confirmatory trademark assignment

• Ten Questions about Confirmatory Assignments

1. Depending upon the applicable IP rights and related law of contract of the jurisdiction, to what extent can an unwritten agreement validly assign IP rights? 2. Assuming that an unwritten assigment is valid, what is the evidentiary showing that is required? 3. Can one record an unwritten assignment on, e.g., the appropriate patent or trade mark registry? If so, what proof is required? 4. Is the evidentiary showing different in connection with establishing the validity of the assignment in the context of a transaction? 5. How can a purchaser receive sufficient comfort about the validity of the assignment, or is it a matter of risk allocation depending upon the positon of the parties? 6. Does the standard of evidence to establish an unwritten assignment differ once again in the context of a court proceeding? 7. Does the standard of evidence to establish an unwritten assignment differ yet again iin the context of taxation? 8. Is a confirmatory assignment a form of ratification? 9. If it not a form of ratification, what is the proper legal characterization for the agreement? 10. In light of all of the foregoing, does the confirmatory assignment confer any benefit to the parties, other evidentiary or substantive?

13 comments:

Confirmatory assignments are frequently used where a written assignment already exists, but the parties do not want to disclose that document because it contains sensitive information (e.g. payments, etc.). In addition, they are often used to confirm an 'automatic' assignment (e.g. from an employee to his/her employer). The latter may be useful, for example, when submitting a US application with UK inventors.

In the United States, this is a statutory question: "Applications for patent, patents, or any interest therein, shall be assignable in law by an instrument in writing." 35 USC Section 261. Your questions are far more interesting as applied to licenses or servitudes more generally. Based on hundreds of years of common law, one would imagine that all personal property, including patents, would require encumbrances to be publicly recorded for them to be enforceable on subsequent purchasers for value without actual notice. In fact, equitable servitudes on personal property were not enforceable at all at common law. As far as I can tell, patents present a unique exception to this history. For that reason I have wondered whether it is fair even to call patents property -- despite their being deemed so by statute. On my view, this is the most underappreciated obstacle to the emergence of a healthy market for patents. Lemley and Myhrvold suggested years ago a solution to the problem -- namely, of requiring the public disclosure of all assignments and licenses. That seems to have gone nowhere thanks to an incomplete understanding by current stakeholders of how such a transition would result in an entirely new market equilibrium, or at least to the general desire for incremental rather than radical changes to the status quo.

Confirmatory assignments are commonly used to record assignments in writing where the commercial terms of an assignment are to remain confidential. I cannot think of many instances where I would be happy to rely on a written confirmation of an unwritten assignment. It is my understanding that in most common law countries an assignment must be in writing for it to be legally effective, otherwise at best your unwritten assignment may only transfer an equitable interest in the relevant IP. A type of assignment document I have occasionally seen and used is the assignment that is both operative and confirmatory. In other words, "I confirm that I assigned, but if that assignment wasn't legally effective for any reason then I hereby assign". It isn't ideal, but sometimes it's the only way to fix a break in the chain of title when you really don’t think you can rely on that unwritten assignment.

3. Can one record an unwritten assignment on, e.g., the appropriate patent or trade mark registry? If so, what proof is required? Yes, that is possible in certain jurisdictions. At the most you would need a date of assignment and particulars of the assignee and the assignor. The relevant forms necessary to record the assignment are prepared by the agents and signed on behalf of the assignee. Example, Singapore

Rob hit the nail on the head. They are used to simplify matters in circumstances where the parties may have been better to have signed short-form agreemnts. A party will often not want to disclose a document with all of the juicy commercial terms, so a confirmatory assignment may be used. A final (arguably erroneous) use may be where a party has, to settle a matter, assigned a CTM under cover of a letter or unilateral agreement signed only by the owner. In the case of a CTM, the assignment has to be signed by both parties to be valid. Therefore, whilst the mark may be assigned in the head of the previous owner, something more needs to be done to validly assign. Arguably the follow-up is not confirmatory in those circumstances, but I've seen the document that followed described as confirmatory.

Associated with the issue of confirmatory assignments is the issue of assignment documents with a purported "effective date" earlier than the date of execution of the document. In jurisdictions where rights in an application can only be assigned in writing, the writing requirement was then not fulfilled as at the "effective date". This may be particularly important in relation to priority claims.

I have seen such Confirmatory Assignments used as evidence supporting a transfer request before the EPO, but it wasn't my job to question them even though the whole procedure looked quite fishy to me. Once upon a time there was a nice little company A which got gobbled by company B. One year later, company B was in turn purchased lock, stock and barrel by company C. A, B and C were in three different countries. A's European representative kept prosecuting the EP cases, but only bothered to file a transfer request when a given application was just about to mature into a grant, providing in most cases a confirmatory assignment drafted by an US notary public as evidence. The document stated that A's IP was transferred to three entities Ca, Cb and Cc, which are all presumably 100% subsidiaries of C. I infer that the applications are jointly owned by all three companies. The assignment is signed by Ca, Cb and Cc's officers as well as the notary. The document couldn't have been signed by A's officers, since A did not exist anymore at that point. There is no mention whatsoever of company B either , so the document did not describe what actually happened, since A could never have dealt directly with C. The representative's cover letter only requests transfer to company Ca, leaving Cb and Cc out of the picture, and Ca is the only name entered in the EPO's register. I googled up a bit and I found out that B wrote in its ultimate annual that it now owned all of B's IP, and C later stated in its own annual report that B's IP was now located in yet another subsidiary Cd, different from Ca, Cb or Cc. In one case the Umschreibestelle questioned the confirmatory assignment in that in only bore the signature of one of the parties. The representative adamantly replied that the assignment should be taken at face value and that's it. The EPO did not insist, and took down the transfer - in Ca's name only. In one of the applications this examiner was bone-headed enough to be minded to consider a refusal, prompting the representative to file a "divisional" application in order to keep the show going. The weird thing was that the "divisional" was in A's name, even though it no longer existed for years. The new application was eventually abandoned, so all the interesting questions which arose did not need to be answered. From the preceding, I think I'd start kicking and yelling about who actually owns a patent (and thus entitled to initiate action) if I were ever dragged before court in an infringement action where a confirmatory assignment was involved. The standard for proving a transfer of rights appears to be much lower as to the right to transfer of an opposition. A confirmatory assignment may appear a practical shortcut, but it could be a false saving. As to the argument that a confirmatory assignment can keep details secret, I don't think they're worth the risk either. I've seen IP sale contracts accepted as evidence for a transfer before the EPO where more black ink was poured to obscure passages than the CIA ever used when declassifying a document. BTW, one of these contracts involved yet another of C's subsidiries transferring its IP to numbered entities conveniently located in tax flexible territories.

Thanks for all of your great comments. In one off-site communication on the topic yesterday, I suggested that confirmatory assignments are among the "dirty little secrets" of IP practice. She wrote back that in fact they are the "dity little not-so-secrets" of IP. I suspect that we are both right.

Something that does not appear to be widely appreciated is that the box for the date of agreement on EPO Form 1002 is provided for the convenience of the applicant only, there being no requirement in the EPC to provide a date. I have often filed forms with no date where the information was not available, and no objection has ever been raised. I have only seen this explicitly stated in the answer to question 80 in Dr. Günter Gall's classic book for EQE candidates "European & International patent applications: questions and answers" [ISBN 0-85121-555-6; 1989 edition]. Dr Günter Gall was a Director of the EPO and evidently wrote with authority. I have had more knowledgeable inventors query the appropriateness of signing any sort of assignment of rights that he doesn't own because the invention belongs to the employer by virtue of UK law, and have then had to explain the USA [for example] doesn't recognise this aspect of UK law. Such assignments made in respect of a first filing are certainly useful when subsequently filing in the USA if the inventor is no longer contactable or become uncooperative, eg due to imminent redundancy.

Anonymous' knowledgeable inventors have a point, and this has always been my rationale for obtaining confirmatory assignments. It must surely be a fundamental principle that one cannot assign what one does not own, so a written assignment from an employee to an employer that already owns the invention by terms of a contract of employment must surely be void. The problem is not solved by writing the employment contract in such a way as to place the employee under an obligation to assign, because a subsequent assignment to another party, while being a breach of contract, will not necessarily enable the invention to be reclaimed by the employer (see, eg Stanford v Roche 583 F.3d 832 (Fed. Cir. 2009). As I understand it, the US law relating to employee inventions is basically the common law. The issue is not that the USPTO will not recognise that the employer owns the invention, rather it is the specific requirement that the inventor assign the rights reflected in the particular patent application, ie that a suitable assignment cannot be completed until the inventor has the actual filed specification and claims before her. A general assignment of the invention, and all notional future rights, will not suffice for this purpose. However, an assignment of a PCT application designating the US is fine (although it may take a little effort to persuade the USPTO to accept a document that is not in its standard form). An unavailable or uncooperative inventor remains problematic even if you have a suitable assignment document, because the USPTO cannot accept the filed application until it has an inventor's declaration, or a petition has been granted to allow the application to be accepted without the signed declaration. Though not a US attorney, for my sins I have found myself with clients in this situation, and it can be a lot of work to resolve.

"This and the related topic of failure to agree or document assignment of IPRs arise all too frequently. I have been faced with the challenge of "I paid, so I own" throughout my career. Here are 10 thoughts on this topic: 1. No one should believe that the law will come to their rescue if they do not document a written assignment and have it signed by the assignor and the assignee. 2. Assignments of IPRs are a perfect example of lack of global harmonisation. There is huge discrepancy between national laws as to what formalities are required - few require more than a written assignment signed by both parties. 3. The greatest density of disputes is between consultants and the corporations who hire them. The expectation is that IPRs in the "work product" automatically transfer. Big mistake. 4. English law enjoys equity, and can be persuaded to find an intention to assign (aka an equitable assignment). Hoping for this result is a lottery. In other parts of Europe, the odds are worse. 5. The position is not as random within an employee/employer relationship, because generally the first owner is the employer. However, at the edges ("course of employment") it is well worth documenting the position. In this context, do not assume that ownership is the end of the matter. Always think about attribution issues (such as moral rights) and economic reward (for exceptional contribution). 6. Failure to document the IPR position is statistically likely to create a significant commercial issue downstream. I have personally seen IPOs delayed, joint ventures stall and tens of disputes that frustrate and delay commercial exploitation. 7. The consolation prize in an ownership dispute is typically a licence. Within this one word, is a world of pain as the parties debate scope (field of use), term (for a project to perpetual), ambit (exclusive to non-exclusive), not to mention royalty. So whilst ownership is undoubtedly first place, bottom of the class will not get much at all. 8. Banks and investors still struggle to understand and value IPRs in the same way as tangible assets such as property and stock, so they scare easily. If chain of title and ownership is not clear, expect them to have significant concerns in all other areas such as validity and infringement. 9. Joint ownership looks like a good compromise. Normally it isn't. There is no global uniformity on the rights conferred on joint owners - and even within a jurisdiction it's different between the various IPRs. 10. Which means that I'm normally just so relieved to receive a confirmatory assignment, that I seldom have the energy to think about Neil's 10 questions - but now I will!"

Many interesting comments on assignments. Here is a further related issue, perhaps basic compared to a confirmatory assignment under the original fact pattern. Assume the inventor has executed an assignment to her employer for a US provisional patent application that includes assignment of all later applications, using standard language regarding assigning international applications, US, non-US applications. The assignment properly assigns the right to claim priority. Then a PCT application is timely filed that claims priority to this provisional. The PCT application includes new disclosure in the specification, including new examples, and new claims. Is a second assignment needed or does the assignment of the provisional suffice? For all jurisdictions? If a new assignment is needed, how is it worded to avoid the issue of 're-assigning' what has already been assigned in the provisional assignment? Seems one can only assign rights one has not already assigned away.

In answer to the last comment, yes, a new assignment is needed. An assignment has to relate to an invention, and if that invention is new, it cannot have been previously assigned. Equitably, yes, but then we argue over whether the new invention is actually covered.

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IP Assignments: Nunc Pro Tunc Assignments in Patent, Trademark, and Copyright Law

by John DiGiacomo

Like any valuable business asset, patents, trademarks and copyrights can be sold, assigned and licensed. Indeed, assignment and licensing is common with respect to intellectual property. In legal terms, an “assignment” is a transfer of ownership, either full ownership or partial. In basic terms, a nunc pro tunc is a type of assignment that is backdated. Nunc pro tunc is Latin meaning “now for then.”A nunc pro tunc assignment will be signed on a particular date, but parties will deem the assignment to have been granted on some earlier date.

For a Trademark registered on May 1, 2017, an example of how a nunc pro tunc assignment provision might look like this:

Now, therefore, for good and valuable consideration, ASSIGNOR agrees that ASSIGNOR hereby assigned unto ASSIGNEE nunc pro tunc effective as of October 1, 2020, all right, title and interest in and to the May 1, 2017 trademark described herein … In testimony whereof, ASSIGNOR, has signed this instrument this 1st day of October 2020.”

In this example, the assignment is deemed to have been granted on May 1, 2017, but has an effective date of October 1, 2020.

In business terms, nunc pro tunc assignments are often used where past IP assignments are made verbally or via conduct. In the rush to get IP “to market,” it is not uncommon for assignments to be granted, but not reduced to writing. Nunc pro tunc assignments are also commonly used to bridge gaps in the “chain of title” for IP. This can happen when corporations and/or assets are sold, but proper paperwork is missing. Purchasers believe that they have ownership to certain patents, trademarks, or copyrights, but the missing documents cause “gaps” in the chain of title. These “gaps” can be cured by obtaining a nunc pro tunc assignment from the original owner of the IP. In the same manner, nunc pro tunc assignments are often used as part of settlements for litigation involving claims of patent, trademark and/or copyright infringement or disputes over ownership

For litigation purposes, nunc pro tunc assignments are often used to give a party legal standing to initiate litigation. To have “standing” to initiate litigation, a party must have some ownership interest in the patent, trademark or copyright. However, for courts, “standing” is based on the effective date of the assignment, not the earlier date listed in the nunc pro tunc assignment.

However, for other purposes, the earlier assignment date listed in the nunc pro tunc assignment is the credited date. For example, an assignment of a registered trademark must be recorded with the US Patent & Trademark Office (“USPTO”). This is done electronically. The assignment must be uploaded along with the proper recordation form and applicable fee. For the USPTO, the trademark assignment is based on the date designated for the assignment rather than the date of execution of the nunc pro tunc assignment.

So, when should you use a nunc pro tunc assignment for a trademark? The most common situations include:

• When a trademark was previously assigned but not recorded – Sometimes, an assignment of trademark ownership may occur but the paperwork is not properly filed or recorded with the United States Patent and Trademark Office (USPTO). In this case, a nunc pro tunc assignment can be used to correct the oversight and retroactively assign the trademark to the new owner.
• When the original assignment was not effective – A nunc pro tunc assignment can also be used to correct a defective assignment. For example, if the original assignment was not properly executed or lacked essential terms, the nunc pro tunc assignment can be used to correct those issues and make the assignment retroactively effective.
• When there is a change in business structure – A nunc pro tunc assignment may be necessary when there is a change in the business structure of the trademark owner, such as a merger or acquisition. In this case, the new owner may need to retroactively assign the trademark to themselves to ensure that they have proper ownership and control over the trademark.
• When there is a dispute over ownership – If there is a dispute over the ownership of a trademark, a nunc pro tunc assignment may be used to resolve the issue. This can occur when multiple parties claim ownership of a trademark, or when there is confusion over who actually owns the trademark.
• When the trademark was abandoned – In some cases, a trademark may have been abandoned by the previous owner. If this occurs, a nunc pro tunc assignment may be used to assign ownership to the new owner retroactively. However, it is important to note that there are strict time limits for filing a nunc pro tunc assignment in these cases.

It is important to note that a nunc pro tunc assignment should only be used when there is a genuine need to correct an error or oversight in the assignment of a trademark ownership. It is not a tool to be used to cover up illegal or unethical behavior.

In addition, a nunc pro tunc assignment can be a complex legal process that requires the assistance of an experienced trademark attorney. The attorney can help ensure that the assignment is executed properly and in compliance with all legal requirements.

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Trademark Assignment

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Home » Trademark Assignment

A trademark assignment transfers all rights in a trademark to another party.  Registering trademarks with the U.S. Patent and Trademark Office (USPTO) offers several rights, and one of those is the ability to record a trademark assignment.

When considering the transfer of any trademark though, it’s important for both parties to have a sound understanding of the legal implications. Failure to properly execute an assignment could result in disagreements over ownership, exposure to litigation, and other adverse outcomes.

What is a Trademark Assignment?

A trademark assignment transfer all rights, title and interest in a trademark to the recipient.  Around 20 percent of trademarks registered with the USPTO will at some point be transferred in this manner. Once complete, the original owner no longer has a legal interest in the trademark. Both parties may benefit from these agreements since the assignor typically receives a payment and the assignee takes control of a valuable piece of intellectual property.

If you’ve secured trademark registration from the USPTO, you’ll need to record the assignment. This will provide public notice regarding the transfer of ownership. This should be done within three months following the assignment date. This creates prima facie evidence of the transfer. The USPTO does not accept Asset Purchase Agreements as evidence of an assignment.

Trademark Assignment Agreement

When ownership of a trademark is being transferred, it’s important to have a written trademark assignment agreement.  A properly crafted contract can protect all parties involved. The USPTO will also not consider agreements to transfer trademarks valid unless they’re in writing.

The following qualifications should be met at a minimum:

• All involved parties – the assignor and assignee – should be identified.
• The trademark being assigned should be identified along with relevant ownership information (e.g. registration number).
• Consideration must be listed (i.e. what each party is receiving).
• List the effective date of the transfer.
• Contract must be duly executed.
• Trademark goodwill must be specifically transfered.

These minimum requirements will typically ensure that the transfer assignment agreement is valid and holds up in court. The onus of creating a valid contract is on the assignor and assignee. Including information regarding payment of the transfer fee and how disputes between the two parties will be handled is also recommended.

Trademark Goodwill

Trademarks are valuable pieces of intellectual property, and this value comes from their inherent goodwill. Trademark goodwill is the positive associations and feelings that the trademark creates in the consuming public.  It is an intangible asset that is linked to the consumer recognition of a brand.

Any trademark assignment must explicitly state that all goodwill is also being transferred. Each transfer is unique and could result in differences in a final contract, but every valid assignment must contain language signifying transference of goodwill. The agreement will otherwise be viewed as an “assignment in gross” and could cause the loss of trademark rights.

Assignments involving both common law trademarks and those registered with the USPTO must include a transfer of trademark goodwill. This is what inherently makes a brand identifier valuable. The importance of this element of assignment relates to consumer trust.  The source of a product/service should match what a consumer was led to believe.

Reasons for Trademark Assignments

Even though a trademark is seen as one of the most valuable assets a business can own, there are a variety of reasons why a trademark assignment may be desired. These are just a few of the reasons behind trademark assignments:

• Business changes : An assignment may be required if a business owner forms a new entity or dissolves an old one.
• Sale of business : A trademark owner may decide to focus on a different business or retire.
• Manufacturing or Marketing costs : A trademark may become more valuable to another party due to manufacturing or marketing costs.

There are many reasons why a brand owner may choose to assign their trademark to a third party. These transfers are permanent when properly executed. This makes it important for registrants to understand all implications. There are other options available – such as licensing agreements, discussed further below – if a trademark owner wants to maintain some control over the trademark.

Before Taking Ownership

Most of the focus on trademark assignments rests on assignors, but those taking ownership of a trademark have many considerations as well. In addition to the rights they’re gaining through the transfer of ownership, they’re also taking on the risks and responsibilities of owning a trademark. Assignees should consider all the following concerns before finalizing an agreement:

• Reputation of brand : Purchasing a trademark is essentially purchasing the reputation of a brand. If consumers do not view a trademark favorably, you’ll have a difficult time changing their minds.
• Confirm ownership : Performing a thorough trademark search prior to entering an agreement is essential. This will confirm ownership and give you an idea of whether trademark disputes may arise in the future.
• Intent-to-use identifiers : Trademark assignment involving Intent-to-Use Trademarks must meet specific criteria. If an identifier is not yet in commercial use, the assignment must be to a business successor.
• Potential disputes of ownership : If proper documentation is not recorded with the USPTO, the assignment could be deemed invalid.
• Third-party disputes : Failure to properly transfer ownership can also leave the assignee open to claims of trademark infringement from third parties.
• Transfer of trademark goodwill : Always make sure trademark goodwill is explicitly transferred in the assignment agreement.

The moral here is to always perform due diligence before taking ownership of another party’s trademark.

Trademark Assignment with the USPTO

To ensure appropriate transfer of ownership, a trademark assignment must be recorded with the USPTO. This is done through the Electronic Trademark Assignment System. In addition to uploading your Transfer Assignment Agreement, you must complete an online form and pay the respective fees. Failure to do so will harm assignees in future litigation and prevent them from renewing the trademark .

When filing a trademark assignment with the USPTO it must be accompanied by a Recordation Form Cover Sheet. This lists the basic required information for transferal. The USPTO typically processes assignments within a month or two and then they become public record.

Nunc Pro Tunc Trademark Assignment

Not all assignments of trademark rights are immediately put into writing. This creates unnecessary risks for both parties. In these situations, a nunc pro tunc trademark assignment can retroactively document the transfer of ownership. Nunc pro tunc is Latin for “now for then,” so it serves as evidence of when an oral agreement was reached between the assignor and assignee without being put in writing.

This written document can be filed with the USPTO, but unlike a traditional assignment, it’s effective from the date of oral assignment rather than the date of execution.  Documenting assignments after the fact is definitely not a best practice and can lead to many issues.  It is however the only way to try to fix an error that has occurred in the past.

Trademark Licensing

Assigning ownership of a trademark isn’t necessary to grant certain rights. Trademark licensing can give third parties permission, for instance, to use a trademark without the original owner relinquishing rights. This is the type of business relationship that exists for more than 900,000 franchised business establishments across the country.

The owners of trademark registrations typically strive to prevent outside parties from using their intellectual property. By licensing use to certain brands or individuals, though, they garner a variety of benefits. These may include gaining expertise, assistance in shouldering the burden of a growing business, increased brand recognition, creation of a passive revenue source, and expansion into new markets.

The three basic types of trademark licensing agreements are exclusive, sole and non-exclusive.  An exclusive license means that the licensee has the exclusive ability to sell the goods or services at issue.  A sole license means that the licensee has the right the sell the goods or services but the right is shared with the licensor.  A non-exclusive license means that the licensor retains the right to license the trademark to other third parties and continue to sell the goods or services themselves.

Licensing agreements should always be in writing and preferably they should be notarized.  Failing to have a license agreement in writing will lead to many issues if trademark litigation or other disputes arise. Having the agreement notarized will also reduce the likelihood of disputes over the validity of the license.

The agreements used for trademark licensing and assignment have some similarities, but there are important distinctions. Licensing documents, for example, should include quality control provisions, the type of license granted, the effective dates of the license, and any specifications regarding the renewal of the agreement. These terms are typically not part of assignments.

If you are considering a trademark assignment, please do not hesitate to contact us with any issues or questions that you may have.

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Assignments overview and pitfalls to beware!

03 December 2012

Many patents will see a change in ownership at some stage in their lives. Assignments are commonplace and occur for a variety of reasons; for example, in the context of a business sale where a buyer purchases all of the assets (including intellectual property assets) of a business from the vendor. Another is in the context of intra-group reorganisations.

Assignments can also occur as part of settlement of a dispute. This article outlines some of the pitfalls of which you should be aware when assigning patents; many of which can be averted by careful drafting of the assignment agreement.

Unless the assignment is intra-group, there will usually be some distance between what the assignee wants (typically, a variety of representations, warranties and indemnities in respect of the assigned rights) and what the assignor is prepared to give. This is a commercial decision and hence no two negotiated patent assignments will be identical.

Consideration

Under English law, to be a valid contract there must be consideration which is either money or money's worth. This is often overlooked but a key point required for the assignment agreement to be legally binding. Whilst the acceptance of mutual obligations may suffice, it is simplest to have a sum of money (even if only for £1). An alternative is to execute the assignment as a deed, though there are specific formalities which must be followed for the agreement to be a deed. Of course, if the parties agree to nominal consideration (eg, £1), it is important that this small amount is actually paid to the assignor.

An assignment of a UK patent (or application) must be in writing and signed by the assignor. It used to be the case that an assignment of a UK patent (or application) would need to be signed by both parties, however the law was changed in 2005. In reality, both parties will usually sign the assignment agreement. Where one or both of the parties is an individual in their personal capacity or a foreign entity, special 'testimonial' provisions are required; for example the signature to the assignment may need to be witnessed.

The assignment

English law distinguishes two types of assignment: legal and equitable. To assign the legal interest in something means that you have assigned simply the title to that property and not the right to exercise the rights inherent in it. This is the equitable (beneficial) interest and if this is not also assigned with the legal title, this can result in a split in ownership. Unless the parties specifically agree otherwise, legal and beneficial ownership should always be assigned together. It is possible to have co-assignees (ie, co-owners) but the terms of the co-ownership will need to be carefully considered.

It is possible to assign the right to bring proceedings for past infringements in the UK, but not in some other jurisdictions. Where non-UK rights are involved, local advice may be required as to whether such an assignment would be enforceable as against a prior infringer. This potential uncertainty makes a robust further assurance clause even more desirable (see below), to ensure the assignor's co-operation after completion of the assignment.

The assignee will also typically argue for (and the assignor will typically resist) a transfer with 'full title guarantee', as this implies as a matter of law certain covenants: that the assignor is entitled to sell the property; that the assignor will do all it reasonably can, at its own expense, to vest title to the property in the assignee; and that the property is free from various third party rights.

In terms of European patents (EP), it is important to remember that ownership of an EP application is determined under by the inventor/applicant's local law, rather than under European patent law. This means that a formal, written assignment agreement should be executed to ensure that the applicant is entitled to ownership of the patent application, for example in cases where the work undertaken was done by a consultant or where local law dictates that the owner is the inventor(s). An assignment should include assignment of the right to claim priority, as well as the right to the invention and any patent applications. This need to obtain an effective assignment of the application (and right to claim priority) is particularly important where a priority application has been made in the name of the inventor. If such an assignment is not executed before applications which claim priority from earlier cases (for example, PCT applications) are filed, the right to ownership and/or the right to claim priority may be lost.

Don't forget tax

Currently, there is no stamp duty payable on the assignment of intellectual property in the UK. However, particularly for assignments which include foreign intellectual property rights, there can be considerable tax implications in transferring ownership of intellectual property rights in some countries and it is always prudent to check that the transfer will not result in excessive tax liabilities for you.

Update the register

Registered rights need to be updated at the patent offices. You will need to decide who pays for this: in the case of one patent, it is a simple process, however in the case of a whole portfolio, the costs can be considerable. Remember, if you ever need to take any action on a patent you own, you need to ensure you are the registered owner of that right at the applicable office.

In the UK, assignments can be registered but there is no statutory requirement to do so. In the case of international assignments, local offices may require recordal of the assignment. In any event, it is desirable for an assignee to ensure that the transaction is recorded. Section 68 of the UK Patents Act provides that an assignee who does not register the assignment within six months runs the risk of not being able to claim costs or expenses in infringement proceedings for an infringement that occurred before registration of the assignment, although recent case-law has reduced this risk somewhat.

Further assurance

The assignee will typically take charge of recordals to the Patents Offices; however they will often need the assignor's help in doing so. A 'further assurance' clause is a key element of the assignment from an assignee's point of view both for this purpose and for assisting in the defence and enforcement of patents or applications for registration. On the other hand, the assignor will typically seek to qualify its further assurance covenant by limiting it to what the assignee may reasonably require, and that anything done should be at the assignee's expense. An assignor should also require that recordals are done promptly to minimise their future correspondence from patent offices.

International transactions

In transactions which involve the transfer of patents in various countries, the parties can execute a global assignment which covers all the patents being transferred, or there can be separate assignments for each country. The former, global assignment, is usually preferred however this will frequently need to be supplemented by further confirmatory assignments in forms prescribed by the relevant international patent registries. As noted above, the preparation and execution of such assignments can be time-consuming and costly, hence the need to decide in advance who bears the cost of such recordals, and the assignee should insist on a further assurance provision.

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Trademark assignment agreements: managing rights post-brexit.

Since the UK’s departure from the EU, there has been a significant rise in the number of trademark assignment recordals against UK registrations taking place as EU trademark owners are now required to manage these rights separately, says Trademark Paralegal Megan Taylor.

In order for transfers of ownership to be recorded, businesses must provide a copy of the relevant document assigning their ownership, to ensure that a valid transaction has taken place under the laws of England and Wales. It is important to ensure the transfer is a valid transaction as the mark could be the basis of, or subject to, future disputes where questions around its validity could be raised and result in a possible loss of costs. 

What makes a transaction valid in the UK?

Despite s.24(3) of the Trade Marks Act 1994  (TMA) stating that a trademark assignment is considered effective if it is in writing and signed on, or behalf of, the assignor (or their representative), there are other laws relating to the transfer of property which must be considered; for example, statutes that pre-date the TMA. One such statute is the Law of Property (Miscellaneous Provisions) Act 1989 which sets out the requirements for a valid Deed for transfers of ownership between individuals. Similarly, the Companies Act 2006 provides guidance in relation to Deeds executed by a company.

It is also important to note that while EU member states can rely on their codified national laws for transferring property within the EU, the UK also incorporates Common Law into its judicial system. The relevant laws here being the Law of Contracts.

Deeds v Assignments

When ownership of a trademark registration is transferred as part of a larger transaction, a copy of the relevant extract of the larger agreement is sufficient to proceed with the recordal. 

However, in other instances, there may be no formal transaction in place or a confirmatory document may be required to simplify or clarify the transfer of any IP right specifically. In these cases, a separate trademark assignment (or other IP assignment) document should be drafted for execution by the parties.

In the UK, there are two types of document that enable the transfer of ownership of property – a deed of assignment and an assignment agreement, the latter also being known as a contract. While both documents are typically in writing, contain a title to confirm the document type and express the intentions of both parties, one of the most distinguishable requirements for a deed is the execution. In addition to the document being signed by both parties, for a deed to be effective both signatures must also be fully witnessed owing to there being no consideration.

Alternatively, the relevant parties may have an assignment agreement drafted. The laws governing contracts in the UK derive from the courts and are therefore formed under Common Law. In order to be a valid contract, there must be four main elements: an offer, acceptance of that offer, an intention to create legal relations and consideration (in other words, what each party gains from the contract). When it comes to formalising this contract, it is vital that the consideration is contained in the document, even if the sum is £1. If this is not included, the document cannot be treated as a valid contract.

Change of name requirements 

Furthermore, it should be noted that where a company number or legal status of a business has changed as the result of a change of name, the transaction should be recorded as an assignment and not a change of name. This is due to the fact that the entity that owns the mark has changed and is no longer the same entity as the prior owner. However, there is no need to evidence this change with a Deed or Agreement to record this at the UKIPO, as a commercial extract will suffice.

Key points to consider

When reviewing ownership portfolios or selling IP post-Brexit, it is important to consider the following:

• Is there consideration?  Determine whether you are transferring the property as a Deed or under an Agreement – different document types may be more beneficial depending on the circumstances of the transaction.
• Seek advice before executing.  Our local associates can confirm whether the document is compliant with national laws. With our reach, we may also be able to provide a suitable single document to cover multiple jurisdictions, saving you and/or your client(s) a huge amount of associated costs.
• If unsure, just ask.  We are at your disposal and happy to help facilitate easy execution, provide legal certainty, and save time in the long run.
• Take caution with local legal wording.  Even if something is titled a ‘Deed’, it is not always the case.
• Be careful not to exclude crucial details.  For example, something seemingly insignificant missing from an assignment document can render the whole agreement invalid. In the UK, even the phrase “ In consideration of £1 (one Pound Sterling) the receipt of which is hereby acknowledged ”, or a “peppercorn” as it is nicknamed, as a metaphor for a very small cash payment or other nominal consideration, used to satisfy the requirements for the creation of a legal contract.

Get in touch with our UK Trademark experts for further advice on how to manage trademark assignments post-Brexit.

Megan Taylor is a Trademark Paralegal and Luke Portnow is a Trademark Attorney at Novagraaf in the UK.

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• Practical Law

Transferring intellectual property rights: avoiding the pitfalls

Practical law uk articles 2-504-4154  (approx. 11 pages).

• What IPR are from a legal perspective.
• The practicalities and consequences of the registration of registrable IPR transactions, and the due diligence to be conducted.
• How to identify the relevant IPR to be transferred.
• How to document the transfer.
• Some important issues concerning liability arising on the transfer of IPR.

Legal nature of IPR

Confidential information, community rights, registering assignments of ipr, administrative and costs issues.

• It was not practicable to register the assignment within the six-month time limit.
• The assignment was registered as soon as practicable thereafter.

Protecting mortgages and charges

Registered rights due diligence.

• Carry out an initial search of the register to check that the seller is the registered proprietor. Check for any earlier assignments to that seller and investigate thoroughly any such assignments and the circumstances surrounding them. If there are any such assignments, consider taking an assignment of the seller's causes of action for failure to deliver good title against his own seller (if any still remain).
• Carry out a second search on the morning of completion as the IPO/OHIM update their registers at midnight following each working day.
• Register the transaction on the day it completes, wherever possible, or as soon as possible thereafter.
• Require the seller to assign with full title guarantee (see " Liability " below).

Identifying the relevant IPR

• Identify the relevant registered IPR which are to be transferred.
• Produce a conceptual definition of the non-registered IPR which are to be included in the sale, such as "all the company's know-how (whether recorded or not) and documentation relating to the process of manufacturing xyz".
• Identify which (if any) of the IPR being transferred will still need to be used by the seller or its group after the transaction has taken place, and determine how such access is to be secured (this will usually require some form of licence back).
• Identify which IPR are not going to be transferred to the buyer, and consider whether or not to write to the buyer explaining precisely which IPR are not going to be included in such a sale and why. This can stop arguments occurring later as to what was meant to be included or excluded, and should also make an action for rectification (correction) of the assignment agreement much more difficult for the buyer to win.
• Properly instruct the seller's negotiating team and lawyers as to the matters above.

Documenting the transaction

Assigning by deed, method of assignment in a sale and purchase agreement, what should be assigned in an spa, country-specific agreements, patent attorney files.

• The person disposing of the IPR has the right to dispose of them.
• The person disposing of the IPR will do all he reasonably can do, at his own cost, to give the assignee the title he purports to give ( section 2(1), 1994 Act ).
• Charged or encumbered the IPR with any charge or encumbrance, which still exists at the time of the present disposition.
• Granted any third party rights in relation to the IPR, which still subsist at the time of the present disposition.
• Allowed anyone else to do so.

Excluding liability

Sale of goods act 1979, mortgages and charges of ipr.

• An outright assignment of the legal title in the IPR to the lender.
• A right of redemption; that is, the right to have the legal title transferred back to the borrower once repayment and other obligations have been fulfilled.
• Pending exercise of the right of redemption by the borrower, some form of licence back from the lender to the borrower to enable the borrower to use the IPR in its business.
• The charging clause.
• A transfer mechanism to allow the transfer of the IPR in the event of default.
• A range of negative obligations on the borrower not to grant conflicting security or other interests in the charged IPR.

Practicalities of assignment: an overview

Problems with the ipr registration system.

• Trade Marks
• Confidentiality

Education Center

Closing and Post-Closing Issues

By Lanning G. Bryer

I. MEANS OF ACQUIRING INTANGIBLE ASSETS II. CONDITIONS TO CLOSING III. CLOSING DOCUMENTS IV. CLOSING DAY V. POST-CLOSING ISSUES VI. CONCLUSION

The deal is virtually done. All that remains is for the parties to “close” the deal. A common definition of a “Closing” date is that date upon which all conditions precedent set forth in an agreement must be satisfied. What seems like a relatively simple and quick process can be anything from short and sweet to long and painful. The three most important skills for the attorney attending a Closing to exercise in order to achieve a successful Closing are anticipation, preparation and organization. If all necessary documents have been prepared and issues anticipated and addressed, the Closing can be seamless. Furthermore, good organization on a complex transaction can make what would be a long, drawn out-process much smoother and more efficient. The following paper identifies and then discusses many of the most common issues to arise during the Closing and post-Closing of a business transaction involving trademark rights.

[1] Lanning G. Bryer, a partner in the New York office of the law firm Ladas & Parry, has written extensively on intellectual property issues. The author acknowledges the assistance of Scott J. Lebson, Esq., an associate in Ladas & Parry’s New York office, in the writing of this paper, which was first presented by Mr. Bryer at the INTA’s Trademarks in Business Transactions Forum in New York City, February 25-26, 2002. Mr. Bryer can be reached via e-mail at  [email protected] . Copyright © 2002 by Lanning G. Bryer. All Rights Reserved

I. MEANS OF ACQUIRING INTANGIBLE ASSETS

In many instances, it is critical to understand the transfer of intellectual property as an essential aspect of a larger transaction, not simply the transfer of intellectual property rights by itself. On the other hand, intellectual property is very often the predominant factor driving mergers and acquisitions. The transaction should be construed in the context of a sale of an entire business in which those intangible assets are used. Generally, businesses are sold either by the purchase of the stock in a corporation or though a purchase of assets used by the business to be sold. Under either scenario, two basic sets of documents, an “acquisition agreement” and “transfer documents” will be prepared and negotiated.

  II. CONDITIONS TO CLOSING

Buyer and Seller typically specify conditions that must be present or events that must occur before they are obligated to consummate the deal. A Seller typically makes representations and warranties about the business as of the date that the acquisition agreement is executed, but that date may be weeks or months prior to Closing, especially if antirust or other regulatory approvals are required in order to close the transaction. The Buyer will typically require that at Closing, the Seller warrant that the representations are still true. If certain statements are no longer true, the Buyer might have the option of declining to go through with the transaction as specified. Other conditions of Closing may reflect issues that come to light during the negotiation of the agreement. For example, in a stock sale, if the Buyer learns certain trademark rights are not owned by the corporation whose stock is being acquired, it may require that those assets either be transferred to the corporation before Closing or directly to the Buyer at Closing. If the Seller does not comply, the Buyer will not be obligated to buy the stock of the corporation.

III. CLOSING DOCUMENTS

A. purchase agreement:, 1. further assurances, b. general trademark assignment agreement.

1. Assignment – Goodwill – United States of America 2. Assignment – Goodwill – Worldwide 3. United States Issues – Intent-to-Use Applications – Verified Statement of Use 4. Intent-to-Use Applications – Amendment to Allege Use 5. Intent-to-Use Applications – Agreement to Continue Prosecution until Verified Statement of Use filed

C. CONFIRMATORY ASSIGNMENT DOCUMENTS FOR RECORDAL IN THE RELEVANT JURISDICTIONS WHERE TRADEMARK RIGHTS EXIST

1. Worldwide Recordal of Intellectual Property Rights 2. Separate Documents for Each Jurisdiction are Required. 3. Costs

D. COMMERCIAL LOAN DOCUMENTS E. TRADEMARK SECURITY AGREEMENT F. RELEASE AGREEMENTS G. OPINION LETTERS H. LICENSE AGREEMENTS I. ANCILLARY AGREEMENTS AND OBLIGATIONS 

In most instances, the Purchase Agreement does not actually effectuate a transfer of assets from Seller to Buyer. Instead, it merely embodies the Seller’s promise to sell stock or assets to the Buyer under certain terms. The consummation of the transaction takes place at the Closing or at a later date (post-Closing) when the parties execute transfer documents and any other ancillary agreements. This is especially true in terms of trademark rights due to their territorial nature. This may dictate a number of specific procedures which are governed by the law of each individual jurisdiction in which the trademark rights exist.

Trademark rights require specific confirmatory assignment and other

documentation to be prepared in accordance with local trademark practice for filing at the relevant Trademarks Office. Additionally, the documents required to be submitted in many jurisdictions frequently change or new requirements are added. Therefore, it may be necessary for the Seller to execute additional documentation subsequent to Closing.

In many instances, the Buyer may not be notified that it is required to submit additional documentation from the Seller until weeks or months after the Closing. Trademark rights in certain jurisdictions may not be capable of being transferred due to current political difficulties (e.g., Iraq, Libya or Afghanistan). Therefore, the Buyer may wish to make certain that the Seller (or its successors or assigns), is required to cooperate and execute such documentation.

“Further Assurances” clauses are critical in order to make certain that when this contingency arises, the Buyer can be in a position to seek Seller’s cooperation. Cooperation from the Seller is especially critical in transactions involving large trademark portfolios where the Buyer may require the Seller’s cooperation in execution of additional documents post-Closing on several occasions. The Buyer may need to ensure that it maintains an officer capable of executing documents post-Closing, especially where the corporate entity acquiring the rights changes its corporate structure by merger or acquisition.

The General Trademark Assignment Agreement is the master assignment

agreement which conveys “equitable title” to all trademark rights which are identified in a schedule, usually attached as an exhibit. In many instances, this schedule can be quite extensive as it should identify all trademarks, including common law rights, pending applications and granted registrations being transferred for each jurisdiction. This document is executed at the Closing and should bear an effective date as of the Closing date, unless the specific circumstances of the transaction dictates otherwise. The General Trademark Assignment Agreement serves several purposes:

(1) to clearly set forth and identify all trademark rights being assigned; (2) to demonstrate to tax authorities that equitable or beneficial title has passed to the Buyer; (3) to make certain that certain technical requirements unique to trademark practice are met, such as the transfer of goodwill, in order to cure any such deficiencies in the Purchase Agreement; (4) sets forth the acknowledgment of rights; (5) contains representations and warranties; (6) sets forth the obligation to execute other confirmatory documents; (7) contains further assurances clauses; (8) sets forth possible retention of rights; and (9) can be used for general corporate purposes.

1. Assignment – Goodwill – United States of America

In the United States, a trademark cannot be assigned separate and apart from the “goodwill” it symbolizes. In addition to existing case law reinforcing this traditional requirement, the Lanham Act specifically requires that the goodwill associated with a trademark accompany any transfer of the trademark itself. Section 10 of the Lanham Act provides:

“[a] registered mark or a mark for which an application to register has been filed shall be assignable with the good will of the business in which the mark is used, or with that part of the good will of the business connected with the use of and symbolized by the mark.”

A trademark is considered merely a symbol of goodwill and has no independent significance apart from the goodwill associated therewith. Attempts to transfer trademarks without the associated goodwill of the business have been characterized as “assignments in gross” and are invalid.

The public policy behind the requirement for transferring the goodwill of the business in conjunction with the trademark itself is to prevent use of a trademark with a different goodwill and different product which may result in deception upon the consumer public. The requirement that goodwill accompany the trademark ensures that a transferee’s use will not be deceptive and will not break the continuity of the goodwill associated therewith.

2. Assignment – Goodwill – Worldwide

However, unlike the United States, many jurisdictions throughout the world do not impose a similar goodwill requirement in conjunction with the assignment of trademarks. In fact, the majority rule worldwide is that trademarks may be assigned without the goodwill. There are basically three categories worldwide in which the transfer of trademarks may or may not be transferred with goodwill. These comprise countries which:

(a) allow unfettered assignments of trademarks; (b) allow assignments with or without the goodwill but impose an advertising requirement; and (c) impose a goodwill requirement such as the United States.

In view of the above and the conflicting laws with respect to the transfer of goodwill, the General Trademark Assignment Agreement should specifically address the category of goodwill being transferred.

3. United States Issues – Intent-to-Use Applications – Verified Statement of Use

The Lanham Act allows for the application of trademarks based upon a bona fide intent-to-use the trademark at a later date. Although the Lanham Act allows for the assignment of intent-to-use (ITU) applications, it also imposes specific requirements limiting the circumstances in which they may be validly transferred. Section 10 of the Lanham Act provides:

“[n]o application to register a mark under section 1051(b) (intent-to-use applications) of this title shall be assignable prior to … the filing of the verified statement of use….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.”

Essentially, this statute requires that either use of the mark is made (along with the proper filing of the Verified Statement of Use with the Patent & Trademark Office) or the entire business associated with the intent-to-use trademark applications has been transferred before the assignment can be considered valid.

For those instances where intent-to-use applications cannot be made subject to the assignment, either because the application has not been converted to a use-based application by the filing of an Amendment to Allege Use or the Verified Statement of Use has not or cannot be filed because use has not and will not be made by the Seller and the Buyer cannot make bona fide use of the trademark within the required time periods, it may be necessary for the parties to agree to abandonment of the application by the Seller. Towards that end, the Buyer should negotiate an undertaking on behalf of the Seller to file the necessary documentation at the USPTO to expressly abandon the intent-to-use application and not to interfere with any new applications for the trademark filed by the Buyer. Potential difficulties in adopting this approach include:

(a) loss of priority; and (b) the potential for third party objections to any new applications for the trademark which may be subsequently filed based upon priority of use.

4. Intent-to-Use Applications – Amendment to Allege Use

If use of the trademark has been made, it may be possible to file an “Amendment

to Allege Use” before the application is published for opposition, together with evidence of the assignment in order to convert this intent-to-use application into a use-based application. Once this documentation has been received and officially processed by the United States Patent and Trademark Office, this would allow for assignment of the application.

5. Intent-to-Use Applications – Agreement to Continue Prosecution until Verified Statement of Use filed

If the application has already been published for opposition and it is too late to file an Amendment to Allege Use, the parties can simply agree to allow the prosecution of the intent-to-use application to continue unfettered by the Seller until such time as the Verified Statement of Use is filed. At that point, assignment of the intent-to-use trademark can take place.

It is critical that intent-to-use trademark applications are identified early so that the parties may afford them the proper treatment under current U.S. trademark practice. As it turns out, very often these trademark applications cannot be assigned at a Closing or post-Closing ceremony. This circumstance illustrates the importance of having a further assurance clause such that when the ITU applications are ready to be assigned, the Seller must execute the necessary documentation. This often takes place well after the Closing date.

1. Worldwide Recordal of Intellectual Property Rights

With the exception of all-stock deals or relatively similar stock transactions, the assets, including the trademark rights of the acquired company, need to be transferred into the name of the new owner in  each jurisdiction where such rights exist. Timely recordal of a change of ownership is critical to protect the ongoing validity and enforcement of intellectual property rights for several reasons, including:

(a) If a change of ownership is not promptly recorded, a misconception can arise in the marketplace as to the identity of the actual trademark owner, leading to a possible loss of rights where a trademark no longer functions as a true indication of origin. This is particularly true in the case of well-known trademarks, or in the case of other marks which are extensively used in their particular jurisdiction;

(b) The new owner may not be able to prosecute infringements, file oppositions or attend to renewals. For example, enforcement of a trademark can only be carried out under the authority of the owner of record or its exclusive licensee. If prompt injunctive relief is required, an undesired delay will result from a necessity to record the transfer of rights. Furthermore, the right of the trademark owner to obtain damages for acts of infringement which occurred before the transfer documents were recorded may be lost in certain jurisdictions.

(c) Fines and/or penalties may be assessed for late recordal of a transfer. In certain jurisdictions, there are time limits after which it may be too late to effect proper recordal of an assignment.

(d) The failure or delay in recording a transfer of ownership may result in a possible loss of royalties. For example, if a license is to be granted and recorded under a trademark, the licensor must be the owner of record. Therefore, a delay in recording the transfer can delay the date when the license agreement becomes effective; this, in turn, can delay manufacturing and/or sales. The resulting loss of royalties may not be recoverable. In a number of countries, a license agreement must be submitted to and approved by governmental authorities and the record owner should appear as the licensor. Delay in recording thus delays approval, with consequential loss of royalties.

(e) License recordals and registered user entries will no longer be current and may affect the validity of the use by a licensee and/or governmental approval for foreign exchange authorizations for remission of royalties.

(f) In the event an “equitable transfer” occurs without the requisite official change of “record ownership” at the relevant trademark offices throughout the world, the new owner will encounter enormous difficulties when confronted with the maintenance, sale, enforcement, hypothecation, licensing and/or use of the trademark rights. For example, proof of use (where required for maintenance of existing trademark registrations) may not be accepted when used by the current owner unless that party is now reflected as the “record owner”.

2. Separate Documents for Each Jurisdiction are Required.

In order to reflect the new owner of a trademark as the “owner of record”, it will be necessary in most jurisdictions for counsel to prepare separate assignment documents for  each  jurisdiction in which such right exists. In some jurisdictions, a certified copy of a “general” worldwide assignment may be acceptable. Trademark statutes exist in most countries of the world and provide a mechanism for the recordal of a change of ownership at a central registry. The form and substance of these documents vary from jurisdiction to jurisdiction, which underscores the advisability for the preparation of separate documents for each  jurisdiction. Such documents must be filed and recorded at the respective local registry. Furthermore, several multi-country registration systems exist, such as International Registration under the Madrid Protocol which has special requirements in order to properly record a transfer of title. In this respect, it is recommended that the acquiring company engage counsel experienced in the worldwide transfer of intellectual property rights and who is familiar with the local requirements for the preparation and recordal of documents necessary for each jurisdiction.

Other issues arise with respect to the filing and recordal of the assignment documents at the respective local registry. In particular, stamp, value added or  ad valorem  taxes may be assessed on the transfer or official actions may issue encompassing a potentially broad range of issues (e.g., “associated” trademarks, advertising and publication requirements) as discussed more fully below. Local requirements underscore the need for separate transfer documents to be prepared, executed and recorded in each jurisdiction in their native language. Furthermore, confidential information which the Buyer does not wish to disclose can be omitted as each transfer document can be prepared simply to satisfy the local requirements for transfer of the national trademark rights exclusively.

Where a significant number of intellectual property rights exist in multiple jurisdictions that are the subject of a merger or acquisition, the costs of simply preparing and recording the necessary documents can be substantial. Official fees are often assessed by the number of trademarks or patents included in the transfer. The burden of absorbing the costs of effecting recordal of the assignment or merger frequently is borne by the acquirer. However, this is not always the case. In some cases, the costs are factored into the purchase price and in other cases these costs are shared by the parties. For instance, the parties can agree to have the Seller absorb the costs for preparation of the documents while the Buyer pays for the charges incurred in connection with recordal of the assignment at the local Trademark Offices. Accordingly, it is advisable that the issue of costs are discussed by the parties and treated in the Purchase or Acquisition Agreement entered into during the course of negotiations.

D. COMMERCIAL LOAN DOCUMENTS

Where elements of a transaction are being financed by a commercial lender, all commercial loan and security documents should be executed prior to or at the Closing ceremony. These documents can include:

(a) Credit Agreements; (b) Loan and Guarantee Agreements; (c) Promissory Notes; (d) Escrow Agreements (e) Security Agreements; (f) Release Agreements pertaining to prior commercial security obligations among one or all of the parties; (g) Consents, Waivers and Subordination agreements; and (h) All other relevant Commercial Loan and Security Documents;

E. TRADEMARK SECURITY AGREEMENT

Like many commercial transactions, business transactions involving trademarks frequently require that the acquirer borrow funds to finance the transaction. In these instances, the lender providing the funds will seek collateral from the borrower to secure the loan as protection against the risk of default. When trademark rights are the subject of a security interest, the grant must take place in the form of a Trademark Security Agreement or similar document.

F. RELEASE AGREEMENTS

Prior to Closing, the presence of any liens, security interests or other encumbrances in trademarks will be revealed in one of two ways:

1. Representations and Warranties:  Carefully negotiated representations and warranties in the Purchase Agreement and/or General Trademark Assignment Agreement will require the Seller to confirm whether prior encumbrances exist against the trademark rights. If such encumbrances against the trademarks exist and are still valid and subsisting, Buyer’s counsel must require the disclosure of these security interests and, wherever possible, require the release of these security interests prior to or at the Closing ceremony.

2. Due Diligence:  Due diligence conducted on behalf of the Buyer, including searches of the relevant trademark registries, should reveal the existence of security interests which have been properly perfected against registered trademark rights. Where unregistered trademarks rights have been collateralized, however, a search of the Trademark Registry would not reveal such encumbrance.

For those trademark rights that have been made the subject of a security interest, it is critical to make certain that a Release of these rights is executed on behalf of the secured party in favor of the Grantor (i.e., the Seller). An obligation to obtain the release of these security interests should be made a condition precedent to the transfer. In most instances, the secured party will not be present at the Closing. If possible, the Release should be executed  Nunc Pro Tunc  to the date of the Closing. The rationale behind this is to make certain that when the Release is presented for recordal at the relevant Trademark Office, the assignment document does not bear an execution and/or effective date prior to the date of the Release. The Release should always be filed and recorded prior to the assignment document in order that the proper chronological chain of title is reflected on the Trademark Register.

Regardless of the manner in which prior security interests against registered or unregistered rights are discovered, arranging for execution of appropriate release documentation (either a Release Agreement or UCC-3) prior to or simultaneously at the Closing is critical. Furthermore, if the secured party is not the Seller, there is no guarantee that the secured party will necessarily release its security interest in the trademarks, depending upon the nature of its prior business with the Seller. In any event, execution of appropriate release documentation by the Seller should be made a condition precedent to performance on behalf of the Buyer.

G. OPINION LETTERS

Seller’s counsel is frequently required to deliver an opinion letter at Closing

concerning trademark issues in business transactions. For an acquiring or investing company, opinion letters are significant in that they are intended to bind the Seller to representations typically on the following:

(a) ownership; (b) validity; (c) enforceability; (d) absence of encumbrances; (e) non-infringement of third party rights; (f) non-infringement by third party; (g) effectiveness of proposed security documents for attachment, perfection and priority of a security interest; and, (g) valuation of the trademark portfolio.

Whenever possible, opinion letters concerning trademark rights should be

rendered by the Seller’s trademark counsel, who, in all likelihood, is already quite familiar with the portfolio. If necessary, extensive due diligence may need to occur before the rendering of an opinion letter. Opinion letters are equally critical in financing or licensing transactions where the trademark is serving as the primary asset or collateral. Separate valuation opinions may also be required to be delivered at Closing. These opinions are concerned with assessing trademarks using different accounting methodologies to determine the actual or fair market value of the trademark asset.

H. LICENSE AGREEMENTS

Many business use intellectual property, including trademarks, that is licensedfrom third parties. The method upon which trademark licenses may be transferred to a Buyer depends upon whether the transaction is a share purchase or an asset purchase. In the case of a share purchase, the Buyer’s position is relatively straightforward, since by acquiring the shares in the company, the Buyer will automatically acquire all pre-existing commercial agreements, including all trademark license agreements. In the case of an asset purchase, any existing trademark licenses will not pass automatically and will need to be specifically transferred to the Buyer. The possible methods of transferring a trademark license include:

A Novation Agreement between the Seller, the Buyer and the licensor.  The Buyer then becomes a party to the license in place of the Seller, and the Seller is released from its obligations under the license.

Assignment or sublicensing of the license  . The prior license may contain an express prohibition on the assignment or sublicensing of the license without the consent of the licensor. Any and all consents should therefore be obtained prior to Closing. The Buyer and Seller will need to determine whether the obligation to negotiate and obtain such consents falls on the Buyer or the Seller. The acquisition agreement may even provide that the Buyer is not obligated to close the transaction if consents from key licensors cannot be obtained.

I. ANCILLARY AGREEMENTS AND OBLIGATIONS

The acquisition agreement often specifies other obligations of the parties related to the acquisition. With respect to trademarks, a license from the Seller to the Buyer or vice versa, is not uncommon. This typically occurs in situations where the Seller is parting with one of its businesses but has certain trademark rights that are used in that business and the business it is retaining. In such a situation, the Seller can either retain the shared trademark right and license it to the Buyer post-Closing or sell it to the Buyer and take a license back. Additionally, short-term licenses may be needed to allow the Seller to phase out its use of certain trademarks post-Closing.

IV. CLOSING DAY

A. execution process b. payment c. delivery of related documents and files: , a. execution process.

(1) Location  – having a central location bringing together all therelevant parties for execution of the documents is helpful. There are distinct benefits in arranging for execution of all necessary documents, including confirmatory assignment documents, at Closing, including:

(a) by having a central location for execution of all the documentation, the presence of all necessary parties, including duly authorized officers of the Buyer and Seller, to complete execution of the documents results in greater efficiency in terms of time and reduced costs for the party bearing the expense, usually the Buyer.

(b) by not executing the documents piece-mail, counsel for the Buyer can immediately take possession of the confirmatory assignment documents and begin the process of dispatching the documents overseas for filing at the respective trademark offices. This is critical for two reasons:

(i) it eliminates the risk, which exists in many jurisdictions, that the Trademarks Office will impose fines or penalties for late submission of change of ownership documentation.

(ii) it eliminates the risk of rejection of the documents in their entirety for late submission or “staleness”. This is especially true if the documents are backdated or bear an effective date earlier than the date of actual execution and the jurisdiction has a particularly short filing deadline.

(2) Availability of notaries:  by having all of the confirmatory assignment documents executed at the Closing or post-Closing ceremony, the parties will be able to take advantage of the presence of attesting notaries and witnesses as well as their designated signatories. When executing confirmatory assignment documents for purposes or recordal at national trademark offices, very often these documents require notarization and/or consular legalization or authentication by Apostille. For those countries that require consular legalization, especially in large transactions, by having both the Seller and Buyer execute all the confirmatory assignment documents in one location, the notarial acknowledgments will be uniform. This, in turn, will expedite the process of authentication, certification of the notarial acknowledgment and consular legalization at the Department of State or individual foreign consulates.

(3) Authorization of Officers to Execute Documents:  The parties should require documentary evidence of the representations of both Buyer and Seller to legally execute the Closing documents and bind their companies. This evidence might include a Power of Attorney, a Board of Directors Resolution, Certificates of Incorporation or By-Laws. In terms of recording the assignment of rights abroad, several jurisdictions, especially in Latin America, require detailed notarized documents providing that the officer who executed the assignment documents on behalf of the company (whether Buyer or Seller), has been appointed as an agent of the company authorized to act on its behalf or appointed as an officer pursuant to a specific Resolution of the Board of Directors or other documents. In most instances, this will require the completion of detailed information such as the date of the resolution and/or the date that the company was incorporated.

(4) Country/Place of Execution:   The place of execution will affect the manner in which the documents are notarized and/or legalized. In terms of a worldwide recordal program, having all the documents executed and subsequently notarized by notaries who are qualified in the same county or country will hasten the legalization process in that the notarials can be certified by at a single County Clerk’s office. By not doing so, having several documents sent to several different counties for certification can result in significant delay.

(5) Contingencies:  Trademark counsel, whether representing the Buyer or Seller, should be prepared for all contingencies which may arise at a Closing with respect to execution of the documentation. Such contingencies can include:

(a) Errors in Preparation:  Due to the jurisdictional nature in which trademark rights arise, the preparation of an extraordinary amount of documentation is required in terms of preparing for a worldwide assignment recordal. As such, if an error in preparation is discovered at the Closing, trademark counsel should be prepared to immediately correct such error(s) in order to promptly arrange for execution of the new, correct document. Towards that end, counsel should make certain in advance that:

(i) Adequate staff is available to implement such changes; Electronic versions of all documents are at counsel’s disposal in order to promptly implement such corrections.

(b) Errors in Execution:  In terms of worldwide trademark assignment recordal programs requiring execution of what can be an extraordinary amount of documentation, it is inevitable that mistakes in execution will occur. This situation arises more frequently when several different parties are required to execute the same document, such as officers of each party, attesting witnesses and notaries. As discussed above, counsel should be in a position to have adequate staff and electronic versions available to promptly arrange for the preparation of new documentation.

(6) Corporate Seals:  Corporate seals for each entity should be available at the Closing. Trademark counsel should make certain well in advance of the Closing date that either the officers of each company bring such seals to the Closing or that new seals are promptly ordered and available by the Closing date. Although affixing corporate seals can occur at any time subsequent to the Closing, this may delay the filing and ultimately the recordal of the assignment documents at the Trademark Registries. The failure to affix corporate seals can result in rejection of the assignment documents in several jurisdictions.

The following concepts should be kept in mind in terms of transfer

1. Check/wire transfer:  all pertinent banking particulars should be available to the parties, especially in the context of a wire transfer, so that the appropriate funds can be transferred to the Seller without undue complication;

2. Confirmation of receipt:  confirmation of receipt of such funds should be available and delivered to the Seller upon request.

3. Escrow Accounts:  established.

C. DELIVERY OF RELATED DOCUMENTS AND FILES:

1. Files  :  From a trademark standpoint, relevant files pertaining to the

trademark rights should be delivered to the new owner, to the extent possible, at or post-Closing, which can include:

(a) pending application files:  should be delivered to counsel for Buyer in order to make certain that all actions and/or deadlines are met. (b) opposition/cancellation files;  (c) litigation files;  (d) prior chain of title files;  (e) pending renewal files;  (f). license files; and (g) general trademark files. 

In arms length transactions, Buyer’s trademark counsel will often be different from that of the Seller. Therefore, Buyer’s counsel should prepare a simple, but formal letter to Seller’s counsel requesting the immediate transfer of all files subject to the transaction.

2. Certificates of Registration:  To the extent possible, Certificates of Registration for each trademark registration should be delivered to the Buyer at Closing or shortly thereafter. Depending upon the specific portfolio, rights in the trademark may have been registered several years or decades ago, and therefore, it is not unusual for many of these certificates to have been lost or destroyed. In order to record the assignment in favor of the Buyer in those jurisdictions which require submission of the Certificate of Registration, it will be necessary to obtain certified copies of the Certificate of Registration from the Trademarks Office. In large transactions, this could result in significant additional expenses, especially in less sophisticated jurisdictions, which the parties should anticipate. If not negotiated in the Purchase Agreement or General Trademark Assignment Agreement, this additional expense will usually be borne by the Buyer.

3. Letters to local trademark counsel re: file transfer:  Where several trademark applications, renewal filings or conflicts are pending worldwide and if the Buyer prefers to use local counsel differing from that of the Seller, Buyer should notify its preferred counsel to instruct Seller’s counsel to immediately transfer such files. Buyer’s preferred counsel should then file the appropriate substitution of counsel documentation with the Trademarks Office where necessary so as not to interfere with the prosecution of the applications when the assignment documents are filed. At the very least, notice to all counsel by Seller’s counsel should be sent out advising of the change in ownership and responsibility.

V. POST-CLOSING ISSUES:

A. immediate docketing of trademarks/action dates: b. handling actions (official actions/renewals/payments) c. review of files to re-assess value of trademarks/major markets: d. filing and recordal of confirmatory assignment documents in each jurisdiction where trademark rights exist e. filing and recordal of confirmatory documents to record a merger and/or change of name f. security interests, a. immediate docketing of trademarks/action dates:.

It is critical that upon possession of the transferred files, an immediate review to determine when renewal dates, terms, responses to official actions and other “action” dates are due. In addition to the particulars of the trademark (mark, registration number, registration date, etc.), these “action” dates should be immediately uploaded into a computer database in order to alert counsel to any impending actions.

B. HANDLING ACTIONS (OFFICIAL ACTIONS/RENEWALS/PAYMENTS)

Any and all trademark applications and registrations requiring immediate action should be brought to the new owner’s attention in order to prevent the loss of such rights. Very often, the new owner will conduct a complete review of which trademarks it is interested in maintaining, however, this process can very often be quite lengthy. Therefore, it is critical that the new owner be advised of immediate action dates in order that their instructions may be timely received. This obligation on the Seller should be a condition of the sale and include a post-Closing undertaking by Seller to assist Buyer in taking any and all steps necessary to preserve and protect the trademark rights.

C. REVIEW OF FILES TO RE-ASSESS VALUE OF TRADEMARKS/MAJOR MARKETS:

Buyer may wish to eliminate any unwanted registrations or applications subsequent to the acquisition. They can abandon them at the time of renewal and just not record assignments against them.

D. FILING AND RECORDAL OF CONFIRMATORY ASSIGNMENT DOCUMENTS IN EACH JURISDICTION WHERE TRADEMARK RIGHTS EXIST

(1) Filing expenses:  Expenses associated with the filing and recordal

of confirmatory assignment documents to record the Buyer as the official “owner of record” can, especially in transactions where worldwide trademark portfolios are being assigned, be quite expensive. There are several costs associated with the filing and recordal of the documentation, including:

i. government fees:  often assessed on a per trademark basis; ii. local counsel fees:  in connection with filing the assignment recordal application iii. taxes;  depending upon the jurisdiction in the form of ad valorem, value added or stamp duties; iv. translation fees:  upon filing or in connection with the official publication of the assignment (if required); v. publication fees:   in connection with local advertising or publication of the transfer in a local newspaper or periodical (if required); vi. foreign consular legalization or authentication charges;  vii. charges for obtaining duplicate or replacement Certificates of Registrati on:  if required; and viii. recordation of any change of address:  if required.

(2) Consideration:  Several jurisdictions require that a specific monetary consideration be recited in the Deed of Assignment for recordal purposes. If the trademarks are assigned as part of a transaction involving the transfer of other assets, the consideration for the transfer is some portion of the consideration for the entire transaction. Prior to filing, trademark counsel should consult with the new owner of the trademarks to determine an appropriate consideration to be recited in each Deed of Assignment for those jurisdictions where it is mandatory to recite same. Trademark counsel should be familiar with the possible local tax requirements when advising the new owner so as not to trigger any unanticipated local tax assessments upon the transfer. Additionally, where tax assessments cannot be avoided upon the transfer, trademark counsel and Buyer should evaluate and determine the specific amount to be paid to the local tax authorities well in advance of filing so that the Buyer can factor this amount into its budget.

(3 Legalization/Authentications:  In several jurisdictions, prior to filing the confirmatory assignment documentation, it will be necessary to arrange for the consular legalization and/or authentication of the confirmatory assignment documentation. While some embassies undertake the process of legalization in an expedient fashion, many embassies, especially from less sophisticated jurisdictions, have a slow turnaround time. Additionally, it is often necessary to have documents which require legalization to be sent to a County Clerks’ office to certify that the notary is, in fact, a notary public in good standing in that country and/or to have the documents sent to the Department of State as well.

(4) Filing Process:  When the confirmatory assignment documents have been executed, notarized and legalized (where necessary) and after a careful review to determine that no information or signatures are missing, the documents are ready to be filed at the respective trademark offices. Trademark counsel should consider the following issues when forwarding the assignment documentation to local counsel for filing:

(a) pending trademark applications:  in order to not interfere with the prosecution of the application, trademark counsel should consider using the same agent for purposes of recording the assignment. If trademark counsel would prefer to use a different agent than the one prosecuting the application, counsel should coordinate its effort with the agent of record and its preferred agent so as not to interfere with the prosecution.

(b) pending renewal applications:  where a renewal application is pending in the name of the new owner, the assignment documentation must be filed with the same agent in order that the agent can prove that the entity renewing the registration is, in fact, the new owner.

(c) deadlines:  certain jurisdictions require the filing of the assignment documentation within a certain period of time from the date of execution. For example, some British law countries still operating under the 1938 Trade Marks Act require assignments made without goodwill to be filed within six months of the date of execution for advertising purposes. Other countries which impose a deadline upon filing of assignment documents include:

(d) official actions:  It is practically inevitable that when arranging for the recordal of an assignment against hundreds or even thousands of trademarks on a worldwide basis, objections and official actions will issue by the Trademarks Office. Among the types of official actions to be anticipated are:

(i) owner of record:  the Trademark Registry does not reflect the Seller (assignor) as the official “owner of record”. For whatever reason, the Seller never undertook to record itself as the new owner against the trademark rights in a particular jurisdiction. Accordingly, the Registrar will require that documentation evidencing the assignment from the previous owner to the Seller be submitted together with the new assignment documentation.

(ii) “association” requirements:  the trademark laws of several jurisdictions have a requirement in place known as the “association” requirement. Under the association requirement, if an application for assignment is filed only against some, but not all, trademarks owned by an assignor which it has registered at a particular trademark office, the Examiner may issue an official action claiming that the assignment cannot proceed due to the existence of “associated” trademarks. In most instances, the Examiner determines that a mark is associated when there is a common element or word contained in the marks. In order to overcome this objection, there are normally three options available:

• Prepare new assignment documentation for execution by the parties against the associated trademarks which were not subject to the assignment.
• File a petition with the trademark office in an effort to “break the association” between the trademarks, arguing that the trademarks should not be “associated” and recordal should proceed uninhibited.
• Commence cancellation proceedings against the associated trademarks.

(iii) change in local practice:  the requirements of local trademark practice shift on a fairly regular basis which may result in requests for additional forms, Powers of Attorney, Affidavits or other documents to be submitted with the assignment documents. In some instances, new assignment documents are required altogether.

(iv) missing/lost documents:  It is not uncommon for Trademark Offices to temporarily misplace or lose entirely a complete set of assignment documents, especially in less sophisticated jurisdictions. Regardless of fault, a new set of assignment documents can be executed by the parties and submitted to the Trademark Office or in certain cases, certified copies will be accepted.

(v)change of address:  the address of the Seller as reflected on the official registry differs from that contained in the assignment document. Accordingly, a Declaration of Change of Address must be filed in order to overcome this objection and allow the recordal of the assignment to proceed.

(vi) license recordal or registered user entry in name of Seller:  when the Seller is recorded as a licensor/licensee or registered user, the Examiner may require evidence of the novation of the license or registered user agreement to reflect that the Seller is no longer the licensor or licensee of the mark.

Regardless of the type of official action which may issue, one dominant theme is clear. Officers (or former officers) of both the Buyer and the Seller should be available to execute whatever additional documentation is requested by the local Trademark Office to complete the transfer of “record title” to the Buyer.

(e) Proof of recordal:  In most jurisdictions, proof of recordal of an assignment, merger or change of name is issued within six months to one year. In other jurisdictions such as India or Italy, proof of recordal may not be issued for approximately 4-5 years. In any event, when the proof of recordal is received, this document should be carefully reviewed to determine the following:

the name and address of the new owner is correctly reflected on the certificate;

the date of the recordal is stated;

the correct application and/or registration numbers are recited on the certificate.

E. FILING AND RECORDAL OF CONFIRMATORY DOCUMENTS TO RECORD A MERGER AND/OR CHANGE OF NAME

Although many of the issues discussed above pertaining to recordal of

confirmatory assignment documents remain true for the recordal of a merger and/or change of name, such as the assessment of government fees on a per trademark basis, as a general rule, fewer documents need to be prepared and executed by the parties for recordal purposes. In many jurisdictions, recordal of a change of name and/or merger can be accomplished with the following documents:

(a) Power of Attorney: usually executed by the Buyer only;

(b) Certificate of Merger/Change of Name: issued by the appropriate Secretary of State’s office (if a U.S. corporation) or similar governmental authority outside the U.S.

Unlike an assignment, however, all assets of the combined companies pass to the new entity by operation of law and therefore, recordal of a merger/change of name must be recorded against all active trademark applications and registrations which stand in the name of the Seller at a particular Trademark Registry.

F. SECURITY INTERESTS

Increasingly, security interests in intellectual property and, in particular, trademarks, are becoming more and more common. Towards that end, perfection of security interests in trademarks worldwide is becoming more common. Recordal of security interests in trademarks is a well-established practice in only the most sophisticated jurisdictions and even there, similar to the United States, the law in this area is not well settled. However, for those jurisdictions outside the United States where security interests have been recorded at the Trademarks Registry, it may be necessary to seek the opinion of local counsel in order to determine whether release documentation prepared for recordal at, for instance, the USPTO, will be sufficient to release the security interest under local law.

(i)   Perfection of security interests in trademarks in the United States:  With respect to U.S. common law and U.S. State trademark registrations, Article 9 of the UCC would apply and the appropriate UCC-1 forms should be filed and perfected at the relevant County Clerk’s Office and/or Secretary of States office. With respect to federally registered rights, the landscape concerning perfection of security interests still remains unclear. While the Lanham Act makes no direct reference to recordation of security interests, the USPTO will accept and it is now common practice to record security interests in trademarks at the assignment division. At the very least, recordation at the USPTO provides constructive notice to subsequent purchasers for value.

(ii) What countries recognize perfection of security interests:  As the value

of intellectual property rights are more widely recognized now than ever before, more and more companies are placing a premium on the protection of these rights, including trademarks. Companies with substantial worldwide portfolios are increasingly offering not only their domestic trademark rights as security to finance a transaction, but increasingly, their international rights as well. Towards that end, secured parties would be well advised to seek perfection of these security interests at the trademark offices in several, if not all, of the jurisdictions in which the trademark security interest has been granted. However, at this time, only the most sophisticated jurisdictions recognize the creation of security interests in trademarks  and  offer a mechanism for perfection of same at the Trademark Office.

(iii) Will the security documents suffice to create and perfect the security interest in the relevant jurisdictions?  – Subsequent to identifying those jurisdictions which offer a mechanism for perfecting a security interest in trademarks, it is critical to determine whether the General Trademark Security Agreement or other trademark security documents will be accepted for recordal. While some jurisdictions will accept a standard security agreement, it may be necessary to effect certain amendments to the Agreement in order to create a valid security interest under local law. A common example of this would be changing the “governing law” provisions to that of the jurisdiction under which perfection is sought. In many instances, it may be necessary for the parties to execute several new trademark security agreements tailored specifically for creating and perfecting trademark rights in certain jurisdictions. Towards that end, it may be necessary to engage local counsel early to determine whether the Trademark Security Agreement will suffice for purposes of creating and perfecting a valid security interest in trademarks under local law.

(iv) Supplemental documentation to the Trademark Security Agreement  : In addition to amendment or possibly creating a new Trademark Security Agreement in compliance with local law, it is often the case that additional documents will need to be executed by the parties and submitted together with the Trademark Security Agreement. Such documents can include:

(1) Application forms; (2) Powers of Attorney; (3) Short-Form Security Agreements; (4) Commercial Security Agreements for filing at the municipal level (if necessary); and (5) Various other forms required under local trademark and/or commercial practice.

(v) Obtaining opinion letters from local counsel  : In order to make certain

that the secured party is not blindly undertaking the ministerial act of perfecting the security interest, it may be worthwhile to obtain a formal opinion letter of local counsel discussing some or all of the following points:

(1) whether any prior liens or encumbrances have been recorded against the trademark; (2) whether a valid security interest is created by the Trademark Security Agreement under local law; (3) whether the security interest is capable of being perfected at the local Trademark Office; and (3) subsequent to perfection at the Trademark Office, whether the security interest is capable of being enforced against third parties;

In what countries should perfection take place/cost assessment:  Simply

determining which jurisdictions recognize perfection of security interests in trademarks and identifying what supplemental documentation would be needed is not enough. A thorough cost-assessment of the value of the trademarks subject to the security interest may be worthwhile. In the end, it may not be worthwhile to proceed in a jurisdiction where notoriety or sales in the trademarks do not exist. Factors to consider in this determination are:

(1) The number of trademarks subject to the security interest; (2) The government fees in perfecting the security interest; (3) Local counsel fees in preparing an amended or new Trademark Security Agreement, supplemental documentation, opinion letters and handling the perfection of the security interests; (4) The value of the trademarks as determined by notoriety and/or sales in the products bearing the trademarks; (5) The sophistication of the jurisprudence in a particular jurisdiction; and (6) Other standard valuation benchmarks in determining the value of trademark rights.

(vii) time considerations:  In addition to cost considerations, time is also a factor when considering perfection of security interests abroad. While certain jurisdictions can typically record the security interest at the Trademark Office within 3-6 months, there are still many jurisdictions which typically require several years before recordal is officially reflected on the register. Furthermore, expedited recordal procedures are generally not in place. Therefore, in terms of obtaining the benefits of perfection by providing notice to third parties, proceeding in some of these jurisdictions may not be worthwhile.

(viii) events of default/enforcement procedures:  In the event of a default, trademark counsel should be aware of what steps must be taken in order to enforce the security interest and foreclose on the trademark assets. If the defaulting party is unwilling to assign rights in the trademark back to the secured party, the secured party may need to bring a court action under local commercial or trademark law.

The key to a successful Closing is, preparation, organization and anticipation. Anticipation results in no or few surprises at the Closing ceremony. Preparation leads to a more mechanical and faster process. Good organization ensures that every issue and step in the process is dealt with so that no open issues remain and all required documents are executed and delivered. Clients will generally be impressed by and grateful for a smooth and uneventful Closing process.

Understanding a deed of assignment for intellectual property

A deed of transfer is used to change the ownership of intellectual property, a common occurrence in business. Explore how and when to use one.

Find out more about intellectual property basics

by   Brette Sember, J.D.

Brette is a former attorney and has been a writer and editor for more than 25 years. She is the author of more than 4...

Read more...

Updated on: November 24, 2023 · 3 min read

Understanding intellectual property in business

How to transfer intellectual property rights in business, what to include in a deed of assignment, registering new ownership, restrictions on intellectual property transfers.

Most companies have intellectual property as part of their assets, including software, product design, or copyright to white papers. Buying or selling such property is done using a document called a deed of assignment.

A large part of what a business consists of may be tied to intellectual property . It's easy to see physical property a company owns, such as a building, office furniture, or inventory, but intellectual property can be more challenging to identify.

Most businesses have intellectual property, or works created by human minds or, in some cases, by computers. Some examples of intellectual property include architectural drawings, ad campaigns, company or product names, inventions, and source code.

Examples of when transfers of intellectual property might happen include when a company is buying another company, when you are setting up an LLC and want to transfer your intellectual property into the company, or when a business buys product rights from another company or individual.

A deed of assignment can be done in one transaction, instead of one transaction for each item of intellectual property, by transferring all ownership rights of all intellectual property detailed in the deed. The document is signed by both the buyer and seller. No payment is required for it to be valid.

A deed of assignment must be in writing and should include:

• The names and addresses of the assignor and assignee
• A description of the program or product for which the rights are being transferred
• A statement that all intellectual property rights to the property are being transferred
• Signatures of the parties and the date of the agreement execution

The deed could also include the following sections, where applicable:

• Consideration, or payment, to be made to the original owner.
• Warranties, or promises that the intellectual property rights being assigned don't infringe on anyone else's intellectual property rights . For example, in a deed regarding the transfer of a copyright, this section could state that the copyrighted work is original and not owned by someone else.
• Indemnification, or promise by the seller to reimburse the assignee if there is some problem with title to the property.
• Future assignments. For example, the agreement could be ongoing, so that anything the assignor creates in the future for this product or program is also transferred to the buyer.

Although a deed of assignment transfers ownership in intellectual property , it does not change the registration of the ownership. The assignee is responsible for handling all registration requirements.

For example, if a patent is transferred via a deed of assignment, the new owner must record the change in ownership with the U.S. Patent and Trademark Office. Similarly, the transfer of a copyright is recorded with the U.S. Copyright Office.

Transfers of intellectual property must comply with U.S. laws. One obvious caveat is that you can't transfer property you don't own. Transfers must also comply with antitrust laws, which are set up to prevent one company from completely dominating an industry.

If intellectual property rights are being transferred overseas, the transfer must comply with Export Administration Regulations and the International Traffic in Arms Regulations , which are designed to protect national security and trade.

The deed of assignment can be a crucial part of a business deal or transaction. You can create a deed of assignment yourself, or you can work with an attorney .

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Trademark Assignment Agreement

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A trademark assignment agreement is a legal document that transfers ownership of a trademark from one party to another. In California, this agreement is governed by California law, which sets out the requirements for a valid and enforceable assignment. The agreement typically includes details about the trademark, the parties involved, and the terms and conditions of the transfer.

A properly executed trademark assignment agreement can help ensure that the new owner has full legal rights to use, sell, or license the trademark while protecting the interests of the original owner. This type of agreement is commonly used in business transactions such as mergers and acquisitions, where trademarks are often valuable assets.

Essential Elements of a Trademark Assignment Agreement

A trademark assignment agreement in California must meet certain requirements to be legally binding and enforceable. Here are some of the essentials of a trademark assignment agreement in California:

The agreement must identify the transferred trademark, including any registration or application numbers, and describe the goods or services associated with the trademark.

The agreement must clearly state that the current owner (assignor) is transferring ownership of the trademark to the new owner (assignee). It should also state that the assignor has the legal right to transfer trademark ownership.

The agreement should specify the consideration that the assignee provides in exchange for transferring the trademark. It can be a monetary payment or other valuable consideration.

The agreement should contain representations and warranties by both the assignor and assignee, such as the assignor's ownership of the trademark and the assignee's ability to use and exploit the trademark.

The agreement should include a provision for the assignment of goodwill associated with the trademark, which refers to the intangible value of the trademark's reputation and customer loyalty.

The agreement may also include provisions for the assignment of ancillary rights, such as the right to sue for infringement, the right to use the trademark in advertising, and the right to license the trademark to others.

The agreement must be signed by both the assignor and assignee and should include the date of execution.

Overall, a trademark assignment agreement in California should be clear, concise, and comprehensive and accurately reflect both parties' intentions.

Importance of a Trademark Assignment Agreement

A trademark assignment agreement is an important legal document that transfers ownership of a trademark from one party to another in California. Here are some reasons why a trademark assignment agreement is important:

A trademark assignment agreement establishes the legal transfer of ownership of the trademark from the assignor to the assignee. This helps to ensure that the new owner has full legal rights to use, sell, or license the trademark.

A trademark is a valuable asset representing a business's goodwill and reputation. A properly executed trademark assignment agreement helps to protect the assignee's investment by ensuring that they have the legal right to use and exploit the trademark.

A trademark assignment agreement can help avoid confusion and disputes over trademark ownership. It provides a clear record of the transfer of ownership and can be used as evidence in case of any legal disputes.

A trademark assignment agreement can enable the assignee to license the trademark to others. It can be a valuable source of income for the assignee and help increase the trademark's value.

A trademark assignment agreement is often used in business transactions such as mergers and acquisitions, where trademarks are a valuable asset. It helps to ensure that the transfer of ownership is legally valid and provides a clear transaction record.

Overall, a trademark assignment agreement is an important legal document that helps to protect the interests of both the assignor and assignee. It provides a clear record of the ownership transfer and can help avoid confusion and disputes over ownership of the trademark. It is important to consult with a qualified attorney to ensure that the agreement meets all legal requirements and adequately protects the parties' interests.

Common Mistakes to Avoid in Trademark Assignment Agreement

When drafting or executing a trademark assignment agreement in California, several common mistakes should be avoided to ensure the agreement is legally valid and enforceable.

The agreement should identify the transferred trademark, including any registration or application numbers, and describe the goods or services associated with the trademark.

The agreement should include all parties involved in transferring the trademark, including any successors or assigns. Failing to include all parties can result in a lack of clarity over who owns the trademark.

The agreement should specify the assignee's consideration in exchange for the trademark transfer. If the consideration is not accurately described, the agreement may be challenged as unenforceable.

The agreement should include provisions for the assignment of ancillary rights, such as the right to sue for infringement, the right to use the trademark in advertising, and the right to license the trademark to others. Failing to address these rights can result in a lack of clarity over the assignee's legal rights to use and exploit the trademark.

The agreement must be signed by both the assignor and assignee and should include the date of execution. Failing to obtain proper signatures can result in a lack of clarity over whether the transfer of ownership is legally valid.

Trademark law can be complex and nuanced. It is important to consult with a qualified attorney to ensure that the agreement meets all legal requirements and adequately protects the parties' interests.

Overall, it is important to carefully draft and execute a trademark assignment agreement in California to ensure it is legally valid and enforceable. Avoiding these common mistakes can help to ensure that the agreement accurately reflects the intentions of both parties and protects their legal rights.

Key Terms for a Trademark Assignment Agreement

• Trademark: It is a recognizable sign, design, or expression that identifies and distinguishes the source of a product or service from those of others.
• Assignor: The assignor is the party currently owning the trademark and transferring ownership to another party through the trademark assignment agreement.
• Assignee: The assignee is the party acquiring ownership of the trademark through the trademark assignment agreement.
• Goodwill: Goodwill is the intangible value associated with a trademark built up through the use and reputation of the mark in the marketplace.
• Consideration: It refers to the compensation or value exchanged between the assignor and assignee as part of the trademark assignment agreement. This can include monetary payment, goods or services, or other forms of value.

Final Thoughts on a Trademark Assignment Agreement

In conclusion, a trademark assignment agreement is an important legal document that transfers ownership of a trademark from one party to another in California. The agreement is essential to protect the legal rights and investments of both the assignor and assignee and avoid confusion and disputes over trademark ownership.

When drafting or executing a trademark assignment agreement in California, it is important to avoid common mistakes, such as failing to identify the trademark, incorrectly describing the consideration, and not obtaining proper signatures.

Consulting with a qualified attorney can help ensure the agreement meets all legal requirements and adequately protects the parties' interests. Overall, a properly executed trademark assignment agreement can provide a clear record of the transfer of ownership and enable the assignee to use, sell, or license the trademark with confidence.

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ContractsCounsel is not a law firm, and this post should not be considered and does not contain legal advice. To ensure the information and advice in this post are correct, sufficient, and appropriate for your situation, please consult a licensed attorney. Also, using or accessing ContractsCounsel's site does not create an attorney-client relationship between you and ContractsCounsel.

Meet some of our Trademark Assignment Agreement Lawyers

Diana is a registered patent attorney and licensed to practice law in Florida and in federal courts in Florida and in Texas. For nearly a decade, Diana has been known as the go-to brand builder, business protector, and rights negotiator. Diana works with individual inventors, startups, and small to medium-sized closely held business entities to build, protect, and leverage a robust intellectual property portfolio comprising patents, trademarks, copyrights, trade dress, and trade secrets.

Skilled in the details of complex corporate transactions, I have 15 years experience working with entrepreneurs and businesses to plan and grow for the future. Clients trust me because of the practical guided advice I provide. No deal is too small or complex for me to handle.

Pura Rodriguez, JD, MBA is the President and Managing Partner of A Physician’s Firm, based in Miami. She represents healthcare providers from different specialties in a broad range of issues, including contract review, business planning and transactions, mergers and acquisitions, vendor and contract disputes, risk management, fraud and abuse compliance (Anti-Kickback Statute and Stark), HIPAA compliance, medical staff credentialing, employment law, and federal and state regulations. She also assists providers in planning their estates, protecting their assets, and work visa requirements.

Experienced and business-oriented attorney with a great depth of contract experience including vendor contracts, service contracts, employment, licenses, operating agreements and other corporate compliance documents.

Jaclyn is an experienced intellectual property and transactional attorney residing and working in NYC, and serving clients throughout the United States and internationally. She brings a targeted breadth of knowledge in intellectual property law, having years of experience working within the media, theater, PR and communications industries, and having represented clients in the music, entertainment, fashion, event production, digital media, tech, food/beverage, consumer goods, and beauty industries. She is an expert in trademark, copyright, and complex media and entertainment law matters. Jaclyn also taught as an Adjunct Professor at Cardozo School of Law, having developed and instructed the school’s first Trademark Practicum course for international students. In her spare time, Jaclyn’s passion for theater and love for NYC keeps her exploring the boundless creativity in the world’s greatest city!

A bilingual attorney graduated from J.D. with a C.P.A. license, an M.B.A. degree, and nearly ten years of experience in the cross-border tax field.

With over 24 years of practice, Chet uses his vast experiences to assist his clients in the most efficient manner possible. Chet is a magna cum laude graduate of University of Miami School of Law with an extensive background in Business Law, Commercial Real Estate, Corporate Law, Leasing Law and Telecommunications Law. Chet's prior experience includes 5 years at two of the top law firms in Georgia and 16 years of operating his own private practice.

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U.S. Supreme Court Narrowed the Application of Assignor Estoppel to Known Claim Scope

In Minerva Surgical, Inc. v. Hologic, Inc. , 594 U.S. ____ (June 29, 2021), the Supreme Court, by a narrow 5-4 margin, upheld the doctrine of assignor estoppel, but constrained its application to assignments where the assignor, expressly or implicitly, knew what they were assigning.  In situations where assignments are executed prior to filing or during prosecution of a pending patent application, if the claims of the application (or of a later Continuation application) are broadened as compared to the claims pending as of the date of the assignment, then “the assignor did not warrant to the new claims’ validity.  And if he made no such representation, then he can challenge the new claims in litigation”.  Slip op., at 16. 

In view of Minerva , some practitioners may not change their practice with respect to the timing of assignments, but others may consider having inventors execute confirmatory assignments after the scope of claims is finalized (such as after allowance or after grant), alone or in combination with confirmatory declarations or exit documentation upon termination of employment. This issue might also be addressed in the employment intellectual property and secrecy agreements or other contracts that contain an assignment or obligation to assign, the employee handbook and the company’s intellectual property policy. We discuss each in more detail below.

There are pros and cons to requesting the execution of a confirmatory assignment after issuance, after a notice of allowance, and again during the pendency of each Continuation or Divisional application, even if the inventors have already signed an assignment of the first (or only) application. 

Pros : Assignor estoppel would likely apply after execution of a confirmatory assignment.

Cons : Increased administrative burdens without real benefit since there are few cases in which assignor estoppel has had to be invoked to prevent named inventors from challenging validity. (However, “[a]ssignors are especially likely infringers because of their knowledge of the relevant technology.” Minerva , Slip op., at 14, n.4, so they, or their future employers, may be of greatest concern as to potential validity challenges [1] ).

• Asking an inventor to sign a confirmatory assignment may provoke some questions from the inventor, but can be done in a cooperative context, in which the allowed claims are presented to the inventor to confirm they accurately reflect what the inventor considers to be their invention.  The practice is not without risk, as if an inventor disputes or otherwise disagrees that the scope of the allowed claims reflects the invention, or refuses to sign a confirmatory assignment, however captioned, the practitioner is left in an undesirable position of potentially having to reopen prosecution in order to disclose such inventor reaction to the USPTO, or expose the resulting patent to potential allegations of inequitable conduct.
• The confirmatory assignment could be part of, or include acceptable language to also qualify as a declaration under 37 CFR 1.63 (namely that the signor believes they are the original inventor or an original joint inventor of a claimed invention in the application; that the application was made or authorized to be made by them; and that they acknowledge that any willful false statement made in the declaration is punishable under 18 U.S.C. 1001 by fine or imprisonment of not more than five years, or both.)  While declarations signed at or around the time of filing an application are rarely challenged, as the Supreme Court recognized in Minerva , the oath (or declaration) is “a statement attesting that the applicant is ‘the original inventor’ of the ‘claimed invention,’ so that he is entitled to the patent sought.” Slip op., at 2 (citing 35 U.S.C. § 115).  Since the inventor’s declaration refers to “the claimed invention”, by signing a supplemental declaration with a confirmatory assignment, the risk of potential challenges to the declaration based on the difference in claim scope between the application at the time of filing and the allowed claims could be mitigated.
• Additional consideration may be useful to support a confirmatory assignment or declaration including a confirmatory assignment, which could be combined with an inventor recognition or award, monetary or other tangible benefit, which might be referenced in the confirmatory assignment.

Even if it is not desired to request confirmatory assignments of inventors in all cases, perhaps the practice can be limited to exit interviews where many employers take the opportunity to educate and attempt to prevent misunderstandings with their departing employees.  Together with the normal reminders of confidentiality, non-disclosure and use of trade secrets, intellectual property owned by the company to which the inventor contributed and any non-compete obligations, the IP segment of the exit interview could include an acknowledgement of the topics covered in the interview and a confirmatory assignment that identifies all patents or allowed patent applications on which the individual was named as an inventor while in the employ of the assignee, and perhaps includes copies of the patents and published applications (or the allowed claims).  This listing would refresh the departing employee’s recollection of the technology that the individual developed for, and transferred to, the employer and serve as an objective document to provide to future employers as to prior intellectual property retained by your organization.

Contractually the inventor could be obligated to execute confirmatory assignments and this obligation could be memorialized in the employee’s or independent contractor’s agreement, any assignment agreement executed by the inventor, the employee handbook and the company’s intellectual property policy.   Creating an expectation that confirmatory assignments are expected throughout the prosecution process may alleviate inventor frustration or anxiety over signing multiple documents.

If you would like to discuss strategy options in light of Minerva , including whether to implement a confirmatory assignment program in your organization, please contact Jeremy Kriegel , Pamela Cox or another attorney at Marshall, Gerstein & Borun LLP .

[1] Arista Networks v. Cisco , 908 F.3d, 792, 804 (Fed. Cir. 2018) held assignor estoppel “has no place in IPR proceedings.”  As such, the issue of assignor estoppel appears limited to validity challenges in the federal courts.

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USPTO modernizes patent, trademark assignment request process

Beginning August 1, the U.S. Patent and Trademark Office (USPTO) is streamlining the process for following new assignments, obtaining information on pending assignments, questions on assignments, liens on patents, filing assignments, recordation forms, and trademark assignments.

Going forward, users will submit requests virtually using the Electronic Patent Assignment System (EPAS) and Electronic Trademark Assignment System (ETAS) storefronts. Paper and fax assignment requests will be directed to the EPAS and ETAS storefronts for digital submissions.

The collection of assignment information is required by 15 U.S.C. § 1057 and 1060 and is used by the public to submit (and by the USPTO to process) patent and trademark assignment recordation requests using the EPAS and ETAS.

For more information, contact the Assignments Recordation Branch customer service personnel at [email protected] or (571) 272-3350, or visit the Assignments Recordation Branch webpage on the USPTO website.

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