Trademarks are more than just logos or catchy names—they’re valuable assets that embody your brand’s identity and the goodwill you’ve built with customers. But have you thought about how your trademark ownership is structured? Whether you own your trademark as an individual or through a business entity can significantly impact how you manage, transfer, and protect this important asset. At Sherman IP, we help clients make smart decisions about trademark ownership and plan to safeguard their brands.
Let’s explore what you need to know about individual versus entity ownership and why keeping your records current with the United States Patent & Trademark Office matters.
Individual Ownership: Flexibility with Planning Required
When you own a trademark personally, you have complete control over how it’s used and enforced. This straightforward approach appeals to many sole proprietors and entrepreneurs who are just getting started. However, individual ownership requires careful succession planning to avoid problems down the road.
Here’s the challenge: if you pass away without including your trademark in a will, trust, or estate plan, its future becomes uncertain. The trademark may pass to heirs through intestate succession—meaning state inheritance laws decide who gets it. This can lead to family disputes or result in someone inheriting the trademark who isn’t prepared to manage it properly. Even worse, if no one steps forward to maintain or renew the registration, your trademark could lapse entirely, leaving your brand vulnerable to competitors.
Lastly, if your trademark is held individually and your business is another entity than a sole proprietorship (i.e., your business is operated through a partnership, corporate entity, LLC or other type of structure) a license should be in place to ensure that the trademark and brand are properly used and maintained. Further, if this is the case, and it is not properly documented, then the trademark could separate from the business upon your passing, which could extinguish your trademark rights leaving your business and your heirs without trademark protection.
The good news? These risks are entirely preventable. If you own trademarks individually, we recommend:
- Including your trademark in your will or trust, with clear instructions about who inherits it and how it should be managed
- Designating a successor who understands your brand and can ensure continuity
- Working with an attorney to document its ownership and control and then integrate the trademark into your comprehensive estate plan, including provisions for ongoing maintenance like the required renewals every 10 years
With proper planning, you can ensure your trademark—and all the goodwill it represents—remains protected and aligned with your wishes.
Entity Ownership: Built for Growth and Continuity
Many businesses choose to hold trademarks through an entity like an LLC, corporation, or partnership. This structure often provides greater stability and flexibility, particularly for growing companies or those with multiple stakeholders. A key advantage? Entities can outlive their founders, providing natural continuity for your trademark.
However, entity ownership comes with its own planning requirements. You’ll need clear documentation to handle management of the trademark’s maintenance and control, potential changes like dissolution, ownership transfers, or sales. Here’s what to consider:
If your entity dissolves, (e.g., an LLC winds down), your operating agreement or corporate bylaws should specify how the trademark is distributed or sold, or have a reversion clause to revert ownership to an individual or entity that will continue to operate and use the trademark. Without this, the asset could be lost or tied up in legal disputes.
When ownership changes—such as new partners joining or shareholders selling their stakes—your governing documents should clarify whether the trademark stays with the original stakeholders, is an asset which flows with the entity or moves elsewhere.
In a business sale, the trademark’s transfer must be explicitly addressed in the sale agreement in a specific way. Buyers will want certainty that they’re acquiring the brand’s intellectual property along with the business. If the Buyer(s) have an attorney, then their attorney will be responsible for preparing the documents that ensure that the Buyer(s) acquire the trademark rights correctly and that the change is properly documented at the proper government office(s). Often unrepresented buyers miss this simple step and place the value of their purchase at risk.
Entity name changes, conversions, or ownership shifts present special challenges. If your LLC becomes a corporation, or “ABC Corp” becomes “XYZ Inc.,” the United States Patent and Trademark Office (“USPTO”) requires that the owner of record for a federally registered trademark matches the entity filing maintenance documents. If you haven’t recorded an Assignment reflecting these changes, the USPTO could refuse your filing—potentially leading to cancellation of your registration.
The solution? Maintain detailed records and include specific trademark provisions in your operating agreements, bylaws, or shareholder agreements. Working with legal counsel to draft these provisions and record assignments with the USPTO when changes occur can save you from costly problems later.
Recording Changes with the USPTO: A Critical Step
Regardless of whether you own your federally registered trademark individually or through an entity, any ownership change must be recorded with the USPTO’s Assignment Recordation Branch, typically with a cover sheet and supporting documentation (e.g., a signed assignment agreement). This applies to assignments to new owners, transfers from sales, or inheritances.
Why is recording so important?
Public notice: Recording updates the USPTO’s database, providing clear public notice of ownership and reducing dispute risks.
Enforcement rights: Only the current owner of record can enforce a federally registered trademark against infringers or defend it in legal proceedings.
Maintenance reminders: The USPTO sends renewal notices to the owner of record of a federally registered trademark. An outdated address could mean missed deadlines and cancellation. Plus, if there’s a mismatch between the owner of record and the entity submitting maintenance filings, the USPTO may refuse your submission, jeopardizing the registration.
Avoiding likelihood of confusion refusals: If you have multiple trademarks and one registration lists an outdated entity name or address, even your own similar applications could receive “likelihood-of-confusion” refusals to a new, more updated registration, creating unnecessary problems.
The recording process is straightforward, but the underlying structure of ownership is more complex and accuracy matters. At Sherman IP, we regularly help clients, plan, create, prepare and file these documents correctly to protect their trademark registrations.
Take Action Now to Protect Your Brand
Choosing the right ownership structure is just the first step. Whether you’re protecting a personal brand or building a corporate identity, proactive planning makes all the difference. By addressing succession, documenting entity transitions, and keeping USPTO records current, you ensure your trademark remains a valuable asset for years to come.
At Sherman IP, we’re here to guide you through these important decisions and help secure your brand’s future. Contact us today to discuss your trademark ownership strategy.
Sherman IP LLP
Protecting Your Vision, Securing Your Future