“Who should be the owner of my trademark?” – This is a tricky question that often comes up in drafting trademark applications.
Legally, anyone can be a trademark owner provided you are the bona fide proprietor of the trademark. This includes incorporated or unincorporated body. The decision on choosing the right owner for a trademark registration should be a strategic one. Being the creator of the trademark does not always mean you must be the owner of the trademark.
To many first-time trademark owners, the first question that often come to mind “should I register my trademark under personal or company name”? Before deciding, it is essential to understand the differences between them.
Registration Under Personal Name
A trademark can be owned personally in the name of an individual. It can even jointly owned by 2 or more individuals.
However, if a trademark is being co-owned by a few owners, it is better to have a co-ownership agreement between the owners to pen down certain issues, for example, the share of ownership, decisions making, exit clauses & etc. This is to avoid deadlock situation if any dispute arises. A deadlock situation on the use of a trademark is be detrimental for a business.
Registration Under Company Name
Most of the time, the word “company” is being used to generalize the various types of legal entity. For example, in Malaysia, we may run a business under sole proprietorship, partnership or private limited company (a.k.a Sdn Bhd).
For business owners who run business as Sole Proprietorship, you are required to register your business under Registration of Businesses Act 1956 with Companies Commission of Malaysia (SSM). Sole Proprietorship does not create a separate entity from the owner, and hence the business owner will personally own the assets and liabilities of the business.
Therefore, for trademark registration purposes, you may consider registering the trademark under your personal name (instead of under the sole proprietorship) for the sake of administrative convenience. For example, if the sole proprietorship is eventually closed down or you incorporated a new private limited company to continue the business, you will still personally own the trademark without incurring any addition cost or effort to update the details in the Registry of Trademarks.
Partnership is similar with sole proprietorship in that the business owners will register the business under the Registration of Businesses Act 1956 with SSM. The main difference is a partnership consists of a team of business owners / partners, and most of the time they would have a partnership agreement to lay down the rights and obligations of each partner.
In this case, a trademark is an asset and will be jointly owned by the partners, and it may also be registered in the name of the partnership.
On the other hand, a private limited company (Sdn Bhd) is a legal entity separated from the shareholders pursuant to Companies Act 2016. Hence, the trademark will be owned by the company if it is registered under its name, and not personally by you or jointly owned by the shareholders personally.
Before we continue, it is worth noting that the registration under personal or company name does not affect the chances of success, procedure and costs of trademark registration. So, what are the factors in consideration?
Company vs Personal
So, back to the question whether a trademark should be owned by an individual or company? There is no definite answer and should be decided on case to case basis.
For example, if a private limited company is incorporated with a few founders and shareholders at the first place, it is advisable to register the trademark in the name of the company, especially if the trademark is created after the company is incorporated and everyone has contributed in creating the trademark.
However, you started a business all by your own under a sole proprietorship, you may register the trademark under your own personal name in the beginning. As your business grows, if you found a new partner or co-founder, you may register a partnership with him. In this case, the trademark may be transferred to the partnership. If you wish to observe whether the partnership is working out, you may grant a licence to the partnership to use the trademark.
On the other hand, if a private limited company is incorporated with other shareholders after you have been using the trademark under the sole proprietorship, you may also use the trademark as an asset in exchange of shareholdings instead of injecting cash capital for shares. Similarly, you may also grant a licence to the company to use the trademark, while retaining the ownership of the mark.
Given that there are still many other possible options in deciding the ownership of a trademark, it is prudent consider each of the options from all angles. If in doubt, it is advisable to seek consultation from professionals.