Who Should Own My Trademark? Me or My Company?
Who Should Own My Trademark? Me or My Company?
I help individuals and small businesses protect their trademarks and one issue that comes up frequently is who to identify as the owner of the mark. Not only is the answer to this question important because it comes up on your trademark application, but also because of the various protections that come with identifying the proper owner of the mark. Should you name yourself as the owner of the mark? Or should you name your company? The identification of the proper is crucial to protecting your rights in the mark.
Who Should YouName as the Owner of Your Trademark?
Generally, the owner of a mark is the person that applies the mark to their goods or services. If an applicant is not the owner, the application is void and cannot be amended, so it is important to get this right from the get-go.
One common way of owning a trademark is the individual ownership structure. This usually occurs in one of two scenarios:
(1) the owner is operating as a sole proprietor, or
(2) the individual is filing an Intent-to-Use (ITU) application, because either the owner has not yet used the mark or has not yet formed a company to use the mark.
In the first scenario, the owner should seriously consider creating an appropriate business entity. In the second scenario, the owner wishes to get the ball rolling with the ITU application until the business entity is formed. If neither of these scenario applies, there is a good chance that the proper ownership structure would not be an individual ownership.
Business entities can own a trademark. Limited Liability Companies (LLCs) and corporations are common business entities that could a trademark. Usually, LLCs or corporations develop a mark to identify itself as a source of goods or services. Generally, if a business entity exists then the owner of the trademark should be named as the business entity. This is because technically it’s the business that would be providing the goods or services, not the owners of the mark. Make sense?
What’s the whole deal with identifying the proper owner anyway?
The named owner of the mark is the person or entity authorized to license or assign the mark, recognize the value in the mark for accounting purposes, use the mark as a security interest, or enforce the mark against infringers. Company ownership also reduces potential risks associated with a change in the ownership structure of the company (such as the sale of the company, or the departure of an owner).
What if we are simply two individuals as partners who own the mark?
If you are partners with another individual and you do not have an LLC or a corporation, then you should be aware of the potential issues that may arise with trademark ownership.
A common example is when spouses operate a business together as a sole proprietorship.
Another example is when a group of individuals is involved in a business. In such a case, the attorney must go through a state-law specific analysis to determine the proper owner. For example, are the individuals operating as a partnership or a joint venture? The answer will depend on the applicable state law.
Joint ownership is permissible in appropriate cases, but can be a red flag for possible risks down the road. A future sale of the company will likely be more difficult, and, in some cases, it may be possible for one owner to enter into contracts regarding the mark without the knowledge of the others. An applicant considering listing multiple individuals as owners should think carefully about whether the individuals are in fact the proper legal owners, and whether that is the proper structure for the business on the long run.
The Importance of Ownership at the Time of Enforcement
Ownership is especially critical when it becomes time to enforce the mark. Only the registrant of a mark (including the legal representatives, predecessors, successors, and assignees of the registrant, or an exclusive licensee) has standing to sue for infringement. If a company is the proper owner of a mark, but the application identifies the company’s president individually as the owner, then the company will not be able to sue for infringement, because it does not own the mark.
In addition, a trademark registration can be invalidated if the person or entity claiming ownership is not the one controlling the nature and quality of the goods or services under the mark. One ground for cancelling a registration is that the owner is not, and was not at the time of filing, the rightful owner of the mark. If a company sues a competitor for infringement, but let's say company’s CEO owns the mark as an individual, the infringer may succeed in invalidating the mark. And that is not good!
Getting it Right from the Get-Go
In some cases, such as simple business entities, identifying the proper owner is simple. In others, it can be a difficult question of state law. Getting it right from the get-go can make a difference between having a valid trademark and having no trademark at all. A trademark attorney can guide you down the right path to avoid problems later.
Disclaimer: The information provided in this blog is informational, ONLY, and generally based on California law. The subject matter and applicable law are evolving or in constant state of change. No legal advice is given and no attorney/client or other relationship is established or intended.