In Short
- Trade mark ownership must be assigned to the correct legal entity, typically the company itself, to protect the brand’s value and avoid legal disputes.
- Partnerships and multiple owners must ensure all partners agree on trade mark ownership and actions.
- A dual company structure can protect trade marks as business assets, especially in case of litigation.
Tips for Businesses
Ensure your business, not individuals like directors or partners, owns the trade mark to avoid complications. In partnerships, register the trade mark under all partners to secure rights. Consider using a holding company to safeguard trade marks and clearly define ownership with proper legal agreements.
Trade mark ownership protects your brand. As your brand becomes better known, the value of your trade mark grows. Eventually, the value of the brand can become one of the business’ most significant assets — think of global brands like McDonald’s, Nike, or Chanel.
However, it is critical that the right person or entity owns the trade mark. Clarifying the ownership of a business’ trade mark is especially important in a partnership or company where multiple stakeholders are involved. This article explains who can own a trade mark and who should hold trade mark ownership in a partnership, trust and company.
Why Trade Mark Ownership Matters
The trade mark registration process should be started by the person or entity that uses the trade mark. A company’s trade mark should be owned by the company, not by the founders, employees or shareholders. Failure to identify the correct trade mark owner on a trade mark application may invalidate the application. It may also make it easier for competitors to contest the trade mark application.
Trade mark ownership also counts when it comes time to enforce the trade mark against competitors. If a company director owns a registered trade mark related to the company’s products, the company may not be able to enforce the registered trade mark in court. Another advantage of operating through a company is that it keeps the assets of its directors separate. However, this will also prevent the company from benefiting from the director’s personal trademark.
Another unfortunate situation may arise in a business partnership. If a partnership splits, but the trade mark was only registered in the name of one of the partners, the other partners may walk away with substantially lower value without the goodwill of the trade mark. They may also lose the right to continue trading under the partnership brand.
This guide explains the essentials of trade marks and the steps required to register a trade mark.
Who Can Own a Trade Mark
The owner of a trade mark must be a ‘legal personality’. Valid legal personalities that can own a trade mark include:
- an individual;
- a company;
- a trustee on behalf of a trust; and
- an unincorporated association (collective trade marks only).
An Individual
An individual is the most basic form of legal personality. They must own the trade mark in their full name. Sometimes, more than one person may wish to own a trade mark jointly. For example, in the case of a business partnership. In this instance, the trade mark application must list all individuals’ names in full. Suppose multiple individuals own a trade mark. Here, each owner must understand that the rights gained through registration require all owners to act together. Therefore, in the event of a business sale or partnership, all business partners may need to agree before assigning the trade mark rights to the new owners.
A Company
A company can own a trade mark in its full company name. The company should be the owner, not its directors or shareholders. Additionally, depending on the size of your company, it is common practice to establish a dual company structure. This is where trade marks are held by a holding company rather than the operating company. This helps protect assets if the operating company faces issues like litigation.
While the law requires trade mark owners to actively use the mark or risk its removal due to non-use, in a dual company structure, the holding company is still considered to be using the trade mark if it is used in the activities of a wholly owned subsidiary. Alternatively, intercompany licence agreements can be created to clearly define the terms under which the operating company licenses the trade mark from the holding company.
A Trustee
In some cases, you may wish to hold a trade mark in a trust. In this case, the trustee will own the trade mark, not the trust itself. Therefore, the trustee’s name should be the trade mark applicant and registered owner. This is the case regardless of whether the trustee is an individual or corporate entity.
An Unincorporated Association
An unincorporated association is a group of people who associate for a specific purpose, but who have not formed a registered company. Clubs and societies are typical examples.
Unincorporated associations can own a collective trade mark. The purpose of a collective trade mark is to distinguish goods or services provided by the association. For example, a club logo or badge could be a collective trade mark.
Continue reading this article below the formWho Cannot Own a Trade Mark
A trade mark cannot be owned by anything that is not a legal personality. Things that are not legal personalities include:
- a person’s initials or alias;
- a business partnership;
- a business name;
- directors or shareholders of a company when acting on behalf of the corporation; and
- a trust in its own name.
A Person’s Initials or Alias
A person may own a trade mark, but they must register it in their full legal name. They may not register the trade mark with their first initial and surname, nor with an alias. The trade mark register is publicly accessible so the person’s full name will be visible to the public.
If you wish to maintain greater privacy, it is best to register a trade mark through a company. The register will state the company’s details rather than your own.
A Business Partnership
If you are in a partnership and wish to register a trade mark, the trade mark must be owned by all partners in their individual capacities, together. For a trade mark to be owned by a partnership, it is a joint ownership of the trade mark by the individual partners, rather than the partnership itself.
A Business Name
A business name is not a legal entity and, therefore cannot own a trade mark. If you want your business to own a trade mark, you must first register a company. The company can then apply for a trade mark, or you can transfer an existing trade mark to the company.
Directors or Shareholders of a Company
If a company will be the owner of the trade mark, it is the company itself that should own the trade mark. Directors or shareholders are only legal personalities as individuals distinct from the company. They should not own trade marks on behalf of the company.
A Trust
A trust is not a separate legal personality. Instead, it is a vehicle for ownership of business assets. Instead, a trustee holds property in the trust for the benefit of the trust’s beneficiaries. Therefore, a trustee must also own any trade mark related to the trust. The trade mark application should be made in the trustee’s name and not in the name of the trust.
Key Takeaways
It is critical that the right person or company owns your business’ trade mark. If the wrong person applies for the trade mark, the application may be rejected or challenged. Trade mark ownership disputes may also make it harder to enforce the trade mark and cause problems when it comes time to sell or wind up the business.
If you need assistance with trade mark ownership, contact our experienced trade mark lawyers as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 1300 544 755 or visit our membership page.
The trade mark should be owned by the legal entity that uses it. For most businesses, this means the company itself, not the founders, shareholders, or employees. If a partnership is involved, all partners should jointly own the trade mark to avoid disputes.
If the trade mark is registered by the wrong person or entity, it can lead to several issues, including the invalidation of the trade mark application. It may also make it difficult to enforce the trade mark or resolve ownership disputes if the business is sold or wound up.
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