Often, individuals joining together on a project believe they should each own the name they choose. Indeed, it only seems fair. But having multiple owners of a single trademark is a recipe for trouble, and the partners would be well-advised to instead posit ownership of the mark in the entity in which they can, and likely do, share ownership. A recent decision from the Fifth Circuit highlights one of the complications that can arise when a trademark is co-owned and the owners disagree about use.
In Reed v. Marshall, the court rejected Lanham Act claims brought by Di Reed against her former bandmates Joi Marshall and Tonya Harris from their band, “Jade,” as well as a third performer, Myracle Holloway. Reed argued that Marshall and Harris had infringed the JADE trademark they all individually co-owned by performing under the name with Holloway, without Reed's consent. The court was not persuaded.
Because all three original members of the JADE band were listed as co-owners of the federally registered service mark, the court concluded that no one owner could be held liable to another for trademark infringement. The Lanham Act is designed to protect owners from infringers, the court explained, and co-owners fall exclusively into the former category. Unless there is a specific agreement limiting a co-owner’s right to use or license the mark, each owner has a full and unrestricted right to do so.
The court went on to note that joint ownership of trademarks is generally disfavored in trademark law because of the potential for consumer confusion. Indeed, businesses, artists, and collaborators developing a brand together should avoid trademark co-ownership. Inconsistent or uncoordinated use by individual owners can weaken the mark itself. If each co-owner uses the trademark in different ways, with varying quality standards, or in connection with different goods or services, it can dilute the distinctiveness of the mark and create confusion in the marketplace. That, in turn, can make it harder for any of the owners to enforce rights against third parties. Courts may view the mark as lacking a single source of origin, which undermines one of the core principles of trademark protection and may jeopardize the ability to claim infringement by outsiders.
But if a trademark is going to be jointly owned, there must be a written agreement governing its use. Otherwise, any co-owner can use the mark however they wish, including licensing it to others or using it in ways the other owners might oppose. Such use weakens the mark and, without a contract, there is little recourse under trademark law itself. As the Fifth Circuit made clear, internal disputes among trademark co-owners do not give rise to Lanham Act claims. Those conflicts must be addressed through contract or corporate governance tools that are often neglected at the outset of joint creative and entrepreneurial ventures.
Congress intended to create a divide between owners and infringers when it passed the Lanham Act and co-owners of a mark "fall only on one side of this dividing line"
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