What? A trademark lawyer suggesting that you needn’t always conduct a full-scale trademark search before you file a new trademark application? Isn’t that tantamount to driving without a seat belt? Hear us out.
If trademark infringement and dilution are frequent headaches for brand owners, counterfeiting – which the U.S. Trademark Act defines as use of “a spurious mark identical with, or substantially indistinguishable from, a registered mark” – is a migraine. As a practical matter, counterfeiting in most cases renders perfunctory the task of analyzing the “likelihood of confusion factors” required in traditional infringement cases. In counterfeit cases, the marks and goods are identical, and the counterfeit mark was applied with the intent to deceive consumers into believing that fake goods are genuine, so it’s reasonable to assume it will do exactly that.
You’ve acquired a new trademark portfolio. Hooray! But wait … as you’re sorting through the marks you’re now handling, you notice some errors and inconsistencies in the owners’ information.
Last time we talked about some important Do’s of IP due diligence. But what might the buyer want to avoid during due diligence?
Here are the top 5 Don’ts to consider:
So you’ve been asked to help acquire a company with an extensive IP portfolio. Great! Now it’s time for that mysterious task known as “due diligence.” Due diligence is intended to confirm all of the assets that a buyer will obtain in an acquisition and to resolve any discrepancies before the deal closes.
What should you actually do during due diligence when it comes to IP? How diligent should you be?
Here are the top 5 Do’s to consider when conducting due diligence:
1. Do be thorough. Dig into the details of the IP owned by the seller. Remember that the schedule of trademarks provided by the seller might not exactly match what is listed in USPTO records. Check the owner name, mark, application and registration numbers, and application and registration dates for possible scheduling errors. It’s possible that active applications or registrations might be missing from the schedule altogether. For foreign marks, cross-check the details in publicly available databases or, if possible, subscription databases to assess accuracy of application and registration details. And don’t forget to ask the seller to identify the markets in which the marks are actually used, and since when.
2. Do check chain of title carefully. Review details of all recorded assignments, including assignor / assignee names, address information and entity types. Look out for errors that you don’t want to have to clean up later. Is the assignee’s state in the assignment abbreviated as “AR” but the USPTO records say “Arizona” instead of “Arkansas”? Is an LLC incorrectly characterized as a “Limited Liability Corporation”? Each step in the chain of title should be accurate.
3. Do check goods and services. Did the seller register the marks in the proper classes? Are the goods and services descriptions accurate? The acquired registrations won’t do you much good if they are misclassified or omit key products.
4. Do review applications and registrations for upcoming deadlines. Is there an office action with a response deadline before or shortly after closing? Are renewals or maintenance filings due soon? What about extensive paperwork requirements for foreign registrations? You’ll want to make sure that the IP portfolio that you acquire at closing matches the IP you identified during due diligence. Of course, the seller may choose not to renew registrations in the ordinary course of business – but it’s important to know that information sooner rather than later.
5. Do ensure that any necessary corrective filings are made before closing. If you find any errors in chain of title or current ownership information, the seller is often in a better position to locate old documents or obtain new ones before closing. Having the seller bear the expense of any major corrections may also be in the buyer’s best interest.
Above all, the key to due diligence is being diligent! Do as much digging as time and budget permit, and don’t be shy about asking the seller to give you additional information or make any needed filings.
One final note: if your due diligence determines that one or more of the seller’s top brands is not registered in the markets where the brand is being used, consider filing new applications as soon as your transaction closes.
Stay tuned for our upcoming post on the top 5 “Don’ts” of Due Diligence.
Since the European Union’s General Data Protection Regulation (GDPR) went into effect in late May, its impact continues to be felt by cybersecurity researchers, investigators, law enforcement officials and – perhaps less obviously – anyone who relies on the information provided by the Internet Corporation for Assigned Names and Numbers’ (ICANN) WHOIS service. This includes lawyers, like us, who routinely check WHOIS to ascertain the identity of a domain name registrant.
We’re seeing a lot of commercial co-ventures (CCVs) lately. It makes sense, right? CCVs can be a win-win for all parties involved – a company informs the public that it will donate a portion of its sales revenue to a nonprofit organization and, in return, the nonprofit allows the company to use the nonprofit’s brand name to market the product or service. (For example: “For every bottle of honey purchased in November 2018, Good Intentions Stores will donate 25 cents to the Fictional National Honeybee Preservation Society.”) Such collaborations can increase the company’s sales and goodwill, and the nonprofit benefits from donations.
We tend to think that trademarks, in general, are pretty special.
However, a “special” trademark application has a … well … special meaning to the PTO. The PTO normally examines applications in the order it receives them, which can take about three to four months. That said, there are two ways to make an application “special” so that the PTO will pull the application out of order and expedite its initial examination.
In a September 6, 2018 webinar hosted by CompuMark, I presented on the very important topic of trademark watching services. Thanks to CompuMark for inviting me to speak, and to everyone who attended the webinar and asked great questions! (If all goes according to plan, future blog posts may cover some of the questions we ran out of time to answer during the webinar). For those who weren’t able to make the webinar during the live presentation, you can access a copy on CompuMark’s website (you’ll need to register on the right side of the screen).