Trademarks and Domain Names

Each Fashion Week marks a period of high visibility for the brands in the fashion industry, but it also exposes them to increased risks of copying, counterfeiting, and unauthorized uses. Patents, industrial designs, trademarks, and copyright can offer complementary protection, provided action is taken at the right time. Why Fashion Week increases the risks of copying and counterfeiting In the age of social media, Fashion Week represents much more than simple runway shows. As soon as they are unveiled on the catwalk, new collections circulate quickly in the media and can go viral within hours. Although this acceleration of the visibility cycle contributes to the excitement surrounding the most sought-after clothing items, it also exposes designers to an increased risk of reproduction and unauthorized uses of their new creations. In this context, it is important to know the right legal tools and take the necessary steps to protect one’s intellectual property rights. Identifying the value of creations to choose the right intellectual property protection Whether it involves a pattern, a logo, a shape, a brand affixed to a garment, or even a functional innovation, different forms of protection may be considered to prevent third parties from capturing the value of your creative efforts. Thus, reflecting on the source and value of your creation makes it possible to use the right legislative tools available to you. This article presents the main intellectual property regimes applicable to the fashion industry. Certain considerations should be kept in mind before launching a new collection. 1. Patents: Protecting technical innovations in the fashion industry Although, in the fashion industry, a product’s appearance often contributes to its commercial success, some brands also distinguish themselves through the technical solutions they incorporate into their creations. Examples include NIKE AIR shoes, Under Armour clothing for performance fabrics, and Gore-Tex. In this context, the patent regime can play an important role, since it is intended not to protect the aesthetics of a garment, but rather the functional innovation underlying it. Patents are useful for protecting a technical innovation. Examples include a manufacturing process, a new device, a composition of matter, or an improvement to any of these. In the clothing industry, innovations such as the zipper, Velcro, or certain waterproof fabrics clearly illustrate the type of invention that may be protected. The basic patent rules are that the invention must be new, non-obvious, and useful. The Canadian Intellectual Property Office (CIPO) assesses the patent application and registers it only if it is satisfied that the invention meets, among other things, these criteria. A patent, if registered by CIPO, grants the exclusive right to exploit the invention for 20 years from the filing date. This protection can have significant commercial value, since it makes it possible to prevent third parties from making, using, or selling the protected invention. Because an invention is protected only in the countries where the patent is registered, the choice of those countries is important. One would no doubt protect certain inventions, such as heated fabrics, in Norway rather than Saudi Arabia. But they could also be protected in Turkey and India, because the invention could be manufactured in those countries. 2. Industrial designs: Protecting the appearance of a garment or accessory An industrial design makes it possible to protect the shape, configuration, pattern, ornamental features, or any combination of these features applied to a product. In short, it protects the appearance of a product. For example, Lululemon holds several industrial designs for its various clothing collections. Here is one example:1 To be registrable, the design must be new. Thus, if a pre-existing, publicly available design is reused,  even if it is successfully registered with CIPO, that design will be at risk of being invalidated because it is not new. Once the design is registered, the registration grants an exclusive right to make, sell, import for commercial purposes, offer, or display for sale or rent the registered design, a right that lasts for at least 10 years from registration or, if that date is later, until 15 years after the application was filed.  The more distinct your design is from what existed, the larger the scope of the protection will be. Thus, the designer must create distinctive and innovative garments, but also identify, before marketing, the visual elements that deserve protection. In the fashion industry, this type of protection can be particularly useful, since the value of a garment often lies in its appearance. For fashion items intended to remain on the market for a long period, registering an industrial design is the most effective way to prevent them from being copied by third parties. This protection varies from country to country. Thus, in the United States, reference is made to a “Design Patent” and, in Europe, to a design. As in the case of patents, the countries must be chosen carefully and registration must be completed. In some states, such as France, protection exists even in the absence of registration. Industrial design protection does not apply to purely functional features of a garment. In other words, if an element was designed primarily to serve a technical purpose, that utilitarian feature cannot be protected under industrial design law. It should be protectable by patent. Depending on the case, the same garment or accessory may also benefit from complementary protection under copyright or trademark law. 3. Trademarks: Protecting the distinctive signs of a fashion brand Trademark law protects the owner of a mark against the use, by a competitor, of a mark likely to create confusion as to the origin of the goods or services. In practice, a trademark is often what allows consumers to distinguish one product from another on the market. It is often the trademark affixed to a garment that makes it possible to sell a white T-shirt for $150 rather than $30. A trademark may consist, in particular, of a logo, common or invented words, or even a distinctive colour affixed to a garment, provided that the sign is distinctive and allows the consumer to identify the commercial source of the product. Trademarks may also take the form of position marks. These are marks in which the location of the sign on the product forms part of what is protected. For example, in Canada Adidas owns a mark consisting of three parallel stripes placed along the sleeve of a jacket. In that registration, the garment itself is not protected. It is shown only to indicate where the stripes are positioned. In other words, what is protected is not simply the presence of stripes, but their precise placement on the garment: 2  For businesses in the fashion industry, trademarks are often among their most valuable assets. Indeed, they represent the company’s image in the eyes of consumers, support its goodwill, and help preserve the value of its products in the marketplace. It is therefore important for these businesses to understand the scope of their rights in order to prevent confusion, combat counterfeiting, and limit harm to the value of their trademark(s). In Canada, a trademark may benefit from a certain degree of protection through use alone, even in the absence of registration. However, that protection remains more limited and, in practice, depends in particular on proof of goodwill and a likelihood of confusion in the relevant market. Registration therefore offers significant advantages, since it grants its owner, subject to validity, the exclusive right to use the mark throughout Canada in association with the listed goods and services, as well as more effective remedies against third parties who use a sign likely to create confusion for consumers. 4. Copyright: Protecting original patterns, prints, logos, and decorative elements In the clothing industry, certain creations may benefit from copyright protection, including logos, patterns, prints, or other original decorative elements. As a general rule, in Canada, an original work is protected as soon as it is created, without the need for registration. Protection usually lasts for the author’s lifetime and 70 years after death. Even in the absence of registration, the author will have rights. If the creation is made by an employee in the course of employment, the owner of the work will be the employer. However, copyright has certain lesser-known limits. When the work is a utilitarian article, such as a sweater, a belt, a cap, or a shoe, the Copyright Act may not apply. Thus, if the work is the design of a sweater and the sweater has been reproduced in more than 50 copies, the copyright owner of the design may prevent reproduction of the design, but may not prevent someone else from making the same sweater under the Act. The design should have been protected as an industrial design or, as some luxury watch companies do, reproduction should have been limited to no more than 50 copies. Needless to say, those watches are outrageously expensive! This exception does not apply to a logo, a trademark, or works that are simply affixed to a utilitarian article. For example, the owner of the copyright in the works of painter Riopelle may still prevent manufacturers of mugs or T-shirts from selling them, even if rights have been granted to the Guggenheim or the Montreal Museum of Fine Arts. Conclusion Creativity alone is not enough in the fashion industry; one must also know how to protect its fruits. Thus, having teams work while keeping protectable features in mind, so as to position the business properly in the market, will support the company’s growth. This strategy will also protect customers against the unpleasant surprises that may result from purchasing a product falsely presented as the original. What to remember A fashion collection may fall under several intellectual property regimes at once: patent, industrial design, trademark, and copyright. Timing is crucial: protectable elements must be identified before the launch or disclosure of a new collection. Protection must be considered by territory: in Canada, but also in the countries where the products will be sold, manufactured, or copied. Canadian Intellectual Property Office, Canadian Industrial Designs Database, LULULEMON ATHLETICA CANADA INC., industrial design registration no 231957. Canadian Intellectual Property Office, Canadian Trademarks Database: Canadian trademark registration number:  TMA757178,  3-STRIPES JACKET & DESIGN — 1382211.

Watch enthusiasts: do you know what SWATCH watches are? Of course you do! But do you know what this trademark actually means? Is it: a) an invented term b) an English word c) a term that is partly in English, that is, the letter “S” combined with the word WATCH d) all of the above? This is the question the Tribunal administratif du Québec (“Tribunal”) had to answer in Groupe Swatch (Canada) Ltée c. Office québécois de la langue française1, in order to determine whether Groupe Swatch (Canada) Ltée (“Groupe Swatch”) was required to add a sufficient presence of French to the signage of its boutiques. It should be noted that this decision was rendered under the former provisions of the Charter of the French Language (the “Charter”) and the Regulation respecting the language of commerce and business (the “Regulation”). As of June 1, 2025, the requirement of a sufficient presence of French has been replaced by the criterion of the marked predominance of French in public signage visible from outside premises. For many people, the SWATCH trademark is an invented term, but the Office québécois de la langue française (“OQLF”) takes a different view… The OQLF’s Position According to the OQLF, SWATCH is a trademark composed of the following elements: S and WATCH. S for “Swiss” or “second” WATCH for “watches” Result: the trademark is composed, in part, of the English word “watch”. Consequence: the Swiss company was required, under the former provisions of the Charter and the Regulation, to ensure a sufficient presence of French on its storefront signage. Groupe Swatch’s Position According to the Swiss company, the SWATCH trademark does not belong to any language because SWATCH is an invented term, consisting of an artificial combination of letters. Therefore, no French presence is required on its storefront signage, by virtue of the “artificial combination of letters” exception set out in section 26 of the Regulation. The Tribunal’s Position First, the Tribunal rightly recalls that the exceptions provided for in the Charter and the Regulation must be interpreted restrictively. The Tribunal then adopts a pragmatic approach, putting itself in the shoes of the average consumer to determine how the public would perceive SWATCH store signage. The Tribunal accepts Groupe Swatch’s position and applies the “artificial combination of letters” exception. In the Tribunal’s view, the public will conclude that SWATCH is an invented term, made up of an artificial alignment of letters and, consequently, the requirement to add French does not apply. This reflects a pragmatic approach based on public perception, as opposed to a strict approach such as the one advocated by the OQLF, which breaks down the SWATCH trademark into two components (S and WATCH). Fortunately so! Otherwise, trademarks composed of invented terms that include a sequence of letters such as “ON,” “IN,” “UP,” “GO” could, for example, have been considered as trademarks in a language other than French rather than as invented terms. Such an approach would have required the addition of markedly predominant French wording in a public signage context. Observations This decision provides an initial and helpful clarification in a context of uncertainty regarding the interpretation of certain new provisions of the Charter and the Regulation, and it has the advantage of being favourable to trademark owners. Indeed, this decision allows for reliance on public perception where a trademark can be seen as an artificial combination of letters, even though that same trademark could be broken down to reveal words in another language. One noteworthy point deserves mention: the OQLF does not appear to have argued (or at least insisted) that SWATCH is an English vocabulary word meaning “sample.” Yet, the Charter and the Regulation expressly require the presence of French (formerly, a sufficient presence; since June 2025, a marked predominance) where a trademark appears in another language on public signage visible from outside a building or premises. Was this argument debated? It is difficult to say from reading the decision. Otherwise, would the outcome have been the same? Looking ahead, what will 2026 bring in terms of the application of the new rules? Certain data and statistics drawn from the OQLF’s2 most recent annual report lead us to believe that the marked predominance of French in public signage will be a priority. One thing is certain: the OQLF is maintaining its dialogue-based approach to encourage amicable solutions, which is welcome. Let us hope for a more pragmatic approach by the OQLF with respect to trademarks, based on public perception, as set out in the SWATCH decision. Let us also hope for a guide providing clarifications on this issue and many other questions arising from the application of the new rules. Happy New Year! Bonne Année! ¡Feliz Año Nuevo! Buon Anno! 2025 QCTAQ 10426 OQLF’s Rapport annuel 2024-2025, published October 9, 2025 (https://www.oqlf.gouv.qc.ca/office/rapports/rag2024-2025.pdf)

The importance of proactive intellectual property rights management Many companies are unaware that they possess intellectual property1 rights, so they are not proactive in dealing with intellectual property as part of their regular operations. Sometimes, these companies are suddenly faced with the issue when a third party undertakes due diligence on them. This due diligence will inevitably include an intellectual property component, which may lead to a series of corrective measures to solidify, consolidate or recover their rights. In extreme cases, the company may be forced to renegotiate the terms of an agreement in principle, to see the value of the company reduced, or to abort a project or transaction due to its failure to pay proper attention to this category of asset. Third parties do not want to invest in or purchase a company or its shares at a high price if it is likely to encounter issues that could render future projects inoperative. Moreover, case law has taught us over the years that a purchaser cannot rely solely on the representations and warranties and the indemnity provisions of a purchase and sale agreement; they must conduct reasonably adequate due diligence, failing which they may be deprived of certain remedies. This bulletin is primarily aimed to help companies and their leaders properly manage intellectual property to avoid pitfalls. It also provides guidance to companies and institutions required to conduct due diligence in the context of a potential acquisition or financing. However, it does not claim to be exhaustive. Furthermore, we hope that this bulletin will help raise awareness among organizations about the importance of IP and demonstrate that large companies and those with activities heavily focused on intellectual property are not the only ones concerned with these agreements. What is an internal intellectual property legal audit? An internal intellectual property audit is a process conducted by a company to assess all of its intellectual property rights and the protection and defence mechanisms in place. The goal is to identify its rights and gaps, thereby obtaining an overview of the status and scope of its intellectual property rights, tracking their evolution, and determining the necessary actions to identify, prioritize, maintain, protect, defend, expand and enhance these rights. It also allows for an informed assessment of their legal status and prospects. This enables the company to ensure it holds all the intellectual property rights necessary to operate its business and is protected against potential lawsuits for non-compliance with the intellectual property rights of others or any intellectual property-related commitments. Such an audit also helps guide management more effectively in various situations, including commercial and legal, in accordance with the company’s strategy. Frequency of internal audits Proactivity The frequency of an internal intellectual property audit depends, among other factors, on the size and nature of the company, the characteristics, complexity and dynamism of the industry, the strategic importance of the intellectual property assets within the company and the evolution of its assets and ongoing or future projects. Ideally, a company will ensure that this audit is carried out periodically, annually or biannually, by gathering individuals knowledgeable about the intellectual property developed within the company with those capable of making decisions on intellectual property matters. For a company with a strong technological footprint or rapid innovation, a semi-annual or even quarterly frequency may be necessary. A company with a limited intellectual property portfolio may opt for slightly longer intervals, while remaining vigilant to exceptional events. Exceptional events Of course, a company’s proactivity does not shield it from urgent or exceptional situations that may arise during its life and require immediate attention without waiting for the periodic review. There are times in a company’s life when an audit becomes necessary. These situations may occur in various contexts, including: Prior to a liquidity event or change of control of the company, such as a merger, acquisition, arrangement, reorganization, initial public offering (IPO) or asset sale, or during strategic operations such as a joint venture or equity or debt financing During the launch of a new product or a market expansion: This step must be preceded by an intellectual property audit, which sometimes includes an assessment of the freedom to operate (FTO) when the launch or expansion involves an innovation During a major structural change, including the reorganization of the company or a new strategic orientation When a significant change occurs in the market, such as the arrival of a competitor or the imminent launch of a product similar to the company’s, an audit can detect vulnerabilities and prepare the response During significant legislative changes affecting intellectual property During litigation, mediation or negotiations involving intellectual property rights in order to assess the strength of the intellectual property assets, as well as the strengths and weaknesses of the case, to facilitate quick decisions in line with the company’s strategic objectives. Additionally, the intellectual property portfolio can serve deterrent or defensive purposes. For instance, in the event of  a patent infringement lawsuit filed by a competitor, it is advisable to check whether that competitor is infringing on any of the company’s intellectual property rights During the negotiation of an intellectual property license, to ensure that the licensor owns the relevant intellectual property rights and that the terms of the license align with the company’s commercial objectives and contractual obligations Addressing intellectual property issues and continuously reflecting on intellectual property through periodic audits, a company that conducts an audit during an exceptional event will be able to respond more easily and quickly to the arising issues What are the advantages of this kind of audit? An internal intellectual property audit allows a company to: Be aware of the status of its intellectual property (IP) rights, their scope, strengths and weaknesses Collect information on the competitive market situation Identify promising IP or IP that the company is relying on to achieve its objectives Determine the projects that need to be undertaken in order to protect IP and highlight priorities Proactively manage intellectual property rights by determining the necessary monitoring Address incomplete documentation, incomplete chains of titles, ambiguous property rights, incomplete coverage of rights, and licenses to be signed Avoid poor management of open-source software Manage uncertainties relating to prior art (any information, publication or document disclosed before the filing date of a patent application relevant for assessing the patentability of the invention, including its novelty and inventiveness) Manage gaps in territorial protection of rights More easily define the direction to take in various situations, including litigation, transactions, contract negotiations, and make decisions in accordance with the company’s strategy Review compliance with laws, such as intellectual property rights marking issues, uses to avoid, and those to encourage Develop the profile of it as a serious and prudent company attentive to intellectual property assets, adding credibility and reassuring co-contractors, buyers and investors Reduce the transaction timeline in the event of an exceptional event What are the main aspects to address during an internal audit? Inventorying the intellectual property Compile an inventory of all intellectual property rights and add any new developments (innovations, new brands) Prioritize intellectual property assets if there are several, in order to allocate resources accordingly for their protection and adhere to established budgets Identify confidential data Identify potential obstacles Identify underutilized or redundant assets Include in this inventory the intellectual property held by third parties for which the company has exploitation rights, including  source codes and open-source software Organizing it in a file Organize all essential documents such as title deeds, certificates, chain of title documents, agreements, licenses, assignments, and expiration and renewal dates of rights. Confirming the ownership of each asset Confirm that official documents designate the correct holder of intellectual property rights that there are no breaks in the chain of title, and that registrations with the intellectual property offices are accurate and correctly attributed to the current holder of the rights. Completing gaps in ownership of rights Identify all relevant parties, as applicable (employees, inventors, designers, contractors, suppliers, partners, third parties) who must sign assignments of rights, confidentiality agreements, waivers of moral rights and licenses. Assessing the validity and strength of intellectual property For patents, trademarks and industrial designs, review the scope of the claims and prior art to determine the legal strength of each patent, industrial design or trademark. Legal risks in intellectual property Analyze whether the company uses intellectual property and technologies that risk infringing third-party intellectual property Assess the risks of damages and establish a strategy for intellectual property infringement by third parties Analyze the scope, validity, and enforceability of any blocking or potentially blocking intellectual property (which hinders the company’s development or commercialization of a technology, invention, or product, creating a market entry barrier) Monitor relevant published IP applications from third parties Regularly update research and analysis of freedom to operate (a study conducted  to ensure that a product or process can be legally developed, manufactured and marketed without infringing existing intellectual property rights held by third parties) Collect all documents related to past or ongoing litigation involving the company’s intellectual property (including court decisions, settlements, negotiations in intellectual property matters, cease and desist letters or notifications to third parties or concerning third-party intellectual property rights, and legal opinions) Assessing the alignment and relevance of intellectual property Determine whether intellectual property rights align with the company’s commercial objectives and the technological advancements being exploited or promising. Reviewing intellectual property contracts Establish an inventory of contracts with an intellectual property (IP) component Such as R&D contracts, collaborative research contracts, material transfer agreements, employment contracts, joint venture contracts, inbound IP licenses (licenses the company has obtained from third parties) and outbound IP licenses (licenses granted by the company to third parties for its own IP), open-source software licenses and third-party components2, franchise agreements, IP-related cost and revenue-sharing agreements, agreements on the allocation of IP rights  (past and new), IP co-ownership and joint exploitation  agreements, IP trust agreements, escrow agreements for source code, cryptographic keys or technical documents, open innovation agreements, non-competition and non-solicitation clauses/agreements related to trade secrets, contracts for services (software development, design, audiovisual), trademark coexistence agreements and consent agreements, co-branding agreements, sponsorship and merchandising agreements (IP aspects), image rights authorizations and other personality elements, publishing contracts, agreements with collective copyright management organizations, commercial agency and representation contracts (use of trademarks, materials), user-generated content agreements (involving interactive user participation contributing  to content, such as social media, video or photo-sharing sites, forums, blogs, etc.), confidentiality agreements, non-competition agreements, and agreements relating to employee inventions and invention disclosures. Verify, among other things: Whether royalty payments have been made Whether there is a need to renegotiate the terms of certain contracts Whether all the conditions are respected Whether all relevant parties have signed the contracts Identify any binding clauses Including clauses related to the following aspects: Use limitations Royalties Co-ownership, non-transferability or limited transferability of contracts Non-exclusivity of granted rights Exclusivity of granted rights Options on intellectual property rights Movable hypothec security interests on intellectual property assets Securitization or monetization of intellectual property Also, verify the conditions attached to the contracts such as the territory, scope and duration, and any restrictions that may hinder a transaction Security and intellectual property Establish or review security protocols for trade secrets and restricted access to company documents and premises. Intellectual property policies Establish or review internal policies and procedures for identifying, protecting and managing trade secrets Establish or review internal policies and procedures to enable/facilitate the development of innovations Establish or review internal policies and procedures for addressing the use of artificial intelligence within the company by employees, subcontractors and contractors Establish or review internal procedures to activate legal verification protocols (to ensure that protocols for conducting legal due diligence are in place) Consolidating developments stemming from R&D Maintain laboratory notebooks (document all the stages of innovation) Dedicate a team to investigate and analyze developments and assess their potential and intellectual property content, and determine the next steps Providing training Provide appropriate training for all the relevant individuals of the company for a better understanding of confidentiality undertakings and the use of AI and to emphasize the importance of documenting every stage of innovation. Monitoring competitors’ rights Monitor relevant published Iintellectual property applications and conduct regular updates of research and analyses of freedom to operate for innovations Review competitors’ new trademark filings Review new competitors’ websites Ensuring alignment between key territories and protection territories Make sure that the company’s intellectual property has protection with the government offices in the territories where it conducts commercial or manufacturing activities, or where intermediaries that are part of its supply chain are located. Also, it should aim for protection in territories where the company intends to expand its activities before entering those markets.  Establishing the scope of protection in these territories This must be undertaken before negotiating with suppliers, future licensees, manufacturers, etc. in a new market and when launching new products, services and innovations. Compliance Establish or review the measures in place, responsible individuals in charge, and the action plan for verifying the compliance of the company’s actions Establish a reporting and detection system for internally developed innovations Verify the company’s compliance with licenses (obligations to disclose sources; codes, copyright notices, compliance with moral rights, etc.). Any use of third-party intellectual property must be documented to ensure the company has the necessary right to exploit these elements in its products Conclusion Organizing, structuring, and managing intellectual property assets is highly advantageous. The question is not whether intellectual property (IP)-related issues will arise in the company’s operations, but when they will occur! A recent audit will help reduce the number of problematic events, and when such an event occurs the response will be faster, with minimal consequences, and may even unveil opportunities. If financing or the sale of the company is planned, conducting an audit is mandatory. In these cases, the audit can be complex, particularly if there are international portfolios or highly technical assets. Being prepared is beneficial, providing ready answers to investors' questions, strengthening the company's image, and optimizing IP valuation. An internal audit offers the company with a comprehensive global perspective on its intellectual property assets, allowing for optimized use while identifying and addressing any potential gaps. This practice mitigates risks and allows precise management of key information to establish intellectual property assets and facilitate commercial transactions involving intellectual property. Intellectual property (IP) includes patents, patent applications, trademarks (registered, pending or used without registration), copyrights, industrial designs, trade secrets, know-how, plant variety protection, domain names and other digital data (databases, software, applications, etc.). Including, in particular: any library, module, software framework, plug-in, SDK (code libraries, debuggers, compilers), script, driver, embedded software (firmware), container image (immutable file), package, and source/object code, and any of their dependencies, that are provided, owned or licensed by a third party, and used, integrated, interfaced, incorporated, distributed, or required for compilation, testing, deployment or execution of tasks, APIs.

This article is part of our two-part series on what foreign buyers of, and investors in, business ventures need to know about the Charter of the French language (the “Charter”) in the context of a business transaction involving operations and employees in Quebec. The first instalment focused on French language issues during the due diligence process. Reference is made to the following hyperlink for access to part one. Continuing our exploration of the Charter in the context of merger and acquisition transactions, this part two focuses on the importance of language compliance during and after the deal-making process, from incorporating language obligations into representations and warranties to post-closing strategies for addressing compliance issues. 6. In the Deal-Making Process: Your Closing Documents Representations and warranties in transaction documents shall generally address language-related matters. For example, the target corporation may be required to represent and warrant that it has fulfilled its language obligations as imposed by the Charter. As a foreign buyer/investor, you may want to ensure that findings from the due diligence investigation are incorporated into the representations and warranties of your share or asset purchase agreement. As you prepare your closing agenda, it is of utmost importance to assess whether the principal and accessory agreements themselves will be subject to French language requirements. For example, it will be advisable to translate into French restrictive covenant agreements or intellectual property assignment agreements that will be applicable to Quebec-based employees or other agreements that may be deemed contracts of adhesion. The requirement to translate any agreement or documents following the results of the due diligence analysis can be included as a closing deliverable in a form satisfactory to the foreign buyer/investor. 7. Post-Closing: Addressing Language Compliance Beyond the Deal Obviously, not all aspects of French language compliance under the Charter will be addressed during the merger and acquisition transaction itself. Potential areas of non-compliance noted during the due diligence stage can give dealmakers a roadmap of steps to undertake after closing to mitigate risks. In recent transactions, there has been a growing need for law firms to provide post-closing support in French language matters. If a purchase price adjustment clause is included in the share or asset purchase agreement, a buyer/investor could benefit from using the costs associated with rectifying any translation defaults as a lever for the negotiation of the price to be paid. This could also include any penalties imposed by the OQLF on the target corporation. Recent amendments to the Charter have significantly increased the fines that a corporation may face for non-compliance with an order issued by the OQLF, which range from $3,000 to $30,000. These fines are doubled for a second offence and tripled for subsequent offences. If an offence persists for more than one day, it is considered a separate offence for each day it continues. Additionally, directors of the corporation are presumed to have committed the offence unless they can demonstrate that they exercised due diligence by taking all necessary precautions to prevent the offence. In cases of complaints, our experience indicates that the OQLF tends to prioritize achieving compliance rather than imposing fines when companies are responsive to complaints. This presents a positive outlook for foreign buyers/investors, as it underscores that the intent of the new Charter and its enforcement provisions is not to penalize foreign buyers/investors, but rather to reaffirm the status of the French language as the official language of work and business in Quebec. Conclusion Prospective foreign buyers/investors may question the wisdom of doing business in Quebec, given its Charterrequirements. However, achieving Charter compliance can provide a distinct competitive edge. By embracing it, you open doors to the predominantly French-speaking market in and outside Quebec, unlock opportunities in thriving sectors like mining, renewable energy and aerospace, and pave the way for lucrative partnerships with the Quebec government. However, considerations relating to the French language shall not be overlooked when it comes to due diligence or other phases of a merger and acquisition transaction as compliance is key to accessing the thriving Quebec market. Moreover, failing to address these aspects could result in various challenges to a buyer/investor’s entry into the market, such as the unenforceability of restrictive covenant agreements with key employees, potential fines, penalties and director liability. A reputational risk can also be associated with non-compliance with the Charter, in light of the media attention that surrounds this type of issue in the Quebec landscape. By adhering to the requirements of the Charter, foreign buyers/investors can position themselves as responsible corporate citizens and set the stage for successful ventures in Quebec's dynamic business landscape. As more guidance becomes available regarding the application of the new provisions of the Charter, and as we gain practical experience from upcoming transactions with foreign investor/buyers, additional instalments to this series will be published.