On October 31, we blogged about the oldest “live” trademark registration at the USPTO which contains the word HALLOWEEN. As we wrote, the mark is “’HALLOWEEN HAUNT,’ registered in 1989 and claiming first use of the mark in 1987 for amusement park services. It is owned by Cedar Fair, L.P., which owns the trademark registrations for CEDAR POINT and KNOTT’S BERRRY FARM and related marks.” (According to the USPTO record, Cedar Fair, L.P. is composed of Cedar Fair Management, Inc., an Ohio Corporation.)
Coincidentally, on November 2, Six Flags Entertainment Corporation (NYSE: SIX) announced that it is merging with Cedar Fair (NYSE: FUN) in a “merger of equals.” According to the Six Flags press release, the merged company will operate under the name Six Flags and trade under the current Cedar Fair ticker symbol, “FUN”.
What does this mean for the HALLOWEEN HAUNT registration? Will it lose its status as the oldest live registration containing the word “HALLOWEEN”? Nope! Depending on how the deal is structured, both registered and common law trademarks may need to be assigned and/or licensed to new or different entities. This is a routine but extremely important “papering” process to ensure the ongoing validity and integrity of the intellectual property that is changing hands and/or being merged.
When assigning a trademark, it is very important that the assignment not only assigns the mark itself, but also the “good will” attached to the mark.
Remember that the purpose of a trademark is to identify the source of goods or services. The longer a mark is used, the more brand recognition is built among consumers. That brand recognition is a business asset, and the USPTO considers it part of the “good will” of the business that is assigning the mark to another entity.
Accordingly, the very first sentence of the federal statute concerning trademark assignments states that:
“A registered mark or a mark for which an application to register has been filed shall be assignable with the good will of the business in which the mark is used, or with that part of the good will of the business connected with the use of and symbolized by the mark.”
See, 15 U.S.C. 1060(a)(1) (emphasis added); see also, Trademark Manual of Examining Procedure (“TMEP”) Section 501.
Now you know that assignments must include the “good will” from using the mark. But what if the mark has not yet been used?
Trademark applications may be filed based on an “intent to use” a mark. Intent to use applications can be very important assets because a company may plan to use the mark but not be ready to produce the goods or provide the services. If the intent to use application ultimately matures into a registration, the filing date of the intent to use application will become effectively become the “first use” (really, priority) date for purposes of infringement and “who is the senior user?” issues. Importantly, the USPTO will use the marks in intent to use applications against later-filed applications, even if those later-filed applications claim actual use of the mark and you have yet to use yours.
But beware: the law prohibits assigning an intent-to-use trademark application before a statement of use has been filed by the applicant; “except to a successor to the applicant’s business, or portion of the business to which the mark pertains, if that business is ongoing and existing.” See TMEP 501.01(a). Absent that exception to the rule, consequences for improperly assigning an intent to use application can include voiding the application and/or the USPTO or a court declaring that any resulting registration is invalid and unenforceable.
Why require proof of using the mark before allowing the assignment of an intent-to-use application? According to the TMEP, “[t]he primary purpose of this provision is to ensure that a mark may only be assigned along with some business or good will, and to prevent ‘trafficking’ in marks.” Id.
Absent that provision, there could theoretically exist a market wherein “trademark traffickers” with no intent to use a trademark by offering goods or services will file applications and then auction them off once they are approved by the USPTO or otherwise awaiting a statement of use. Even with good faith “trafficking,” businesses could be harmed by “brand hoarders” driving up the costs of naming a business. And, if the brand traffickers in bad faith target specific businesses who might not have registrations despite having common law rights, we could see something similar to the cybersquatting problem with domain names.
Chain of title issues are extremely important in all aspects of intellectual property. Copyright, trademark, and patent case law and statutes are filled with ownership and title issues, including topics like who created or invented a work or invention; and, despite who created or invented it, who really owns the rights under the law? Copyright and patent applications require applicants to disclose the true authors and inventors of the works and inventions seeking protection. Importantly, those same copyright and patent applications also contain areas to disclose who has been assigned or otherwise owns the rights to the work or invention, regardless of authorship and inventorship. Author/Inventor does not necessarily equal Owner! Is the proper person or entity signing the assignment?
When assigning a trademark or otherwise moving your intellectual property, it is imperative to seek counsel who is aware of pitfalls such as those presented above. You are best served seeking counsel as early as possible in the creative/development process. An improperly timed or worded assignment can have devastating consequences on the strength and validity of your intellectual property.
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