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Intent-to-Use TM Applications Usually Cannot Be Assigned

An Intent-to-Use trademark application usually is not assignable.  Plan ahead or know how to avoid the dilemma.  Trademark applications can be based on actual use which has already occurred, or an applicant’s intent to use the mark in the future.  Use-based applications are freely assignable; ITU applications are not.  
An ITU application can only be assigned to a successor to the business, or a portion of the business to which the mark pertains, and only if that business is ongoing and existing.  When an entire business is being sold, ITU applications can be included in the sale.  However, a business cannot carve out and sell an ITU application, even if wants to sell the particular brand or merely move the ownership to an affiliated entity.  

In corporate transactions or restructuring, this prohibition could negate a trademark registration if the transfer is improper.  Similarly, if an ITU application is collateral, the secured party needs to be careful how it takes assignment of that collateral at foreclosure.

One way to avoid this dilemma is in advance, form a new entity that will run that portion of the business related to the brand, and file an intent to use application in the name of that entity.  

If a business has not taken these actions yet still wants to sell a brand that is connected with an ITU application, the solution is to give the “buyer” an exclusive license to use the mark, which by terms of the agreement converts to an assignment once the mark has been used and the owner files evidence of use with the U.S. Patent and Trademark Office.  As part of that license agreement, the party should contemplate how the original applicant will execute and deliver an assignment when the time comes.  It may be prudent to have a signed assignment as an exhibit, to be effective once a Statement of Use or Amendment to Allege Use has been filed for the application.

The reason one cannot transfer ITU applications is because Congress did not want the ITU applications to become a commodity which people hoard.

Ned T. Himmelrich
410-576-4171 • nhimmelrich@gfrlaw.com