What if the seller never properly registered the software’s IP?

For software, whether copyright exists does not turn on registration. Copyright is not created by registering it. Under the Copyright Act, and subject to that Act, copyright subsists in every original literary work if one of the listed conditions is met, such as the author being a citizen of, or ordinarily resident in, a treaty country, and the Act’s definition of literary work includes computer programs.

What registration does

A certificate of registration is evidence that the copyright subsists and that the person registered is the owner. That helps in a dispute, but it does not create ownership. Registration matters more for transfers: the Act says an assignment or licence is void against a later assignee or licensee who paid value without actual notice, unless the earlier one was registered first. The Canadian Intellectual Property Office (CIPO) registers assignments, licences and other documents.

The real question is who owned it

Subject to the Act, the author of a work is the first owner of the copyright. Where the author was employed under a contract of service and made the work in the course of that employment, the employer is the first owner unless there is an agreement to the contrary. An assignment is valid only if it is in writing and signed by the owner or the owner’s duly authorized agent. So code written by employees may sit with the company, while code written by an outside developer needs a signed written assignment before it does. Who owns code written by a contractor goes further.

What a buyer can do

• Ask for a list of everyone who wrote code, with the employment or contractor agreement for each.
• Require signed written assignments from anyone outside the company, obtained before closing, and ask for ownership warranties in the agreement.
• After closing, consider registering the copyright or recording the assignment to you with CIPO, which also records documents such as a security agreement.
• Check other IP separately. CIPO has its own guidance on trademarks and patents, and a business name that was never registered as a trademark raises different questions.