Who should own your trademark, you personally, or your business? This is a crucial decision for small business owners, and today we’re breaking down the pros and cons of individual versus business trademark ownership!
Who Can Own a Trademark?
A trademark can be owned by an individual or a business entity like an LLC or corporation. Ownership isn’t just about paperwork—it impacts control, liability, and long-term protection.
👩🏻/💼 Individual Ownership vs. Business Ownership
- Individual Ownership: The benefits of individual ownership are usually problems for the business, as I’ll explain later.
- PRO: Individual leverage. The owner has direct control of the trademark and can drive the terms of any license allowing the business to use it.
- PRO: Individual control of use. The owner has the final say about what the trademark can and can’t be used with, and how.
- PRO: Licensing revenue. By licensing the use of the mark to the business, the owner can have a continued stream of income.
- Business Ownership:
- PRO: More attractive to investors and buyers. When the business itself owns the mark, it is easier to transfer as an asset of the business during a sale and to attract investors who know the business is in control of the mark. Otherwise, the individual owner could:
- throw a wrench in a deal by refusing to license the mark to a new owner;
- refuse to renew a license for the business to use the mark;
- fail to renew a registration for the mark, thus losing the value of the registration; or
- not do a proper job enforcing against infringement, rendering a registration nearly useless by becoming generic.
- PRO: More attractive to investors and buyers. When the business itself owns the mark, it is easier to transfer as an asset of the business during a sale and to attract investors who know the business is in control of the mark. Otherwise, the individual owner could:
For those reasons, investors and entities interested in buying the business usually prefer to have the business own the trademark rights.
- PRO: Prevents personal liability for infringement. Having the business own the trademark also keeps liability within the company, not with you personally. If you find out your trademark is infringing on someone else’s, which can even happen if you register it with the USPTO since someone with earlier rights who never registered their mark can sometimes have your registration canceled, you’ll want the business’ assets to be at risk for any financial judgment for infringement insurance doesn’t cover rather than your personal assets.
- PRO: Business can license. The business can even make money from the trademark rights if it owns them, because as the owner it has the right to license the use of the mark to others, such as franchisees.
For these reasons, for most businesses, having the company own the trademark is usually the better long-term strategy. If you’re an owner of a business, sometimes your personal interests and the interests of the business are at odds, and trademark ownership can be an area where this is the case.
📃 Licensing & Assigning a Trademark
If you own the trademark rights personally, you can allow your business use the trademark in one of two ways:
- License it to your business. This allows the business to use the trademark while you retain ownership.
- Assign it to your business. If you decide to transfer all ownership of the trademark rights to the business, you’ll need to assign those rights through a formal transfer.
Either way, a written agreement is necessary to state clearly what rights are granted or transferred, and under what circumstances. An assignment of registered trademark rights should be filed with the trademark office as well.
🗝 Key Takeaway:
What’s right for you? If you plan to grow your business, business ownership might be the best move. Need guidance? Consult an attorney before making the decision. And be sure to subscribe for more legal insights!
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