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USPTO Trademark Assignment: Everything You Need To Know

USPTO trademark assignment is the process of assigning a trademark you have registered with the U.S. Patent and Trademark Office to a third party. 3 min read updated on February 01, 2023

Updated November 25, 2020:

USPTO trademark assignment is the process of assigning a trademark you have registered with the U.S. Patent and Trademark Office to a third party. A trademark is a symbol, word, device, phrase, or combined elements that represent your business or brand. When this mark is associated with the quality of your services, it is a valuable form of intellectual property (IP). Because this is considered an asset, it can be assigned. Assignment means to transfer the ownership rights of your trademark to a third party in exchange for profit or benefit. Registered and pending trademarks, as well as patents and patent applications, can be assigned. You must file an assignment agreement with the USPTO. Business reorganization, acquisition, and other circumstances may result in a trademark assignment.

Steps in Assigning a Trademark

• Draft an assignment agreement and have it signed by both parties. Name the person or company buying the trademark as the assignee and the current trademark owner as the assignor. Clearly identify both these parties as well as the trademark in question. Establish terms such as the cost of the trademark, how disputes about the assignment will be settled, and who will pay the transfer fee.
• Fill out the Recordation Form Cover Sheet, which can be completed online. You'll need to include the name and address of a registered agent to receive official USPTO information.
• Submit both the agreement and the cover sheet to the USPTO's Assignment Recordation unit. This can be done online, by fax, or through standard mail. The latter two options require you to establish a deposit account to pay the USPTO recording fee. Mailed forms can be submitted with a money order or check payable to the USPTO director.
• If your trademark is state-registered, you must also record the transfer with the applicable state.
• The USPTO Patent and Trademark Database will be automatically updated for assignments as well as name changes and mergers. When filling out your form, check one of those boxes for the nature of conveyance to ensure that records are updated. Do not select other, which will not update the record. The records will also not be updated if you file multiple documents with the same execution date, the application is in a blackout period, or you have exceeded the allowed number of ownership changes. In these cases, you must make a written request to have the database updated.
• Choose the correct conveyance type, either assignment of part of the interest or assignment of the entire interest along with the associated goodwill.

Points To Remember

All trademark transfers must also include the mark's associated goodwill . This includes the earning power created by customer recognition of the mark. Trademark assignment may be found invalid if the goodwill does not accompany the transfer of the mark.

Failing to follow the ownership transfer procedures can result in liability if the assignee infringes on a third-party trademark. If you buy a trademark and the original owner does not transfer ownership, a dispute could result.

Check the database to determine whether the updates have been made. Click ownership to display the current owner or assignment to display the entire chain of title.

Do not use assignment if you simply need to change your name as the trademark owner. Instead, record the name change through the USPTO Assignment Recordation Branch .

Patent and Trademark Ownership

When it comes to a patent, owning the patent gives you the exclusive right to sell, manufacture, and use the invention in question. Patents last for 20 years while trademark registration lasts for 10 years and can be renewed. The term ownership references the current holder of a trademark or patent. If you own a registered trademark, no one else can use that mark on their products or services, and imports carrying an infringing mark may be blocked from entry by U.S. Customs and Border Protection.

Assignment Fees

While trademark assignment once carried a $25 fee and a $40 fee was required for trademarks, the USPTO recently discontinued this fee for patents and not for trademarks. That's because trademarks are rarely assigned while the assignment is quite common in the fast-paced world of patents.

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After a trademark achieves federal registration, ownership of the mark may change hands for a variety of reasons. When a trademark owner transfers their ownership in a particular mark to someone else, it is called an assignment. Generally, for an assignment of a trademark to be valid , the assignment must also include the ‘goodwill’ associated with the mark (goodwill is an intangible asset that refers to the reputation and recognition of the mark among consumers). If the assignment of a trademark includes the mark’s goodwill and is otherwise legal, the assignee gains whatever rights the assignor had in the mark. Importantly, this includes the mark’s priority date, which has implications for protecting the mark from potential infringers going forward.

In contrast, if an assignment of a trademark is made without the mark’s accompanying goodwill, then it is considered an assignment “in gross” — and the assignment is invalid under U.S. law. Courts have analyzed whether an assignment was made in gross in a few different ways, but, as is the case with much of trademark law, protecting customers from deception and confusion is the primary motivation behind any analysis for determining the validity of an assignment.

One way courts determine if an assignment was made in gross is through the substantial similarity test. This test essentially examines whether the assignee is making a product or providing a service that is “substantially similar” to that of the assignor, such that consumers would not be deceived by the assignee’s use of the mark. This analysis includes an assessment of the quality and nature of the goods and services provided under the mark post-assignment.  Thus, even if an assignee is using the mark on the same type of goods, but the goods are of lower quality than the goods previously offered by the assignor under the mark, the assignment could be invalid. However, slight or inconsequential changes to goods and services after an assignment are not likely to invalidate the assignment, as such changes are to be expected and would not thwart consumer expectations.

Decisions on the question of substantial similarity are only marginally instructive, as the  test calls for a fact specific inquiry into what the consuming public has come to expect from the goods or services offered under a given mark. For example, courts have noted that despite similarities in services and goods, “even minor differences can be enough to threaten customer deception.” [1] Instances of products or services that were deemed not substantially similar (and thus resulted in invalid assignments) include: an assignee offering phosphate baking powder instead of alum baking powder; [2] an assignee using the mark on a pepper type beverage instead of a cola type beverage; [3] an assignee producing men’s boots as opposed to women’s boots; [4] an assignee using the mark on beer instead of whiskey; [5] and an assignee selling hi-fidelity consoles instead of audio reproduction equipment. [6]

Conversely, case law has also shown that substantial similarity can be found even when products or services do differ in some aspects, if consumers aren’t likely to be confused. For example, the following product changes did not result in a finding of an invalid assignment: an assignee offering dry cleaning detergent made with a different formula; [7] an assignee using thinner cigarette paper; [8] and an assignee selling a different breed of baby chicks. [9]

Whether goods or services are substantially similar may seem like an easy test to apply, but, as case law demonstrates, this fact-intensive analysis can yield results that look strange in the abstract. Disputes involving the validity of a trademark assignment are decided on a case-by-case basis, using the specific facts at hand to determine if consumer expectations are being met under the new use. Thus, while trademarks acquired through assignment can have significant value (and grant the assignee important rights formerly held by the assignor), assignees should be wary of changes to goods or services under an acquired mark that could be seen as deceiving the public.

[1] Clark & Freeman Corp. v. Heartland Co. Ltd. , 811 F. Supp. 137 (S.D.N.Y. 1993).

[2] Independent Baking Powder Co. v. Boorman , 175 F. 448 (C.C.D.N.J.1910).

[3] Pepsico, Inc. v. Grapette Company , 416 F.2d 285 (8th Cir. 1969).

[4] Clark & Freeman Corp. v. Heartland Co. Ltd. , 811 F. Supp. 137 (S.D.N.Y. 1993).

[5] Atlas Beverage Co. v. Minneapolis Brewing Co. , 113 F.2d 672 (8 Cir. 1940).

[6] H. H. Scott, Inc. v. Annapolis Electroacoustic Corp. , 195 F.Supp. 208 (D.Md.1961).

[7] Glamorene Products Corp. v. Procter & Gamble Co. , 538 F.2d 894 (C.C.P.A. 1976).

[8] Bambu Sales, Inc. v. Sultana Crackers, Inc. , 683 F. Supp. 899 (1988).

[9] Hy-Cross Hatchery, Inc v. Osborne 303 F.2d 947, 950 (C.C.P.A. 1962)

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Home > Trademark Blog > Trademark Assignment > What is a Trademark Assignment? How Do I Assign Trademark Rights?

What is a Trademark Assignment? How Do I Assign Trademark Rights?

A trademark assignment (which is different than a trademark license ) is simply the transfer of ownership of a trademark from one person or entity to another.  In order for an assignment to be valid and enforceable, it must include the underlying goodwill associated with the trademark, or in other words, the recognition the trademark has with the public.  Otherwise, the transfer of ownership will be considered an assignment in gross and the trademark may be deemed abandoned by the parties and all rights could be lost forever.

The Trademark Assignment Should Be in Writing

Although an assignment need not be in writing to be effective, it’s strongly recommended that it be in the form of a written document signed by both the assignor and the assignee.  In the event the parties fail to memorialize the trademark assignment in writing at the time of an oral assignment, they can later prepare what’s called a nunc pro tunc assignment.  This type of assignment is similar to an ordinary assignment of trademark rights, but instead of it being effective on the date it’s executed (which could be years after the trademark was orally assigned), it’s considered effective from the date the oral assignment was made.

Recording a Trademark Assignment

If the trademark being transferred is the subject of an existing US trademark registration or pending trademark application, the assignment should be recorded with the Assignment Services Division of the United States Patent and Trademark Office (USPTO).  This should be done electronically using the Electronic Trademark Assignment System ( ETAS ).  You must complete the online form, upload the assignment, and pay the government filing fees (which are quite minimal).  It’s important to promptly record the assignment so that the USPTO records remain accurate and so that the public is put on notice as to the rightful owner of the trademark.  In addition, a trademark registration renewal cannot be filed in the name of the new owner unless the assignment has been recorded with the USPTO.

Be Very Careful…

Although a pending trademark application may be assigned prior to maturing into a trademark registration, you may not assign a trademark application filed under Section 1(b) ( intent to use ) until the trademark itself is in use in commerce , meaning that there’s an existing and ongoing business related to the mark.  If an intent-to-use application is prematurely assigned, any resulting trademark registration will be considered void and subject to a trademark opposition or trademark cancellation .

Need Help Preparing or Recording a Trademark Assignment?

In conclusion, there are many pitfalls that must be avoided when making an assignment of trademark rights in order to ensure that the transfer of ownership is valid, legal, and binding.

I’m experienced US trademark attorney Morris Turek.  If you have any questions about trademark assignments, the assignment of trademark rights, or maybe need some assistance from a skilled trademark attorney with preparing and recording a trademark assignment, please contact me for your free consultation at (314) 749-4059 , via email at [email protected] , or through my contact form located below.  I look forward to hearing from you soon.

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Home » 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.

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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What is an Assignment of Trademark?

January 10, 2023 By John DiGiacomo

A trademark is a valuable business and personal asset. Like other assets, a trademark can be sold, transferred, licensed, used as collateral for money financing, etc. However, a trademark is an intangible asset, and as such, when trademarks are sold or transferred, the proper legal papers must be drafted and executed. It is NOT like going to a store, paying money, and taking possession of a physical object.

So, what are the proper legal papers? If you are selling or transferring a trademark, what is needed is an Assignment of Trademark . This is a written legal document that must be properly drafted and signed. An Assignment of Trademark is the legal document that transfers an owner’s entire right to a trademark to a new owner. This is similar to how a Deed will transfer a homeowner’s entire right to real property to a new owner. Note that an Assignment is very different from a license. A Trademark License Agreement allows another person or entity to USE the trademark. To continue the homeowner’s analogy, a License is like a homeowner renting the house allowing another to use the house.

A sale of a trademark might be just for the trademark or might be part of a larger sale of a business or a set of business assets. Thus, if trademarks are included in a business sale or sale of assets, special attention is needed to ensure the trademarks are properly transferred. If you need advice and legal counsel with respect to selling or transferring a trademark, call the trademark attorneys at Revision Legal at 231-714-0100 or 855-473-8474. We are lawyers with deep experience in all aspects of Trademark Law.

In addition to transferring ownership, an Assignment of Trademark also serves as a public record of the transfer and of the new ownership. This is because, generally, an Assignment must be filed with the U.S. Patent and Trademark Office (“USPTO). This is similar to how a Deed to a home must be registered and recorded with the County Recorder’s Office. If not properly drafted and signed, the USPTO can reject the Assignment and refuse to acknowledge that the trademark was sold or transferred. There are several things that must be contained in a valid Assignment, including:

• Proper and full identification of the trademark — including the trademark registration number
• Proper and full identification of the current owner of the trademark
• If the owner is a corporate entity, then a clause indicating that the corporate entity has authorized the sale or transfer
• Proper signatures, particularly if the seller/transferee is a corporate entity
• Inclusion in the Assignment of the “goodwill” associated with the trademark

What could happen if the Assignment is improper?

As noted, the USPTO could reject the Assignment. There is also several dangers including:

• An improper Assignment could invalidate the trademark entirely
• USPTO registration could be canceled or challenged by a competitor
• An improper Assignment could prevent the new owner from asserting trademark priority rights and protections dating back to the original owner’s first use of the trademark

Contact the Trademark Attorneys at Revision Legal For more information, contact the experienced Trademark Lawyers at Revision Legal . You can contact us through the form on this page or call (855) 473-8474.

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You are here, 15.15 trademark ownership—assignee (15 u.s.c. § 1060).

            The owner of a trademark may [transfer] [sell] [give] to another the owner’s interest in the trademark, that is, the right to exclude others from using the mark.   This [transfer] [sale] [gift] is called an assignment, and the person to whom this right is assigned is called an assignee and becomes the owner of the trademark.  

            [The assignment must be in writing and signed.]   To be enforceable, the assignment must include the goodwill of the business connected with the mark.  

            An assignee may enforce this right to exclude others in an action for [infringement] [or] [ insert applicable form of unfair competition from 15 U.S.C. § 1125(a) ].  

            [The plaintiff is an assignee, who has received an enforceable ownership interest.] 

            “The purpose behind requiring that goodwill accompany the assigned mark is to maintain the continuity of the product or service symbolized by the mark and thereby avoid deceiving or confusing customers.”   E. & J. Gallo Winery v. Gallo Cattle Co. , 967 F.2d 1280, 1289 (9th Cir. 1992). Whether goodwill is transferred is a factual issue. Id.  

            A trademark assigned without the underlying goodwill (including a transfer of underlying assets or rights) is sometimes referred to as a trademark “assigned in gross,” which fails to transfer enforceable trademark rights.   “The law is well settled that there are no rights in a trademark alone and that no rights can be transferred apart from the business with which the mark has been associated.”   Mister Donut of America, Inc. v. Mr. Donut, Inc. , 418 F.2d 838, 842 (9th Cir. 1969).   For a discussion of the goodwill requirement, see 3 J. Thomas McCarthy, Trademarks And Unfair Competition § 18:2 (4th ed. 2015).  

            In a case brought under the Lanham Act, a signed writing is necessary for an assignment to be valid. 15 U.S.C. § 1060.   A signed writing is not required to prove an assignment in a common law trademark infringement claim. McCarthy , supra , at § 18:11.

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How to Properly Assign a Trademark to a New Business Entity

By Eric Perrott, Esq.

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Many companies will make changes to their corporate structure, which may include incorporating in a state that has favorable tax or legal benefits. If you own a business and have registered your trademarks with the United States Patent and Trademark Office (USPTO), make sure you follow the steps below to avoid the abandonment of your registration.

In many ways, trademarks (along with copyrights and patents) are treated similarly to your other business assets. They can be sold, transferred, even used as collateral for debts. However, when it comes to transferring trademark rights from one entity to another, it is simply not enough to transfer the registration, or transfer the trademark itself . Instead, a trademark must be “assigned” through an Assignment of Rights. That Assignment must transfer not only the trademark and the registration, but must also transfer the goodwill behind the trademark to be valid.

A trademark ownership transfer must include a transfer of the “goodwill” of the trademark.

In basic terms, a trademark’s purpose is to represent aspects of the company using it. A trademark can represent a company’s quality, customer service, style, etc. It represents the company’s ethos, its connection with its customers, and its mission statement. All of these elements are considered “goodwill” that a company builds in its trademark through use, advertising, and marketing over time.

Therefore, a trademark is more than just a piece of paper filed with the USPTO. A trademark’s value is the recognition and goodwill that it has to consumers (however big or small that might be). When a trademark is assigned to a new company, the goodwill must be transferred with the trademark, or it will not be valid.

What could happen if I do not properly assign my trademark to my new company?

If a trademark is not properly assigned, then rights in the trademark are terminated and the new company cannot claim the rights dating back to the original company’s first use of the trademark. Any registration for the trademark would be cancelled and the new company would need to reapply as if it was a brand-new trademark (because, without the goodwill, it is).

Is an “asset purchase agreement” sufficient to transfer trademark rights?

For trademarks, assets transferred through an Assets Purchase Agreement will not typically be enough, on its face, to support the proper transfer of a trademark to a new company. An Assets Purchase Agreement will not be accepted by the USPTO to transfer a registration to a new company. Only a proper Trademark Assignment will be accepted to “record” the transfer of a registration from one company to the other.

Trademark assignments are complicated and involve dozens of legal decisions to decide when and if a trademark was properly transferred. Most issues are not discovered until a party seeks to enforce or defend its rights. At that point, however, it could be too late. An experienced trademark attorney can help identify red-flags and counsel clients to attempt to avoid errors that could cost the trademark owner dearly, at the worst possible time. Make sure you know the risks before you change business entities.

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Eric Perrott, Esq.

Eric Perrott, Esq. is a trademark and copyright attorney committed to providing high-quality legal services for any sized budget. Eric’s ability to counsel clients through any stage of trademark and copyright development and protection allows him to provide his clients with personalized advice and unique analysis. Eric can be reached directly at: [email protected]. The contents of this blog are for informational purposes only and may not be relied on as legal advice.

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How To's The Basics

June 30, 2020

Violation of the assignment-in-gross rule for trademarks.

A recent case that addressed rights in the trademark reign provides a cautionary tale of the consequence of the failure to assign a trademark with its goodwill.

By  Scott D. Locke and Jessica J. Kastner  | June 30, 2020

Trademark rights are property rights. Like real property and personal property, as well as other intellectual property rights such as patents and copyrights, they can be assigned. However, the transfer of trademarks is unique in that any assignment of a trademark must also transfer the goodwill that is associated with that trademark. The requirement is deeper than a perfunctory recitation in an assignment document. The failure to transfer goodwill can invalidate the assignee’s rights under the agreement. A recent case that addressed rights in the trademark REIGN provides a cautionary tale of the consequence of the failure to assign a trademark with its goodwill.

The Anti-Assignment in Gross Rule

The owner of trademark rights can assign those rights to other persons or entities. The ability to assign trademark rights is significant because between competitors who wish to use the same or a confusingly similar trademark for the same or related goods, the party that began using the trademark first will generally prevail, and with any assignment the purchaser inherits the seller’s date of first use,  i.e.,  the seller’s priority.  Carnival Brand Seafood Co. v. Carnival Brands, Inc,  187 F. 3d 1307, 1310 (11th Cir. 1999).

However, any assignment of a trademark, must include an assignment of the goodwill that is associated with the trademark. 15 U.S.C. §1060(a)(1). For this reason, most assignments of trademarks explicitly recite that the assignor assigns specific trademarks and the goodwill associated therewith. However, the mere recitation of this language will  not  in and of itself render an assignment proper and confer priority. Failure to actually transfer the goodwill associated with a trademark is deemed an “assignment in gross” and renders the assignment invalid.

More than a century ago, in  United Drug Co.. Theodore Rectanus Co.,  248 U.S. 90 (1918), Justice Pitney explained the theory behind the prohibition against “assignments in gross” for trademarks. As he noted, trademark rights are part of a broad law of unfair competition and the rights in trademarks grow out of the use of them. Consequently, they are not property rights apart from their use in connection with a business.  Id.  at 97. Thus, unlike the owner of a patent right, the owner of a trademark right cannot park its rights and make use of them merely by enforcing those rights to prevent others from using the same or similar trademarks.  Id.  at 98.

One of the core components of the anti-assignment in gross rule is that it precludes a purchaser from benefiting from the goodwill of the seller if the purchaser applies the mark to different goods. This sounds similar to the “similarity of goods” factor used in the likelihood of confusion analysis that is used for determining whether there is trademark infringement. However, purchasers of trademarks may be surprised to learn that these standards are quite different. Under a likelihood of confusion analysis, goods may be loosely related and still weigh in favor of holding a trademark to have been infringed.

By contrast, in the context of determining whether an assignment is “in gross,” courts strictly require goods to be very similar in order to uphold an assignment. As such,  even if  an assignment expressly assigns the goodwill associated with the trademark, the assignment may be ineffective if the assignee’s products are not nearly the same as the assignor’s goods.

‘PepsiCo v. Grapette’

In the seminal case  PepsiCo, Inc. v. Grapette Co.,  416 F.2d 285 (8th Cir. 1969), the U.S. Court of Appeals for the Eighth Circuit established a framework for considering the proximity that goods must be in order to avoid a finding of an assignment in gross. In that case, a first company, H. Fox and Co., had registered the name PEPPY in connection with the cola syrups in 1926. In 1965, a second company, Grapette Co. bought the trademark PEPPY from H. Fox and Co. in the context of Chapter 11 bankruptcy proceeding. H. Fox and Co. made a formal assignment of its goodwill.  Id . at 286. Grapette began to use the trademark in connection with a bottled soft pepper drink. No inventory and no other assets were transferred.  Id.

In 1965, PepsiCo warned Grapette about a possible litigation if Grapette did not cease using the mark, and in 1966, PepsiCo initiated suit based on an alleged infringement of its trademark PEPSI.  Id.  Pepsi’s use predated 1965, Therefore, the issue was whether the assignment from H. Fox and Co. was one in gross and thus invalid. If the assignment were invalid, then Grapette would not receive the benefit of H. Fox and Co.’s priority date and would not be able to assert a defense of laches.

In explaining the contours against the prohibition against an assignment in gross, the court explained that for assignment of a trademark to be effective, it must not be “naked,” meaning that the purpose of the assignment must be consistent with the object of trademark law,  i.e. , to indicate the origin of the article by the association of the trademark with it.  Id.  Consequently, the court held that “any assignment of a trademark and its goodwill (with or without tangible or intangibles assigned) requires the mark itself to be used by the assignee on a product having substantially the same characteristics.”  Id.  at 288.

Turning to facts before it, the Eighth Circuit determined that H. Fox and Co.’s cola flavored syrup and Grapette’s pepper type bottled beverage were too dissimilar for there to have been an effective assignment of goodwill.  Id.  The court emphasized that the issue of having substantially the same characteristics was to be viewed through a lens that focuses on the public welfare. Consequently, the fact that the products were related or even in the same international class in the Trademark Office did not matter. Ultimately, the harm of holding otherwise would “condone public deceit” in that “[t]he consumer might buy a product thinking it to be of one quality or having certain characteristics and could find it only too late to be another.”  Id.

‘Vital Pharmaceuticals v. Monster Energy’

More recently, another case involving beverages,  Vital Pharmaceuticals, Inc. v. Monster Energy,  2020 WL 2091996 (S.D. Fla. 2020), reminds practitioners and assignees for trademarks, that the prohibition against assignments in gross continues to be a problem for litigants. In that that case, the parties disputed whether the assignment of rights to the trademark REIGN was invalid.

In 2015, Dash LLC, not a party to the lawsuit, began using the trademark REIGN and obtained a registration for the dietary supplement drink mixes as well as supplements and other products. One of the drinks that Dash sold was a powdered, fruit flavored, pre-workout supplement that was caffeinated.  Id.

By March 25 2019, Monster Energy Company, through a subsidiary, launched energy drinks under the name REIGN. At about the same time, Vital Pharmaceuticals (VPX) entered into a trademark purchase and assignment agreement with Dash for Dash’s trademark rights. VPX did not acquire anything other than the REIGN trademark.  Id.  at *2. Following the sale, Dash ceased using the REIGN trademark.

On March 28, 2019, three days after Monster launched its product, VPX announced that it would be launching an energy drink under the trademark REIGN. VPX’s REIGN product differed from Dash’s REIGN product in that: (1) VPX’s product was ready to drink while Dash’s product was a powdered supplement; and (2) VPX’s product contained no ingredients in common with Dash’s product.  Id.

The court considered four factors.

First, as the court in  PepsiCo v. Grapette  did, the court in this case focused on whether the assignee was using the mark for a substantially similar product.  Id.  Emphasizing the need to protect consumers, the court was explicit that even minor difference can be enough to threaten customer deception, and thus harm customers because they would mistakenly rely on a brand that they had come to trust.  Id.

Noting that VPX entirely abandoned the product line that Dash had sold, the court concluded that VPX has “left behind  any  goodwill Dash had earned for its mark.”  Id.  VPX tried to advance an argument that the products need not be identical and that they were sufficiently similar because both its products and the products of the assignor of the mark were: (i) fruit-flavored, (ii) pre-workout, (iii) dietary supplements that (iv) contain caffeine.  Id.  However, the court concluded that these similarities were insufficient, particularly because VPX implemented a complete change of ingredients.

Second, the court considered whether VPX acquired any assets from Dash. Although the transfer of tangible assets is not a prerequisite for an assignment to be valid, the court noted that the absence of any tangible acquisition can undermine the public’s legitimate expectation that a mark will go on in real continuity.  Id.  at *6-7. Thus, the factor weighed in favor of a finding of an invalid assignment of trademark rights.

Third, the court considered whether the assignor continued to capitalize on its goodwill under a new trademark. In this case, the assignor emphasized to its customers that it was replacing its REIGN products with products sold under the trademark SLAY.  Id.  This course of action suggested that the assignor was retaining its goodwill and not transferring it, despite using a different trademark. Thus, because the assignor retained its customers’ goodwill, even if it used a different trademark, it could not transfer that goodwill.

Fourth, the court considered whether there was a continuity of management between the assignor and the assignee such that the assignee would continue to provide the same quality of services.  Id.  The absence of this continuity of management also weighed in favor of a finding of an assignment in gross because it suggested a lack of continuity of the quality of the goods.

Because all four of the factors weighed against Grapette and suggested that there was no transfer of goodwill, the court held that the assignment was in gross. Consequently, the court entered an injunction in favor of the plaintiff that precluded VPX from using the REIGN trademark in connection with its beverage products.

Most practitioners who draft assignments that cover trademark rights know that the assignments should include an express transfer of the goodwill that is associated with the subject trademarks. However, this assignment of goodwill must be one of not only form but also of substance. The four factor test that the court in  Vital Pharmaceuticals  recently applied is a reminder that if the assignee’s products are dissimilar from the products of the assignor, a court may find that the circumstances surrounding the transfer suggest that the parties truly intended only an agreement by the assignor to refrain from future use of its trademark and not to ensure both continuity of type of goods and quality under the assigned trademark. In such cases, then the assignment may be found in gross and thus invalid.

Accordingly, in order to reduce the likelihood of a finding an assignment to be in gross, assignees should consider whether any one or more of the following procedures, which would help to ensure a continuity of quality, would be consistent with their business plans: (1) acquiring physical assets from the assignor; (2) retaining personnel of the assignor or hiring them as consultants; (3) requiring the assignor to abandon selling the same goods; and (4) offering at least some of the same products, even if there is a desire to expand into other goods and services. Although the tag should not wag the dog, failure to be able to demonstrate that goodwill has in fact been transferred, can jeopardize what the assignee thought was a valuable asset.

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Trademark Assignment

Trademarks are assets of a company. Just like any other asset, they can be bought and sold. However, unlike other assets, trademarks cannot generally be sold by themselves. In other words, a trademark must be sold with something else, something which is related to the trademark. A trademark assignment is the typical mechanism by which a trademark is transferred.

Proper Trademark Assignment

A trademark assignment is either or both of the act of transferring a trademark and the document by which the trademark is actually transferred. Companies will transfer a trademark when they are bought or acquired, or when a specific service or product line is sold or spun off. A trademark assignment actually changes the ownership of the trademark from the first party to the second.

A trademark assignment, if done properly, will usually identify and state a few things. First, the document will identify the trademark itself, usually with a serial or registration number (if a trademark application has been filed or granted), the mark itself, and often with the list of goods and/or services with which the mark is used. This information is often sufficient to clearly identify a trademark. For common law trademarks – trademarks which are merely used but not filed at the USPTO – the trademark assignment may only be able to identify the mark and its corresponding goods/services. If possible, additional information can be included describing the first use of the mark or geographic areas of use, but one must be careful not to identify that information in a way that unintentionally limits the scope of the trademark’s rights.

The trademark assignment should also identify whether or what other assets, or products, or goodwill is being conveyed with the trademark. The transfer cannot occur in isolation. For example, if Nike were to sell its Air Jordan trademark to Adidas, it could not just give the trademark to Adidas in exchange for a boatload of cash; it would have to also move its inventory of shoes, or plans for designing the shoes, or the Nike division and all the workers responsible for designing Air Jordan shoes.

Improper Trademark Assignment

A trademark assignment can be improper for a number of reasons.  For example, someone may attempt to improperly assign an intent-to-use application, may assign the trademark without a written document, or may not actually have the rights to assign it.  One problem that can arise is a naked assignment. A naked assignment is a transfer of a trademark without any accompanying goodwill. In the above example, if Adidas just sent money to Nike for the ability to use AIR JORDAN and for nothing else, that would be a naked assignment and presumed invalid.

If a trademark assignment transfers a trademark from a company that no longer exists, that assignment can be invalid. Depending on the state law, some companies have the ability to transfer assets during a limited wind-down period after dissolution of the company, but those laws vary from state to state or may not allow it all. Even the local law forbids a non-existent company from transferring a trademark, the conveyance may be invalid. In some cases, clawback, retroactive, or nunc pro tunc agreements might be a possibility, but those should be carefully researched and approached with great skepticism.

Separate Trademark Assignment Documents

When conveying a pending or registered trademark, it is best to record the trademark assignment with the USPTO. Recording at the USPTO makes the assignment public record. As such, sometimes parties may want to draft a trademark assignment as a stand-alone document. This allows those parties to record the trademark assignment by itself without making all the details of a much larger deal public.

For example, if Nike were acquiring Under Armor, there would be hundreds of pages of agreement details covering purchase price, debt obligations, transition periods, stock purchases, employee handling, etc. The vast majority of these details would be irrelevant to the transfer of the trademark, and neither company would probably want to make those details public (and likely, the agreement would have a confidentiality clause preventing those details from being made public). To still be able to record the trademark assignment, the lawyers would put the assignment in an exhibit. The exhibit would probably be only one or two pages and would not contain any details regarding the bigger detail. The lawyers could then file only that particular exhibit with the USPTO while maintaining the rest of the agreement in confidence.

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Everything you need to know about a Trademark Assignment Agreement

13 Mar 2023

A trademark may be one of the most important assets for your business.

Find out how to protect your business and enhance the value of your company with a Trademark Assignment Agreement. 

If your business uses unique phrases or logos in your production of goods and services, you may wish to differentiate your business from your competitors. Often, customers rely on a trademark to distinguish one product from another.

Therefore, the reputation of your business may depend on the value and authenticity of your trademark. Hence, it is important to fully understand what a Trademark Assignment Agreement is and how to use it to your advantage. 

What is a trademark?

A trademark is a type of intellectual property which identifies your goods or services. It can be any word, phrase, symbol, design that is able to distinguish your goods and services from others. 

Having a trademark protects you and your business from your competitors. With a trademark, your goods and services cannot be easily replicated or copied. Depending on what jurisdiction you are in, there are different ways of protecting this right.

You may register your trademark so that you secure the exclusive right to use your trademark and eliminate any possibility that your competitor can copy your business. For instance, in Hong Kong, you can register your trademark with the Trade Marks Registry of the Intellectual Property Department. The legal effect of registration is that you will personally own the trademark, possess exclusive right and can take legal action against a third party who uses your trademark. 

What is assignment?

During assignment, one person, or the assignor, transfers rights or benefits to another person who is known as the assignee. In the context of trademarks, an assignor is the trademark owner and they can transfer the rights, interests, titles and benefits to the assignee, who is the new owner. 

Beyond the assignment of trademark, patents and other intellectual property can also be the subject of assignment. Check out DocPro’s Patent Assignment Agreement and Intellectual Property Assignment Agreement . 

What is a Trademark Assignment Agreement?

As part of the trademark assignment process, it is useful for the assignor and assignee to utilise a Trademark Assignment Agreement .

A Trademark Assignment Agreement outlines the specific details of the transfer of the assignee’s rights, titles, interests and benefits attached to the trademark. As with all written contracts, it provides much more legal certainty and clarity as compared to any oral agreements. 

It is important to note that Trademark Assignment Agreements are different from licenses to use trademarks. Licenses to use trademarks merely provide a user with permission to use a trademark and is not a transfer of ownership rights. 

When do you need a Trademark Assignment Agreement? 

Typically, the registered proprietor of the trademark may assign a trademark for consideration. When a registered proprietor of the trademark wishes to transfer a registered trademark to another person for consideration, they may utilise a Trademark Assignment Agreement to facilitate this transaction. 

In addition, a Trademark Assignment Agreement may also be executed even without a trademark registration. In some circumstances, owners of trademarks such as inventors or creators may assign the ownership of their trademark to a third party, like a company, in return for consideration. 

Why is a Trademark Assignment Agreement important?

Most people may have a rough conception of what a trademark is, but may not have much clarity as to the transfer of ownership. Therefore, it is important to draft up a Trademark Assignment Agreement. It is especially crucial if your business depends heavily on the value of the trademark, which depend on the certainty of the valid legal ownership of this trademark. 

A Trademark Assignment Agreements provides valid proof of the legal right to the trademark. In the event of a dispute, the Trademark Assignment Agreement confirms who the most updated owner of the trademark is. 

How to write a Trademark Assignment Agreement?

A Trademark Assignment Agreement provides an outline of the transfer of an assignor’s rights, title and interest. 

Read on to learn more about the essential provisions in a Trademark Assignment Agreement. 

Assignment 

The assignment provision assigns the rights, title and interests of the trademark to the Assignee and lists the date which the assignment of the agreement takes effect. 

This provision is important since it irrevocably and absolutely assigns the aforementioned rights, title and interests and provides confirmation of the assignment. 

Consideration

As part of the trademark assignment, the assignee may pay the assignor a stipulated sum for the assignment of the trademark and the associated intellectual property. Depending on their preference, the consideration may take the form of money or the assignee’s ordinary shares. 

The warranty section is essential in ensuring that the assignor has the power to enter into the agreement and has the power to legally perform their obligations. It is especially important in the context of a Trademark Assignment Agreement since the assignee would want assurance from the assignor that the trademark that is being assigned is free from mortgages, charges and other security interests, and that the assignor has not assigned, licensed or disposed any interest regarding the trademark to any other party other than the assignee. 

Costs and duties

Beyond consideration for the trademark assignment, parties may be additionally responsible for different associated costs. 

For instance, there may be additional incurred costs for negotiation, preparation and execution of the assignment, or stamp duty associated with the transfer in ownership of the trademark. This section outlines who would be responsible for each item of payment to provide clarity in the event of a dispute. 

Schedule / Description of Trademark

At the end of the Trademark Assignment Agreement, the assignor and assignee may provide details of the trademark that is to be assigned. 

If relevant, the specific technology associated with the trademark and any other proprietary information can be detailed in this section. A description of the trademark, including any creative particulars can be outlined. This is important in situations where the trademark in question is a word or phrase or a complicated design. 

Both parties to the assignment can have a clear idea as to what the trademark comprises and the scope of the assignment. 

Must a Trademark Assignment Agreement be in writing? 

Usually, assignment agreements are not required to be in writing and merely must show an intention to transfer rights. 

However, local legislation governing the assignment of trademarks may stipulate that the assignment must be in writing. For instance, in Hong Kong, the assignment of a registered trademark must be in writing and signed by the assignor (s27(4) Trade Marks Ordinance Cap 559). 

Therefore, you should always refer to your local legislation on the guidelines governing the transfer of a Trademark Assignment Agreement. 

It will always be in your business’ best interests to protect the value of your trademarks. To properly distinguish your products and services from your competitors, prevent misuse of your trademark and to ensure your business can reach its full potential, make sure you use a Trademark Assignment Agreement.

Please note that this is a general summary of the position under common law and does not constitute legal advice. As the laws of each jurisdiction may be different, you may wish to consult your lawyer.

Christina Keough

Christina is a legal writer at docpro. christina manages the legal articles and blogs, identifies legal topics, and invites lawyers and legal experts to contribute. christina holds a law degree from a leading university. if you would like to become a blog contributor to docpro, please click the link below:, docpro legal contributor, trademark assignment agreement, intellectual property, related posts.

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Assignment of Trademark

Updated on : Feb 22nd, 2022

Trademark proprietors can transfer trademarks similarly to how they can transfer physical properties. One of the ways to transfer a trademark is through an assignment. Assignment means transferring rights, interests, titles and benefits from one person to another. Assignment of a trademark means to transfer the owner’s right in a trademark to another person.

The transferring party is called the assignor, and the receiving party is called the assignee. Section 2(1)(b) of the Trade Marks Act, 1999 states that assignment means an assignment of a trademark in writing by the act of the concerned parties. Both unregistered and registered trademarks can be assigned with or without the goodwill of the business.

Who can Assign a Trademark?

Section 37 of the Trade Marks Act, 1999 states that the person registered as proprietor of trademark in the register of trademarks has the power to assign a trademark and receive consideration for such assignment. Thus, a trademark proprietor can assign a trademark to another person.

Kinds of Trademark Assignment

The different kinds of trademark assignments are as follows:

Complete Assignment  

The trademark proprietor transfers all rights in the trademark to another person, including the right to earn royalties, to further transfer, etc. 

For example: X is the proprietor of brand ‘ABC’. X assigns his trademark ‘ABC’ completely through an agreement to Y. After this, X will not have any rights with respect to the brand ‘ABC’.

Partial Assignment

The trademark proprietor assigns the trademark to another person with respect to only specific services or goods. The transfer of ownership in the trademark is restricted to specific services or products.

For example: X is the proprietor of a brand ‘ABC’ used for sauces and dairy products. X assigns the rights in the brand ‘ABC’ with respect to only dairy products to Y and retains the rights in the brand  ‘ABC’ with respect to sauces.

Assignment with Goodwill of Business  

The trademark proprietor assigns the rights, entitlements and values associated with a trademark to another person. When the trademark is assigned with goodwill, the assignee can use the trademark for any class of goods or services, including the goods or services which were already in use by the assignor. 

For example: X is the proprietor of ‘Sherry’ brand relating to hair products. X assigns the brand ‘Sherry’ to Y with goodwill. Y will be able to use the brand ‘Sherry’ with respect to food products and any other products they manufacture.

Assignment without the Goodwill of Business  

The trademark proprietor assigns to the assignee rights and entitlements in a trademark with respect to the products or services that are not in use. The assignor restricts the transfer of the rights in the trademark in the case of assignment without goodwill. The assignor assigns with the condition that the assignee is not entitled to use the trademark relating to the goods or services already in use by the assignor.

For example: X is the proprietor of a brand ‘Sherry’ that he uses for manufacturing and selling bags. X assigns the brand ‘Sherry’ without goodwill to Y. Y will be able to use the brand ‘Sherry’ for any other product other than bags.

Pre-Requisites for Assignment of Trademark

• The trademark assignment should be in writing.
• The assignment should be between two identifying parties, i.e. assignor (owner of the trademark) and the assignee (buyer of the trademark).
• The assignor should have the intent and must consent for the trademark assignment.
• The trademark assignment should be for a proper and adequate consideration (amount).

Trademark Assignment Agreement

The proprietor of a trademark generally assigns it to the assignee through a properly executed trademark assignment agreement. The trademark assignment agreement should be drafted keeping the following points in mind:

• The rights of the trademark should not be detrimentally affected due to the obligations contained in the agreement.
• The decision and requirement regarding whether the assignment is with or without the goodwill of the business must be explicitly mentioned.
• The agreement should show a clear purpose of the transaction/assignment.
• The geographical scope of the location where the assignee possesses the values and rights in the trademark must be mentioned.
• The transfer of the right to collect and sue damages for future and past infringements must be mentioned.
• The agreement should be duly executed, i.e. it must be stamped and notarised as per the applicable Stamp Act.
• The signatures and witnesses must be mentioned.
• The place and date of agreement execution must be mentioned.
• The date and day of the assignment along with the parties to the assignment must be mentioned.
• The agreement should mention whether or not it would be binding on the legal heirs of the assignor and assignee.

Process of Assignment of Trademark

The process of assignment of the trademark in India are as follows:

• The proprietor of the trademark (assignor) assigns his/her rights in the trademark through a trademark assignment agreement to the assignee.
• The assignor or assignee, or both, can make a joint request to register the assignment by filing an application of a trademark assignment in Form TM-P to the register of trademarks.
• Form TM-P must be filed with the registrar of the trademark within six months from the date of the assignment. The application can be filed after six months of assignment, but the fee may vary accordingly.
• The assignment must be advertised in such a manner and within the period directed by the registrar of trademarks.
• The copy of the advertisement and the registrar’s direction should be submitted to the office of the registrar of trademarks.
• Upon the receipt of the trademark assignment application (form TM-P) and required documents, the registrar of trademarks will register the assignee as the proprietor of the trademark and record the specifications of the assignment in the register.

Documents Required for Assignment of Trademark

The following documents must be submitted to the registrar of trademark along with form TM-P:

• Trademark assignment agreement.
• Trademark certificate.
• NOC from the assignor.
• Identification documents of the assignor and assignee.

Restrictions on Assignment of Trademark

The Trademarks Act, 1999 provides the following restrictions on trademark assignment:

Parallel Use Restriction  

The assignor cannot assign a trademark when the assignment results in the creation of exclusive rights in different persons with relation to the same or similar products or services and will likely deceive or cause confusion. Thus, multiple exclusive rights relating to the same/similar products or services in different persons are not allowed. It prevents the parallel use of a trademark by more than one person in relation to the same/similar products or services.

Multiple Territorial Use Restriction  

The assignor cannot assign a trademark when the assignment results in the creation of an exclusive right in different persons in various parts of India relating to the same/similar products or services. The assignor cannot assign a trademark when the assignment results in the creation of an exclusive right in different persons in various parts of India relating to the same/similar products or services sold or delivered outside India. Thus, assigning rights in different parts of India relating to the same/similar products or services is not allowed.

Benefits of Trademark Assignment

• The trademark assignment enables the trademark proprietor to encash the value of his/her brand.
• The assignee obtains the rights of an already established brand due to trademark assignment.
• The trademark assignment supports the assignor and the assignee to expand their respective businesses.
• The trademark assignment agreement enables the assignor and the assignee to establish their legal rights in case of any dispute.

Disclaimer: The materials provided herein are solely for information purposes. No attorney-client relationship is created when you access or use the site or the materials. The information presented on this site does not constitute legal or professional advice and should not be relied upon for such purposes or used as a substitute for legal advice from an attorney licensed in your state.

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A Complete Guide to Buying a Trademark for Your Business

Updated: March 11, 2024

Published: July 10, 2023

As a new business, you want to create a lasting impression on your customers. Building a strong brand that resonates with your customers is an important part of doing exactly that — and having a unique business name, tagline, or logo is crucial for building brand awareness . 

Whenever a customer sees Apple’s logo, for example, it immediately conjures up the experiences that person has had with the brand.

Apple’s famous logo is an example of a trademark. A trademark is a unique name, phrase, symbol, or sound registered in the name of a business. Trademarks help companies protect their intellectual property and give them exclusive usage rights. 

Finding a brand name or symbol could be a long, tiresome project. Then, the process of registering your new trademark can take over a year. If you don’t want to wait that long, you may consider buying a trademark instead. 

While it’s faster than registering a new trademark, the process can be complicated. Learn how to spot a safe trademark purchase, close the deal, and avoid common pitfalls.

Which trademarks are safe to buy?

The United States Patent and Trademark Office (USPTO) approves new trademarks. You may buy an already registered trademark or one under application for registration. But you must know which federal trademarks are safe to buy. 

Registered trademarks 

It’s not just enough to have an approved trademark registration. The trademark owner needs to maintain the trademark. For example:

• The trademark must be in commercial use
• The trademark owner must file the renewal and declaration of use forms

If you buy a registered trademark that hasn’t been used for a long time or renewed, you might be unable to defend your trademark rights if another business claims it. 

Trademarks under application

There are two trademark application filing basis types — “use in commerce” and “intent to use.” 

Use-in-commerce applications are for registering trademarks that are already used for products or services. An application owner may transfer these applications to another owner.

Intent-to-use applications are for registering trademarks that have never been used in commerce. 

If you want to buy such a trademark, the owner must first file an amendment to allege use or a statement of use with the USPTO to show they have used the mark in commerce. This discourages people from registering trademarks just to resell them. 

Buying a dead or abandoned trademark application isn’t a good idea. There’s a high chance that another business might claim this mark.

Pros and cons of buying a trademark 

While buying a trademark offers many benefits, it can have some disadvantages. Evaluating the pros and cons will help you go through the process more confidently.

Advantages of buying a trademark

• Saves time compared to a new trademark registration
• Avoids the complicated process of finding a unique company name or mark
• Transfers the existing goodwill of the mark
• Eliminates the risk of the trademark getting rejected, wasting your branding efforts

Disadvantages of buying a trademark

• May be difficult to find a trademark that matches your brand identity 
• Could be costlier than registering a new trademark
• Might hurt your business if the original trademark owner had a negative reputation
• Has a challenging valuation process since the mark is an intellectual property

Now that you know the pros and cons of buying a trademark, here’s an important question: 

Is buying a trademark name worth it?

All trademarks start as a name or a symbol — nothing more. But over time, customers will begin to associate specific values with a brand’s trademark. When customers see the trademark of a customer-friendly brand, they might remember their good experience with the brand, for example. 

With this in mind, it can be worth buying a trademark if the trademark is a good match for your mission and vision . On the other hand, buying a random trademark that doesn’t suit your brand’s personality probably isn’t a great idea and probably wouldn’t be worth it. 

It’s also not worth spending money on a trademark from a poor-quality company, as customers’ negative sentiments about this company could hurt your business. You should also steer clear of trademarks with legal disputes, which could be transferred to you.  

How to buy a trademark

If you’ve decided to buy a trademark, you must first determine what kind of mark you need. Search USPTO and other trademark databases and choose a mark. The next step is to ensure the trademark has no legal dispute. After purchasing the trademark, you need to register it with the USPTO. 

While these steps seem straightforward, you must pay attention to many details. Here’s a closer look at the process: 

Step 1: Determine the type of trademark you need

A trademark is not just a catchy tagline or beautiful logo. It will be a significant part of your brand identity. The first step in buying a trademark is deciding what it should convey to your customers, like:

• Your brand’s qualities
• Type of goods or services
• Your brand’s vision or mission

Next, determine the attributes of the trademark you’re looking for. For example, you might want a short, fun name to convey your brand’s personality . Or you might need a phrase with a profound meaning. For a logo, determine the imagery and colors you’re looking for. 

Step 2: Search trademark databases

Next, review existing trademarks to find one that suits your business. The USPTO’s Trademark Electronic Search System (TESS) is the best place to start your search. You’ll find registered trademarks and applications in TESS. 

You should also search for existing trademarks in other sources, like:

• USPTO’s supplemental register
• Assignments on the Web (AOTW) 
• State trademark databases
• US Securities and Exchange Commission filings
• Amazon and other online selling platforms
• Domain names and social media handles

Searching for an existing trademark can be quite the time-consuming process. Hiring a law firm specializing in trademark search services may be a good idea.

Step 3: Assess the trademark and make an offer

After you find a trademark you’re interested in, check to see if any similar trademarks exist and are used in commerce. Legal disputes could arise if two or more businesses claim rights over a trademark. 

You also should check how the trademark has changed owners and if there are any ongoing issues with the previous owners. You can check the chain of ownership on the USPTO website. 

Next, ensure the trademark owner is currently using this trademark in commerce and has filed renewal and usage declaration forms with the USPTO. You might be able to get a trademark that isn’t in commercial use or that hasn’t been maintained for a cheaper price. Still, there is a risk of another business claiming it. 

“In the absence of clear documentation demonstrating how the [trademark] seller monitored and enforced its trademark rights, the buyer may be purchasing worthless trademarks,” says Alyssa J. Devine, CEO and founder at Purple Fox Legal, a business law firm.

It’s also good to check if the mark is a common law trademark . That means another business has the right to the trademark through common use, even if it hasn’t registered the mark with the USPTO. You may also want to search international trademark databases to check usage outside the US. 

After assessing the trademark, approach the current owner and start negotiating a deal to buy the trademark. 

Step 4: Create an assignment agreement

Trademarks are intellectual property just like other assets, such as real estate. So, after negotiating a price for the trademark, it’s time to execute a sales contract through an assignment agreement. 

When you buy a trademark, you buy not only that particular mark but also the common law rights and the goodwill associated with it:

• Common law rights: The rights to a trademark obtained through long-term usage 
• Goodwill: The inherent value of the mark that comes from the relationship consumers have with it and its earning power

The assignment agreement should include clauses to specify that the seller is transferring you the common law rights and goodwill along with the trademark. An assignment agreement could be complicated, so you might want a trademark attorney to prepare or review these documents.

Step 5: Record the assignment with USPTO

You should register the trademark with the USPTO after signing the assignment agreement. While it’s not mandatory, registering a trademark assignment in the Electronic Trademark Assignment System (ETAS) will give you the right to resell the trademark. 

You must complete the registration within three months of purchase. 

Before you register the assignment agreement using the ETAS, ensure you have the following information and documents ready: 

• The full name of the owner
• The name and address of the purchaser
• The serial number of the trademark property
• Sales documents

Tips for buying a trademark

Here are some tips for navigating the trademark purchasing process:

• Hire a trademark attorney to check the mark's validity and draft a sales contract
• Ensure the owner has maintained the mark
• The mark’s goods or services category should match your goods or services
• Conduct a thorough search to ensure the trademark is unique to avoid legal disputes
• Ensure your sales agreement transfers the common law rights, usage rights, and goodwill

Buying a trademark instead of applying for a new one might help you kick-start your business. But it comes with a lot of complexities and legal work. Seeking legal advice on your trademark purchase can make the process go more smoothly. 

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