Trademark ownership may be one of the most lucrative and recognizable assets for any major company. Even still, a trademark’s life is incredibly fragile as any improper mishandling or illegal trademark assignment can completely invalidate the mark. Another important distinction that must be made between trademarks and other financial assets: trademarks require monitoring and care to maintain their value and legitimacy. An illegal trademark assignment often results as a lack of care for the upkeep of a trademark and may even be considered an assignment-in-gross.
This lesser-known legal principle instructs that all transfers of trademark ownership must include other related business assets and must be done in genuine goodwill. These business assets may include company shares, trade secrets, management or other financial assets. In turn, it is prohibited to execute a bare transfer during trademark assignment as a mark alone possess no discrete worth. Any trademark transfer completed without adhering to this guideline will be considered an illegal trademark transfer under the Lanham Trademark Act, 15 U.S.C. §1060.
Understanding whether a trademark assignment was done under genuine goodwill is a more difficult matter to measure. One way that courts will most commonly assess this condition is through a substantial similarity test. This judicial test examines both the quality and description of the goods and services before and after the transfer. Uniformity in the description of goods and services prevents a trademark assignment from intentionally misleading or confusing consumers. The guidelines for consistent quality of goods and services, however, can be quite exacting at times. In fact, some courts have observed that even nuanced differences in quality can cause a mark to fail the substantial similarity test. In the landmark 1920 Supreme Court case of Coca-Cola Co. v. Koke Co. of America, for instance, an assignee using a pepper-flavored beverage instead of the previous classic cola-flavored beverage of a mark was deemed to be misleading to consumers. Alternatively, Bambu Sales, Inc. v. Sultana Crackers reached an opposite ruling when an assignee adopt thinner cigarette paper than used by the previous mark owner.
Trademarks often demand the greatest amount of attention during the time of a trademark assignment. It can still be difficult to navigate the many laws and policies relevant to a trademark assignment as these laws often change in their interpretation and general application. Sometimes, the necessary provisions affecting a specific trademark services can even appear esoteric and difficult to interpret all together. Our Nextrend trademark attorneys provide individualized legal counsel to professionals and businesses through the entire trademark assignment process to avoid the possibility of any assignment-in-gross.