Trademark rights can last for many years (basically forever if the trademark is renewed and statements of use are filed with the USPTO), but in some cases, the business landscape is changing, and such changes require further recording. The U.S. has some peculiarities as to the changes to the trademark assignment that, in many cases, are unknown to foreign trademark owners and their attorneys. In this article, the peculiarities of trademark assignment, including some restrictions, are discussed.
When to Update Trademark Records
There are numerous cases required to make changes in trademark records, and they are related not only to legal entities but individuals as well, among which are:
- when the trademark owner sells their trademark or trademarks to the other entity;
- when a new entity becomes an owner of intangible assets during the merger;
- if the business changes its name or changes the type of the entity (for instance, LLC converted to Corporation);
- if an individual changes the last name, for instance, as a result of marriage.
The changes shall be recorded regardless of whether the trademark is only filed for registration or already registered. However, there are some restrictions as to trademark application assignment and trademarks registered in the US under the Madrid Protocol, which will be discussed below.
Restrictions on the Assignment of Intent-to-Use Applications
In the U.S., there are two types of trademark applications: used-based (trademark has already been used and proof of such use is filed with the application) and intent-to-use application (the applicant only has the intent to use trademark application).
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The U.S. limits the possibility of assigning trademark applications based on the intent to use only to a successor to the applicant’s business. Such regulation reflects the so-called prohibition of the assignment of gross concept, which I will discuss below. That means the government encourages to assign trademarks only along with some business or goodwill, and there is no business or goodwill before the trademark has begun to be used.
Assignment of trademark registration registered by Madrid Protocol
If the trademark is filed or registered in the US by Madrid Protocol, trademark assignment, or change of the name of the trademark owner shall be made with the International Bureau of the World Intellectual Property Organization (WIPO).
Trademark Assignment Procedure
It is possible to record trademark assignment as to a single trademark, and as to multiple trademarks. The government fee for trademark assignment is $40 for one trademark, and additionally $25 for each trademark in the assignment procedure made.
There is no requirement to provide the trademark office with a hard copy of the assignment agreement – the scanned copy will be enough. However, foreign applicants need to know that they may be required to provide the English translation of the assignment agreement if it is conducted in a foreign language. Terms of recording of trademark assignment usually 2-6 weeks.
Goodwill concept
Unlike many countries, in the US so-called naked assignment is prohibited according to the concept of anti-assignment of gross. It means that any assignment shall include the goodwill of the business connected with the use. Practically, it can be important in cases when the new trademark owner of a business starts a trademark infringement case, the opponent can argue that the trademark assignment was in gross (without goodwill), which means that the assignment is invalid, and therefore, there is not violation of the trademark. This concept was developed in some court cases (for instance, PepciCo v. Grapette) and now is codified in the Lanham Act.
In order to comply with goodwill requirements, the transferring of goodwill shall not only be stated in the trademark assignment agreement, but shall be done in fact. Factors for assignment with the goodwill are: transferring with some tangibles (i.e., inventory); and usage of the trademark for substantially similar products by the new trademark owner.
Ortynska Law handles trademark assignments. In case you are
- a foreign IP attorney;
- entrepreneur or investor;
- in-house counsel and need to conduct IP due diligence in connection with mergers and acquisitions, you can contact Mariya Ortynska:
Email: [email protected]
Phone: +1 (914) 703-5632