Trademark and “silent company”

Dec 20, 2022

It happens that several people undertake a joint economic venture, which is branded outside only by one of them. The reasons for this state of affairs are various. Sometimes it’s a reluctance to form a commercial law company or even a civil law company at the very beginning, sometimes someone wants to remain anonymous. It also happens that one of the persons already runs a business, so the new business begins to be run under this company.

 

WHAT IS A SILENT COMPANY?

It is worth remembering that conducting business in this form may have serious consequences, especially for those people who remain anonymous in it. In the event of a conflict, which unfortunately is often a permanent element of joint ventures, they will be in a worse situation than people formally involved in the activity.

In the doctrine and jurisprudence, the activity conducted in the form described above is treated as the so-called silent company. It is not a corporate relationship, but a strictly obligation one, classified as one of the forms of an unnamed contract, concluded in accordance with the principle of freedom of contract. While it is generally recognized that a silent partner makes a contribution to the company and participates in the profit, there are no obstacles to proving a different scope of rights and arrangements between the parties, since the agreement is unnamed.

 

TRADEMARK IN A SILENT COMPANY

In the above context, it may be important to ask about the rights to trademarks that are used in the business. The very issue of the legal status of a “silent company” is a bit off topic. The right to a trademark may be vested in several persons, regardless of the fact that they formally run a company. However, in the absence of any agreements in this regard, silent partners may have problems with proving their entitlement or co-authority to the trademarks. Therefore, it seems reasonable to secure in the form of an agreement or even an informal correspondence of the rules regarding the right to trademarks. In practice, it may turn out that in the event of a conflict, one of the persons, e.g. formally running a business, will try to register a trademark and thus legitimize its use of a given trademark. Other persons are then left to invoke the accusation of “bad faith”, or copyright infringement, especially if, for example, they created a graphic representation of the trademark. Any evidence related to the findings regarding the idea for the mark and the scope of its use in the business may prove helpful.

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