Typically, trademark applications and registrations can be assigned in whole or in part. For general information on trademark assignments, see the web page entitled, Trademark Assignments, where important concepts such as the chain of title and recording an assignment are discussed. However, there are special rules for intent-to-use applications under §10 of the Trademark Act. The statute is referred to as the anti-trafficking provision of the Lanham Act, 15 U.S.C. §1060(a)(1). It specifically states:
[N]o application to register a mark under section 1051(b) of this title shall be assignable prior to the filing of an amendment under section 1051(c) of this title to bring the application into conformity with section 1051(a) of this title or the filing of the verified statement of use under section 1051(d) of this title, except for an assignment to a successor to the business of the applicant, or portion thereof, to which the mark pertains, if that business is ongoing and existing.
The policy behind the statute is to ban assignments of intent-to-use applications (prior to the filing of an Allegation of Use or Statement of Use), unless the application is assigned with the business associated with the mark. Assuming there is an ongoing and existing business, the assignee of the intent-to-use trademark application, must purchase the whole business (assets, business location if one exists, employees etc.) affiliated with the mark. If the assignment is held to be invalid, it will void the underlying application or registration under §10 of the Trademark Act. See Clorox Co. v. Chem. Bank, 40 USPQ2d 1098 (TTAB 1996).
The following factors will be considered when determining if the assignee is a successor to the business of the applicant, was there a transfer of the business and the good will of the trademark, is there continuity of management, is the assignee producing products or rendering services similar to the applicant, has there been a transfer of assets, and are there documents supporting these facts. The fact finder will look to determine if the assignment was part of a larger transaction between the applicant and the assignee. In the matter of Central Garden & Pet Company v. Doskocil Manufacturing Company, Inc., 108 USPQ2d 1134 (TTAB 2013) [precedential], this was part of the problem. An assignment was recorded with the Assignment Division of the United States Patent & Trademark Office (“USPTO”), but the assignment constituted the entire agreement between the parties, and was not part of a more significant transaction. In this case, the assignee was not the successor to the business of the applicant. In fact, the Assignor continued in the same business after the transfer, including producing and selling the same products branded with the mark that was the subject of the assignment.
See also, Railrunner N.A., Inc. v. New Mexico Department of Transportation and New Mexico Mid-Region Council of Governments, Opposition No. 91172851 (July17, 2008) [not precedential], where an opposition was filed with the Trademark Trial and Appeal Board (“TTAB” or “Board”) and Opposer challenged the assignment. The Board held that it was the responsibility of the applicant to provide documents demonstrating a transfer of part of the applicant’s business to which the mark pertains. The assignment document did not make a reference to a transfer of any part of the applicant’s business, and the record did not contain any documents showing a transfer of the applicant’s business or a portion thereof. In this case, the Board simply could not envision a transfer of a railroad business with its corresponding assets and liabilities, absent written documents.
See Philip Restifo v. Power Beverages, LLC, Opposition No. 91181671 (TTAB Sept. 21, 2011) [not precedential], where the Board held that §10 of the Trademark Act was not violated by an assignment of an intent-to-use application. The Board held that licensing a third party to manufacture and distribute the branded goods qualifies as an ongoing business. In addition, the applicant assigned all rights he had in his company to the assignee and relinquished his personal interest in the business demonstrating that the assignee was a successor to the business. There were also two independent agreements showing a larger transaction between the parties in this case.
Trademark attorneys must take care in counseling applicants filing intent-to-use applications because of these special rules. If an applicant has not filed an Allegation of Use or Statement of Use at the time it would like to assign an intent-to-use application, it may consider licensing the use of the mark to the prospective assignee. A written trademark license should be negotiated and prepared. Then the use of the trademark by the licensee entity can form the basis for the applicant filing either an Allegation of Use or a Statement of Use. Once the proof of use is filed, then the assignment can occur. It is important to consult with trademark counsel, before assigning a mark. If you have questions pertaining to trademark assignments, please contact the firm for a courtesy consultation.