Sale of Trademarks

Because trademarks are items of property, they can be sold to another. The sale of a trademark, whether of a registered mark or one subject to a pending use-based application, is called an assignment and must be in writing. The written document must state that the goodwill symbolized by the mark is being assigned with the mark. An assignment that fails to assign the goodwill of the mark with the mark is ineffective to transfer trademark rights. The new ''owner'' does not capture the seller's or assignor's prior use date and begins his or her own date of use of the mark. The assignment document need not be in any special form and is usually less than one page. See Figure 5-2 for a sample trademark assignment.

An owner need not assign all its marks. For example, a company could assign a mark relating to its wireless communication device and retain other marks it owns relating to computer software for accounting purposes. If an entire business is sold, however, it is presumed that all of the marks and their goodwill are sold or assigned with the business.

Although common law rights to a mark, registered marks, and applications based on actual use of a mark are all assignable, intent-to-use applications generally are not assignable. If the mark is the subject of an intent-to-use application, it has not been used. If it has not been used, there is no goodwill attached to the mark. Thus, there is really nothing to be assigned, and the PTO wants to ensure that parties do not apply for marks merely for the purpose of stockpiling them and then selling them to others. An exception exists when the mark is being assigned to a successor of the business of the applicant to which the mark pertains if that business is ongoing and existing. In such a case, an intent-to-use application can be assigned.

Although there is no requirement to notify the PTO of the assignment, it is prudent to file or record the assignment document with the PTO. Fees are minimal ($40 for the first mark being assigned in a document and $25 for each mark thereafter) and a form (Form 1681A) is available for downloading from the PTO Web site at www.uspto.gov. Recording the assignment provides public notice of the ownership of the mark so that later purchasers are bound by the sale. Recording also allows the PTO to correspond with the correct owner and provides a chain of title of the mark so that when a renewal application or Section 8 Affidavit of Use is filed by the new owner, the PTO will accept it. For example, if an original registration issues to Gap Company and then Gap assigns the mark to Eddie Bauer Limited without recording the assignment with the PTO, Eddie Bauer Limited's renewal documents will be rejected because the PTO records will reflect that Gap is the owner of the mark.