Trademark Ownership Dispute: Can a Founder Register a Brand in Personal Name After Incorporating a Company?
Introduction
In the modern business landscape, establishing a powerful brand is among the most significant assets a company can possess. However, brand ownership often becomes a legal grey area when a founder initially uses a brand name personally and later incorporates a company with partners to leverage that brand. A common question arises in such cases:
Can a Founder Register a Brand in Personal Name After Incorporating a Company?
This article discusses the legal position under Indian trademark law, possible risks, and the best approach to avoid disputes over brand ownership.
Understanding Trademark Ownership in India
Under the Trade Marks Act, 1999, the right to register a trademark belongs to:
- The person or entity currently using the mark in trade or commerce, or
- A person/entity intending to use the mark in the future.
The law also recognizes the prior user principle, meaning the person who first adopted and used the trademark in good faith has superior rights over later users, even if the latter obtains registration. This principle safeguards long-standing users against third-party claims.
The Scenario: Brand Used Personally Before Incorporation
Let’s consider a real-world-like example:
- 2016: An individual (Founder A) creates and uses the brand name “ABCD” for their business, issuing invoices under this name without any registered business entity or trademark registration.
- 2020: Founder A, along with two friends, incorporates ABCD Private Limited to leverage the reputation of the brand. Since incorporation, the brand “ABCD” is used commercially under the company’s name.
- 2025: The brand is well-established, but no trademark registration has been obtained yet. Founder A now wants to register the trademark personally, claiming to be the original innovator of the brand.
This leads to a legal question: Does the founder retain individual rights to the trademark, or has ownership shifted to the company?
Legal Analysis of Ownership Rights
(i) Prior User Rights (2016–2020)
Founder A can prove prior use through:
- Old invoices and bills mentioning the brand name
- Proof of sales and marketing efforts
- Any advertisements or online presence since 2016
Under Section 34 of the Trade Marks Act, a prior user has superior rights over later adopters, even without registration. This means Founder A retains a legal claim to the name “ABCD” prior to 2020.
(ii) Ownership Post Incorporation (2020 onwards)
Once “ABCD Private Limited” was incorporated:
- The company became a separate legal entity distinct from its shareholders or founders.
- The brand name was used in the company’s business/trade, meaning that all the goodwill and reputation built from 2020 onwards are legally tied to the company.
- The company now also qualifies as the current bona fide user of the trademark.
Thus, while Founder A has historical rights, current usage belongs to the company.
(iii) Filing Trademark in Personal Name – Potential Issues
If Founder A applies for a trademark today under their personal name:
- The company may object, claiming that it is the actual user since 2020.
- The Trademark Registry may raise an objection due to possible ownership conflict.
- Co-founders may allege misappropriation of company goodwill, leading to disputes or even legal proceedings under principles of fiduciary duty.
Even if the mark is granted, internal disputes could undermine its enforceability later.
Best Possible Solutions
To avoid disputes and ensure clean ownership rights, there are three practical solutions:
Option A – File the Trademark Under the Company’s Name
- The safest and most legally sound approach is to register the mark in the name of ABCD Private Limited.
- The application can still claim “user since 2016” by attaching:
- Old invoices and documents showing usage by Founder A (2016–2020).
- A declaration that the company has taken over prior usage rights from the founder.
- This consolidates ownership under the company, protecting the brand as a company asset.
Option B – Execute an Agreement for Prior User Rights Assignment
- Founder A can execute a written assignment or transfer agreement stating that all trademark rights developed from 2016–2020 are transferred to ABCD Private Limited.
- This document can be submitted with the trademark application as supporting evidence.
- It prevents future disputes with co-founders and clarifies that the brand legally belongs to the company.
Option C – File Personally With NOC From the Company
- As an alternative, Founder A may apply personally, but the application will be stronger if:
- The company provides a No Objection Certificate (NOC) acknowledging the founder’s prior rights.
- A clear licensing arrangement is made allowing the company to continue using the brand.
- Without such documentation, the registry or co-founders may challenge the application.
Why It’s Risky to File Personally Without Agreement
Registering the trademark under your personal name without company consent may lead to:
- Legal challenges from the company or other shareholders.
- Internal disputes over ownership, leading to court intervention.
- Potential breach of fiduciary duty as a director or partner, since a company director cannot privately claim rights over assets used by the company without disclosure.
Thus, even as the innovator of the brand, filing personally at this stage without proper documentation could backfire legally.
Key Takeaways
- Prior user rights protect the founder’s claim over a trademark even if not registered initially.
- Current usage by a company means that the goodwill and legal rights are now associated with the company.
- The cleanest legal solution is to:
- Assign prior rights to the company, and
- File the trademark under the company’s name claiming user since the date the founder first adopted the mark.
This ensures no conflict of ownership in the future and protects the brand as a valuable asset of the company.
Final Word
Brand ownership disputes between founders and companies are common when trademarks are not registered early. If you are in a similar situation, the best approach is to:
- Document prior usage rights,
- Assign them to the company, and
- Register the trademark in the company’s name to secure legal protection.
Early trademark registration under the appropriate owner is always advisable to avoid such complications in the future.
