The “Do’s” of IP Due Diligence

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.

Playing a game of “Guess Who”: the domain name dispute process post-GDPR

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.

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Brand Visibility via Commercial Co-Venture Agreements

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.

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Making Trademark Applications “Special”

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.

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Strategies for Squashing Sketchy Specimens

So your time-of-filing trademark watching service [1] warned you that someone filed a use-based application to register a mark that’s awfully close to your mark.

You drill into their application file history and notice that their proof of use of their trademark looks like this:

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A Look at Brand Lifeguarding: Trademark Watching

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).

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Tricks to Transferring Trademarks

A trademark assignment is the transfer of ownership of a mark.  This usually entails having the owner transfer all its rights, title and interest in a given mark to a third party.

Sounds pretty straightforward, right?  Well, imagine you’re not just assigning one trademark to a third party – instead you’re transferring an entire portfolio containing hundreds of marks in dozens of countries.  Generally, this transfer of rights must be documented – or recorded – with the trademark office in every jurisdiction where marks have been assigned.  Otherwise, the outdated Trademark Office records relating to the ownership of a mark could cause issues, like blocking new applications filed in the new owner’s name.  The requirements for assigning trademarks and recording this transfer of rights often vary by jurisdiction, so handling the transfer of a global trademark portfolio can become a major undertaking.

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Five Reasons NOT to Register Your Trademark

Our followers know that we get a little giddy at the prospect of registering trademarks.  It’s almost as much fun as deep-fried Twinkies!  (Um, make that “Twinkies® brand sponge cakes.”)  So why are we posting about reasons NOT to register your mark?  Well, although we love global brands, you may sometimes be better off skipping or delaying those new applications.  Consider, for example, the following:

  1. How long will you continue to use the brandIf you will only use the mark for a short time, or in a limited geographical area, maybe it’s not worth spending the money on registration.  You might even stop using the brand before the application matures to registration!
  2. Is your industry brand-focused?  In some industries, brands can be (gasp!) a little less important. If your competitors don’t tend to copy your brand names, consider applying to register only your most important brand names.
  3. Might the Trademark Office consider the mark descriptive? If you’re at risk of a refusal to register the mark on descriptiveness grounds, you might refrain from applying, or wait until after you have used the mark for five years.
  4. Is there a crowded field of similar marks? If you’re not keen on trying to persuade the Trademark Office to withdraw a refusal to register your mark on the ground of confusion with five prior third-party registrations (ugh), maybe your resources would be better spent on something other than a new application…like finding a new brand?
  5. Is there a compelling reason to register the mark now? In some cases, if you’ve been using an unregistered brand for a while, maybe there’s no need to disrupt the status quo, particularly if the brand isn’t especially valuable or distinctive, you’re facing serious registrability hurdles, and there’s no infringement you need to stamp out.  Why call attention to yourself and invite oppositions when no confusion has arisen in the real-world marketplace?

Of course, the above considerations may not apply in every case.  If a brand’s importance is increasing, you’re entering new territories, or you have infringement concerns, it’s often a good idea to conduct searches and file applications.  Just wanted to share some (fat-free) food for thought before you rush into filing globally!

Boo, Lean, and Truncate: A Guide to Getting Your Search On

Ever wonder what dance parties and trademark searching have in common?  Neither did we.  But I can’t deny this title reminds me of a dance party.  Maybe because today is Friday (today is Friday, right?).

We often receive requests to file new applications for clients who have already cleared a potential mark through searching the PTO records and the Internet.  If done properly, a bit of self-help can cut down on legal expenses.  However, a proper preliminary search can be tricky – it involves more than just plugging the exact mark into the “basic search” feature on the PTO website here (“Quick Links” -> “TESS” -> “Basic Word Mark Search”) and hitting “submit query.”

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Helping “Insure” Your Success: When and How to Use “Insurance” Extension Requests for US Trademark Applications

You might remember from our “How Much Use Equals ‘Use’?” post that the USPTO can be picky when it comes to accepting proof that a brand is in use (and, of course, when we say “use,” we mean that special kind of “trademark use” that the USPTO is looking for – i.e., use of a brand in connection with products or services offered in commerce).

Luckily, owners of trademark applications based on proposed use have some time to develop and submit proof of use.  After an initial 6-month period, a trademark owner may request up to five 6-month extensions before it has to file proof that its brand is in use (that’s a total of three years!).  Of course, while taking advantage of these extensions might be helpful in some cases, the faster a trademark owner can submit an acceptable example of use, the faster its application can proceed to registration.

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