Overview
This lecture covers trademark transactions, focusing on assignments (sales) and licensing, their legal requirements, and the practical and strategic implications for businesses and legal professionals.
Types of Trademark Transactions
- Trademark transactions primarily include assignments (sales) and licenses (renting use).
- Assignments transfer ownership of a mark, while licenses permit use without transfer of ownership.
- Both assignments and licenses can be combined for complex transactions, such as collateral for loans.
Legal Requirements and Goodwill
- In the US, trademark assignments must include the transfer of associated “Goodwill” (the reputation and customer associations tied to the mark).
- Goodwill does not require a tangible business, but must relate to ongoing economic activity.
- Assignments should be in writing and recorded with the USPTO.
- Assignments of intent-to-use applications are limited; actual use is generally required before transfer.
Key Cases and Principles
- Courts are cautious about invalidating marks due to “assignments in gross” (assignment without goodwill).
- As seen in Sugar Busters v. Brenner, courts examine whether use of the mark continues similarly post-assignment.
- Assigning a mark for entirely different products can be problematic without transferring relevant goodwill.
- Clorox v. Chemical Bank highlighted prohibition of trafficking in trademarks as mere commodities.
Trademark Licensing and Quality Control
- Trademark licenses require the trademark owner to control the quality of goods/services to avoid “naked licensing.”
- Lack of control can result in abandonment of the mark, but courts are reluctant to cancel marks in practice unless the public is misled.
Practical Considerations and Market Realities
- Trademarks are often used as collateral for loans via conditional assignments and security interests.
- Large corporations own portfolios of trademarks across various products, often obscuring the actual manufacturer/source.
- Settlement agreements may involve assignment and license-back arrangements, or coexistence agreements dividing markets or products.
Careers and Professional Roles
- Trademark practice includes not only lawyers but also managers, valuators, marketing experts, and consumer psychologists.
- Organizations like INTA offer resources and networking for students interested in trademark professions.
Key Terms & Definitions
- Assignment — The sale and transfer of ownership of a trademark.
- License — Permission to use a trademark without transferring ownership.
- Goodwill — The value of a brand’s reputation and customer associations.
- Assignment in Gross — Assignment of a trademark without its associated goodwill.
- Naked License — A license lacking quality control by the trademark owner.
- Security Interest — Using a trademark as collateral for a loan.
Action Items / Next Steps
- Review and analyze key cases such as Sugar Busters v. Brenner and Clorox v. Chemical Bank.
- Read the assigned chapter on trademark transaction settlements.
- Prepare for class six by building case studies on real-world trademark transactions.