The Seven Secrets of Security Interests

Well, they’re not really secrets.  But whether you’re representing the bank taking a security interest, an owner granting one, or a buyer who wants to ensure that outstanding security interests are released before a deal closes, here are a few things to keep in mind when it comes to IP security interests.

1. History is good.  Does the latest security interest agreement tell the whole story?  Ideally, recitals should include details of the underlying credit agreement, security agreement, and any other relevant documents.  If your security interest is a reaffirmation or supplemental filing, mention any documents previously recorded with the USPTO.  Lay out all the details so the reader can get up to speed quickly.

2. It’s all in the details.  Make sure dates, corporate names, addresses, entity types, recordation information, and other specifics about agreements and parties referenced in the security interest are all correct.  This also goes for your schedules of IP against which the security interest is granted – mark names and application and registration numbers and dates should all be correct.

3. Keep U.S. IP separate?  If there is IP outside of the United States, and the security interest is granted in U.S. and non-U.S. IP, consider preparing separate security interest agreements for recording in different jurisdictions.  Why disclose a full list of foreign IP in a filing publicly available on the USPTO website?

4. Consider corrective IP filings or use of “DBA’s.”  You might discover ownership inaccuracies relating to the IP against which a security interest is to be granted or released.  For example, the “Inc.” that is part of the corporate name might not be listed in the ownership information on the USPTO website.  Similarly, the corporate name might contain periods or spaces that are not reflected in the owner of record for the trademarks on the schedule.  In some instances, the parties might file corrective documents with the USPTO in order to correct those errors .  In other instances, consider whether you can list the incorrect owner name as a DBA for the granting or receiving party in the USPTO form.  Either way, the parties to the security interest or release should be listed with the correct corporate name.

5. Keep your chain of title orderly.  Did you know that more than one document can be recorded with the USPTO on the same day?  If you need to record a release of one security interest before recording a new security interest, and those documents have the same effective date, you can do that!  On the online recordation form, just fill in “1” or “2” in the “Multiple assignments with the same execution date” section of the ETAS form.

6. Matching scope of grant and scope of release.  When drafting releases of security interests, the scope of the original grant should match the scope of the security interest that is being released.  Often this scope extends well beyond just the registered IP and includes intangibles like the goodwill of the business.  Copy the language from the original security interest into the release document to ensure that the release exactly matches the interest that was originally granted.

7. What to do about dead or new IP for releases of security interests?  Between the time a security interest is granted and a security interest is released, some registrations may have expired and some applications may have been abandoned, and new applications may have been filed.  Should the dead IP and the new IP be included in the release?  When it comes to the new IP, the answer is a more straightforward “no”; there’s no need to confuse chain of title by releasing a security interest that was never recorded to begin with.  But dead IP is a trickier issue.  If there isn’t a lot of dead IP, you might decide to include it in the schedule to a release – especially for any registrations that remain in the grace period or that remain listed as “active” in USPTO records even though the grace periods are long expired.

While these seven tips may not exactly be secrets, they are important to remember when it comes to preparing and recording those all-important security interests and releases!

Counterfeits Got You Down? An Ex Parte (Seizure) Might Cheer You Up!

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.

Continue reading

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.

Continue reading

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.

Continue reading

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.

Continue reading

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:

Continue reading