Should an Intellectual Property Holding Company Own My Trade Mark?
Emily Young
Your intellectual property is a critical part of your business. This makes it essential to have the best practices in place to protect it adequately. An intellectual property (IP) holding company is one way to control your IP portfolio, including your trade marks. To help you decide whether an IP holding company is suitable for your business, this article will take you through what an IP holding company is and the advantages and disadvantages of having such a company.
What is an Intellectual Property Holding Company?
An IP holding company is a company whose primary purpose is to hold and manage IP assets. This is a common practice for major businesses, who may use holding companies for tax advantages or create a barrier between assets to protect the company’s IP if they are part of any civil or criminal proceedings.
Advantages of an Intellectual Property Holding Company
There are several advantages of having an IP holding company own your trade mark.
1. Protect Your IP Assets
Having an IP holding company protect your IP is a great way to protect all your IP assets, including your trade marks. For instance, saving a separate entity exclusively for your IP can help protect your IP from any issues relating to any companies that are using your trade mark as a licensee, creating a barrier between the issues themselves and the brand. This is particularly relevant for companies facing bankruptcy or insolvency issues because the IP will be kept separate from the main corporate entity.
2. Minimise Tax
There are some tax advantages to having an IP holding company own your trade marks. For example, you can delegate your trade marks and other IP assets between the company group to help minimise tax. This is useful in situations where the company in question is already part of a sophisticated structure.
3. Administrative Advantages
There are some administrative advantages to having an IP holding company own your trade mark. By creating a centralised place for your IP, maintaining your trade marks and monitoring their use is much easier. If you plan on licensing your trade mark to other companies, having an IP holding company can also make this easier. It can show the value of your brand, with all licensing information accessible in one place.
Disadvantages of an Intellectual Property Holding Company
As well as the benefits of having an IP holding company, there are some disadvantages of having an IP holding company own your trade mark.
1. Trade Mark Maintenance
Maintaining an IP holding company can be difficult. If you are a small corporation, adding another corporate entity to your business structure may cause unnecessary difficulties. Difficulties may particularly arise regarding reporting requirements for a company. However, this may be less of an issue for larger companies already part of an elaborate corporate structure.
2. Trade Mark Enforcement
If an IP holding company owns your trade mark, you must enter a licensing agreement to use your trade mark. However, the Australian courts have seen increased difficulty with receiving damages for trade mark infringement for licensees, particularly if you are not the exclusive licensee. Therefore, if you plan on entering some licensing agreements without being the sole licensee of your trade mark, you must consider this.
Key Takeaways
Ultimately, the question of whether an IP holding company should own your trade mark is up to you. Therefore, you should consider the circumstances of your business. For example, some advantages of having an IP holding company own your trade mark include:
- protecting your IP assets from external issues;
- minimising tax; and
- maximising administrative efficiency.
On the other hand, some disadvantages of an IP holding company owning your trade mark include difficulties:
- maintaining a large corporate structure; and
- enforcing your trade mark rights.
If you need help deciding if an IP holding company is for you or have more general IP questions, get in touch with our experienced trade mark lawyers. You can contact them at 1300 657 423 or by filling out the form on this page.
Frequently Asked Questions
An IP holding company refers to a company whose primary purpose is to hold and manage the IP assets of a company. This is quite common for large companies who already have corporate structures in place, as it has a number of advantages.
Some of the advantages of having an IP holding company include protecting your IP assets from external issues, minimising tax, and maximising efficiency by holding all your IP assets in one centralised place.