Well, the short answers to your question are:
1. They are both using the Yes name (albeit in a different way), and until a court states otherwise, they are both legally entitled to.
2. They can both issue albums under the names they are using. Although ARW are using "Yes, featuring ARW" that's almost certainly to avoid forcing the issue in court. It's quite possible that they could attempt to issue an album under the name "Yes" and do so successfully unless they go to court.
3. Like any trademark or brand, "Yes" can be sold (and thus bought), and inherited. It's all a question of who owns the shares of the company, and also the ownership contract. Even if the company folds, the name now holds intrinsic value and can be sold and owned independently of the status of the company. When forming a company, one of the most important things is to define what happens when somebody: quits, is fired, or dies. Such a contract can provide first rights to the company, that is when Squire passed, the rest of the company has the right to purchase his shares before his shares can be sold or bequeathed to someone else. But if the band chooses to not act on that, then anybody can purchase those shares.
Note that "until a court states otherwise" is a bit more complicated than it might imply, since there are the laws of multiple countries to consider. So it's entirely possible that ARW could secure the rights to "Yes" in the US, but not in the UK.
A longer answer is:
The business and art of music don't mix well. Songs, lyrics, band names, logos, stage shows, visuals, etc. are all things with intrinsic value that can be owned. Ownership can be transferred, and defined under contract.
Henry Potts "Yes - Where are they now?" site has quite a bit of information here:
http://www.bondegezou.co.uk/wnyesm.htm#mgmt
There are multiple trademarks and such in play and, of course, the legal aspects are handled differently in different countries as well. Combine that with the fact that most band members probably don't consider that somebody who leaves the band might actually decide they might try to continue using the band name, the contracts probably aren't that well considered. I suspect a great many bands might find their record label owns the "brand" and the name, and could do what they want with it.
Note that those refer to contracts/companies created in '97, 2002 and 2014, but undoubtedly weren't the first.
Yeswest (Squire, Rabin and White, I think) had contested the use of "An evening of Yes music plus" and the use of the name Yes in any marketing by ABWH and lost, although I don't know if it ever went to court. The suit was apparently based off an agreement signed in 1984 by all past and current members of Yes that indicated a leaving member couldn't use the name or mention they were in the band after a certain date (I haven't been able to find the original suit for more details).
However, in 2002, Tony Kaye sued to stop the production of the "In a Word" box set, claiming unpaid royalties and that he wasn't consulted, and that suit apparently claimed Tony was a 25% owner of the name, apparently based on a 1982 contract.
This was applied for by Anderson/Squire/White but not Steve Howe 1980. Even stranger is that the filing was made in June 1980,
after Jon had left the band in March, and Downes and Horn started recording with the band in May. The trademark was finally registered in 1982, when Rabin was in (but Jon wasn't yet). The trademark was filed in Australia but notes it's a US trademark, so I don't know what to make of that.
I would guess there's a lot of gray area here, and that while an original member (Squire) was still in a band touring and writing as "Yes" that could also prove continuity, that Anderson's lawyers recommended that they don't test it. Once they decide to start using the name, then it's up to the other Yes to decide whether it's worth taking them to court. I suspect that with the mess of old contracts (undoubtedly more than what Henry reports), that they aren't assured of a win, and the risk (and expense) isn't worth it. Since it's Steve Howe that has the relationship with Roger Dean, they get the better logo, T-shirts, album covers, etc. combined with the fact that Howe still seems to be the Yes fan favorite in the Rabin/Howe debate. On top of that they are playing far more of the classic '70s material.
I think there are probably other legal precedents as well. From what I know, Bev Bevan and Jeff Lynne had agreed to Bev's use of ELO Part II for his band. I wouldn't be surprised, however, if this agreement was reached in part because Lynne might have found he didn't own the ELO name and couldn't prevent Bev from using it. Now that Bev has left, the group is "The Orchestra featuring members of ELO Part II" (sounds familiar, doesn't it?), and ELO is now "Jeff Lynne's ELO." A lot of these things don't get to court, because their lawyers work out agreements to avoid it.
Court cases, business filings, and such are typically public records. But contracts between individuals don't have to be.
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