No one goes into business with a partner expecting things to fall apart. Still, statistics show that many business partnerships end up that way. Ten percent of all business partners end their relationship within the first year, and 45% split up in the first four.

With statistics like these, co-owners should know upfront what will happen to their intellectual property assets if things go awry. To help with this, here's what you need to know about who gets to keep the trademarks after a business breaks up.

It Comes Down To Ownership

In the U.S., a trademark owner can be an individual, partnership, corporation, LLC, sole proprietorship, or other entity type. So determining whether the business' trademarks are own by the company or by one of the partners individually ultimately decides who gets to keep the rights after a split. If one partner owns the trademarks individually, they will get to keep those rights. If the mark is owned jointly by both partners or by a business entity where both parties have an interest, then the parties must look to other mechanisms to determine ownership.

Assigning Trademark Rights

If both co-founders have an interest in the business' trademarks, another way to decide who gets ownership is through an assignment. In an assignment, one partner agrees to assign all of their trademark rights to the other partner, usually in exchange for payment.

To be effective, trademark assignments should always be in the form of a written agreement signed by both parties. Additionally, ex-cofounders must file the change in ownership with the USPTO to update the trademark ownership status.

Sell and Split The Proceeds

If the parties cannot agree on an assignment, their next best move is selling the trademarks and splitting the proceeds according to each person's ownership interest. Selling the marks and splitting the profits keeps the parties in control of the process and avoids the costly legal fees that come with litigation.

Navigating the ins and outs of trademark ownership can be one of the most challenging parts of a business breakup. At the Mykyta Law firm, we can help – for a free consultation, simply complete the website contact form or give us a call at (646) 884 -3319.