Monday, February 1, 2010

Does My Girlfriend Own My Trademark?

Dear Rich: I am starting a fashion design company with my girlfriend. She is the designer and I am handling business/legal issues. She designed the company logo and created the business name. We are going to apply for a trademark for the logo and the name and the question has come up as to whether (i) she should own the trademark alone or (ii) we should be joint owners (we are not seeking to register the trademark in the name of the business to avoid the trademark becoming part of the company's bankruptcy estate upon a bankruptcy). My concern is that, if she owns the mark alone, she can walk away from the table on any given day and take the real value of the brand that we hope to create together. On the other hand, she did design the logo and it seems fair that she should be able to keep the rights to her artwork. Is it common for an entrepreneur to insist on owning a trademark alone or would it be typical to share the trademark among equal business partners even though only one person designed it? Of course, we hope that everything works out perfectly between us and the ownership of the trademark never becomes relevant but, things don't always play out so peachy. Any insight that you could give would be appreciated. We're not sure whether you wanted the insight for keeping things peachy with your girlfriend or about your trademark ownership so we'll address both issues (since they are equally important). 
Keeping things peachy with your girlfriend. There are three elements required for a successful long-term relationship with your girlfriend: (1) personal hygiene -- we can't stress how important this is, whether it's individual cleanliness, bathroom orderliness, or sanitary kitchen habits, (2) social deportment -- here we're talking about that sense of respect that comes from good table manners, interpersonal restraint and general cordiality, even in the face of overwhelming despair and doom, and (3) lots of laughs - without lots of yuks (hopefully not derived from the misfortune of others), most relationships are doomed. Okay, so that should establish a long term union for your business. Now about your trademark.
Creating a trademark does not create trademark rights. It's true that you will need permission from the artist to use copyrightable artwork in a trademark but you won't need permission to use the name (as that is not copyrightable). Even so, creating the artwork doesn't create trademark rights. Those rights are earned by your use of the mark in commerce. If you're operating as a business--we assume you're a partnership--it would make the most sense to create a partnership agreement and for the partnership to own the marks. Your partnership agreement should address what happens to these assets if the partnership breaks up or if one partner wants to buy out the other. Nolo, our employer (insert FTC disclaimer here) has books that can help you do that.
Your bankruptcy plan. We're not clear about your plan to retain ownership of the trademark to avoid bankruptcy. Your fashion business (or whoever owned the marks) would have to license the marks to the business. So, wouldn't the license become part of the bankruptcy plan? The Dear Rich Staff are not experts on that stuff but we wouldn't count on your approach. (And anyway if the company went into the bankruptcy, doesn't that mean that the brand has failed? So what would be the value of the mark?) Anyway, let's think positive even though we know that's usually not a good idea.