The hydra had multiple heads, but can a trade mark have multiple owners?

One of the major unexplored areas of trade mark law and practice is the extent to which they employ the notion of legal fictions. This Kat has addressed this issue in the context of quality control and trademark licensing, taking as the starting point the description of a legal fiction (at least in the common law tradition) set forth by Professor Eban Moglen, namely
"as a proposition about the substance or procedure of the legal system, purporting to be a principle or rule material to the determination of cases, which rests in whole or in part on factual premises known to be inaccurate at the time of the fiction's invocation. Each fiction, qua fiction, may be said to have a subject matter, comprised of the premise or premises counterfactually maintained." 
 While this Kat ultimately concluded that quality control as an element of trade mark licensing is not a legal fiction, the absence of conclusive empirical support for the concept troubled him.

The notion of legal fictions recently crossed my mind as I ran across one of the most unusual structures ever for ownership of a trade mark application, involving five applicants: the start-up company, its two founders, and the two principal investors. When I asked how it came to pass that there are five named applicants, the explanation that I understood was that it had been agreed that all IP being created by the start-up would be owned in equal shares by all five parties:”what is good for patents is good for trade marks, no?” In passing, I was then asked—“what is the harm “in having multiple owners? I demurred from responding, but the encounter brought me back to consider once again about the challenge of trying to make legal sense of multiple ownership of a trade mark. Particularly, the question arises: how we can square the notion of a trade mark as a source indicator when there are objectively multiple sources for the mark? Moreover, how do we account for the goodwill in the mark?

This Kat recalls a time where multiple ownership of a trade mark was frowned upon as a legal matter, if not outright disallowed. From that starting point, he witnessed the gradual acceptance of the notion in most (all?) jurisdictions, although the rationale for the change in position was never entirely made clear to him. Unlike trade mark licensing, which derived from a partial transformation in the manner of trade mark use and thereby challenged the legal system to come up with a rationale to preserve the underlying legal framework, this Kat cannot discern any trigger in ownership practice that pushed the trade mark system into conceptual panic mode. As best this Kat can recall, one day multiple ownership was not permitted, but the next day it was—end of story.

And yet, the question remains—how we conceptually justify multiple ownership of a trade mark? By analogy to the quality control notion in trade mark licensing, can it be said that all owners use, or potentially use, the mark, in a uniform manner? Given the challenge in ensuring that there is quality control in the (simple) licensor-licensee relationship, it strains credulity to reasonably believe that the functional equivalent of quality control is present where there are multiple owners of the mark. If this conclusion is correct, then one is compelled to ask whether the answer is that multiple trade mark ownership is simply a legal fiction that has been embraced by both legal thought and practice. As such, the source theory of trade marks is preserved simply because the law says that this is so.

Conceptual niceties aside, the most challenging trade mark agreement that this Kat ever negotiated was a settlement that provided for multiple ownership of the disputed trade mark by the two erstwhile litigants, with each party being granted specific rights of use in the mark quite separate from the other. How has the arrangement worked out? This Kat does not know. What he does recall is his parting comment following execution of the agreement—“I hope that the two of you will never have to exercise the termination provisions of the agreement.” What was true for them is even more appropriate for the five owners of the instant application. Good luck.
The hydra had multiple heads, but can a trade mark have multiple owners? The hydra had multiple heads, but can a trade mark have multiple owners? Reviewed by Neil Wilkof on Sunday, September 14, 2014 Rating: 5

1 comment:

  1. Well, if the multiple owners are (for example) the partners in a professional practice, held together by a partnership agreement and all participating in the business, then the joint quality control is real and I would say that the registration is valid. Such a situation is unnecessary (the application can be made in the name of the partnership) and tiresome (partnership changes need to be recorded as they happen) but there seems no real reason why it should not work where all the applicants are in a joint business endeavour.

    In any other situation s46(1)(d) beckons, surely?


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