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. When determining ownership, 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 may invalidate the application. It may also make it easier for a competitor 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 that relates to the company’s products, the company may not be able to enforce the registered trade mark in court. One advantage of a company is that it keeps the assets of the company separate to those of its directors, but this will also stop the company benefiting from the director’s trade mark.
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.
Therefore, it is important that the correct person or entity owns the trade mark in your business.
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 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.
A company can own a trade mark in its full company name. The company should be the owner, not its directors or shareholders.
In some cases, you may wish to hold a trade mark in a trust. In this case, it is the trustee who 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.
Who 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 a greater level of 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 cannot own trade marks on behalf of the company.
A trust is not a separate legal personality. 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 that relates to the trust. The trade mark application should be made in the name of the trustee and not in the name of the trust.
It is critical that your business’ trademark is owned by the right person or company. If the wrong person applies for the trade mark, it may lead to the application being 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 advice on registering a trade mark, call LegalVision’s trade mark lawyers on 1300 544 755 or fill out the form on this page.
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