Trademark Assignment

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Trademark Assignment

A trademark assignment transfers all rights in a trademark to another party.  Registering trademarks with the U.S. Patent and Trademark Office (USPTO) offers several rights, and one of those is the ability to record a trademark assignment.

When considering the transfer of any trademark though, it’s important for both parties to have a sound understanding of the legal implications. Failure to properly execute an assignment could result in disagreements over ownership, exposure to litigation, and other adverse outcomes.

What is a Trademark Assignment?

A trademark assignment transfer all rights, title and interest in a trademark to the recipient.  Around 20 percent of trademarks registered with the USPTO will at some point be transferred in this manner. Once complete, the original owner no longer has a legal interest in the trademark. Both parties may benefit from these agreements since the assignor typically receives a payment and the assignee takes control of a valuable piece of intellectual property.

If you’ve secured trademark registration from the USPTO, you’ll need to record the assignment. This will provide public notice regarding the transfer of ownership. This should be done within three months following the assignment date. This creates prima facie evidence of the transfer. The USPTO does not accept Asset Purchase Agreements as evidence of an assignment.

Trademark Assignment Agreement

When ownership of a trademark is being transferred, it’s important to have a written trademark assignment agreement.  A properly crafted contract can protect all parties involved. The USPTO will also not consider agreements to transfer trademarks valid unless they’re in writing.

The following qualifications should be met at a minimum:

  • All involved parties – the assignor and assignee – should be identified.
  • The trademark being assigned should be identified along with relevant ownership information (e.g. registration number).
  • Consideration must be listed (i.e. what each party is receiving).
  • List the effective date of the transfer.
  • Contract must be duly executed.
  • Trademark goodwill must be specifically transfered.

These minimum requirements will typically ensure that the transfer assignment agreement is valid and holds up in court. The onus of creating a valid contract is on the assignor and assignee. Including information regarding payment of the transfer fee and how disputes between the two parties will be handled is also recommended.

Trademark Goodwill

Trademarks are valuable pieces of intellectual property, and this value comes from their inherent goodwill. Trademark goodwill is the positive associations and feelings that the trademark creates in the consuming public.  It is an intangible asset that is linked to the consumer recognition of a brand.

Any trademark assignment must explicitly state that all goodwill is also being transferred. Each transfer is unique and could result in differences in a final contract, but every valid assignment must contain language signifying transference of goodwill. The agreement will otherwise be viewed as an “assignment in gross” and could cause the loss of trademark rights.

Assignments involving both common law trademarks and those registered with the USPTO must include a transfer of trademark goodwill. This is what inherently makes a brand identifier valuable. The importance of this element of assignment relates to consumer trust.  The source of a product/service should match what a consumer was led to believe.

Reasons for Trademark Assignments

Even though a trademark is seen as one of the most valuable assets a business can own, there are a variety of reasons why a trademark assignment may be desired. These are just a few of the reasons behind trademark assignments:

  • Business changes: An assignment may be required if a business owner forms a new entity or dissolves an old one.
  • Sale of business: A trademark owner may decide to focus on a different business or retire.
  • Manufacturing or Marketing costs: A trademark may become more valuable to another party due to manufacturing or marketing costs.

There are many reasons why a brand owner may choose to assign their trademark to a third party. These transfers are permanent when properly executed. This makes it important for registrants to understand all implications. There are other options available – such as licensing agreements, discussed further below – if a trademark owner wants to maintain some control over the trademark.

Before Taking Ownership

Most of the focus on trademark assignments rests on assignors, but those taking ownership of a trademark have many considerations as well. In addition to the rights they’re gaining through the transfer of ownership, they’re also taking on the risks and responsibilities of owning a trademark. Assignees should consider all the following concerns before finalizing an agreement:

  • Reputation of brand: Purchasing a trademark is essentially purchasing the reputation of a brand. If consumers do not view a trademark favorably, you’ll have a difficult time changing their minds.
  • Confirm ownership: Performing a thorough trademark search prior to entering an agreement is essential. This will confirm ownership and give you an idea of whether trademark disputes may arise in the future.
  • Intent-to-use identifiers: Trademark assignment involving Intent-to-Use Trademarks must meet specific criteria. If an identifier is not yet in commercial use, the assignment must be to a business successor.
  • Potential disputes of ownership: If proper documentation is not recorded with the USPTO, the assignment could be deemed invalid.
  • Third-party disputes: Failure to properly transfer ownership can also leave the assignee open to claims of trademark infringement from third parties.
  • Transfer of trademark goodwill: Always make sure trademark goodwill is explicitly transferred in the assignment agreement.

The moral here is to always perform due diligence before taking ownership of another party’s trademark.

Trademark Assignment with the USPTO

To ensure appropriate transfer of ownership, a trademark assignment must be recorded with the USPTO. This is done through the Electronic Trademark Assignment System. In addition to uploading your Transfer Assignment Agreement, you must complete an online form and pay the respective fees. Failure to do so will harm assignees in future litigation and prevent them from renewing the trademark.

When filing a trademark assignment with the USPTO it must be accompanied by a Recordation Form Cover Sheet. This lists the basic required information for transferal. The USPTO typically processes assignments within a month or two and then they become public record.

Nunc Pro Tunc Trademark Assignment

Not all assignments of trademark rights are immediately put into writing. This creates unnecessary risks for both parties. In these situations, a nunc pro tunc trademark assignment can retroactively document the transfer of ownership. Nunc pro tunc is Latin for “now for then,” so it serves as evidence of when an oral agreement was reached between the assignor and assignee without being put in writing.

This written document can be filed with the USPTO, but unlike a traditional assignment, it’s effective from the date of oral assignment rather than the date of execution.  Documenting assignments after the fact is definitely not a best practice and can lead to many issues.  It is however the only way to try to fix an error that has occurred in the past.

Trademark Licensing

Assigning ownership of a trademark isn’t necessary to grant certain rights. Trademark licensing can give third parties permission, for instance, to use a trademark without the original owner relinquishing rights. This is the type of business relationship that exists for more than 900,000 franchised business establishments across the country.

The owners of trademark registrations typically strive to prevent outside parties from using their intellectual property. By licensing use to certain brands or individuals, though, they garner a variety of benefits. These may include gaining expertise, assistance in shouldering the burden of a growing business, increased brand recognition, creation of a passive revenue source, and expansion into new markets.

The three basic types of trademark licensing agreements are exclusive, sole and non-exclusive.  An exclusive license means that the licensee has the exclusive ability to sell the goods or services at issue.  A sole license means that the licensee has the right the sell the goods or services but the right is shared with the licensor.  A non-exclusive license means that the licensor retains the right to license the trademark to other third parties and continue to sell the goods or services themselves.

Licensing agreements should always be in writing and preferably they should be notarized.  Failing to have a license agreement in writing will lead to many issues if trademark litigation or other disputes arise. Having the agreement notarized will also reduce the likelihood of disputes over the validity of the license.

The agreements used for trademark licensing and assignment have some similarities, but there are important distinctions. Licensing documents, for example, should include quality control provisions, the type of license granted, the effective dates of the license, and any specifications regarding the renewal of the agreement. These terms are typically not part of assignments.

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If you are considering a trademark assignment, please do not hesitate to contact us with any issues or questions that you may have.

 

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