The brand's name came simply from Tim Leatherman, their founder. I don't know what is the real origin of his family name, though :)

Tim is still kicking and doing promo events. I ran into him under a tent selling tools in downtown Melbourne!

One would assume it's an occupational surname like Tanner.

I have to admit, when I discovered this I was a bit disappointed. For a long time I thought it was just a great brand name somebody came up with instead of the founder's last name.