What Is an Assignment of Trademark?

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
And more

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
And more

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.

Recording the Assignment with the USPTO

An Assignment of Trademark does not become effective against subsequent purchasers or mortgagees without notice until it is recorded with the USPTO. This is similar to the rule in real property law where an unrecorded deed is vulnerable to a subsequent bona fide purchaser. Under 15 U.S.C. section 1060(a)(4), a party who purchases a trademark for valuable consideration without actual notice of a prior unrecorded assignment takes the mark free of that prior assignment. Recording the assignment promptly is therefore critically important.

Assignments are recorded through the USPTO’s Assignment Center system. The recording fee is currently $40 per trademark registration or application number. The recorded assignment becomes part of the public record visible in any TESS or Assignment Center search. Failure to record does not void the assignment between the parties, but it leaves the transaction exposed to the subsequent-purchaser risk described above.

Assignments With and Without Goodwill

One of the most important rules in trademark assignment law is the requirement that an assignment must transfer the goodwill of the business associated with the mark. Under the assignment-in-gross doctrine, a trademark assignment that transfers the mark without its associated goodwill is void — it has no legal effect. Courts have interpreted goodwill broadly to include the business’s reputation, customer relationships, ongoing business operations, and the connection consumers make between the mark and the source of goods or services. A naked assignment — one that transfers the mark alone, with no business assets, customer relationships, or know-how — is unenforceable.

Practical Requirements for a Goodwill Transfer

To satisfy the goodwill transfer requirement, the assignment agreement should:

Expressly state that the assignment includes the goodwill of the business symbolized by the mark
Transfer associated tangible assets — customer lists, domain names, social media accounts, marketing materials — where possible
If the assignor will continue operating in the same industry, include a non-compete or field-of-use restriction
Ensure business continuity to minimize disruption to consumer relationships

Assignments as Part of Business Sales and Asset Transactions

Most trademark assignments occur in the context of a broader business transaction — an acquisition of a company, a sale of a product line, or a restructuring. The trademark assignment is one document among many, and the parties and their attorneys are often focused on the larger deal rather than on the nuances of trademark law. This creates real risk.

In asset purchase transactions, each trademark — identified by registration number — must be specifically listed in the assignment agreement. A general all-intellectual-property clause without specific identification of trademark registrations may not be sufficient to transfer registered marks. The purchasing party’s counsel should prepare a schedule of all trademark registrations and applications being transferred and verify that the list is complete against the USPTO records.

Trademark Licensing vs. Assignment: Choosing the Right Structure

Sometimes a business wants to monetize a trademark without permanently transferring it. In that case, a Trademark License Agreement is the appropriate vehicle. A license grants the licensee the right to use the mark under defined conditions while the licensor retains ownership. A critical requirement of any trademark license is quality control: the licensor must monitor and control the quality of goods or services sold by the licensee under the mark. Failure to maintain quality control creates a naked license, which — like an assignment in gross — can invalidate the trademark entirely. See FreecycleSunnyvale v. Freecycle Network, 626 F.3d 509 (9th Cir. 2010).

The Trademark Attorneys at Revision Legal have deep experience drafting and recording trademark assignments, advising on goodwill transfer requirements, and structuring trademark licensing arrangements. Contact us at (855) 473-8474 or online before you sign any assignment or licensing agreement.