IP issues hiding inside shareholder and founder disputes
A shareholder dispute in a technology or brand-driven company is usually pleaded as oppression, breach of the shareholders' agreement, and breach of fiduciary duty.
Underneath, there is often a question none of those causes of action answers. Does the company own the thing that makes it valuable? Here is where to look.
1. The core technology was never assigned
There is no statutory rule vesting an employee's invention in the employer. The inventor owns it unless there is an assignment or the person was hired to invent (Comstock Canada v Electec Ltd (1991), 38 CPR (3d) 29 (FCTD)). For copyright, the employer-ownership rule in subsection 13(3) of the Copyright Act, RSC 1985, c C-42, reaches only works made in the course of employment, and an assignment must be in writing.
Founders who worked before incorporation, or without employment agreements, commonly hold title personally. That affects valuation in a buyout and leverage in a negotiation. It also affects what a departing founder can take.
2. The IP sits in the wrong entity
A founder's holding company owns the patents or trademarks and licenses them to the operating company, sometimes informally. Is the licence terminable? On what notice?
The other shareholders' reasonable expectations about the security of those rights may be squarely within the oppression analysis (BCE Inc v 1976 Debentureholders, 2008 SCC 69).
3. Registrations and accounts in an individual's name
Trademark applications filed personally by one founder. Domain names, social media handles, app store accounts, code repositories, and cloud administrator credentials controlled by one person.
Trademark ownership follows use, so the register may simply be wrong. The accounts are not intellectual property at all, but control of them is practical leverage. They belong in any request for interim relief.
4. Co-ownership
If two founders co-own a patent, each can generally practise the invention, and neither can license it without the other's consent (Forget v Specialty Tools of Canada Inc (1995), 62 CPR (3d) 537 (BCCA)). The boardroom deadlock is replicated in the asset.
5. The departing founder competes
The familiar claims are available: fiduciary duties that survive departure (Canadian Aero Service Ltd v O'Malley, [1974] SCR 592), and breach of confidence (Lac Minerals Ltd v International Corona Resources Ltd, [1989] 2 SCR 574).
But, if the founder owns the IP, those claims may not stop them from using it. The order of analysis matters: ownership first.
6. Moral rights
An author-founder keeps moral rights unless they were waived. An assignment of copyright alone is not a waiver (Copyright Act, s 14.1). This is rarely decisive, but it is often overlooked.
7. What happens to the brand during the fight
If two factions each carry on business under the mark while the dispute runs, the mark may stop pointing to a single source. That puts its distinctiveness, and its validity, at risk. An interim arrangement about who uses the brand protects the asset both sides are fighting over.
Remedies and forum
The oppression remedy gives a superior court broad discretion to make any order it thinks fit (Business Corporations Act, RSO 1990, c B.16, s 248; Canada Business Corporations Act, RSC 1985, c C-44, s 241), including against directors personally in an appropriate case (Wilson v Alharayeri, 2017 SCC 39). A superior court can also decide ownership as between the parties and order one of them to sign an assignment, which can then be recorded.
What it cannot do is amend the federal registers itself. That is the Federal Court's jurisdiction (Trademarks Act, RSC 1985, c T-13, s 57; Patent Act, RSC 1985, c P-4, s 52; Copyright Act, s 57(4)). The Federal Court can decide title to a patent even where that means interpreting agreements (Salt Canada Inc v Baker, 2020 FCA 127). It cannot hear the oppression claim.
One court is usually better than two. The question is which one delivers the complete remedy.
An intake checklist
List every asset the business depends on: patents and applications, trademarks, code, content, domains, accounts.
For each, establish who created it, when, and in what capacity.
Collect what was signed: assignments, employment and contractor agreements, licences, IP clauses in the shareholders' agreement.
Check what the registers say, including the domain registrant.
Find out who has administrative control today.
Find out what each side is doing with the brand and the technology right now.
Diarize the deadlines: limitation periods, the five-year window for challenging a trademark registration on prior use, and patent office fees that someone must keep paying.
wu law. provides co-counsel, agency and consulting services to other firms. If a shareholder file has an ownership question underneath it, get in touch.
This post is general information for lawyers. It is not legal advice.
