Do you know how to transfer Trademarks after a sale?

How to Transfer Ownership of a Trademark when You Re-Brand or Sell your Business

Whether you are a large company or a small company, your US trademark is one of your most valuable assets. It represents your brand's identity and distinguishes your products or services from those of your competitors. But what happens when you need to transfer ownership of your trademark? Since a US trademark is registered, it needs to be treated differently from other company assets. Whether you're selling your business, undergoing a rebranding, or simply reorganizing your company structure, a trademark assignment (ie. recording a properly executed trademark assignment with the USPTO) is a legal process that ensures the new owner's rights in the trademark are made of record.

In this article, our goal is to identify the key steps involved in a trademark assignment process, highlighting the legal requirements and best practices to ensure a smooth transition.

What is a Trademark Assignment?

A trademark assignment involves transferring ownership of a trademark from one party (the assignor) to another (the assignee). This step is important for upholding the trademark's validity and safeguarding its rights. Unlike licensing, which simply allows for the use of the trademark, an assignment involves transferring all rights, ownership, and stakes in the trademark along with any associated goodwill. The assignment itself is a legal document that is signed by the previous owner, declaring that the new owner has attained full rights to the use of the trademark and all the goodwill associated with that trademark. In order to be effective, such an assignment agreement must be recorded at the USPTO (whereas a license agreement need not be recorded).

Step-by-Step Guide to Trademark Assignment

1. Draft a Written Assignment Agreement

The foundation of any trademark transfer is the written agreement, for assignment. The assignment of a Trademark must be in writing. The written assignment lays out the terms and conditions of the transfer, ensuring both parties have an understanding of what's being transferred. Important components to incorporate in the assignment include;

• Names and addresses of the party assigning the trademark and the receiving party ("Assignee").
• Details of the trademark, including the registration number and a description of the goods/services it covers.
• Effective date of the assignment (when the transfer of rights is to take effect).
• Transfer of goodwill: It's crucial for the agreement to explicitly mention that along, with the trademark its associated goodwill is also being transferred. Goodwill encompasses the reputation and customer loyalty tied to the trademark, which enhances brand value.

2. Record the Assignment with the USPTO

After signing the agreement, the next important step is to register the assignment with the United States Patent and Trademark Office (USPTO). This process is essential for ensuring that the transfer is legally recognized, and it is therefore recommended to seek guidance from a trademark attorney who's well-versed in the rules and procedures. Here's how you can proceed:

• Submit an Assignment Recordation Cover Sheet: This form can be found on the USPTO online Assignment Center ("ETAS") and must be completed with details about the assignor, assignee, and the trademark being assigned.
• Pay the required fee: As of now, the USPTO charges a fee for recording the assignment, which can be paid online during the submission process. That fee is currently $40.

Recording the assignment with the USPTO not only updates the official records but also serves as public notice of the change in ownership, protecting the assignee's rights against potential disputes.

3. Ensure Compliance with Goodwill Transfer

As mentioned, the written assignment must include the transfer of goodwill associated with the trademark by the conveying party to the new owner. This requirement ensures that the trademark continues to represent the same quality and characteristics that customers have come to expect. Failing to transfer goodwill can render the assignment invalid, jeopardizing the trademark's protection.

4. Restrictions on Intent-to-Use Applications

It's important to note that intent-to-use applications cannot be assigned before the applicant files a Statement of Use or an Amendment to Allege Use (unless it is being conveyed to a successor in interest). This restriction prevents the trading of trademarks that have not yet been used in commerce, ensuring that the trademark system remains fair and reliable. For more information, see the Trademark Manual of Examining Procedure (TMEP) section 501.01(a). 

5. Check for Existing Recorded Assignments

Before finalizing any transfer it is recommended to search the USPTOs database for any existing recorded assignments. This step helps confirm that the assignor has ownership of the trademark and that there are no conflicting claims or prior transfers that could complicate the assignment process.

Common Mistakes in Recording Assignments

The recordation of a trademark assignment at the USPTO is a very technical process. If there are any mistakes or defects in the submitted information (or the assignment itself) it will be rejected, and you will receive a Notice of Non-Recordation. That Notice of Non-Recordation will provide one month for you to resubmit with the correct information without having to repay the fee. There are a variety of common reasons that a recordation may be rejected, and for which you may receive a Notice of Non-Recordation, including:

1. If you left out any critical information from the cover sheet.
2. If the submitted document is illegible or of poor scan quality.
3. If the information on the cover sheet does not match that in the supporting document (assignment).
4. If the submitted assignment does not accurately convey "goodwill."

Conclusion

Transferring ownership of a trademark involves a process that demands close attention to detail. By following the specified steps and meeting all obligations, you can protect your brand's identity and preserve its value through a successful trademark transfer. If you make errors in the forms, the assignment may not be recorded and may not be effective.

For support and to ensure adherence to all intricacies, it is advisable to seek advice from a qualified trademark lawyer. At Dragan Ivetic Attorney, at Law, LLC we pride ourselves in guiding businesses through the complexities of trademark regulations offering expert assistance at every stage, including the assignment stage. Get in touch with us today to explore how we can support you in your trademark transfer journey.

Contact us for your Trademark Questions!