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When registering a trademark, you may be asked whether the name should be registered as an individual or a corporation. This issue is an important issue that is not limited to trademark rights, but also applies to patent rights, design rights, and utility model rights.
Many people ``somehow made it a corporation'' or ``filed the application as an individual'', but there are different advantages and disadvantages to using an individual name and a corporation name. In this article, we will summarize the characteristics of each.
First, let's check the list of main differences between personal name and corporate name.
| Comparison item | Personal name | Corporate name |
|---|---|---|
| Acquisition risk | Not affected by acquisition | Possibility of relocation due to company acquisition |
| M&A procedures | Separate transfer registration required | Automatic transfer with stock transfer (no procedure required) |
| Address announcement | Home address will be published | Your company address will be published |
| Risk of non-use revocation judgment | Risk if used by a corporation | Easy to match between rights holder and user |
| Accelerated examination | Condition not met for corporate use | Easy to match between applicant and user |
| Inheritance | Inheritance procedure required | Corporation continues (inheritance not required) |
The biggest advantage of owning trademark rights in your own name is that you are not affected by company takeovers (including hostile takeovers).
In the case of a corporate name, if the company is acquired, the trademark rights will be transferred along with the company. However, if the trademark is in an individual's name, the trademark rights will continue to belong to the individual even if the ownership of the company changes.
Specific use case:Holding in the president's personal name is effective when there is a risk of a hostile takeover or when you want to protect an important brand separately from the company's management rights.
The advantage of owning trademark rights in the name of a corporation is that it simplifies procedures in case of M&A or buyout.
In the case of a corporation, if you transfer the shares, the trademark rights will also be transferred with the corporation, so there is no need for a separate transfer procedure (application for trademark transfer registration). Registration of transfer of trademark rights requires a stamp fee of 30,000 yen per registration, so this is a significant cost reduction for companies that own many trademark rights.
Specific cost example:If you own 50 trademark rights and register the transfer individually, you will need 1.5 million yen (30,000 yen x 50) in stamp fees alone. If you transfer shares in the name of a corporation, this fee will be unnecessary.
There are some disadvantages to using a personal name that you should be aware of.
If you file an application in your own name, the address of the right holder will be published in the register and database of the Patent Office. This means thatyour home address may be known to third parties. If you want to avoid disclosing your home address, you should consider filing in the name of a corporation.
If the person actually using the trademark is a corporation and the name of the trademark right is an individual, there will be a mismatch between the right holder and the user. In this case, there is a risk that a third party will request a trial for cancellation of non-use.
Of course, it is possible to avoid revocation if an individual can prove in a contract that the individual has given a license to a corporation. However, by aligning rights holders and users from the beginning, such risks can be prevented.
Note:If the trademark owner is a corporation and the user is also a corporation, unnecessary risks and response costs for non-use revocation trials can be avoided.
In the case of an individual name, in the unlikely event that something happens to the right holder, the heir will need to carry out the "procedures for applying for transfer registration due to inheritance." Transfer registration procedures are also required when transferring to a third party.
A common case is when a business is first started as a sole proprietorship and a trademark is acquired in the individual's name, but then the business is established as a corporation. In this case, personal assets and corporate assets will be mixed, so we recommend transferring them to a corporate name.
The main disadvantage of using a corporate name is that if the company is acquired, the trademark rights will also be transferred.
Especially in the case of a hostile takeover, there is a risk of unintentionally losing trademark rights. If you want to avoid this risk, one possible measure is to transfer only important trademark rights to the president's personal name. If the trademark is in the individual name of the company president, the acquisition of the company will not affect the trademark rights.
It usually takes about 12 months to examine a trademark, but if you use the "accelerated examination" system, you can receive the examination results in about 2 months from the submission of a statement of circumstances.
However, one of the requirements for accelerated examination is that the ``trademark applicant'' and the ``user (the person actually using the trademark)'' are the same.
Important:If the applicant is an individual (e.g. in the name of the president) and the user is a corporation (e.g. the president's company), the requirements for accelerated examination will not be met because the applicant and user do not match. If you plan to use accelerated examination, you need to carefully select the name at the time of filing.
If you need advice tailored to your individual circumstances regarding the selection of a name for trademark rights, please feel free to contact us. A patent attorney in charge will get back to you.
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Last updated: January 10, 2023
AUTHOR
Takefumi SUGIURA （杉浦 健文）
EVORIX Intellectual Property Law Firm Managing Patent Attorney
Supports clients across IT, manufacturing, startups, fashion, and medical industries, covering patent, trademark, design, and copyright filings through trials and infringement litigation. Specialized in IP strategy for AI, IoT, Web3, and FinTech. Member of the Japan Patent Attorneys Association (JPAA), Asian Patent Attorneys Association (APAA), and Japan Trademark Association (JTA).