By: Ashley Prew
A sometimes overlooked part of a business transaction is the sale of intellectual property rights. Specifically, any trademarks, service-marks, patents, and copyrights that a business owns need to be handled properly in the sale of the business. Unfortunately, some of our clients have purchased trademark and service-marks in the course of acquiring another business, but failed to receive legal title via proper transfer to the new business owner at or immediately after the closing.
If a business owns and then sells a federal trademark or service-mark, the required transfer of title document is an Assignment of Interest that is filed with the United States Patent and Trademark Office (“USPTO”). The assignment can be compared to a deed for real estate. If the assignment is never recorded or filed with the Trademark Office, then ownership remains with the previous owner. If this occurs, additional expense will be incurred later when the discovery is made and the mistake has to be corrected. In addition, if there is a dispute over ownership, costly litigation may result to resolve the ownership dispute.
Properly addressing the intellectual property rights of a company in the Asset Purchase Agreement or Buy/Sell Agreement is only the first step in ensuring the trademark or service-mark is properly sold in the transaction. Beyond these agreements, it is up to the parties to ensure that the Assignment of Interest is both executed prior to or at the closing, and then properly filed with the United States Patent and Trademark Office. After the ownership transfer is properly recorded with the USPTO, it becomes the new owner’s responsibility to ensure it adequately protects the intellectual property interest. Some of these protective acts include continuously using the mark, filing the required renewals with the USPTO, and taking steps to ensure competitors do not infringe on the registered mark.
When purchasing, selling, applying for, or maintaining a federal trademark or service- mark, it is important to ensure you have an attorney who can advise you on the required steps to protect this intellectual property. If you have questions regarding trademarks, service-marks, or copyrights, please do not hesitate to contact us directly.