade activity, and are incorporated under the Alberta Companies Act.[4] [5]

This structure allows for noisiness like operations that result in raising funds and generating profit, but any revenue generated by a non-profit is directed back to the organization and intended to further the mission and purpose. [5] [6]

A further distinction is that non-profit companies can be set up as either private or public companies. Incorporation of private non-profit companies require at least two members, can have up to 50 shareholders or members, and it comes with some restrictions on membership.[7] Incorporation of public non-profit companies require at least three people without the same restrictions on membership.[7]

A public structure is often found to be useful where an organization expects to operate in a more commercial space while still pursuing non-profit goals. There are even situations in which organizations choose to adopt a multi-layer approach, such that they incorporate as a society to hold the broader mission and then create a private non-profit company to run the business side of operations within that scope. Not only does such an approach help manage risk, but it also allows the society itself to continue operations even if the business side does not succeed.

Why Care?
Now, getting to the relevance of this all. Why does any of this matter? In the simplest way, the choice you make about which structure to adopt affects what the organization can do, how it can grow, what considerations should be made, and potential limitations to be mindful of.

A society may be an appropriate fit for more community-based organizations which are not intended to involve significant commercial activity. Its straightforward structure and affordable route are some of factors that continue to make this a popular choice for individuals starting off.

A non-profit company may be the better option where the organization has some more flexibility in their possible operations, including the ability to generate revenue within the same incorporated structure. While these are a bit more complex to establish, the flexibility and ability to use funding to realize their goals makes it a worthwhile trade.

In any case, it is worth taking the time early on to think carefully about the organization’s purpose, how it plans to operate, and whether it expects to engage in any meaningful business activity and act accordingly. A clear mission is essential, but so is a structure that allows that mission to thrive. Ultimately, it is not necessarily a choice between the better or worse option, but the determination of which option is best aligned with the intended purpose and outcomes of the corporation.

Societies Act, RSA 2000, c S-14, s 3(1) [Societies Act].
Government of Alberta, “Incorporate a society” (accessed 10 April 2026), online: https://www.alberta.ca/incorporate-a-society.
Societies Act, supra note 1, s 4(1).
Government of Alberta, “Incorporate a non-profit company” (accessed 10 April 2026), online: https://www.alberta.ca/incorporate-non-profit-company.
Companies Act, RSA 2000, c C-21, ss 200(1), 202(1) [Companies Act].
Government of Alberta, “Incorporate a non-profit” (accessed 10 April 2026), online: https://www.alberta.ca/incorporate-a-non-profit.
Government of Alberta, “Start a non-profit organization” (accessed 10 April 2026), online: https://www.alberta.ca/start-a-non-profit-organization.

Equity vs Profit Sharing: Considerations When Promising a Piece of the Pie

Fri, 10 Apr 2026 21:16:05 GMT

Written by Jamil Oueidat
JD Candidate 2026

Note: The below information does not constitute legal advice. No guarantees are made as to accuracy, completeness, or applicability to individual situations.

Founders of early-stage businesses frequently face a common decision point when someone asks to participate in the upside of their business. This person might be a potential industry mentor willing to make introductions, a key contractor who cannot be compensated at full market rates, a business development partner, or a capital provider who sees the potential value of the business. In response, the founder might say, for example, “we will give you equity” (equity arrangement) or “we will give you a percentage of profits” (profit sharing arrangement). Despite the similar language, these two approaches carry very different legal consequences.

In general terms, a profit-sharing arrangement is a contractual commitment to make continuing payments calculated according to a specified formula, without transferring ownership in the company. An equity arrangement, by contrast, involves issuing a security, such as shares in the capital of the company, which gives the recipient an ownership stake in the business. Ownership brings statutory rights under Alberta corporate law and may also trigger compliance requirements under Canadian securities law.

Why the Distinction Can Matter

For founders, the distinction can matter because choosing the wrong structure can produce unexpected results. It may unintentionally create unwanted legal consequences, trigger securities law concerns, or impose long-term payment obligations that complicate the company’s finances and discourage future investors.

Founders typically care about three things when it comes to their business: (1) control; (2) cashflow; and (3) incentives. Control changes because equity holders can have voting rights and statutory access rights that a pure profit-sharing participant typically would not have. Cashflow changes because profit-sharing is designed to pay out during operations, while equity returns are typically limited to dividends (if declared). Incentives differ because equity generally aligns the equity holder with the long-term interests of the business, while profit-sharing mat incentivize short-term profitability.

Profit-Sharing Arrangements

A profit-sharing arrangement is a contract under which a company agrees to pay the other party a defined portion of its profits (or revenue) generated from its operations. Unlike an equity arrangement, the other party does not gain an ownership stake in the company. Profit sharing is governed by a private commercial contract entered into by the participating parties. How the profits (gross or net) are calculated for the purpose of the profit sharing, as well as what costs (if any) are deducted and how taxes are handled, should be specified in the profit-sharing agreement.[1] The profit-sharing agreement generally set out the terms of the arrangement as well as any termination clauses.

Advantages:

Since a profit-sharing arrangement does not result in the granting of any equity, the company’s ownership and control remains with the founders. By entering into a profit-sharing arrangement, no change occurs to the company’s share structure. In other words, this means that no structural changes would be required. If a profit-sharing arrangement is selected, the other party to the agreement would not have a say in how the company is operated.[2] If your priority is to keep your company closely held and under your full control and ownership, this can be an attractive feature of a profit-sharing arrangement.

Another advantage is that, since profit sharing arrangements are governed under a private contract between the participating companies, they can be made bespoke according to each party’s preferences. Additionally, in a profit-sharing agreement, there would be no need to amend articles of incorporation or issue share certificates.

Disadvantages

Profit sharing arrangements create continuing obligations (subject to the term of the agreement) to pay out part of your company’s profits/revenue. If your business ends up becoming highly profitable, the payout to the other party to the arrangement can be quite large. Moreover, profit-sharing agreements can be complex, as there would be a need to anticipate many different scenarios and thoroughly define all the terms of the agreement. Since the profit-sharing agreement is a binding contractual document, any ambiguity may cause disputes or even litigation in the future.[3]

Another legal consideration to keep in mind is that profit-sharing arrangements can, in some circumstances, be interpreted as evidence of a partnership. The Partnership Act defines a “partnership” as “the relationship that subsists between persons carrying on a business in common with a view to profit.”[4] While profit sharing alone does not automatically create a partnership, poorly structured agreements can expose founders to unintended legal consequences, including shared liability. Careful drafting is therefore important to ensure the arrangement remains purely contractual.

Equity Arrangement

An equity arrangement refers to the granting of a company’s equity to another party. By entering such an arrangement, the other party would become an equity holder of the company, thereby granting them ownership rights under the applicable corporate statute (Alberta Business Corporations Act or Canada Business Corporations Act). Since equity represents an ownership stake in the business, the equity holder would gain rights that they would not otherwise have under a profit-sharing arrangement: voting rights and dividends (if declared), for example.

Importantly, issuing equity must be done by complying with securities law. For example, if you wanted to issue shares to a new investor, one may consider doing so under a prospectus exemption (the different categories of prospectus exemptions are listed under NI 45-106). If no exemption is available, the issuer would need to prepare and file a prospectus, which is extremely costly and therefore rarely feasible for early-stage companies.

Advantages:

If you choose to proceed with an equity arrangement, the other party would become an owner of your business, which can incentivise long-term support of your company. In other words, it would be in their interest to support you in growing and scaling your franchise. This can be especially advantageous if the receiving party is someone with substantial experience in and connections to your industry (say, a prospective industry mentor, for example). Another advantage is that it does not impact cash-flow and allows for profits to be retained and used for reinvestment.

Considerations:

By granting equity to another party, you lose full control and ownership of your company. Another disadvantage of issuing equity stems from the need to find an applicable prospectus exemption. As I explained above, prospectuses are incredibly expensive, and many startups cannot afford to produce and file them, given their accompanying financial burdens. As such, early-stage business owners looking to finance their operations are almost always looking to issue securities under an exemption.

The prospectus exemptions are listed under NI 45-106, and they include things like:(1) the private issuer exemption; (2) accredited investor exemption; (3) family, friends, and business associates exemption; (4) employees, directors, senior officers and consultants exemption; etc. It is strongly advised that, if you do end up going this route, that you speak to a lawyer before issuing any securities, as some of the foregoing exemptions are interpreted quite narrowly and may require additional filing or documentation.

Conclusion:

Ultimately, the choice between a profit-sharing arrangement and an equity arrangement is not merely a matter of terminology. Each structure carries with it different legal, financial, and governance implications that can shape the future of a business. Before promising someone a “percentage of profits” or “equity,” founders should carefully consider how the arrangement will affect control of the company, its cashflow, and the incentives of those involved. Because these arrangements can create significant legal consequences if structured improperly, founders are strongly encouraged to consider seeking legal advice before finalizing any such agreement.

[1] Gordon Law Group, "Profit Sharing Agreements" Gordon Law Group, online: .

[2] Voyer Law, "Video Game Profit Sharing Structures" Voyer Law, online: .

[3] Supra note 1.

[4] Partnership Act, RSA 2000, c P-3, s 1(g).

Who Owns Your Big Idea? Navigating University IP Policies as a Student Founder

Thu, 09 Apr 2026 21:28:12 GMT

Written by Noah Smith
JD Candidate 2027

Introduction
Being a student-founder is exciting, but before you build your pitch deck to pitch investors, there is an important question to answer: Does your university have a claim to your intellectual property?

Unfortunately, for many student founders, the answer is often more complicated than one might expect. The reason is, across Canada, universities take very different approaches to ownership over IP created on campus. Ultimately, the answer can depend on whether you were paid, what resources you used, and crucially, which institution you attend. Understanding these policy wrinkles early can save you from unexpected surprises down the road and better prepare you for meetings with investors.

The Variable Canadian Landscape
Unlike the United States, where a significant number of universities follow a fairly uniform model under the Bayh-Dole Act[1], Canada has no national policy standard for institutional IP ownership.[2] The result is a collection of policies that vary significantly from school to school. At least one commentator has observed that institutional ownership appears to be the more common approach among Canada's larger research universities.[3] Broadly, Canadian universities tend to fall into one of three camps:

Creator-Owned: Generally, under this model, the inventor (or "creator") retains ownership of the IP they produce, even, in many cases, if it was developed using university resources. The most well-known example is the University of Waterloo, whose Policy 73 states that “ownership of rights in IP created in the course of teaching and research activities belong to the creator(s)” (with some exceptions).[4] Waterloo's reputation as one of Canada's most prolific generators of tech startups has been linked, at least in part, to this policy.[2] Notably, the university only takes an equity stake if the creator voluntarily engages the university's commercialisation office for assistance.[2]

Institution-Owned: At the other end of the spectrum, some universities default to institutional ownership. Under these policies, any IP created using university resources or in the course of university-funded research belongs to the institution, though the inventor may receive a share of licensing or commercialisation revenue. The University of British Columbia, for example, requires that any person connected with the university who proposes to protect or license an invention developed using university facilities or funds must disclose it and assign the rights to the university under UBC Policy LR11.[5] Net commercialisation income is then split 50/50 between the university and the inventors.If the university decides not to pursue protection or licensing, the rights may be reassigned to the inventor.[5]

Hybrid or “Inventor's Choice”: An increasing number of universities take a hybrid approach. For example, the University of Toronto offers an “Inventor's Choice” model, where the creator can retain full ownership and handle commercialisation independently, or assign the IP to the university and share the risk, cost, and reward.6 The University of Alberta takes a similar approach. There, inventors retain their IP by default and may choose whether to assign it to the university for joint commercialisation, with revenue sharing of roughly one-third to the other party in either case.[7]

What About the University of Calgary?
For students at UCalgary, the policy is relatively favourable to student founders. UCalgary's Intellectual Property Policy provides that students generally own the IP they create as part of their work for academic credit or a degree, so long as they have made a substantive or creative contribution to the work.[8,9]

However, there is an important caveat. If you are employed by the university (e.g., as a research assistant paid from a professor's grant) the work you produce in that capacity typically belongs to your employer unless a different arrangement has been agreed upon.[9] Notably, scholarships and awards do not by themselves create an employment relationship for these purposes. Instead, the distinction turns on whether you are doing assigned or commissioned work. This distinction between student work and employee work is one that many student founders overlook. If you are being paid to do research that overlaps with your startup idea, you need to clarify ownership before you start building.

UCalgary also requires that any IP intended for commercialisation be disclosed through Innovate Calgary, the university's technology transfer division.[10,11] This does not mean the university will claim your IP, but it does mean there is a defined process to follow.

Why This May Matter for Founders
You might be wondering whether any of this really matters for a pre-revenue startup built around a class project or a thesis. The short answer is yes, and for the reasons below, the earlier you sort it out, the better.

First, prospective investors often care. Investors conducting due diligence will often want to know that your company has clear title to its core IP. Any ambiguity about whether your university could assert a claim is a red flag that can kill a deal.[2]

Second, co-founder disputes get messy. If you and a classmate are building something together and one of you was a paid research assistant while the other was not, you may have different ownership positions under university policy without even realising it.

Third, an unexpected ownership interest from the university can complicate or even block commercialization. If your university holds (or later asserts) a claim to part of your IP, you may need to negotiate a licence or assignment before you can sell, sublicence, or even pivot your product. That process takes time, costs money, and introduces uncertainty at exactly the stage when a startup can least afford it.

Key Takeaways
Read Your Institution’s IP Policy: Every university's policy has nuances and exceptions. At UCalgary, the key document is the Intellectual Property Policy available through University Legal Services.[8] Do not assume your situation is straightforward.

Clarify the Student vs. Employee Distinction: If you are receiving any form of payment from the university, a professor, or a research grant, determine whether the work you are doing falls under an employment relationship for IP purposes. Keep in mind that scholarships and awards might not create this relationship, but assigned or commissioned work can.

Be Deliberate About Resources You Use: Some policies distinguish between IP created using university resources (e.g., lab equipment and specialised software) and IP created on your own laptop in a coffee shop. It is important to know where your work falls.

Talk to Co-Founders: Each person on your team may have a different IP situation depending on their employment status, their department, and even the specific grant funding their work. Do not assume everyone is in the same boat.

Engage Early: Proactively engaging your university's tech transfer office means getting access to resources, mentorship, and legal support that can help you commercialise more effectively.[10]

Get Legal Support. University IP policies interact with employment law, contract law, securities law, and patent law in ways that can be genuinely complex. Resources like UCalgary’s Business Venture Clinic can help student entrepreneurs navigate these intersections.

Note: The above information does not constitute legal advice. No guarantees are made as to accuracy, completeness, or applicability to individual situations.

References
1. Bayh-Dole Act, 35 USC §§ 200–212 (1980). For an overview, see "The Bayh–Dole Act and its transformative impact on science innovation and commercialization," PMC (2024), online: https://pmc.ncbi.nlm.nih.gov/articles/PMC11152831/.
2. University Affairs, "Canada needs a national overhaul of university IP policies," online: https://universityaffairs.ca/opinion/canada-needs-national-overhaul-university-ip-policies/.
3. CanInnovate, "Ownership of Intellectual Property in Canadian Post-Secondary Institutions," online: https://www.caninnovate.ca/p/ownership-of-canadian-academic-ip.
4. University of Waterloo, "Policy 73 – Intellectual Property Rights," online: https://uwaterloo.ca/secretariat/policies-procedures-guidelines/policies/policy-73-intellectual-property-rights
5. University of British Columbia, "Inventions Policy (Policy LR11)," online: https://universitycounsel.ubc.ca/files/2022/05/Inventions-Policy_LR11.pdf. See also Innovation UBC, "Ownership of Inventions at UBC," online: https://uilo.ubc.ca/researchers/commercialize-invention/inventions-inventorship-faq/ownership-inventions-ubc.
6. University of Toronto, "Inventions & Commercialization – Protect Intellectual Property," online: https://research.utoronto.ca/inventions-commercialization-entrepreneurship/protect-intellectual-property.
7. University of Alberta, "Intellectual Property," Research + Innovation, online: https://www.ualberta.ca/en/research/services/commercialization/intellectual-property.html
8. University of Calgary, "Intellectual Property Policy," online: https://www.ucalgary.ca/legal-services/intellectual-property-policy.
9. University of Calgary, Faculty of Graduate Studies, "Intellectual Property," online: https://grad.ucalgary.ca/current-students/thesis-based-students/thesis/intellectual-property.
10. Innovate Calgary, "Our Story," online: https://innovatecalgary.com/our-story/.
11. University of Calgary, "Innovate Calgary," online: https://www.ucalgary.ca/research/research-units/innovate-calgary.

Defending Your Brand: A Guide to Trademark Opposition Board Proceedings

Tue, 07 Apr 2026 16:34:31 GMT

Written by Austin Minnings
JD Candidate 2026

Introduction
As a business owner or entrepreneur, your brand may be one of your most valuable assets. However, the path to securing a registered trademark can sometimes meet resistance in the form of a Trademark Opposition Proceeding. Whether you are defending your own application or opposing a confusingly similar mark, understanding the procedural rigors and the legal mechanisms behind the Trademark Opposition Board (the “TMOB”) is essential for protecting your intellectual property.

The Procedural Roadmap: Statement of Opposition, Evidence and Arguments
The TMOB process is a highly structured sequence of deadlines. Firstly, any person may file a statement of opposition with the Registrar within two months of advertisement of a trademark application on the website of the Canadian Intellectual Property Office.[1] Within two months after a copy of the statement of opposition has been forwarded to the applicant, the applicant shall file and serve a counter statement.[2]

Once a counter-statement is served, the evidentiary phase begins. The opponent typically has four months to submit and serve their evidence, which must be provided via affidavit or statutory declaration.[3] Following the Opponent’s filing, the applicant has four months from the effective date of the opponent’s evidence or statement to submit its own evidence.[4] A critical, yet often overlooked, stage is the potential for cross-examination. On application by either party, the Registrar may order the cross-examination of any deponent who provided an affidavit.[5] Only after the reply evidence stage closes does the Registrar invite the parties to submit written representations i.e., the formal legal arguments that frame the case before a final hearing is requested.[6]

Proving Confusion: The “Ordinary Consumer” Standard
A common ground for opposition is confusion under Section 6 of the Trademarks Act[7] (the “Act”). In the landmark case Masterpiece Inc v Alavida Lifestyles Inc[8], the Supreme Court established that the test for confusion is one of first impression. The TMOB does not look at a trademark through the lens of a legal expert. Instead, it adopts the perspective of the "ordinary, casual consumer somewhat in a hurry".[9] Key takeaways for any applicants include:

Initial Impression Matters: Confusion can exist even if a consumer later realizes their mistake, the legal harm lies in the initial diversion of goodwill.[10]
Resemblance is Key: While many factors are considered such as the nature of the wares or services, the resemblance between marks is often the most significant factor.[11]
The Fame Limit: Even a famous mark does not grant a monopoly over all categories. Protection generally only extends to unrelated goods if there is a reasonable connection that supports a likelihood of confusion.[12]

Establishing Distinctiveness and Bad Faith
To successfully oppose a mark based on a lack of distinctiveness, an opponent must show that their own mark is known in Canada to a "substantial, significant or sufficient" degree.[13] It need not be a household name, but it must be known enough to impact the distinctiveness of an applicant's mark.[14]

Furthermore, recent authorities like Neighborly Assetco LLC v Naborly Inc[15] highlight the increasing importance of bad faith claims. Bad faith may be established if an applicant filed for a mark while aware of an opponent's prior rights, specifically to gain an unfair advantage or to obstruct a competitor’s legitimate use. The TMOB will scrutinize the intent of the Applicant and the timing of the filing to determine if a legitimate business purpose existed. As such, navigating a TMOB proceeding requires a precise adherence to timelines and a deep understanding of how confusion, distinctiveness and bad faith are interpreted by the TMOB.

Note: The above information does not constitute legal advice. No guarantees are made as to accuracy, completeness, or applicability to individual situations.

[1] Practice in trademark opposition proceedings, Government of Canada Trademarks Opposition Board, June 17, 2019 at Section II.1, online: https://ised-isde.canada.ca/site/canadian-intellectual-property-office/en/trademarks-opposition-board/practice-trademark-opposition-proceedings#Section4.

[2] Ibid at Section II.3.

[3] Ibid at Section IV.1.

[4] Ibid.

[5] Ibid at Section VII.

[6] Ibid at Section VIII.

[7] RSC 1985, c T-13.

[8] 2011 SCC 27.

[9] Ibid.

[10] Ibid.

[11] Mattel Inc v 3894207 Canada Inc, 2006 SCC 22.

[12] Ibid.

[13] Bojangles International LLC and Bojangles Restaurants Inc. v Bojangles Café Ltd, 2006 FC 657.

[14] Ibid.

[15] [2024] TMOB No 5093.