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Ezell's Case Illustrates Need to Decide Who Owns Mark Before Dispute Arises

Plaintiff Ezell’s Fried Chicken, Inc.’s logo

Fellow Seattle IP lawyer Gary Marshall put me onto this.

It’s a struggle over use of the restaurant name “Ezell’s Fried Chicken” between its founder, Ezell Stephens — now separated from the company — and the company’s board. Both parties now sell fried chicken in the Seattle area under the Ezell name.

Gary asks some good questions about who owns a company’s technology. The same questions can be asked about who owns the company’s trademark.

“Founders often neglect to put licenses between themselves and their company in writing. They just assume that the company can use the technology they create. But what happens when they are no longer associated with the company? Can the company continue to use the technology? Can the founder?”

Those are questions the court will have to decide. But as Gary points out, it needn’t be that way.

Decide from the outset who owns the trademark. The founder or the company? Then decide what happens if the company breaks up. Who will own it then?

Just last week I traded emails with a small business owner faced with this very problem. His partnership operated under a single brand. The partnership split up, and the partners are on their own. They now compete against each other offering the same services on the same turf. And both partners continue to operate under the partnership’s brand. Confusing to consumers? You bet.

It raises the same questions the Ezell’s litigants face. Which partner can use the brand? Can either? If one applies to register the mark, can the other object?

Don’t roll the dice with the court. That’s expensive and disruptive. Control your own fate and get these issues hammered out between partners, shareholders, and joint venturers when times are good. It might cost a bit in legal fees up front, but it’ll save you lots more down the road.

So what’s up with the Ezell’s case? The Western District sent it back to King County Superior Court — from which the case had been removed — finding plaintiff’s causes of action sound in state court, the court plaintiff had selected. It also awarded fees, finding the removal had been improper (though it later reduced the amount of the award).

Story on the Ezell’s dispute here.

The case cite is Ezell’s Fried Chicken, Inc. v. Stephens, No. 10-1424 (W.D. Wash.).

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