Who Should Be the Owner of a Registered Trademark – an Individual or a Business Entity?

By Jamie Cutler

The application to register a trademark requires the identification of the owner of such mark. In most instances, a seemingly simple, but often complex, question arises – who should be the owner of the trademark? An individual, such as the owner or executive of the company with which the trademark is associated, or said company?

Who Can Legally Be the Owner of a Trademark?

The party who uses the mark in connection with the goods or services associated with the trademark should generally be the owner.

A trademark owner may be any person or entity capable of suing and being sued in a court of law. This can include, but is not limited to, individuals, partnerships, corporations, limited liability companies (LLC), sole proprietorships, or trusts.

Importance of Naming the Correct Owner.

Once the trademark application is submitted, the owner designated in the application cannot be amended. As well, an incorrect owner does not have the ability to assign the trademark to the correct owner. Thus, the designation of an incorrect owner can void the application and subsequently invalidate a registration.

A registered trademark can be subject to cancelation if the owner was incorrectly designated, such that the designated owner at the time of filing was not the party controlling the nature and quality of the goods or services associated with the mark. For example, if a company tries to enforce its rights against an infringer, but the president of the company is the owner, the accused infringer can initiate a cancelation proceeding, which could result in a decision to invalidate the company’s trademark. In these situations where an individual is identified as the owner of a trademark used by their company, one could try arguing that the individual owner granted the company a license to use the trademark, but it is better practice to avoid such a situation, if possible.

Further, only the owner of the registration or application (including an assignee or licensee) has standing to sue. Thus, following the same example above, the company would not be able to sue for infringement because the president, and not the company, is the owner. However, the company could have standing to sue if the individual granted the company a license to use the mark.

When a Trademark Registration is Owned by an Individual Vs. When It Should Be Owned by a Business Entity.

An individual is usually the owner of a trademark registration when the business entity that will own the trademark has not yet been formed. If the business entity will be controlling the nature and quality of the goods or services and will be recognized as the source of the goods or services, then upon the entity’s formation the trademark should be assigned to such business entity. The reason the business entity should be the owner is because they are providing the goods or services to consumers, not the individual owner. Assigning a registration or application to a business entity will not invalidate the application or registration. If an individual or business entity is assigning an intent-to-use application, the applicant does not need to file an allegation of use, so long as the assignment documentation includes language indicating that the application is being assigned to a successor of that portion of the business to which the mark pertains.

Advantages of a Business Entity Owning the Registration.

One advantage of the business entity owning the trademark registration is that a corporation, LLC or the like protects personal assets whereas individually owning a trademark does not provide personal liability protection. Thus, an individual owner can be personally liable if there is a finding that their trademark registration infringes on another’s rights. Additionally, if someone infringes on an individual’s trademark registration, the individual can sue for damages, but cannot sue for any damages to the company in which the trademark registration is associated with unless the company is a licensee. Lastly, when a business is the owning entity, risks associated with change of company ownership are reduced, such as not obtaining an assignment from the old individual owner or employee.

There are also some advantages to owning a trademark registration, regardless of whether the owner is a business entity or an individual. These advantages include: 1) the entity’s ability to assign or license the registration; 2) the trademark registration can be used as a security interest in financial transactions; 3) the entity, as the owner, will have standing to enforce its registration rights.