Should Your Company or You Personally Own the Trademark?

The trademark applicant must be the owner of the mark on the day the application is filed, and the owner is the party that controls the nature and quality of the goods or services sold under it. That rule decides who should own the trademark in most cases: the operating company, not the founder. An application filed by someone who did not own the mark at filing is void, and the USPTO will not let you fix it by amending the applicant’s name or assigning the application later. CLP’s trademark law team checks ownership before any filing because this is the one error with no cure.

Why the ownership question matters more than it looks

A void application looks fine on the register. The USPTO rarely catches the problem during examination, the registration issues and everyone forgets about it. The defect surfaces years later, when the registration matters most: a competitor’s lawyer in an infringement case digs into who was actually selling the goods on the filing date, or an acquirer’s diligence team asks why the founder’s name is on the certificate when the company has run the business since day one. At that point the registration can be cancelled, and with it the nationwide priority date you thought you had.

The problem is common because founders file early, often before the company exists or while they are still deciding on a structure. Our post on business name vs trademark protection explains why the entity and the brand are separate questions; this post is about putting the right name on the trademark application.

When the company should own the trademark

If the company manufactures or sources the goods, sets the standards, handles customer complaints and signs the contracts, the company controls quality and the company should be the applicant. That is the normal case for a product business, a restaurant, an agency or a software company. It is also what investors, lenders and buyers expect to see. A brand owned by an individual founder is an asset the company does not control, and a term sheet will usually require it to be assigned to the company before closing.

If the company has not been formed yet, form it first. Our business formation and structuring practice times the formation so the entity exists before the application is filed in its name. Filing an intent-to-use application in the founder’s name as a placeholder is a mistake, both because the founder may not have a bona fide intent to use the mark personally and because, as our post on intent-to-use trademark applications notes, such an application cannot be assigned before use except to a successor of the applicant’s business.

When a founder or holding company can own it

Individual or holding-company ownership is legitimate when the structure is real. A founder who licenses the mark to the operating company, controls the quality of what the company sells and documents that control in a written license is the owner under the Lanham Act’s related-companies rule, and the company’s use counts as the founder’s use. Groups with several operating subsidiaries often hold all marks in a parent or IP holding company for the same reason.

Two conditions make this work. The license must be in writing and must give the owner real quality control, with the owner actually exercising it. A license with no quality control, sometimes called a naked license, can lead to a finding that the mark was abandoned. And the structure should serve a purpose, such as asset protection, tax planning or a personal brand that outlives any one company, rather than a founder’s wish to keep the name in a personal account.

Foreign owners add one more step. An applicant domiciled outside the United States, including a Turkish parent company holding U.S. marks, must be represented before the USPTO by an attorney licensed in a U.S. state, and the application cannot register until one appears.

Fixing a filing in the wrong name

If the application has not registered yet, the answer is a new application in the correct name, which gets a new filing date. The original can be expressly abandoned. If the registration has already issued, an assignment from the founder to the company does not cure the defect, because the founder had nothing to assign on the filing date. The practical course is a new application in the company’s name alongside the flawed registration, so that a valid registration exists before anyone challenges the old one. Our USPTO trademark registration practice handles both filings together.

The analysis is different if the founder genuinely was the owner at filing, for instance as a sole proprietor before incorporating. In that case the founder owned the mark, the application was valid, and a written assignment of the mark with its goodwill to the new company, recorded with the USPTO, transfers it cleanly.

Keeping ownership clean after registration

• Record every assignment with the USPTO. Assignments must be in writing and must transfer the goodwill with the mark.
• Update the owner of record after a merger, a conversion from LLC to corporation, or a name change, so the register matches the entity that is using the mark.
• Put quality-control terms in every license, including licenses to affiliates and distributors.
• Address the mark in founder agreements and buy-sell provisions so a departing co-founder cannot claim it.
• Review ownership before every maintenance filing, since a declaration of use filed by the wrong party raises its own problems.

If you are about to file and are unsure which entity should be the applicant, or you suspect an existing registration is in the wrong name, a consultation with Capitol Law Partners can resolve it before it becomes a diligence problem. Schedule a consultation.

This article is for informational purposes only and does not constitute legal advice. No attorney-client relationship is formed by this communication.

Attorney Cagatay Ersoy. Practical strategy for founders, investors, and growing companies.

Need help with this topic? See our trademark ownership, registration and enforcement page or schedule a consultation.