A trademark is valuable property. As such, trademarks can be used in the same manner as other property. As examples, trademarks can be sold, can have more than one owner, be transferred, given as collateral for financing, be the subject of estate planning, and more. When a trademark is sold or transferred, the legal term is “assignment.” In general, to validly assign a trademark, three steps should be taken:

• Preparation and signing of a written Assignment of Trademark — both assignor and assignee should be signatories; this document can be seen as analogous to a Deed with respect to real estate transactions
• Recordation of the Assignment with the United States Trademark Office (with a copy of the Assignment attached) — similar to how a property Deed is recorded at the County Recorder’s Office after a real estate purchase
• Where the trademark is associated with certain products/services, the Assignment should explicitly transfer the goodwill associated with the trademark, the associated goods/services, and the assignor’s business

Note that a trademark assignment is a permanent transfer of trademark rights. If the transfer is intended to be for a set length of time, then the proper document is a trademark license. For example, a license structure is typical for franchise/franchisee relationships.

Partial assignments of trademark and extra legal steps

Often, trademark assignments are complete or whole. That is, all rights are transferred. Business mergers, acquisitions, and/or restructuring are common situations where assignments are complete.

Partial assignments are also common. With partial assignments, the owner/assignor transfers only part of the full “bundle” of rights and/or only defined aspects of the trademark to the assignee, such as the rights to the trademark for a subset of goods or services associated with the trademark. Note that, according to Trademark Office rules, trademark owners cannot use partial assignments to impose geographic restrictions. If a geographic restriction is desired, then the proper legal procedure is to obtain a concurrent use agreement through proceeding before the Trademark Trial and Appeal Board.

Partial assignments are subject to the same three requirements as set forth abov,e including the recordation requirement. However, when ownership of a trademark is divided in this manner, the best practice is to also file a separate Request To Divide with the Trademark Office. This request will create “parent” and “child” registrations, with ownership information being made available publicly. Current and correct ownership information is necessary so that the Trademark Office can properly administer trademark registrations.

Finally, the new part-owner of the trademark must understand its obligations with respect to the renewal and maintenance of the trademark. All owners must file the necessary renewal applications, pay the required fees, and file the required affidavits of continued use or excusable nonuse. If a part-owner fails to file the renewal documents, then the trademark will lapse as to those goods/services in the registration that were not properly renewed.

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.

When Partial Assignments Are Appropriate: Common Business Scenarios

Partial trademark assignments arise in a variety of business contexts. Understanding when they are appropriate — and when a different structure is preferable — helps businesses make informed decisions about how to structure transactions involving trademark rights.

• Spin-offs and business unit separations. When a company spins off a division that operates under a subset of the parent company’s trademark portfolio, a partial assignment can transfer the marks associated with the spun-off business while the parent retains rights in marks associated with its remaining operations. This is common in corporate restructuring and divestitures.
• Product line sales. A company that sells a product line — but not the entire business — may partially assign the trademark associated with that product line to the buyer while retaining the mark for use with other products. The APA must define the scope of the assignment carefully to avoid disputes about which products the assignee can sell under the mark.
• Joint ventures. In some joint venture structures, one party contributes trademark rights for a specific field of use to the joint venture while retaining the mark for other uses. This is a form of partial assignment that requires careful drafting of the assignment document and the joint venture agreement to ensure that the respective rights of each party are clearly defined.
• International vs. domestic rights. While the USPTO does not permit partial assignments that impose geographic restrictions within the United States, it is possible to assign a U.S. trademark registration while the assignor retains rights in foreign trademark registrations for the same mark in other countries — or vice versa. These transactions require careful coordination of both the U.S. assignment and any applicable foreign assignment procedures.

The Assignment of Goodwill Requirement

One of the most important legal requirements for any trademark assignment — partial or complete — is that the assignment must transfer the goodwill associated with the trademark. Under the Lanham Act, 15 U.S.C. § 1060, an assignment of a trademark that is not accompanied by the goodwill of the business in which the mark is used results in an invalid “assignment in gross” — a transfer of the mark without the associated business identity that the mark represents. Such assignments are void under U.S. trademark law.

In a partial assignment, the goodwill transfer requirement means that the goodwill associated specifically with the goods or services for which the trademark is being assigned must transfer along with the mark. The assignment agreement should explicitly identify the goods or services covered, the goodwill associated with those specific goods or services, and any business assets (customer lists, manufacturing processes, recipes, formulas) that embody that goodwill and are being transferred as part of the assignment.

Courts and the USPTO have scrutinized goodwill transfer language carefully. A boilerplate recitation that “all goodwill appurtenant to the mark is hereby assigned” without more may be insufficient where the parties’ conduct suggests that no meaningful goodwill actually transferred — for example, where the assignor continues to use the mark in commerce as before and the assignee has no established connection with the goods or services in question.

Post-Assignment Brand Management: Avoiding Trademark Abandonment

A trademark can be abandoned if its owner discontinues use with an intent not to resume use. Under 15 U.S.C. § 1127, three consecutive years of non-use creates a rebuttable presumption of abandonment. In the context of a partial assignment, both the assignor and the assignee must ensure that the mark continues to be used in commerce for the goods or services covered by their respective portions of the trademark rights.

After a partial assignment, the USPTO will create “parent” and “child” registrations as described above. Both registrations are independent — each must be separately maintained through the filing of timely Section 8 declarations of continued use and Section 9 renewal applications. If the assignee ceases to use the mark for the assigned goods or services and fails to file the required maintenance documents, the child registration will be cancelled — without any effect on the parent registration held by the assignor.

Where the partial assignment results in two parties using the same or similar mark in the market — even for different goods or services — there is a potential for consumer confusion. Businesses in this position should consider whether a quality control agreement or brand guidelines document is appropriate to ensure that the respective uses of the mark remain consistent with the established brand identity.

Concurrent Use Proceedings: When Geographic Divisions Are the Goal

As noted, the USPTO does not permit partial assignments to divide trademark rights along geographic lines within the United States. The appropriate mechanism for achieving geographic division of trademark rights is a concurrent use proceeding before the Trademark Trial and Appeal Board. In a concurrent use proceeding, two parties who are both using the same or similar trademark in different geographic territories can petition the TTAB to grant each party a registration limited to their respective geographic area.

Concurrent use registrations are relatively rare and the proceedings are administratively complex. However, where two businesses have legitimately coexisted using the same trademark in different regions for many years — a situation that often arises when a small regional business and a larger national company have both been using the same mark without prior knowledge of each other — a concurrent use registration may be the only path to stable, legally recognized trademark rights for both parties.

Contact the Trademark Attorneys at Revision Legal

Trademark assignments — whether partial or complete — require careful legal execution to be valid and enforceable. The Trademark Attorneys at Revision Legal handle trademark assignments, recordation with the USPTO, Request to Divide filings, concurrent use proceedings, and trademark portfolio management for businesses of all sizes. Contact us through the form on this page or call (855) 473-8474.