Selling Your Business: Transferring Federal Trademarks to New Owners
You are selling your business and need to transfer ownership of its branding. How do handle the company’s federally registered trademarks? The short answer is that you transfer the company’s federal trademarks to the new owner by way of a written agreement. While we encourage you to consult with a trademark lawyer, there are a few points to consider before taking action. Do you intend to permanently or temporarily assign ownership of the trademark? Do you intend to transfer ownership in entirety or partially?
A trademark may be transferred by process of a “trademark transfer,” when a party sells its trademark rights to another party. The transfer can be temporary, or permanent. A permanent transfer is known as a trademark assignment. A trademark assignment should be signed and recorded with the United States Patents and Trademark Office (USPTO).
A Trademark Assignment Agreement
A trademark transfer is generally conducted via a “trademark assignment,” when one party permanently transfers trademark rights to another person. A trademark assignment is generally documented by way of a “a trademark assignment agreement,” and the agreement must be registered with the USPTO.
A trademark assignment can be a complete assignment or a partial assignment. In a complete assignment, all trademark rights are transferred from one party to another, which also include the rights to further reassign the rights to a third party. On the other hand, with a partial assignment, only the rights to one part or aspects of the business are assigned, where rights may not be assignable to third parties. A trademark owner that opts to file a partial assignment is encouraged to file a request to divide with the USPTO, which will enable the USPTO to more effectively monitor post registration filings and confirm that the USPTO records reflect proper ownership information. Keep in mind that in these situations, both owners must file the necessary post-registration documentation, including renewal applications; nevertheless, a trademark owner may not utilize an assignment to impose geographic restrictions on a registration. This should be accomplished via a concurrent use proceeding.
The Process of Trademark Assignments
It is incredibly important to have your assignment agreement filed with the USPTO. The agreement should contain full details of the terms and conditions of the transfer, including the level of assigned rights, the trademark’s USPTO registration number, current registration warranties that will be transferred to the new owner, and documentation that the assigning party fully owns the rights he or she is transferring.
The parties should also establish the terms such as the cost of the trademark, how disputes about the assignment will be settled, and who will pay the transfer fee. Once both parties have signed the agreement, it has to be recorded with the USPTO. The recording date of any document is the date it is filed with the USPTO. You will also need to send in a copy of the signed assignment agreement. The whole filing process usually takes roughly one business day if the filing is done online.
Once you have started the transfer process, make sure you see it through to completion. An unfinished transfer may land you in trouble where the new owner infringes on another person’s trademark. Since you are still the federally registered owner of the trademark, you may be implicated in the dispute. For this reason, it would be wise to consult an experienced trademark attorney to make sure the process is completed correctly. You could be the party purchasing the rights and the owner later sues you for ownership after failing to complete the transfer.
Even a change of business or change in type of business entity name may require a trademark assignment. Consult our firm to discuss whether you require the use of a trademark assignment. A simple change of name to your business will affect the title to your trademark application or trademark registration and should be recorded as an important link in the chain of title.
Role of Goodwill in a Trademark Transfer
Goodwill means the brand reputation directly associated with the trademarked goods or services. A trademark in itself has no inherent value if you do not use it to promote those goods and services. It is for this reason that all trademark transfers must also include the mark’s associated goodwill. Sales of trademarks that do not include the transfer of goodwill are considered invalid.
A trademark assignment agreement should indicate that the sale includes all goodwill associated with the trademark. The reason for the transfer of goodwill is to prevent instances where the purchasing party defrauds consumers by providing different and possibly inferior products using the acquired trademark, which can lead to suits.
After you are done with the filing, be sure to check the database to ensure that the updates have been made.
International Trademark Registrations
An international Registrations may be assigned; however, only parties that are a national of, is domicile in, or has a bona fide industrial commercial establishment in a country that is a contracting party to the Madrid Protocol. Assignments of extensions of protection to the United States must be recorded at the International Bureau of the World Intellectual Property Organization (WIPO). Important to note, the USPTO will record only assignments that have been recorded in the International Register.
Considerations
The Antares Law Firm can assist you with the drafting, negotiating, and filing of a trademark assignment. While this article has provided a useful blueprint for trademark transfers, our firm can help you prepare a comprehensive strategy, schedule a discovery call with the Antares Law Firm today.
—Laila Ghauri, Trademark Lawyer, Antares Law Firm
