You need a trademark lawyer. No, really. Even if you have a corporate lawyer. No, especially if you have a corporate lawyer. Do not let your corporate lawyer do your trademark lawyer’s work. Would you let your dentist do your appendectomy? The following is a story of trademark work gone wrong. (Arguably better than an appendectomy gone wrong, but still).
Perry Orlando files a trademark application for THE EMERALD CITY in 2008. He files on an “Intent to Use” basis. Everything goes fine, and the application is allowed, but Mr. Orlando still has to file is Statement of Use before the mark will register.
In 2009, and before he files the Statement of Use, Mr. Orlando assigns the trademark to Emerald Cities Collaborative, Inc. (The U.S. trademark lawyers, of course, can see the problem immediately). From the case, it looks like the assignment was probably drafted by a lawyer. The lawyer seems to have even maybe understood the problem and tried to get around it. Mr. Orlando agreed to “assign unto ECC all right . . . in the Mark . . . . at such time as the Mark is registered at the PTO” (emphasis in original). Emerald Cities Collaborative (“ECC”) agrees to take the steps necessary to show the mark used in commerce, and files the Statement of Use about 4 months later, simultaneously recording the assignment. The Trademark Office accepts all this, and everything is once again fine, all until Ms. Sheri Roese files an application for EMERALD CITIES. Since THE EMERALD CITY and EMERALD CITIES are pretty darn similar, ECC files an opposition.
Ms. Roese does her homework, apparently (she represents herself in the opposition proceeding), and sees the same problem that the U.S. trademark lawyers have already seen, namely, you can not assign an intent to use mark in the United States. The reason for this is it violates Section 10 of the Lanham Act, and the reason it violates Section 10 of the Lanham Act is that trademark rights in the United States only exist when the trademark is attached to a good or a service and sold or rendered in commerce. (You can find my very long explanation as to why this is here). Names that are not attached to goods or services in commerce aren’t trademarks, and the trademark law doesn’t recognize an assignment of non-existent trademarks. In fact, it’s called “trafficking.” And that sounds bad.
The lawyers really did try to get around the whole “no assignment of trademarks not in use” problem, but given the fact that EEC agreed to start using the mark (meaning it wasn’t used prior to that), the agreement, “construed as a whole” constituted an “immediate assignment of Orlando’s intent-to-use application before filing of the SOU.”
An invalid assignment can sometimes be cured, but under Section 10, the invalid assignment renders the subsequent registration invalid also. So when it’s challenged by a subsequent user of the same or a similar mark, the holder of the invalid registration loses.
If you are looking to buy a business that has a trademark portfolio, figure out which ones are in use. You can make your company a licensee or a distributor for the target company, so that use of the marks can begin and can be shown to the Trademark Office prior to the date of the assignment. And don’t let your trademark lawyer try to put fancy language into the assignment to make it not sound like an assignment of an “intent to use” mark. Because it probably still will be.