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Trade mark – what's in a name?

22 April 2010

It would appear that Sir Alex Ferguson will be stepping back from the touchline at the end of next season, and of his many successors being mentioned in the media, Jose Mourinho's name continues to crop up.

This has raised an interesting trade mark question: when Jose was the “Special One” at Chelsea he allowed his then employer, Chelsea Football Club Limited, to register a number of trade marks incorporating ‘Jose Mourinho’, including one UK Trade Mark and two Community Trade Marks.

As far as we are aware, whilst Jose is currently the manager of Inter Milan, this has not been too much of an issue.  However, if Jose should move to Manchester United, it could change everything.

The use of the name Jose Mourinho as a trade mark could be used by Chelsea without any restriction; more importantly, it would prevent Manchester United from using Jose Mourinho in relation to their goods and services.

This is a serious point for all intellectual property rights holders, especially registered rights holders.

So, where should the intellectual property rights be held?  There are a number of options, but decisions such as this are often made with insufficient analysis.

Jose is reportedly a multi millionaire, who speaks five languages - however he may have misunderstood, or not realised, the significance of allowing Chelsea to obtain these registrations – a re-emphasis of the fact that these decisions are difficult to make, and if they do go wrong, it will be with devastating effect.

We often find that the same difficulties arise in the case of insolvency.  For example, a designer builds up goodwill and a reputation with their name.  As they become more successful, they set up a company and the company registers the designer’s name as a trade mark.

The situation is exactly the same for inventors with patents. The company seems like the best place for the rights as the company is going to use them, and the investors like to see the key asset of the business being carefully protected.

Now, fast forward a number of years; the company has entered difficult times and becomes insolvent. The IP rights, such as the trade mark for the name of the designer, are assets to be sold to the highest bidder. The highest bidders are probably not going to be the designer, whose name is the subject matter of the trade mark.

More often than not, it is a competitor who becomes the new owner of the designer’s name. The competitor can now use the name on their own goods, which could be of much lower quality, and prohibit the designer from using their own name.

There are generally three options where the IP rights should reside:

  1. with the trading company. Investors like this, and there is no need for additional paperwork providing a licence for the company to use them
  2. with the designer or inventor. This allows them to maintain total control over the rights. However, it makes the business a less attractive investment proposition
  3. stored in a holding company. This often presents the best of both worlds, with both the designer/inventor and the company holding shares in the holding company

That said there may be tax considerations associated with all three options.

Essentially, the decision as to where the rights should be held is a difficult one. Time and care must be taken to ensure that the decision is future proof, and that is doesn’t leave you out in the cold.

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Get in touch

Emile Saadi

Solicitor
T: 03700 86 8494
I: +44 (0)1908 48 8494
E: emile.saadi@shoosmiths.co.uk