Transferring A Trademark To A New Business Entity
In the United States, transferring the ownership of a Trademark is generally complicated, which is why the help of an experienced Trademark Attorney is crucial.
Why Transfer Ownership of a Trademark?In many ways, Trademarks (along with patents and copyrights) are treated similarly to other business assets. They can be transferred, sold, or even used as collateral for debts.
Transferring ownership of a Trademark from one entity to another, is not enough to transfer the registration or transfer the Trademark itself. Instead, Trademarks must be “assigned” via an Assignment of Rights, which must not only transfer the Trademark and the registration but must also transfer the goodwill behind the Trademark to be valid.
Transferring ownership of a Trademark involves two major steps:
- Documenting the Trademark transfer between the parties, and
- Documenting the Trademark transfer with the U.S. Patent and Trademark Office (USPTO).
Before you can document your Trademark transfer with the USPTO, you will need to create a Trademark Transfer Agreement, which lays out the terms of the transfer, including what specific rights are being assigned, payment terms, the USPTO registration number of the Trademark in question, and any representations and warranties from the Trademark’s current owner. Furthermore, the current owner represents the new owner that once owned all the rights to the Trademark being transferred. Additionally, they are not aware of pending claims against the Trademark or its use for commerce in the United States and have the authority to transfer the Trademark.
Your wants or need to transfer or acquire a federally registered Trademark, reasons may vary. For example, during a business acquisition or as part of a reorganization, Trademarks may need to be assigned to a different business entity. In this article, you will learn how to transfer ownership of U.S. Trademarks and why it is crucial to do it correctly, with the help of a skilled and experienced Trademark Attorney.
How Do I Transfer Ownership of a Trademark?Primarily, a trademark ownership transfer must include a transfer of the Trademark’s “goodwill.”
Essentially, the purpose of any Trademark is to represent aspects of the company that is using it. Trademarks can represent a company’s overall quality, customer service, and style, amongst many other things. A good Trademark generally represents the company’s ethos, its mission statement, and its connection with its customers. All of these elements are considered “goodwill” built by a company in a particular Trademark through its use, marketing, and advertising over time.
Therefore, Trademarks are more than just a piece of paper you file with the USPTO. The value of a strong Trademark is the recognition and goodwill that it has to customers and clients, regardless of the size of the business using it. When a Trademark is transferred to a new company, that goodwill must be transferred along with the Trademark, otherwise, it will not be valid.
What Happens When a Trademark is not Transferred Properly?When a Trademark, for any reason, is not properly assigned to the new company, the Trademark rights are immediately terminated and the new company will not be able to claim the rights dating back to the original company’s first commercial use of the Trademark. Additionally, if a company executes a Trademark transfer incorrectly, the USPTO will cancel any registration for the Trademark and the new company will need to start from scratch and re-apply as if it was a new Trademark, as – without the goodwill – it essentially is.
Are Asset Purchase Agreements Enough to Transfer a Trademark?When it comes to Trademarks, an Asset Purchase Agreement will typically not be enough to execute a proper Trademark ownership transfer to a new company.
The USPTO has specific requirements for the proper transfer of a registered Trademark; they will only accept a proper Trademark Assignment Agreement to “record” the transfer of a Trademark registration from one company to another.
Why Do I Need to Hire a Trademark Attorney?Trademark transfers are complicated and doing it properly involves dozens of crucial legal decisions. In Trademark transfers, the majority of issues are not discovered until a party seeks to defend or enforce its rights. However, at that point, it is usually too late. An experienced Trademark Attorney can help you identify red flags and avoid costly mistakes in the Trademark transfer process.