Pillsbury Winthrop Shaw Pittman

Intent to lose? Be wary of pitfalls involving intent-to-use trademark applications

By Bobby Ghajar, Mark R Kendrick and Carolyn Toto

Merger and acquisitions often involve the acquisition and/or assignment of trademarks. Companies acquiring trademarks must beware of potential problems lurking with intent-to-use (ITU) trademark applications (or applications that started as ITU applications), such as improper assignment or lack of a bona fide intent to use the mark. We review the case law highlighting these issues and provide practice pointers to address these issues.

In the US, one can file an ITU application, in effect reserving the mark and establishing a constructive priority date before the mark is actually used in commerce. The US Patent and Trademark Office (USPTO) will not register an ITU application until the applicant files proof that it is using the mark in commerce. The applicant may do so in the form of an amendment to allege use before the Trademark Examiner approves the mark to be published for opposition, or in the form of a statement of use after the mark survives the opposition period and a notice of allowance is issued. An applicant has up to three years from the date of the notice of allowance to file a statement of use (SOU) to represent the mark is being used.

Section 10(a)(1) of the Lanham Act, also referred to as the anti-assignment provision of the Trademark Act, prohibits assignments of ITU applications prior to the filing of an SOU or amendment to allege use (AAU), with one exception. See 15 USC §1060(a)(1). It is possible to assign an ITU application if it is ‘an assignment to a successor to the business of the applicant, or portion thereof, to which the mark pertains, if that business is ongoing and existing’. Among other factors that the courts and Trademark Trial and Appeal Board (TTAB) evaluate when determining the validity of an assignment of an ITU application are the sufficiency of the transfer documents, whether the assignee is truly a successor to the business, whether the business is ‘ongoing and existing’ and whether the ITU was filed in the correct entity’s name. The congressional intent behind enacting the prohibition of assignment of ITUs was to prevent trafficking of or profiting from the sale of an ITU application. See The Clorox Co v Chemical Bank, 40 U.S.P.Q.2d 1098, 1100-01 (TTAB 1996)…

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