Trademark Agreements

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Trademark Agreements Assignments Versus Licenses

Matt: Hello! Welcome back to Trademark Law Radio. This is Matt Plessner, and today we’re going to be discussing the difference between assignments and licenses in terms of trademark agreements. And to help us out today, Brian Hall, attorney at law of the Traverse Legal office of Traverse City, MI, joins us once again today. Brian, hello.

Brian: How’s it going Matt?

Matt: Doing pretty well, thank you for asking. Now, let’s start off by talking about, Brian, why do trademark owners enter into trademark agreements?

Brian: There are several reasons. Probably the first reason that comes to mind for most trademark owners and the reason they go contact a trademark attorney is because they want to monetize, or make money from, their trademark. And in order to do so, they want to capture how they’re doing that in a trademark agreement. So, there are all kinds of other terms that can be part of a trademark agreement, but really it comes down to, they found a deal, they reached that deal, and they want to memorialize that deal with someone who wants to make use of your trademark.

Matt: Well that sounds good. Let’s get into the difference between the assignment and the license. First of all, what is a trademark assignment?

Brian: That’s a good question. So, what we’re talking about here today are the two major kinds of trademark agreements, which are trademark assignments and trademark licenses. First, the trademark assignment is essentially where a trademark owner decides that they are going to relinquish ownership or control of that trademark agreement, and doing so, assign it (or typically it’s a sale) to a third party that will then become the trademark owner. So this happens oftentimes when other companies buy each other out or if the entity decides they no longer want to use a trademark; it might be going out of business, and some third party decides they want to either start using it and buy whatever it might be. So a trademark assignment agreement is going to be drafted that shows that that previous trademark owner is no longer the owner and a new trademark owner is the owner. And that’s important for a number of reasons. It’s important to the trademark owner that’s assigning a mark, also known as the assignor, because they don’t want to have liability or any responsibility associated with that trademark once they get rid of it. But it’s obviously also important to the person that’s getting that trademark (known as the assignee) because they want to show that they are indeed the owner and they have a good chain of title to that trademark. 

Matt: And also Brian, what’s a trademark license?

Brian: So a trademark license is very, very different than a trademark assignment. And it’s very important when we’re talking about trademark agreements that we distinguish between the two; if you’re a trademark attorney, or simply a layman. And a trademark license means that the trademark owner is granting some limited and defined right as it relates to that trademark to a third party. So remember Matt, when we’re talking about trademark assignments, the trademark owner is getting rid of their trademark rights and giving them to someone else. Either it is part of a sale, a gift, or whatever it might be. A trademark license allows the trademark owner to maintain ownership of that trademark but grants certain rights to a third party. So those rights can vary, and they are always going to be drafted as part of a trademark license agreement, or some other agreement that outlines them. Because they are very critical terms, and they can be related to many things. It can pertain to where that trademark licensee is allowed to use the mark geographically. So for example, if the trademark owner has trademark rights throughout the United States, they may grant a trademark licensee the right to use it in, let’s say, Texas. So that would be defined. There might be other language as it relates to the trademark license such as how the trademark can be used, who may use it, fees associated with use (sometimes termed royalties), or otherwise. So most people are more familiar with trademark license agreements because that kind of language is typically in just about any type of website’s terms of use or otherwise. That essentially say, hey, you can use my website and you can use my trademark in these limited ways

Matt: Now, if I were entering into a trademark agreement, which trademark agreement is better if I’m a trademark owner?

Brian: It’s a great question, and a lot of it comes down to what kind of deal or what kind of goal you’re trying to accomplish. So, typically, if you’re a trademark owner and you’re looking to maintain ownership of your trademark, a trademark license is what you’re looking for, because it’s going to allow you to maintain ownership while at the same time, granting some kind of limited form of right to use (or otherwise) that trademark. If you’re looking to get rid of a trademark, then a trademark assignment is what you should be considering. 

Matt: Well, thank you very much, Brian, and one final question for you. Do I need to file trademark agreements anywhere?

Brian: That’s a great question, and I think what you’re referring to there is, typically, the United States Patent and trademark office wants to make sure that if you are the owner of a registered trademark the USPTO database accurately reflects that ownership. So, if you’re licensing certain rights with your trademark to third parties, would you have to file some kind of document with the USPTO? And the answer to that question is “no.” However, if you have assigned your trademark rights, the answer is “yes.” And typically you have to file proof of your trademark assignment and assign that via the USPTO. You can do it all online, and it’s really important for two reasons. One, it’s important to the previous trademark owner, similar to what i said earlier about making sure everyone knows who the owner is so they can have liability and otherwise, but I think it’s even more important to the new trademark owner because they want it to reflect their ownership. So typically, a trademark assignment agreement is going to have language in it that shows that they’re assigning not only the trademark but all the goodwill associated with that trademark to that new person or entity and that new person or entity has a duty to go file the necessary paperwork with the USPTO so that it is reflected accurately on the public record.

Matt: Well, I think that should do it for today, but thanks again for joining us and hope to talk with you more in the future.

Brian: Thanks Matt-have a good one.

Matt: You too, and I’m Matt Plessner, and this is Trademark Law Radio.