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Intellectual Property & Branding

Trademark Assignment: A Startup Guide

Promise Legal Staff

• 3 min read
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1. Introduction: What is Trademark Assignment and Why It Matters for Startups

Trademark assignment is the legal transfer of ownership of a trademark (or trademark application) from one party (the assignor) to another (the assignee). For startups, assignment is crucial to:

  • Protect IP: Ensure the company owns its brand assets outright.
  • Business Continuity: Facilitate equity transactions, asset sales, or mergers by cleanly transferring trademark rights.
  • Combat Infringement: Empower the new owner to enforce rights against infringers.

The U.S. Trademark Act (15 U.S.C. § 1060) governs assignments. Key points:

  • Assignments must be in writing and signed by the assignor. (15 U.S.C. § 1060)
  • An assignment must include goodwill of the business connected with the mark; otherwise, it’s invalid. (Model Jury Instructions)
  • Assignor and assignee should clearly define the territorial scope to avoid disputes.

3. Requirements for a Valid Assignment

  1. Written Instrument & Signatures: Must clearly describe the mark, parties, and rights transferred.
  2. Goodwill Transfer: Assignment must include the associated goodwill—transfer in gross (no goodwill) is void.
  3. Territorial Scope: Specify regions where rights transfer.
  4. Bona Fide vs. License: Assignment conveys full ownership; licensing merely grants use rights while the owner retains title. (Aggarwal Associates)

4. USPTO Recordation Process

Recording assignments with the USPTO isn’t mandatory but is highly recommended:

  • Public Notice: Establishes new owner’s priority over later purchasers.
  • Electronic Filing: Free via ETAS; paper fee is $40 for the first mark, $25 per additional. (USPTO FAQs)
  • Steps:
    1. Prepare signed assignment agreement.
    2. Complete Form PTO-1594 (Assignment Cover Sheet).
    3. Submit online via the USPTO Assignment Center or mail to USPTO Assignment Branch.

5. Chain of Title & Due Diligence

Maintaining a clear chain of title avoids ownership disputes:

  • Accurate USPTO Records: An outdated register complicates clearance and enforcement. (USPTO Director’s Remarks)
  • Case Law: Park ’N Fly v. Dollar Park & Fly underscores the need for clear records to uphold incontestability. (FindLaw)
  • Due Diligence Checklist:
    • Verify assignor’s ownership and freedom from liens.
    • Confirm mark status (live, registered, valid). (INTA Report)
    • Review existing licenses and use history.

6. Partial Assignments & License Conversion

Partial assignments (specific goods/services) require special care:

  • Transfer goodwill for the specific class; omit other classes.
  • Record partial assignments with USPTO to avoid confusion. (Wilson Legal Group)
  • Avoid geographic restrictions in assignments—use concurrent use proceedings instead. (Revision Legal)

7. International Considerations

For trademarks under the Madrid Protocol:

  • Record assignments with WIPO to update international registrations. (IP Law Mastery)
  • Notify national/regional offices (e.g., EUIPO for EUTMs) to secure local rights. (CMS Guide)

8. Common Pitfalls & Case Law

  • Missing Goodwill: Assignment in gross is invalid. (Park ’N Fly)
  • Unrecorded Assignments: Can block maintenance and enforcement. (Mondaq)
  • License vs. Assignment: Misclassifying a license as an assignment risks losing ownership rights. (Aggarwal)

9. Tax & Contractual Considerations

Trademark transfers have tax and contractual implications:

  • IRS Rules: Assignments treated as capital asset sales under Pub. 544; valuation guidance in IRM 4.48.5. (IRS Pub. 544)
  • Capital Gains: Taxable on appreciation; maintain acquisition cost records. (Statute Online)
  • Agreements: Include covenants, reps & W&I clauses covering IP rights, no encumbrances, and indemnities. (FreshDox Template)

10. Best Practices & Templates

Adopt these practices and use templates for consistency:

  • Key Clauses: Identification, consideration, warranties, indemnification, governing law. (FasterCapital Guide)
  • Due Diligence: Ownership verification, lien search, status check, related agreements review.
  • Recording Template: Use USPTO Form PTO-1594 and ETAS for electronic recordation. (USPTO MPEP)

11. Conclusion: Actionable Next Steps & Startup-Friendly Checklist

  1. Conduct a comprehensive trademark clearance search.
  2. Draft and sign a written assignment agreement transferring goodwill and rights.
  3. Record the assignment with USPTO (electronic preferred) and WIPO (if applicable).
  4. Notify national or regional offices for international marks (EUIPO, JPO, etc.).
  5. Review and update related corporate documents (stock purchase agreements, asset purchase agreements).
  6. Incorporate tax planning and include W&I clauses in the agreement.
  7. Monitor usage and enforce rights regularly to prevent abandonment.

By following these steps, startup founders can ensure that trademark rights are properly transferred, recorded, and maintained—laying a strong foundation for brand protection and business growth.