Filing a federal trademark application in the U.S. requires careful attention to a number of details, including obvious components, like the configuration of the mark and the nature of the goods and/or services on which it is being used or will be used. Of the numerous elements that go into the application, there are certain “routine” details that can be easily overlooked. One such “inconsequential” detail, if handled improperly, can doom a trademark application and any resulting registration. The culprit: designation of the mark’s owner.
Most trademark applicants will recognize that a trademark’s owner is a fundamental characteristic of that mark. However, far fewer recognize the legal meaning of that designation or the consequences for getting it wrong. Because various assets of a business are often exchanged, held or acquired at will as between related entities, partners and stakeholders, it’s only natural that a business owner would assume that trademark assets can be treated similarly. But this naïve, innocent mistake can cost the unwary trademark applicant dearly.
If the wrong applicant is listed in the original application, the result is a fatal flaw that cannot be cured by remedial filings of any kind. An entirely new trademark application (and filing fees) must be filed, and any “placeholder” rights that the original trademark application may have otherwise provided will be lost. It gets worse. If the defective application has matured into a trademark registration before the mistake is discovered, the resultant registration is void and subject to cancellation. One must hope that the trademark owner discovers the flaw before it is unearthed by a competitor or by the defendant in an enforcement action. Registration rights are lost, and re-filing is only a partial cure because the rights that come with federal trademark registration are not retroactive. A third party may have, in the meantime, generated rights in the mark that complicate, at best, our unsuspecting applicant’s rights therein. Compounding this frustrating circumstance, the Trademark Office will not review a trademark application to ensure that the proper applicant is listed unless the applicant itself submits evidence that clearly contradicts the proffered identification of the mark’s owner. Therefore, many trademark applications that will turn out to be void for this reason are passed to registration (sometimes at great financial cost to the applicant) without raising any flags, only to rear their heads down the road at what is often the most inconvenient time.
The nuanced legal standard, coupled with the commonly held understanding of the nature of trademark rights, multiplied by the inability of the Trademark Examining Attorney to provide guidance, means that the question “Who owns this trademark?” should be at the top of every trademark attorney’s list of discussion points.
But who does own a trademark? While the answer is not always simple, the legal standard can be summed up in a few words: the owner is the person or entity that controls the nature and quality of the goods sold or services rendered under the mark. That doesn’t necessarily mean the company or person who places the goods or services into the marketplace. A trademark owner can license a trademark to a subsidiary, franchisee or like party who places goods or services in commerce where the goods bearing the mark and/or the licensee’s performance of services under the mark are controlled by the parent/franchisor. Even a holding company can own trademarks when it exercises control over their use, such that the use of those marks by a related company “inures to the benefit of” the holding company.
On the other hand, a distributor or importer, as those terms are commonly understood, is merely a conduit for goods between the manufacturer and the consumer, and possibly other intermediaries. However, somewhere along the distribution chain is a party who is responsible for the quality of the products that eventually hit the market, and it is this party who is the proper owner of the trademark under which those goods are sold. For it is to this party that the public should turn when, say, the product is defective or the consumer has questions or feedback about its features. Likewise, it is this entity who will stand to benefit from the accumulation of goodwill that consumers feel towards the person or company who provides a product or service that they like.
When there is alignment between a trademark’s owner and the name listed on the application for same, the consumer universe is satisfied and this registration pitfall, at least, is avoided.
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