October 10

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Trademark Registrations Are Worthless?

I often tell clients of Paradies® law that a trademark starts out its life with no value and only becomes valuable as good will accrues with use the mark in commerce.

This usually starts a conversation about what I mean by this, and a good discussion of just what a trademark is and does follows.

Good will is a foreign concept to most clients, and many don’t know that good will is an important intangible that can add value to a balance sheet.

Learning that the value associated with a trademark can increase (or decrease) as customers identify your company as the source of a certain quality of goods or services is an important step in understanding trademarks as IP.

How valuable?

The google brand has been valued at more than $150 billion.

In comparison, a newly registered trademark, which hasn’t yet accrued any meaningful good will, has no value.

Why was this rule against freely assigning intent-to-use applications added to U.S. trademark law?

According to the court, the rule was added to “prohibit ‘trafficking’ in marks: the buying and selling of ‘inchoate’ marks which as yet have no real existence,” citing a treatise on trademark law, 3 McCarthy on Trademarks and Unfair Competition § 18:13 (4th ed.). 

Trademark law doesn’t let a person file an application for the purpose of selling it to someone else, in order to make a profit off of reserving a right in a trademark. 

Why? 

Trademark policy wants only people or companies with a real intent to use a mark in interstate commerce in the very near future to file intent-to-use applications. Many countries and most U.S. states do not allow a person or company to file a trademark application until the mark has been actually used in commerce. 

So, U.S. trademark law adopted an anti-trafficking rule, and violating the anti-trafficking rule “…voids the assignment as well as the underlying application and resulting registration,” as cited in an earlier case in California, Oculu, LLC v. Oculus VR, Inc., No. SACV-14-0196-DOC, 2015 WL 3619204, at *7 (C.D. Cal. June 8, 2015). 

This anti-trafficking policy and the reasoning of these courts fits with the statement that applications for trademark registration have no value, and a trademark develops value only as good will accrues with use of the mark. 

Accordingly, U.S. trademark law discourages someone from filing an intent-to-use application for a trademark just to resell it, because that would be unjust enrichment. 


Why not jump on a FREE strategy to discuss how trademarks can add value to your business. You can book your strategy session today, using my convenient scheduler.

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