Should You Transfer Ownership of Your Trademark to Your Company?

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There are two ownership options when registering your trademark in Australia. You can register under your name, or you can register under the name of your business.

There’s no one correct answer. Your circumstances will indicate which option best suits you. However, there have recently been changes to the legalities around who has the right to own a trademark in Australia. You need to consider these changes before you make a decision. 

Seek Professional Advice About Your Trademark

Jacqui Pryor, an attorney from Mark My Words Trademarks, recommends seeking professional advice when it comes to registering trademarks within Australia. That’s because there are a number of factors to take into consideration.

What Are Some Considerations About Registering a Trademark?

If you’re considering registering a trademark in your capacity, you need to be aware of the risks. When a mark is registered, but not used within the prescribed period, you’re in danger of having the mark removed by a third party. They can do this if they can prove “non-use.”  

This can happen when you register the trademark in your name and then allow your company to use it. In this case, you should have a licensing agreement in place between you (the registered owner), and your company (the authorized user).

What’s more, it’s not enough to have the understanding in writing. In fact, you need paperwork that’s structured correctly to certify your company is viewed as an “authorized user.” This means the courts will recognize your company’s use of the mark as if you were using it, as the owner.

An Agreement Needs to Conform to Current Law

Specifically, the agreement needs to adhere to the provisions laid out in the Trade Marks Act 1995. Any licensing agreement, moreover, needs to reflect these provisions. Also, you and your company need to show that you’re fulfilling the requirements of the contract. For example, you’ll need to take the responsibility of quality control for the goods or services offered under the trademark. You’ll also have to manage all finances that relate to them.

Let’s Look at a How the Legal System Interpreted a Recent Case

Case law has recently examined a situation that put into question the rightful owner of a trademark. In the past, a director of a company would likely assume that by registering a mark in their name (and then allowing their company to use it) they could claim themselves as the owner. This is common in situations where there is only one director. However, a case that illustrates the problems with these assumptions was Insight Radiology Pty Ltd v Insight Clinical Imaging Pty Ltd ([2017] FCAFC 83).

The issue that arose is that trademarks are put through an opposition period after the trademark application’s approval. Another individual could refer to various provisions in the Act to oppose the registration of the trademark. For example, they could claim that the person who filed the application was not the owner of the mark. They can argue they are the rightful owner instead.

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How Did the Court Rule in This Trademark Case?

In this case, the Federal Court of Australia determined that the person who claimed ownership of a logo never intended to use it or authorize another entity to use it. That’s because he did not try to license it to his company. For ownership to be certified, the applicant has to provide information proving the reason for authorship or evidence of prior use of the mark. Alternatively, the applicant can show that they filed the application and that they intended to use it. 

This person did transfer ownership of the mark to the company at a later stage. However, the court found that this didn’t change the fact that he had initially filed the application in his name. This is because ownership is assumed on the date the application is filed. The court stated that his company had always owned the trademark and he never had the right to transfer ownership of a logo that was never rightly his. 

What Does This Mean for You?

Being the only director of a company doesn’t automatically mean you’ll be the owner of the trademark. A business name cannot own a trademark. Therefore, an applicant needs to consider the rightful owners when they apply. Who is the author or creator of the mark, and who paid for its creation in the case of collateral like a logo? Is the individual going to use the logo or will the company use it?

It is important to note that there is no cost difference between registering a trademark in your name and that of your company.

Consider These Examples

Here are some situations that will affect your decision:

• If you are a sole trader, you should file the application in your name. 
• For a company that is a partnership, there will be joint ownership of the mark.
• If your company later files for incorporation you’ll need a transfer to license the mark to the company.

What Are the Benefits of Protecting Your Trademark?

The most significant benefits of registering a trademark, particularly for smaller businesses are:

• You can avoid drawing up a licensing agreement between you and your company and all the paperwork that involves.
• You confirm rightful ownership so there can be no opposition in the future.

It may be more suitable for you to work with a holding company, which can hold assets for other companies. They would still need to license the use of the trademark to the trading company. Moreover, they would need to prove they authored the trademark and intend to use it via the license.

Take Heed of the Changing Issues Around Trademarks

In the past, ownership of a trademark was not such a crucial issue unless it came under opposition. However, with the new legalities, it’s important to review your trademark portfolio to correct ownership. If you find that the owner didn’t file trademarks, you should submit new applications.

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source https://www.business-opportunities.biz/2019/04/18/transfer-ownership-trademark-company/