A trademark is oftentimes a business’ most valuable asset. Consider brands like Amazon, Apple, Microsoft with brand valued in the billions, a significant portion of their overall business worth is based in the brand that’s been built. In a time period where creatives and brands are on the rise, it is important to take in account the steps being taken to protect one’s brand. Reports show an annual growth of 35% since 2020 for trademark applications, not exclusive of podcasters and content creators. This accounts for over six hundred thousand applications submitted to the United States Patent and Trademark Office.
Far often, people utilize trademarks and copyright as the best means to protect their intellectual property “IP” and this is accurate. Trademarks and copyrights definitely establish a legal presumption of ownership and constitute a prima facie proof in contesting another party’s unauthorized use of one’s trademark or copyright. Nonetheless, today’s conversation isn’t so much about preventing others from using your intellectual property, but rather preventing creditors from enforcing a judgment against your intellectual property. Yes, your intellectual property could be at risk if not properly titled.
In a situation where a debtor has no other assets but their intellectual property, a prevailing creditor could consider pursuing the right to royalties of the debtors’ interest in their intellectual property. Though uncommon, it is not impossible. Judges make unilateral decisions all the time. That is to say, it can happen to anyone including you.
Collecting on a judgement becomes more difficult for creditors when IP owners have granted a security interest in their asset. To grant a security interest is to collateralize the asset in exchange for some medium of exchange, usually cash. Where a debtor has granted a security interest in their IP, there is stronger legal precedent against attachment and there is a superior interest to the creditor. Which brings us to the question, how should one title their IP?
Similar to a house, car, cash, brokerage account, or memorabilia; intellectual property is an asset. Despite not being tangible, the intangible nature of the IP still carries value. Titling your assets is an important decision as it determines not only who controls the asset, but ultimately, the person that is responsible and can be sued. Just as creditors have various legal tools at their disposal, so does the asset owner. Determining whether to maintain ownership under one’s individual name or to title the asset to a corporation or limited liability company are some options to consider.
By understanding and utilizing different legal strategies, you can save yourself the time and money fighting what could be a long monotonous lawsuit. Keep it simple and properly title your assets. At The Presser Law Firm, we specialize in building the best infrastructure to house our clients’ assets. Tailored to each individual’s goals, we can guide you and make your assets resistant to creditor claims.