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The Zest

Collaborations and capsule drops: who owns the trademark when two brands launch together

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In a collaboration, each brand keeps its own trademark, and the other brand uses it under a license. The thing that needs deciding is the third mark: the collab name or the capsule logo that neither of you owned before the drop. Under U.S. law the owner of that mark is whoever controls the nature and quality of the goods sold under it, not whoever thought of it, and if you don't settle that in writing before launch, you can end up with a mark nobody can register.

I've watched this go wrong in a way that is easy to avoid, so here is how the law sorts it and what the agreement needs to say.

Three marks in every collab

Picture a St. Pete swim label and a ceramics studio doing a ten-piece capsule. There are three marks on the hang tag:

  • The swim label's brand. It owns that mark and is letting the studio's name appear beside it.
  • The studio's brand. Same thing in reverse.
  • The capsule name, the "X by Y" lockup, or a new logo made for the drop.

The first two are licensing questions. The third is an ownership question, and it's the one founders skip because the drop is small and the relationship is friendly.

Ownership follows control

The TMEP states the rule in one sentence: "the owner is the party who controls the nature and quality of the goods sold or services rendered under the mark." That's the test for the capsule mark. If the swim label designs the pieces, approves the samples, sets the factory and handles returns, the swim label controls quality and is the owner, even if the studio came up with the name.

The Lanham Act backs this up with the related company concept. Under 15 U.S.C. § 1055, use of a mark by a related company "shall inure to the benefit of the registrant or applicant," and § 1127 defines a related company as any person whose use of the mark "is controlled by the owner of the mark with respect to the nature and quality of the goods or services." So when your partner sells the capsule under your mark with your approval and your standards, their sales count as your use. When they sell under it without your control, their use isn't yours.

Why "we'll own it together" is the trap

Joint ownership is legal. The TMEP says joint applicants "enjoy rights of ownership to the same extent as any other" owner. But getting it right at filing is unforgiving. The TMEP's rule is that "if the applicant does not own the mark on the application filing date, the application is void," and an application "filed in the name of the wrong party" is a defect that "cannot be cured by amendment or assignment." The TMEP's own list of fatal examples includes an application filed in the names of two parties when "the listed parties did not own the mark as joint applicants," and an application filed by one joint venturer when the mark belonged to the joint venture.

Here is the part that surprises people. Two brands that split the capsule work loosely, each doing a bit of design and a bit of selling, may not be able to say which of them owns the mark, and an application that guesses wrong is void from the start. Not fixable. You refile and lose the filing date.

Joint ownership also makes the control test harder to meet. Control has to come from the owner. With two owners and no agreed standard, neither one is clearly controlling quality, and the TMEP warns that a trademark owner who fails to control licensees "may be found to have abandoned its rights in the mark." The Lanham Act's definition of abandonment includes any conduct of the owner, including omission, that "causes the mark to become the generic name for the goods or services" or otherwise lose its significance as a mark. I wrote about this risk in the article on licensing and quality control.

The cleaner structure: one owner, one license

For most capsule drops, the better answer is to pick one owner for the collab mark and license the other partner. The owner files the application. The partner's use inures to the owner because it's controlled. The agreement spells out what "controlled" means: approval of samples, approved factories, packaging standards, the right to inspect, and the right to pull the plug on goods that miss the standard. The TMEP recognizes "a controlled licensing agreement" whether oral or in writing, but you want it in writing, because the writing is the evidence of control.

The flip side matters too. The TMEP says "a mere licensee cannot rely on use of the mark by the licensor" to claim priority. If you're the partner who didn't take ownership, you don't build rights in the collab mark no matter how much of it you sell. Make sure your deal gives you what you actually want from the drop, which is usually revenue share and credit, not the mark.

Who gets the mark when the drop ends

Decide this before launch, because the law makes some transfers hard. A registered mark is assignable only "with the good will of the business in which the mark is used," and assignments "shall be by instruments in writing." An intent-to-use application, which is how most capsule marks get filed before the drop, cannot be assigned before an allegation of use is filed, except to a successor to the applicant's business. So a plan like "we'll file now and transfer it to whoever keeps it later" can run into the statute if the transfer happens before the capsule ships. I covered the mechanics in the article on buying a brand.

What the collab agreement has to cover

  1. Each brand's own mark: a license to the other, limited to the capsule, the channels and the dates.
  2. The collab mark: who owns it, who files, and who pays the USPTO fee.
  3. Quality control: who approves samples and production, in what form, and what happens to rejected goods.
  4. After the drop: whether the collab mark is retired, assigned, or licensed on, and whether either brand can reuse the name alone.
  5. Sell-through: how long leftover inventory can be sold under the marks after the term ends.

If the collab mark is going to live on, treat it like any brand name: search it before you fall in love with it. I wrote about how that search works in the article on searching before you file. The ownership mess is avoidable. The confusing-name mess is too.

If you want to talk through how a collaboration mark gets owned and filed, you can see how the search and filing packages work on the services page, and the FAQs page answers most of what comes up before a first call.

Book a free 15-minute discovery call with the attorney (opens in a new tab)

(No legal advice is given on the discovery call. It's a chance to tell me what you're building and hear how the process works.)

Sources

This article is general information, not legal advice. Reading it does not create an attorney-client relationship.

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