Let’s take a moment and think that you own a brand that you want to register either in your name or that of your company’s. Often individuals get stuck in this dilemma and refrain from the successive steps. Before getting into that, it is essential to get a clear idea of what a trademark is?
A trademark is a word, expression or design that is easily recognizable and directly represents the products and services you are providing.
Registering a Trademark – Should I use Company name or personal name?
Usually, big corporations do not lay too much emphasis on this question as they have this area covered from the beginning.
If a person is running a company as a one-woman/man show, then this section is irrelevant. When there are no other parties involved in a venture, whether a trademark is registered in a company name or personal name is purely a business decision.
Partnerships, on the other hand, is a different story altogether. When some individuals are running a business together, it is best that the trademark ownership is left under the ownership of the company. It should always be kept in mind that partnership businesses should always be run only after setting up a separate company.
Why Set Up a Separate Company?
Partnership ventures are tricky and dangerous when looked upon from a legal point of view. A partnership is not an entity, legally speaking. It is an agreement that two or more individuals or entities have reached upon and agreed with the incorporation of certain conditions.
When something goes awry, all of the participating parties in the agreement will be liable for anything or everything the guilty party did. For instance, if one of the participants in the partnership took a loan and left for the Cayman Islands then the remaining partners will be held accountable. They will be personally liable to repay the debt using their assets and properties.
Filing Trademark – In Your Name or That of the Company?
The tables turn when that individual plans on having shareholders and investors onboard. When someone plans on having investors but want to keep 100% ownership of the trademark, then it is best that the trademark is assigned to the name of the owner.
If the company goes bankrupt while the trademark is in the name of the firm, it is inevitable that the brand will die. On the flipside, trademarks owned by individuals tend to stick around in the long run even if the company itself is dead. Take the case of Finnish communications giant Nokia. After its downfall as a company, the brand Nokia resurfaced again under the watchful eyes of HMD Global. The whole process was possible only because the brand Nokia was registered to the board of directors, not to the company.
In case the owner of the trademark dies before assigning the trademark to another entity, then the trademark will die with him. However, if there was a will in which he left his assets, including the trademark, to a specific person or unless a trustee was appointed it is transferred to the concerned individual.
What Does The Trademark Law Define?
Trademark law in US and Canada states that:
- A company or entity can use a particular mark or logo under the controlled supervision of the owner adhering to the quality and nature of the goods or services. It is to be kept in mind that the company uses the mark only on those good and services that they applied for during the registration or application processes.
- In case you are a trademark owner and allow your mark to be used under license, you must ensure quality control on the goods and services that carry your trademark. It is best to have proper licensing agreements between the entities using the mark and the trademark owner.
- Since individuals and businesses are separate legal entities, a registration for a trademark can be invalidated when the entity or person claiming ownership do not have control over the quality and nature of the services or goods under the mark. A classic example when a trademark may be invalidated is when a husband files for a trademark in his name, but a wife starts using it without his consent.
- Enforcing intellectual property rights is only valid for legal owners of a trademark.
Advantages Filing the Trademark under the Company Name
Post formation of a business entity, it is a general practice for the company itself being the owner of the registered trademark. The company is the owner of the trademark has several advantages like:
- Business will be able to assign or license the trademark.
- Trademarks are quantifiable properties, and they add value to the business.
- Trademarks can be used as security interests during financial transactions.
- Registered marks can be used as exploits during business negotiations.
- Owning company will have the higher ground when it comes to enforcing its trademark rights.
Trademarks are assets and their value increases with time. The value of the business will therefore also increase. If your company owns your trademark, your company assets will be more attractive to investors or potential purchasers if you decide to sell your business.
In the US it is legal to own a trademark jointly. When looked upon from a practical standpoint, it is often challenging to own a brand jointly. It will be clear when the following unsettled issues are studied more closely.
- Whether the owner can license the mark, without the consent of the co-owner.
- Whether one owner can file for infringement of trademark without the participation of the co-owner in the lawsuit.
It is clear that it is best for joint ventures to form a separate entity when they plan on jointly owning a trademark.
Legal Trademark Ownership in Case of Joint Ventures
In case you plan on jointly owning a trademark, it is crucial to get accustomed to what the law allows and what it doesn’t. The law authorizes co-owners to:
- Enter freely into contracts and agree upon any form of ownership arrangement Contract law will be the basis for trademark ownership jointly instead of the trademark law.
- Law presumes that each participant is entitled to an undivided and equal share during the absence of a settlement.
Considerations for Amazon sellers
If you are selling on Amazon and plan to register your trademark with a purpose of registering with Amazon Brand Registry, consider filing your trademark in the same name under which your Amazon seller account was opened. This will make it easier for you to prove ownership of your trademark and store in case of a dispute or listing hijacking.
What if you plan to sell your business?
Please note that trademark application based on “intent to use” cannot be assigned (transferred) to another company prior to use. The primary purpose of this provision is to ensure that a mark may only be transferred together with business or goodwill and to prevent trafficking in marks.
So, for this reason, we recommend filing an intent to use applications under the name of the company which you intend to use to sell the products or services, and not under the name of any individuals.
Protection of Trademark
There are three specific ways to protect a trademark:
- Register the trademark with the Trademark Office of your country.
- Use the trademark in a proper way that will not invalidate the use of the trademark (see our cartoon about proper usage of a trademark here).
- Police the marketplace and the Trademarks Office database to make sure nobody uses or files a similar trademark.