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Trademark rights in the United States are governed by the laws of the 50 states and Puerto Rico and, most importantly, by federal law under the Lanham Act. [80] Federal trademark protection for those marks "used in commerce" provides the most comprehensive protection and is widely regarded as the best way to protect trademarks whose use expands beyond a local territory or jurisdiction. [81] In the change of ownership of trademarks in a merger or acquisition, basic requirements for establishing proper ownership are specifically covered by federal statute. [82]

Assignment. In the United States, a trademark cannot be assigned apart from the goodwill it symbolizes. [83] In addition to the plethora of case law expounding and reinforcing this traditional requirement, the Lanham Act specifically requires that the goodwill associated with a trademark accompany any transfer of the trademark itself. [84] 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." [85] A trademark is merely a symbol of goodwill and has no independent significance apart from the goodwill associated with it. [86] Attempts to transfer trademarks without the associated goodwill of the business have been characterized as "assignments in gross" and are invalid. [87]

The public policy behind the requirement for transferring the goodwill of the business with the trademark itself is to prevent use of a trademark with a different goodwill and different product, which may result in consumer deception. [88] The requirement that goodwill accompany the trademark ensures that a transferee's use will not be deceptive or break the continuity of the goodwill associated with the trademark. [89]

Outside the United States, many jurisdictions do not impose a similar goodwill requirement in conjunction with the assignment of trademarks. [90] In fact, the majority rule worldwide is that trademarks may be assigned without the goodwill. [91] There are basically three categories worldwide in which trademarks may or may not be transferred with goodwill. The first category of countries comprise those which allow for the unfettered assignments of trademarks. An example of a country in this category is France. The second category of countries are those that allow assignments with or without the goodwill but impose an advertising requirement. Generally, British law countries that have adopted the Trade Marks Act 1938 and the U.K. Trade Marks Act 1994 are included in this category. The third and final group of countries are those such as the United States which impose a goodwill requirement.

Intent-to-Use Trademarks. The Lanham Act allows for the application of trademarks based on a bona fide intent-to-use the trademark later. [92] The Lanham Act specifically allows for intent-to-use applications to be assigned, but imposes specific requirements limiting the circumstances in which they may be validly transferred. [93] Section 10 of the Lanham Act states, "[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." [94] 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 U.S. 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.

The Paris Convention. The Paris Convention for the Protection of Industrial Property specifically discusses trademark transfers in the context of its associated goodwill. [95] Under Article 6quater whether the transfer of the business of the assignor is required to effect a valid transfer of trademark rights is determined by the national law of the particular jurisdiction in which the transfer is taking place. [96] Furthermore, Article 6quater does not impose upon the member nations of the Paris Convention an obligation to recognize an assignment that does not transfer the associated goodwill of the trademark. [97]

Goodwill under the Community Trademark System. The Community Trademark (CTM) system does not require that the goodwill of the business associated with the trademark accompany a transfer. [98] In the event a transfer agreement is silent about goodwill, an assignment under the CTM system will be assumed to include the entire business associated therewith. [99] Furthermore, it is not possible to assign the mark of a Community Trademark Registration (i.e., assign the mark for only a particular member nation of the European Community). [100]

Goodwill under the Madrid Agreement and Protocol. The Madrid Agreement and Protocol do not require that a transfer of the ownership of a trademark be accompanied by its associated goodwill. [101] In fact, Article 9ter(l) requires the International Bureau to record a partial transfer containing only a portion of the goods and services covered under a specific International Registration. [102] However, this mandatory recordal requirement by the International Bureau is qualified in that individual member nations may refuse to recognize the validity of such an assignment without the entire goodwill. [103]

Recordal of Trademark Assignments in the United States. Under the Lanham Act, it is critical that companies who recently acquire ownership of trademark rights, regardless of the nature in which they were received (merger, acquisition, takeover, or sale), record with the Commissioner of Patents and Trademarks their newly acquired ownership. The time frame in which to record and the result of failure to record are specifically provided for by statute. [104] The relevant provision reads:

An assignment shall be void as against any subsequent purchaser for a valuable consideration without notice, unless it is recorded in the Patent and Trademark Office within three months after the date thereof or prior to such subsequent purchase. A separate record of assignment submitted for recording hereunder shall be maintained in the Patent and Trademark Office. [105]

In the event that the acquiring party fails to properly record its new ownership of the trademark and the party from which the rights were bought transfers the same trademarks to a third party at a later date, the acquiring party will lose its rights in the marks. This statute is designed to protect third parties who, without knowledge of the initial transfer because of lack of recordal and who provided sufficient consideration for the trademarks, are not penalized by the initial purchaser's failure to provide notice by recording its ownership in the trademarks. In this respect, recordal prevents the third party from losing its rights and priority because of the unscrupulous behavior of the seller or its own misunderstanding of the transaction's nature.

Proper recordal of the new ownership in trademarks achieves more than having the name of the new owner reflected on the Federal Register. The Trademark Office will not allow an entity to file a Section 8 Affidavit of Use or even renew a trademark if that company is not reflected as the proper owner of record at the Trademark Office. [106]

After assignment of a registered trademark, the assignee obtains all right, title, and interest previously owned by the assignor. [107] Furthermore, it is essential that any assignment deed provide for the transfer of all common law rights in the mark. [108] The rationale behind this practice is that common law rights usually predate the actual federal registration, further extending the priority period in a trademark. [109] Additionally, in the event that a federal registration is later declared invalid, the common law rights still allow for priority of rights in the mark. [110]

Despite nonrecordal of a transfer of ownership in trademarks, the assignee retains the right to file an infringement action, cancellation, or opposition proceeding. [111] In order to proceed in an opposition or cancellation, however, the assignee must demonstrate through formal documentation that it has acquired ownership in the trademark upon which the action is based. [112]

Benelux. The term "Benelux" is an acronym for Belgium, the Netherlands, and Luxembourg. These three European jurisdictions formed the Uniform Benelux Trademark Law, which became effective on January 1, 1971. [113] As a result, the national trademark law of each of the three jurisdictions was abolished, paving the way for a uniform system of recording the transfer of trademarks. [114] This makes it necessary to record a trademark transfer in a single location - the Hague, Netherlands.

The Community Trademark. In an effort to harmonize the respective trademark laws of its member nations and eliminate trade barriers, the European Community created a unified trademark law to cover the entire community. [115] Implementing Regulation (EC) No. 2868/95 took effect on January 1, 1996; at a central office in Alicante, Spain, it is now possible to file an application to transfer and record ownership, which has effect within all the member nations vis-à-vis a unified system. [116] The Community Trademark does not replace the member nations' respective trademark laws, however; [117] it is critical that purchasers of trademarks record their new ownership in the Alicante office so that it may have effect against subsequent third-party purchasers. [118]

Madrid Agreement and Madrid Protocol. The Madrid Agreement Concerning the International Registration of Marks (Madrid Agreement), signed on April 14, 1891, enables a trademark owner who is a national, has a domicile, or has an "effective industrial or commercial establishment" in one of the member states of the agreement to obtain a single trademark registration covering multiple jurisdictions. [119] One of the principal disadvantages of the Madrid Agreement is that, if the home registration upon which the International Registration is based ceases to exist within the first five years, the International Registration and all its territorial extensions will also cease to exist. As a result, the Madrid Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks (Madrid Protocol) was proposed in an effort to attract more nations and went into effect on April 1, 1996. [120] The distinct element that makes the Protocol more attractive is that an application for an International Registration may be based on either a trademark application or a registration in the applicant's country of origin.

Trademark ownership transfers are governed under Articles 9, 9bis, 9ter, and Rules 25, 26, and 27 of the Common Regulations under the Madrid Agreement concerning the international registration of marks and the Protocol relating to that Agreement, which became effective on January 1, 1998. Recording a transfer is necessary for it to be valid and enforceable against subsequent third-party purchasers acting in good faith. It is recommended that any transfer instrument include a provision for recovery of past infringements, since the national laws of member nations may preclude such recovery by a transferee if not expressly provided for. Because an International Registration is not effective in the home country, it is critical that a transferee obtain all right, title, and interest to the home registration upon which the International Registration is based. [121]

When a corporation is acquired by purchase of all its shares without specifically mentioning its trademark rights, ownership of the trademarks will remain with the corporation being acquired. However, if a business is acquired by purchase of all its assets and the underlying agreement does not specifically mention the acquired company's trademark rights, the purchase may not be recognized in some jurisdictions where the International Registration has been extended. Essentially, mergers and acquisitions are governed by the national laws of the member nations; however, if the owner of the International Registration changes because of a merger or acquisition, this change should be recorded with WIPO, the governing body responsible for the administration of both the Madrid Agreement and Protocol. Furthermore, transfers of ownership of an International Registration will only be effective in jurisdictions subject to the Madrid Agreement or Protocol. The United States is noticeably absent from the contracting nations.

Other Multilateral Treaties. In addition to the arrangements and treaties previously discussed, other multilateral arrangements and treaties include the African Intellectual Property Organization (OAPI) arrangement, Andean Pact, Pan American Convention of 1929, Central American Convention, North American Free Trade Agreement (NAFTA), and Trade-Related Intellectual Property Rights (TRIPS), all of which grant reciprocal rights or harmonize national trademark laws to some degree. [122]



[80] The Lanham Act is codified at 15 U.S.C. § 1051-§ 1127.
[81] See 15 U.S.C. § 1051(a).
[82] See 15 U.S.C. § 1060. See also 37 C.F.R. §§3.1-3.85 and the Trademark Manual of Examining Procedure (T.M.E.P.) §§ 501-503.09 for in-depth analyses of the formal requirements, documentation, and fees regarding proper recordal of trademark right transfers.
[83] See McCarthy, Trademarks and Unfair Competition, § 18.2. See generally, Defiance Button Machine Co. v. C & C Metal Products Corp., 759 F.2d 1053 (2d Cir. 1985), cert. denied, 474 U.S. 844 (1985); Money Store v. Harriscorp Finance, Inc. 689 F2d 666(7th Cir. 1982); Visa USA., Inc. v. Birmingham Trust Nat'I Bank, 696 F.2d 1371 (Fed. Cir. 1982); Warner-Lambert Pharmaceutical Co. v. General Foods Corp., 164 U.S.P.Q. 532 (T.T.A.B. 1970); Pepsico, Inc. v. Grapette Co., 416 F.2d 285 (8th Cir. 1969).
[84] See 15 U.S.C. § 1060.
[85] Ibid.
[86] See Marshak v. Green, 746 F.2d 927 (2d Cir. 1984).
[87] See Berni v. International Gourmet Restaurants, Inc., 838 F.2d 642 (2d Cir. 1988).
[88] See McCarthy, § 18:3.
[89] Ibid.
[90] Ibid. § 18:10.
[91] Ibid.
[92] See 15 U.S.C. § 105l(b)(l), which provides, "A person who has a bona fide intention, under circumstances showing the good faith of such person, to use a trademark in commerce may request registration of its trademark on the principal register hereby established by paying the prescribed fee and filing in the Patent & Trademark Office an application and a verified statement, in such form as may be prescribed by the Commissioner."
[93] See 15 U.S.C. § 1060.
[94] Ibid.
[95] As of April 15, 2001, the following countries were parties to the Paris Convention: Albania, Algeria, Argentina, Armenia, Australia, Austria, Azerbaijan, Bahamas, Bahrain, Bangladesh, Barbados, Belarus, Belgium, Benin, Bolivia, Bosnia and Herzegovina, Botswana, Brazil, Bulgaria, Burundi, Cambodia, Cameroon, Canada, Central African Republic, Chad, Chile, Colombia, Congo, Costa Rica, Croatia, Cuba, Cyprus, Czech Republic, Denmark, Dominican Republic, Ecuador, Egypt, El Salvador, Equatorial Guinea, Estonia, Finland, France, Gabon, Gambia, Georgia, Germany, Ghana, Greece, Grenada, Guatemala, Guinea, Guinea-Bissau, Guyana, Haiti, Holy See, Honduras, Hungary, Iceland, India, Indonesia, Iran, Iraq, Ireland, Israel, Italy, Ivory Coast, Japan, Jordan, Kazakstan, Korea, Laos, Latvia, Lebanon, Lesotho, Liberia, Libya, Liechtenstein, Lithuania, Luxembourg, Macedonia, Madagascar, Malawi, Malaysia, Mali, Malta, Mauritania, Mauritius, Mexico, Moldova, Monaco, Mongolia, Morocco, Mozambique, Netherlands, New Zealand, Nicaragua, Niger, Nigeria, Norway, Oman, Panama, Papua New Guinea, Paraguay, Peru, Philippines, Poland, Portugal, Romania, Russia, Rwanda, Saint Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines, San Marino, Sao Tome and Principe, Senegal, Sierra Leone, Singapore, Slovakia, Slovenia, South Africa, Spain, Sri Lanka, Sudan, Surname, Swaziland, Sweden, Switzerland, Syria, Tajikistan, Tanzania, Toga, Trinidad and Tobago, Tunisia, Turkey, Turkmenistan, Uganda, Ukraine, United Arab Emirates, United Kingdom, Uruguay, Uzbekistan, Venezuela, Vietnam, Yugoslavia, Zambia, Zimbabwe.
[96] Article 6quater of the Paris Convention provides: (1) When, in accordance with the laws of a country of the Union, the assignment of mark is valid only if it takes place at the same time as the transfer of the business or goodwill to which the mark belongs, it shall suffice for the recognition of such validity that the portion of the business or goodwill located in that country be transferred to the assignee, together with the exclusive right to manufacture in the said country, or to sell therein, the goods bearing the mark assigned. (2) The foregoing provision does not impose upon the countries of the Union any obligation to regard as valid the assignment of any mark the use of which by the assignee would, in fact, be of such a nature as to mislead the public, particularly as regards the origin, nature, or essential qualities, of the goods to which the mark is applied.
[97] Ibid.
[98] See Article 17(1). See also Counsel Regulation (EC) No. 40/94.
[99] See Article 17(2).
[100] Article 17(1) provides, “A CTM registration can only be assigned for the entire European Union. The registration cannot be apportioned, and rights in the mark assigned only for a particular European Union country." See also Ethan Horwitz, World Trademark Law and Practice, §8.03.
[101] See Madrid Agreement Concerning the International Registration of Marks, Article 9ter(l).
[102] Article 9ter(l) provides, "If the assignment of an international mark for part only of the registered goods or services is notified to the International Bureau, the Bureau shall record it in its Register. Each of the contracting parties shall have the right to refuse to recognize the validity of such assignment if the goods or services included in the part so assigned are similar to those in respect of which the mark remains registered for the benefit of the assignor."
[103] Ibid.
[104] See 15 U.S.C. § 1060.
[105] Ibid.
[106] See Worldwide Trademark Transfers, 4.
[107] Ibid.
[108] Ibid.
[109] Ibid.
[110] Ibid.
[111] Ibid.
[112] Ibid.
[113] See Worldwide Trademark Transfers, IA.
[114] Ibid.
[115] See Counsel Regulation (EC) No. 40/94, which took effect on March 15, 1994. The fifteen (15) member nations of the European Community are Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal, Spain, Sweden, and the United Kingdom.
[116] See Implementing Regulation, (EC) No. 2868/95.
[117] Ibid.
[118] Ibid.
[119] The following jurisdictions are Member Nations of the Madrid Agreement as of April 15, 2001: Albania, Algeria, Armenia, Austria, Azerbaijan, Belarus, Belgium, Bhutan, Bosnia and Herzegovina, Bulgaria, China, Croatia, Cuba, Czech Republic, People's Democratic Republic of Korea, Denmark, Egypt, Estonia, Finland, France, Georgia, Germany, Hungary, Iceland, Italy, Japan, Kazakhstan, Kenya, Kyrgyzstan, Latvia, Lesotho, Liberia, Liechtenstein, Lithuania, Luxembourg, Macedonia, Moldova, Monaco, Mongolia, Morocco, Mozambique, Netherlands, Norway, Poland, Portugal, Romania, Russia, San Marino-, Sierra Leone, Slovakia, Slovenia, Spain, Sudan, Swaziland, Sweden, Switzerland, Tajikistan, Turkey, Turkmenistan, Ukraine, United Kingdom, Uzbekistan, Vietnam, and Yugoslavia.
[120] Member Nations to the Madrid Protocol as of Dec. 14, 1999, include Austria, Belgium, China, Cuba, Czech Republic, Democratic People's Republic of Korea, Denmark, Estonia, Finland, France, Georgia, Germany, Hungary, Iceland, Japan, Kenya, Latvia, Lesotho, Liechtenstein, Lithuania, Luxembourg, Moldova, Monaco, Morocco, Mozambique, Netherlands, Norway, Poland, Portugal, Romania, Russia, Sierra Leone, Slovakia, Slovenia, Spain, Swaziland, Sweden, Switzerland, Turkey, Turkmenistan, United Kingdom, and Yugoslavia.
[121] See Lanning G. Bryer, Melvin Simensky, and Neil J. Wilkof, Intellectual Property in the Global Marketplace, (New York: John Wiley & Sons, Inc., 1999).
[122] See Bharati Bakshani and Dr. Ian Jay Kaufman, Imperative Strategies for Protecting Trademark Assets: The International Market, Intellectual Property in the Global Marketplace, V.1., § 12.4(c) (1999). The OAPI arrangement covers the following jurisdictions: Cameroon, Central African Republic, Chad, Congo, Benin, Gabon, Guinea, Mali, Ivory Coast, Mauritania, Senegal, Togo and Niger.




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