Advice on Trademark Ownership

Are you starting up a new company with some colleagues? Has your partner presented a trademark idea for your business? Have you considered the implications assigning trademark ownership might have on your company?

Unlike copyright or patent law, under the Trade Marks Act 1994, a registered trademark does not have a proprietor until an application to register it has been made. The owner will be the person named in the application. An individual, a company or a partnership may be registered as the owner. Ownership can be transferred (assigned) at any time in the application process or after registration. In the UK, a fee of £50 will be incurred for transferral of a registered trademark.



Company / Partnership Ownership

· Transferral or license of a registered trademark

o If the company is sold, the IP rights are generally transferred to the purchaser

o The company can assign or license the trademark to other companies or individuals

o If the company goes bankrupt, the trademark part of its assets can accordingly be sold off.

· When the company owns a registered trademark its value may be increased:

o Registered trademarks are quantifiable assets with a monetary value

o Registered trademarks can serve as a security interest in financial transactions

o Successful registered trademarks can be exploited as negotiating tools in business ventures

· Owners of a registered trademark are entitled to sue a third party for infringement. However, they are also liable in the event that their registered trademark is deemed to have been used unlawfully. Company or partnership ownership protects the individual from potential liability.


Individual Ownership

· Transferral or license of a registered trademark

o An individual may assign or license a trademark to a third person

o In the event of death, trademark ownership passes to the individual’s estate

o If the company goes bankrupt, the IP rights remain with the individual, and cannot be seized as part of the company’s assets. However, in the event that the individual faces bankruptcy, the trademark may be sold off accordingly

· Revenue:

o Ownership of a registered trademark could generate income for the owner, since royalties may be demanded for trademark usage (from the licensee)

o This system of ownership could have tax advantages for a company


Co-ownership

· Co-owners are at liberty to form any agreement concerning the division of rights of ownership. In the absence of agreements, the law will assume that each applicant “is entitled to an equal and undivided share” (TMA s.23). This means that:

o Each co-proprietor is entitled, without the consent of the other co-proprietors, to do any act for his own benefit, which would otherwise amount to an infringement of the trademark

o A co-proprietor may not grant a licence to a third party for use of the trademark, or assign his share without the consent of the others

o In the event of the death of a co-proprietor, his share passes to his estate, not to the other co-owners

Google’s AdWords faces further scrutiny in the Paris Court of Appeal

Both LVMH Moet Hennessy Louis Vuitton and the internet search giant Google claimed victory last week in the latest of a series of challenges to Google’s AdWords business. On Tuesday 13 July the French Supreme Court (Cour de Cassation) referred a ruling in favour of the French luxury goods company back to the Court of Appeal.



The dispute involves Google’s paid referencing service, ‘AdWords’, which allows advertisers to bid for keywords- many of which are protected trademarks- used in Google’s search engine. When an internet user enters a keyword, advertisements known as “sponsored links” are shown in the top of the screen. Consequently, a search on a trademarked word could bring up a competitor’s product or - in theory – even direct the consumer to counterfeit products.



The Cour de Cassation’s judgment affirmed an earlier ruling by the European Court of Justice, which held that the practice of selling keywords associated with registered trademarks does not infringe trademark rights per se. Despite using its official blog to herald that ruling as a triumph for the free flow of information over the shackles of an overly coercive IP regime, the court made it clear that such advertising could constitute an infringement where it “does not enable an average internet user... to ascertain whether the goods or services referred to therein originate from the proprietor of the trade mark... or on the contrary, originate from a third party.” LVMH said that the Supreme Court’s recent decision “will enable the Paris Court of Appeals to rule on Google’s civil liability when using trademarks without the trademark owner's authorization." No date has been set for the forthcoming hearing.



Sources


http://googleblog.blogspot.com/2010/03/european-court-of-justice-rules-in.html

http://www.mediaweek.co.uk/news/1015878/Google-AdWords-held-liable-sale-trademarks/

http://sanfrancisco.bizjournals.com/sanfrancisco/stories/2010/07/12/daily10.html