Record That Trademark Assignment!
Trademark Assignment Recordation: Don’t Lose Your Rights
In previous posts, I discussed some of the technicalities, principles, and perils associated with licensing and selling trademarks. Once you get the assignment right, there is still one final formality that you should follow—trademark assignment recordation with the USPTO.
Why Record a Trademark Assignment?
The benefit of recording the assignment is that it can no longer be assigned to someone else. Additionally, if it was paid for with “valuable consideration”—i.e. real money—any prior unrecorded assignments will be voided by the recorded assignment as long as it was assigned without any notice of a prior assignment and is recorded within 3 months of the assignment.
How to Record an Assignment
Assignments can be recorded either through the Trademark Office’s Electronic Trademark Assignment System (ETAS), or by filling out a Recordation Form Cover Sheet (Form PTO-1594) and mailing it in. There is no charge to file electronically, but the current charge for recordation by mail is $50.00.
There is no proscribed form for the assignment, but by statute it must be in writing and duly executed. The assignment will be checked for accuracy by the United States Patent and Trademark Office (PTO) so make sure the information in the application matches the assignment document.
Why Trademark Assignment Recordation is Important
The recording statute is important for two reasons. First, when purchasing a trademark (or a business that owns trademarks), it allows the purchaser to know if the business can actually convey its trademarks in the sale. This should be part of the normal due diligence process when purchasing a business. Second, it protects against the trademark being sold to someone else.
While this may seem far-fetched, this tends to occur most often when businesses are sold, or placed into bankruptcy or receivership where the trademarks are then sold off by the bankruptcy trustee or receiver. Imagine the scenario where a floundering company sells off some if its trademarks, but the purchaser of the trademark fails to record the assignment. If the company that assigned the trademark later files for bankruptcy protection, those trademarks can become part of the bankruptcy estate and may be sold by the bankruptcy trustee. If the company that purchases the trademarks in bankruptcy records the assignment, it will have rights superior to the company that first bought the trademarks but failed to record its assignment.
Trademark assignment and ownership problems like this most often occur when a trademark is sold, and then the business that sold the trademark is purchased by another company that assumed it had the right to continue the business under the previously used trademarks.
Key Takeaways Regarding Recording Trademark Assignments
After the transfer of trademark rights, it is important to officially record the trademark assignment with the PTO because:
Prompt recordation of the assignment is the best practice to secure your rights to the assigned trademark and provide public notice;
Failure to record your assignment could result in the loss of your rights if someone else (an innocent purchaser for value) later acquires an assignment and records; and
There are no filing fees for electronic recordation.
For more insights on trademark assignment, see our Trademark Services Overview and Consumer Products Industry Legal Solutions pages.
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