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Without an assignment/license, who owns the trademark if the publicly recognized controller of it changes soon after first use?

Raleigh, NC |

Say Person A creates / markets an application with help from his good friend, Person B. A and B brainstorm application names, and A suggests the name that is used for the application, XYZipp. Without a formal entity, XYZipp is first released to the public in A’s name, A and B quickly discuss a more formal partnership and start an LLC called XYZipp Apps a few months later.

1) The XYZipp trademark is not registered, and the app is now sold by the LLC, not in the name of Person A.
2) More apps are created / sold using name variations of the XYZipp mark.
3) No assignment or license to use the trademark is made.

A few years later, A wants to end the partnership. At this point, who owns the XYZipp and XYZipp Apps trademarks? The LLC that bears the name? The partners? Person A?

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Attorney answers 4

Posted

Unless there are more facts, and there might be, XYZipp and XYZipp Apps trademarks appear to belong to the LLC by agreement of A & B, and dissolution will need to resolve how LLC assets are distributed.

You would do well to try to get A & B (I presume you are one of them) to mediate a settlement if this is a valuable asset, which is likely is for you to be here asking about it. So, I suggest you contact an IP attorney to try to work on a mediated settlement. Perhaps A gets the assets and pays B a negotiated royalty to "buy out" B's interest, if any. Or, vice versa B gets the assets and pays A. A mediation is preferable so you agree on the solution rather than having a Judge impose one on you. As an IP mediator, I like MEDALOA (mediation and last offer acceptance) for this type of situation. You know it as "baseball arbitration". Having the mediator choose the best offer from one of the parties if there is no agreement makes the parties think twice about making an unfair offer or not negotiating in good faith as such shenanigans usually result in the last offer from the other party getting imposed.

Good Luck and choose carefully and negotiate fairly.

I am not your lawyer and you are not my client. Free advice here is without recourse and any reliance thereupon is at your sole risk. This is done without compensation as a free public service. I am licensed in IL, MO, TX and I am a Reg. Pat. Atty. so advice in any other jurisdiction is strictly general advice and should be confirmed with an attorney licensed in that jurisdiction.

Posted

This is very fact specific; it's going to turn on exactly what happened during the early development, what the written agreements say, and how things have played out to this point. You should go see an IP attorney who can review your documents and help you to understand the position of the company at present.

No information you obtain from this answer is legal advice, nor is it intended to be. You should consult an attorney for individualized advice regarding your situation. No attorney-client relationship is formed by my responding to your question.

Asker

Posted

Thanks for the quick, though vague reply. Assuming no written agreements or conversations mention trademark ownership / use, and barring any additional significantly related facts, how would it look at first impression to you?

Kerry Blasingim

Kerry Blasingim

Posted

Up in the air. It could be that your initial collaboration would constitute an informal partnership and, despite the fact that only one person's name was used in marketing, a court could say both parties were invested in any goodwill the name created. Barring that, a court could find that any common law trademark rights were transferred into the LLC when it began using the name and variations to release the same and similar products with the knowledge and permission (and participation) of the initial seller. Or, it could be held that all that was granted was a license to use the common law trademark established by the original party A. Which of those were the case would determine where ownership of the trademark and associated goodwill now lies. It could be with the LLC, in which case it's an asset that needs to be sold as part of the winding down process - either member could try to buy it, it could be sold to a third party, or it could just be dropped altogether. It wouldn't automatically go out to either A or B, though. If it started with A, though, and was just licensed through, it would still belong to A. As I said, there's too much going on here for anyone to give you a real answer without knowing a lot more information. Your hypothetical is too specific to allow for only one real answer.

Kerry Blasingim

Kerry Blasingim

Posted

Sorry, I meant that it was too specific to allow for only one real answer without knowing all of the facts - I got distracted by something shiny.

Bruce E. Burdick

Bruce E. Burdick

Posted

Something shiny? Perhaps the sun peeking through after the spring blizzard.

Asker

Posted

Kerry, Thanks for the follow up, very informative. I definitely caught your meaning, shiny distractions notwithstanding :) Have a great day!

Posted

All the facts point to the LLC as the owner of the trademark. But ... there are certainly more facts in play that can only be evaluated by your own trademark attorney.

The above is general information ONLY and is not legal advice, does not form an attorney-client relationship, and should NOT be relied upon to take or refrain from taking any action. I am not your attorney. You should seek the advice of competent counsel before taking any action related to your inquiry.

Posted

Another possible concern for you, unless otherwise defined by contract, might be who owns the copyrights to code in your apps and to other intellectual property. As far as your trademark question goes, the I agree with the first response, which was that a lot depends on the earlier stages of development. In order to fully answer your question, I'd like to know more about what happened between creating the app, naming the app, and forming and LLC. Either way, you should consider contacting an IP attorney who is licensed in North Carolina, as your facts implicate State and common law trademark issues.

DISCLAIMER: this is not intended to be specific legal advice and should not be relied upon as such. No attorney-client relationship is formed on the basis of this posting. The law firm of Klish and Eldreth, PLLC offers many flat-rate legal services in the areas of business law and intellectual property to entrepreneurs, small-to-medium size businesses, independent inventors and artists in North Carolina. Your inquires are always welcome. Feel free to call 919-833-5322 for a free phone consultation or email Justin@klisheldreth.com

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