Plus which Aspects to Consider Before Answering
Deciding to register a Trade Mark is an excellent business decision. However, you need to ask two very important questions before starting the registration process. The first will determine in which class(es) to register your Trade Mark. The second, in whose name the Trade Mark will be filed.
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Question 1 – Trade Mark Registration: What Are You selling?
In other words, what kind of business are you running? Clarifying this will determine the Trade Mark classes applicable to your business to provide adequate brand protection.
There are many, many, many different products you can sell or services you can provide. So the Intellectual Property (IP) industry categorizes any product or any service you can sell as a business into groups (or classes).
You can either file in one class or in multiple classes. There are 45 different classes in which you can file a Trade Mark. Of which 34 are goods classes and 11 are service classes. These are classified in terms of the Nice Classification – an international standard.
Examples of Trade Mark Classes
A Trade Mark class is used to associate a Trade Mark with a specific industry. For example, you would associate Nike with apparel. And if you think of KFC, you think of the fast-food industry. But sometimes, you would need to file a Trade Mark in more than one class.
More often than not, a business actually sells a product and provides a service. For example, a coffee roastery would sell coffee beans – that is the product. But many roasteries also have a coffee shop or a whole franchise of coffee shops. That would be covered in the food and drink service class. So that business would have to file their Trade Mark in the coffee product class and in the food and drink services class.
Sometimes you have products that span across multiple product classes. IP Braai has started selling branded clothing. That would be covered by the apparel class. But if we started selling branded braai tongs, for example, that would be covered by the kitchen appliance class.
Plus if we started selling these products from an online or a physical shop, and the shop was called IP Braai, that would be covered by the retail service class. The bottom line is you have to choose the class that best describes your business and your industry.
Question 2 – Trade Mark Registration: Who Is the Trade Mark Owner?
The second question to answer is in whose name are you going to register the Trade Mark. Who will be the Trade Mark owner? In whose name will the Trade Mark be filed?
Although there is no right or wrong answer here, it all depends on what business entity you are trading as and on your long-term goal. Here, it is very important to consider your long-term strategy.
Let’s talk about the three most popular business entities:
Entity A: Sole Proprietor
If you are trading in your own name, as a sole proprietor, you personally are the only possible Trade Mark owner.
Entity B: Partnership
However, what if you are in a partnership and you have joint ownership of the Trade Mark? What if the partners part ways? What then? This is especially important if that business has spent significant time and money to build goodwill and reputation in that brand.
At this point, it’s probably best to start trading in a company. Or, at the very least, if you want to stick with a partnership, establish a holding company. You could then file the Trade Mark in the name of the holding company. And both partners would have shares in the holding company.
You could also then consider putting a shareholder’s agreement in place. This would regulate what happens to the Trade Mark if the partnership disbands, if the partners go their separate ways.
Entity C: Company
If you are trading in a company and you are the only shareholder, this means you own the company – in whose name do you register the Trade Mark then? Would you register it in your own personal name or in the name of the company? Here you need to ask yourself: What would happen when you sell the company?
Would you want to sell the company with the Trade Mark? If so, then file the Trade Mark in the name of the company. When you sell, you would simply sell your company shares and the Trade Mark would be sold within the company. This is because it is a company asset.
But what happens if the Trade Mark is a very important brand name? Maybe it’s a family name. Maybe it’s very valuable to the owner for some other reason. In that case, you could register the Trade Mark in your own name. Then, when you sell the company, you remain the Trade Mark owner. You could then earn royalties from the new company owners for using your brand.
This is a very valid strategy. But bear in mind that the new potential owners would have to be in agreement with the fact that the Trade Mark is not sold with the company. This might even affect the value of the company. Although, this is an excellent example where a license agreement would be applicable. You would actually license the usage of the Trade Mark to the new company owners.
