Trademark Licensing & Assignments: Best Practices for Transferring Rights

A trademark assignment is the legal transfer of ownership plus the underlying goodwill. Assignments in gross — without the associated goodwill or going concern — are generally invalid. Practically, the assets or business continuity associated with the mark must accompany the transfer for the assignment to stick.

Assignments should be recorded with the USPTO via the Electronic Trademark Assignment System (ETAS). This puts the world on notice, ensures renewal correspondence goes to the right address, and prevents the previous owner from re-selling the mark to an innocent third party. Failure to record is one of the most common — and most expensive — IP mistakes.

Licensing is renting the mark. A licensor permits a third party to use the brand on goods or services. The critical legal requirement is “quality control” — the licensor must retain the right to inspect licensee goods and ensure brand standards are maintained. Without it, the license is fatally flawed.

Naked licensing — permitting use without exercising quality control — has been held by courts to be abandonment. The mark stops functioning as a source indicator. Some of the most prominent IP cases in the last 20 years have hinged on this point. Document quality control, and exercise it.