Traps for the Unwary Trademark Owner (Part Three) – Trademark Auctions

Internet trademark auctions are virtual marketplaces where people buy and sell registered trademarks from around the world. Some of these auction websites attempt to sell U.S. trademark registrations. Many of these registrations are invalid and worthless.

Make sure you are buying the mark + its goodwill:

Goodwill is an intangible asset that is part of the value of the trademark owner’s business. It is the value of the reputation of the company and product or service that consumers associate with the trademark.

A U.S. trademark registration and the underlying trademark must be sold with its associated goodwill to transfer any rights in the trademark. Failure to do so will invalidate the trademark transfer, which means you will not actually own the subject trademark registration.

Make sure you are buying a valid registration:
If you buy an invalid trademark registration you likely will not have any protectable rights in the trademark registration. Transfer of a trademark does not fix an invalid registration, whether you knew about the defect or not. For example:

• If the purchased registration was obtained fraudulently, it may become the subject of cancellation, expungement, or reexamination proceedings. An example of a fraudulent filing is where the seller knowingly falsely provides a signed statement to the U.S. Patent & Trademark Office that the mark is in use in commerce to obtain the registration, when in fact it is not. Not only will the purchaser have bought an empty asset, but it may also become subject to surprise legal or administrative proceedings.
• If there is evidence that the registration was part of a scheme to violate U.S. trademark law or USPTO rules, the registration may face administrative sanctions and invalidation.

Do your due diligence:
Consider consulting your trademark attorney who can research whether the trademark registration is valid, evaluate the protectability of the trademark, advise you on ensuring the transfer is valid and handle the necessary transactions in support of the transfer.