Ownership – Buying and Selling a Trademark

Ownership Must Be Accurate At Time of USPTO Filing – Clean Chain of Title

One of the most important aspects of acquiring and enforcing trademark rights is correctly ascertaining which party is the actual owner of the mark.  A mistake in correctly listing the owner of the mark in a USPTO trademark application may cause the application to be void at the time of filing.  Consequently, we urge our clients to confirm which party, whether an individual, corporation or company, owns the mark, prior to filing any trademark application.

Formation Of Legal Entity

Frequently, a start-up may not have formed a legal entity yet.  While you are permitted to file as an individual and assign the mark over to a subsequently formed company, there are some important limitations that should be discussed prior to filing, as well as additional costs, including preparing a formal trademark assignment agreement and recording the assignment with the USPTO Assignment Branch.

Buying & Selling Trademarks – Assignment Of Trademark & Goodwill

Additionally, as intangible property, trademarks, like domain names, copyrights and patents, may be bought and sold.  It is extremely important to execute a formal trademark assignment agreement between the parties in connection with any change of ownership of a registered or common law trademark and then recording the transfer of any registered trademark with the USPTO Assignment Branch.  Note – common law or unregistered marks may not be recorded with the USPTO

Trademark Must Be Assigned With The Goodwill Of The Business

In the United States, an assignment of the trademark must include an assignment of all right, title and interest in the mark and the goodwill of the business to which the mark is used; otherwise, a court may deem the transfer a “naked assignment” and void the mark.

Additionally, there are prohibitions on transferring intent-to-use (ITU) trademark applications unless part of the sale or portion of an ongoing business.  In other words, you cannot file an intent-to-use trademark application and transfer it prior to your actually using the mark, filing the necessary use documents with the USPTO unless the transfer was part of the sale of the business.  This prevents “trafficking” in trademarks – similar to cybersquatting.

Security Interests & Clear Chain of Title

Trademarks may be used as collateral for loans or investments.  As part of perfecting a security interest, the secured party will normally record the security interest with the USPTO, as well as file a UCC-1 Form (under the Uniform Commercial Code) with the State in which the property is located.   If the loan is paid off, it is important to have the security interest removed from the trademark record in order to clear the chain of title.

Further, it is imperative to have a clear chain of title for any registered trademark.  In order for the USPTO to accept Statements of Use, Declarations of Continuous Use and Renewals, the party filing must be the party listed as the last owner of the mark; otherwise, the USPTO will refuse acceptance of the document which may result in abandonment or cancellation of the registered trademark.