Pitfalls of Trademark Assignments: Assignment in Gross

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Trademark assignment is an area of U.S. intellectual property law where small business owners, startups, and investors can easily make big mistakes. Most people know that they need a trademark assignment agreement, and that trademark assignments must be registered with the U.S. Patent and Trademark Office.

Fewer people are aware that U.S. copyright law and case law adds specific requirements for the content of trademark assignment contracts, in addition to other technical requirements for registering a trademark. If you register a trademark assignment that doesn’t meet these requirements, your assignment might be void, and you might not even know it. Advice from an intellectual property attorney can help you avoid costly mistakes with your trademark assignment and registration.

Assignment and Trademark Filing Basics

Trademark registration filing can easily deceive business professionals. This is because registration is not proof of the validity or enforceability of a registered trademark assignment. The U.S. Patent and Trademark Office doesn’t read the text of trademark assignments to verify that they contain certain required provisions, and you won’t be informed that your registered trademark or assignment could be unenforceable. Several commonly overlooked requirements include:

  • Failure to conduct due diligence to ensure that the assignor has strong, protectable IP rights in the trademark
  • Failure to file the registration of trademark assignment within 90 days of execution
  • Failure to assign the goodwill associated with the trademark

Trademark Assignment in Gross & Goodwill

Assigning the goodwill of a company is a fundamental aspect of drafting effective trademark assignments under U.S. trademark law. ‘Goodwill’ is a broad concept that includes the qualities and characteristics that are associated with a trademark, which might include a particular location, assets, or operations. If your trademark assignment agreement does not include provisions assigning the goodwill associated with the trademark, then it may be deemed an unenforceable “assignment in gross.”

However, you may still have an “assignment in gross,” despite a clause in the contract that assigns the goodwill of the trademark. This is because a court might look at the actual facts of the circumstances and determine that regardless of the contract, the parties did not actually transfer the goodwill. U.S. courts care more about the facts and the actual outcome of the transaction, and if there is a discrepancy between what is written on paper and the real-world facts, a court might deem your trademark assignment to be an assignment in gross.

Don’t get caught with an unenforceable trademark assignment. Contact a Texas intellectual property lawyer to ensure that your business is building value with secure and enforceable contracts.

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