Trademark Ownership – Who Should Own Your Trademark?

While it may not seem obvious on the surface, the legal question of who owns a trademark registration is one of the crucial legal decisions made when registering and maintaining a trademark registration. It might seem obvious – “If I am the one who came up with the trademark, I am the owner.” However, like many aspects of running a business, it is not that simple.

If you are a business owner, each piece of property that you own as that business can be considered an “asset.” It might be the screen printing press you bought, the company laptops, the desks, chairs, etc. Did you know that your trademarks are also considered assets? It is essential to understand that trademarks, like any other asset, can be bought, sold, and transferred, and owners of those trademarks have certain property rights in those trademarks.

Comparing Trademark Ownership to Real Property

Consider this example of “asset” ownership:

Ryan Dione and his business partner, Jen Gurdish started DG Enterprises, LLC. and, through the company, purchased a storefront in historical Old Town Alexandria, right outside of Washington, D.C. The storefront has three floors and can support a retail space and two offices. The business owns the building, and Ryan and Jen are both equal members of the LLC.

Neither Ryan or Jen can claim to own the building themselves, personally. If Ryan opens another business with his brothers, John and Don, that new business could not hold themselves out as the owner of the building either, because that new business is a completely separate legal entity then DG Enterprises, LLC.

If Jen and Ryan start a new business, Lightning Barriers LLC, then they would need to transfer ownership of the building from DG Enterprises, LLC to Lightning Barriers LLC before Lightning Barriers LLC could make filings on behalf of the building management or hold itself out as the owner of the building for any purposes.

Now consider the same facts, but with a trademark:

Ryan and Jen’s form a catering business called “Nuportent Catering LLC” and call their business “Nuportent Catering.” Early on in the business, Nuportent Catering LLC registered the mark with the United States Patent and Trademark Office to establish federal trademark rights.

If Ryan starts a new business with his brothers, the new business will not be considered the owner of that trademark or the corresponding registration. Ryan’s new business would not be able to maintain the trademark (i.e. renewals) and would not be able to enter into binding agreements with third-parties about the rights to use the “Nuportent Catering” trademark.

If Jen and Ryan decide to close the LLC and open a corporation, then, to transfer the trademark they must transfer the trademark in addition to the underlying goodwill. They may also wish to transfer the right to sue for past infringement and a few other important elements that, if not transferred now, may be unable to be transferred later. This should be done through a Trademark Assignment, a written document signed by authorized representatives of both companies, formalizing the transfer of the trademark, the underlying goodwill, and any other rights the previous owner had.

That Trademark Assignment can then be filed with the USPTO’s Assignment division and recorded to the database, allowing the new owner to make renewal filings and to request a new trademark certificate.

Consequences of Filing a Trademark Under the Wrong Owner

The consequences for filing a trademark application (or renewing a trademark registration) with the wrong owner can be severe. If the wrong person files a trademark application, then, at least, it will delay the registration of that trademark application because it will require filing Office Action responses to the USPTO.

Some mistakes cannot be fixed through an Office Action, however. If that is the case, then the correct owner will need to file a new application. This could be particularly bad if someone else has, in the meantime, filed an application for a trademark that is similar for related goods and services.  If that happens, the re-filed application will have to wait until the other application is reviewed (and the original applicant may have to potentially spend thousands of dollars to stop the other trademark from registering.)

Even though you are able to secure a registration using the improper owner, the registration or application could be void. A third-party could file a Petition to Cancel the resulting registration and would have a good claim that the registration should be canceled.

But why does it matter? A trademark registration gives the owner a number of key advantages – under the law, the owner is presumed to own a protectable trademark and is presumed to be the owner of that trademark. It also gives nationwide notice, meaning that new businesses couldn’t say they simply had “never heard of you” to avoid an infringement claim. These are all crucial for a sound enforcement strategy and will save trademark owners time and money while protecting their trademarks.

So, what could happen to an owner of a USPTO federal trademark registration attempted to enforce its rights against an infringer? If the trademark ownership of the registration is incorrect, the infringer could file a Petition to Cancel and, if successful, the trademark owner would lose all of the benefits mentioned above. The trademark owner would have to rely on its unregistered (common-law) trademark rights, which will increase the time, costs, and sometimes the effectiveness of the enforcement.

Understanding the ownership of your company’s assets is crucial for the long-term success of your brand (and ultimately, of your company). Knowing who really owns your trademark and what to do when that ownership changes is necessary to protecting your intellectual property.

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Josh Gerben, Esq.

Josh Gerben, Esq. is the founder and principal of Gerben IP. In 2008, Mr. Gerben started the firm to provide high-quality trademark services at reasonable prices. Today, he is recognized by the World Trademark Review as a top trademark filer, having registered over 7,500 trademarks. The contents of this blog are for informational purposes only and may not be relied on as legal advice.