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The Difference Between an Assignment and a License of a Patent

The transfer of rights in a patent generally fall into two categories: an assignment and a license. The transfer is usually accomplished by an agreement.

Whether the agreement at issue is an assignment or a license matters because generally an assignee can sue for infringement alone, while a licensee of less than substantially all of the patent rights cannot sue for infringement alone without the patent owner.

A patent grants the owner certain rights, such as the right to exclude others from making, using, offering for sale, or selling the invention throughout the United States or importing the invention into the United States. 35 U.S.C. § 154(a)(1) 

Usually, an assignment transfers all of the rights* of one party in a patent to the recipient (the assignee). Vaupel Textilmaschinen KG v. Meccanica Euro Italia S.P.A., 944 F.2d 870, 875 (Fed. Cir. 1991); 35 USC 261. Also, a transfer of substantially all of the patent rights can be considered an assignment for the purposes of standing to sue for infringement. A transfer of less than substantially all of the rights, is a mere license. It is the content and legal effect of the agreement that determines whether it is an assignment or license, not its title.

In the Vaupel case, the court found the agreement at issue there transferred substantially all of the rights in the patent, where the seller retained the following rights: “1) a veto right on sublicensing by Vaupel; 2) the right to obtain patents on the invention in other countries; 3) a reversionary right to the patent in the event of bankruptcy or termination of production by Vaupel; and 4) a right to receive infringement damages.” Therefore, despite the seller retaining these rights, the agreement at issue was considered an assignment.

In contrast, in Sicom Sys. v. Agilent Techs., Inc., 427 F.3d 971, 978-979 (Fed. Cir. 2005), Canada licensed the patent at issue to plaintiff Sicom. The court found the license did not transfer substantially all of the rights, where Canada reserved the right to use the patented technology itself, to veto Sicom’s reassignment of its rights, and to sue for non-commercial infringement. Canada also retained legal title to the patent.

The line between a transfer of substantially all of the rights and less than substantially all of the rights is gray. Ignoring this issue and simplifying it, an assignment usually transfers everything (including legal title) whereas a license grants less than all of the rights and reserves rights to the person or entity granting the license.

*The Supreme Court has also said that the transfer of an undivided portion or share of a patent can also be an assignment, but then assignor and assignee must act together to sue for infringement. Waterman v. Mackenzie, 138 U.S. 252 (1891).

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Don’t Bother Speculating in Trademarks: COVID-19 VAX and CORONAVAX Trademark Apps Likely To Fail

A company named And Still, LLC filed trademark applications to register COVID-19 VAX and CORONAVAX for vaccines.

The Boston Business Journal reported that the trademark applicant planned to sell the the trademarks to a company that makes a coronavirus vaccine.

If this is true, it is very unlikely to work.

There is No Market For Speculating in Unused Trademarks

First, there is no market for unused trademarks. As I’ve written before, it is a common misconception that filing a trademark application grants rights in a trademark without actually using the trademark.

Trademark rights are acquired by using the trademark in conjunction with the sale/providing of goods or services. An intent-to-use trademark application can be filed before a trademark is used with products or services, but only if there is a demonstrated bona fide intent–at the time the application is filed–to use the trademark with the goods/services described in the application.  M.Z. Berger & Co., Inc. v. Swatch AG, No. 2014-1219 (Fed. Cir. June 4, 2015).

Here, if And Still, LLC didn’t have an intent sell vaccines itself (or in some cases through an affiliated/controlled company) under the marks at the time the trademark applications were filed, the trademark applications are likely subject attack on this basis. Intent to sell the marks, without use, won’t work.

Descriptive Marks Require Acquired Distinctiveness

Second, a mark that is merely descriptive of the goods/services and has not acquired distinctness in the marketplace will be refused registration the primary register.

In 2019, the TTAB affirmed the refusal to register ZIKAVAX and ZICAVAC for vaccine formulations because each mark was descriptive.

Bharat Biotech International Limited applied to register these marks in 2017 following the epidemic caused by the Zika virus.

The TTAB found that misspelling of zika as ZICA did nothing to make ZICA non-descriptive. It also found that evidence showed that the VAX and VAC were common abbreviations for vaccine.

The TTAB concluded that “the proposed marks immediately describe the goods as Zika vaccines, because [t]he question is not whether someone presented with only the mark could guess what the goods or services are. Rather, the question is whether someone who knows what the goods or services are will understand the mark to convey information about them.”

Here, the COVID-19 VAX and CORONAVAX is likely to meet the same fate at the ZIKAVAX trademark application, a refusal as descriptive.

Descriptiveness refusals can be overcome by showing the mark at issue has become associated with a single source in the market place. This market recognition is known as acquired distinctiveness or secondary meaning. But that is unlikely here at this stage because the applications are intent-to-use applications. Intent-to-use applications tend to indicate that applicant has not yet used the mark. And without use, there is unlikely to be a marketplace association.

There’s also the option to place a descriptive mark on the supplemental register. But that’s if the marks are not generic. Also, a registration on the supplemental register does not provide a presumption that the registrant owns the mark.

Further, even if the marks where registered on the supplemental register, the marks would still need acquired distinctness for enforcement, which appears unlikely at this time.

Cite: In re Bharat Biotech International Limited, Serial Nos. 87570858 and 87570862 (TTAB 2019) (Refusing ZIKAVAX and ZICAVAC as descriptive of vaccine formulations).

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Trademark Due Diligence in Corporate Transactions

At least one trademark is often involved in a sale, merger, asset purchase, or similar corporate transaction of a business. Below are some of the steps that a buyer might undertake to investigate a seller’s rights in trademarks involved in corporate transactions.

1. Proper Original Owner

A trademark application, and the resulting trademark registration, filed in the name of the wrong owner may be void and invalid. See TMEP § 803.06. Some errors in the manner the applicant was listed in the original application can be corrected, but some cannot. See TMEP 1201.02(c). Therefore, it is important to check whether the original applicant of the trademark registration was correct and properly identified on the application.

For many applications, a copy of the original trademark application can be found in the USPTO’s Trademark Status & Document Retrieval (TSDR) system.

If the trademark registration is void for being filed in the name of an uncorrectably wrong entity, then the trademark registration’s value may be discounted, and consideration should be made of filing a new trademark application.

2. Proper Chain of Title

Once it is established that the trademark registration arose from an application naming the correct owner, then the next item to review is the chain of ownership from the original applicant to the current owner. Each assignment and transfer of the registration of the underlying trademark should be reviewed to ensure a proper chain of title to the current owner of the trademark registration.

Ideally all of the assignments and transfers should have been recorded (but sometimes they are not) at the USPTO so that a search of title can be made at the USPTO’s Electronic Trademark Assignment System (ETAS). If gaps, errors, or unreleased security interests in the chain of title exist, they can be remedied before closing.

3. Assignments Include Associated Goodwill of the Business

A trademark cannot be assigned/sold alone (known as a “naked assignment” or a “assignment in gross”) without the goodwill of the business associated with the mark. U.S. Trademark law provides, “A registered mark or a mark for which an application to register has been filed shall be assignable with the good will of the business in which the mark is used, or with that part of the good will of the business connected with the use of and symbolized by the mark.” 15 USC 1060.

A naked assignment is invalid. See Sands, Taylor & Wood Co. v. Quaker Oats Co., 978 F.2d 947, 956 (7th Cir. 1992) (“the transfer of a trademark apart from the good will of the business which it represents is an invalid ‘naked’ or ‘in gross’ assignment, which passes no rights to the assignee”).

Therefore, each assignment in the chain of title from the original trademark registration owner should be reviewed to ensure that it contains a recitation that the goodwill of the business associated with the mark was transferred with the trademark to the assignee.

4. Currently Accurate Description of Goods/Services in Registration

Overtime businesses can add and/or drop products and services. It is ideal for the description of goods and services in a trademark registration to accurately and completely cover the goods and services that are now offered under the corresponding trademark. The older the trademark registration is, the more chance that change in conditions have arisen so that the description of goods and/or services in trademark registration(s) is out of alignment with the current goods and services.

If the registration(s) do not cover some of the currently offered goods or services, a new trademark application can be filed on the same mark covering the goods/services not covered by the current registration(s) (since a trademark registration cannot be amended to add goods or services).

If the current registration list goods/services not currently offered and not planned to be offered in the future, at the time for renewal of the registration, the description can be changed to remove goods/services no longer offered.

5. Unregistered Trademarks Specifically Listed

While the above points are directed to trademarks that are registered, unregistered trademarks should also be considered. Trademark rights can arise from use of a trademark in connection with goods/services, without any registration. For example, the Lanham Act protects unregistered distinctive trademarks used in commerce. 15 USC 1125(a).

Therefore, a trademark transfer document should identify unregistered trademarks that are being transferred, in addition to registered marks. Further, the goods and services corresponding to each unregistered mark should ideally also be identified in the transfer document.

These are some steps that a buyer can perform in a corporate transaction involving trademark registrations.

Note: reference to trademarks in this post also includes service marks.

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Is the Bottom or Back of Your Design Important?

When filing a design patent application, you should consider whether the design has unimportant features or sides. Then the design patent application can be prepared to take this into account.

For example, Super-Sparkly Safety Stuff, LLC sued Skyline USA, Inc. alleging it of infringing Design Patent D731,172S (‘172 Patent).

The complaint shows the following image of Skyline’s alleged pepper spray infringing product. The product does not have rhinestones on the bottom as compared to the cylindrical side.

However the design of the ‘172 Patent has rhinestones on the bottom, as shown in figure 3.

The district court granted summary judgement of non-infringement finding that the Skyline product did not infringe the ‘172 patent.

The court said that “the accused product has no rhinestones on the canister bottom … This difference is significant, particularly given the relatively simple and limited elements of the product design, and would be obvious to an ordinary observer.”

You might think that the bottom of the product is not that important and differences in the bottom should not weight heavily when comparing an alleged infringing product to a design patent. But this case shows that even the bottom of a product might be important in a design patent case.

If the bottom or the back of your design is not important, then consider whether it should not be claimed by presenting it in broken lines.

In this case, it may be that the bottom is important because the bottom is where the key ring attaches on the pepper spray product. Therefore, the bottom could be in view to the user often in normal use.

Citation: Super-Sparkly Safety Stuff, LCC v. Skyline USA, Inc., 3:18-cv-00587-N (N.D. Tex 2020). Super-Sparkly appealed and the appeal is pending.

Hat tip to Design Law.

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Trademark Office Likelihood of Confusion Factors: The DuPont Factors

The trademark office (USPTO) will review a trademark application to determine whether the mark in that application is likely to cause confusion with another registered mark. And, if so, it will refuse registration of the application.

In particular, the relevant statute provides that an applied-for mark will be refused registration when it “consists of or comprises a mark which so resembles a mark registered in the Patent and Trademark Office… as to be likely, when used on or in connection with the goods of the applicant, to cause confusion, or to cause mistake, or to deceive.” 15 U.S.C. §1052(d).

The USPTO uses the factors provided in In re E. I. Du Pont de Nemours & Co., 476 F.2d 1357, 1361 (C.C.P.A. 1973) to evaluate whether there is a likelihood of confusion, which are:

(1) The similarity or dissimilarity of the marks in their entireties as to appearance, sound, connotation and commercial impression. 
(2) The similarity or dissimilarity and nature of the goods or services as described in an application or registration or in connection with which a prior mark is in use. 
(3) The similarity or dissimilarity of established, likely-to-continue trade channels. 
(4) The conditions under which and buyers to whom sales are made, i.e. “impulse” vs. careful, sophisticated purchasing. 
(5) The fame of the prior mark (sales, advertising, length of use). 
(6) The number and nature of similar marks in use on similar goods. 
(7) The nature and extent of any actual confusion. 
(8) The length of time during and conditions under which there has been concurrent use without evidence of actual confusion. 
(9) The variety of goods on which a mark is or is not used (house mark, “family” mark, product mark). 
(10) The market interface between applicant and the owner of a prior mark: 
(a) a mere “consent” to register or use. 
(b) agreement provisions designed to preclude confusion, i.e. limitations on continued use of the marks by each party. 
(c) assignment of mark, application, registration and good will of the related business. 
(d) laches and estoppel attributable to owner of prior mark and indicative of lack of confusion.
(11) The extent to which applicant has a right to exclude others from use of its mark on its goods. 
(12) The extent of potential confusion, i.e., whether de minimis or substantial. 
(13) Any other established fact probative of the effect of use.”

The weight given to these factors may vary in individual cases and all factors may not be relevant in every case. The USPTO sees the first and second factors as key when evaluating a trademark application, i.e. the similarities between the marks and the similarities between the goods.

Citations: In re E. I. Du Pont de Nemours & Co., 476 F.2d 1357, 1361 (C.C.P.A. 1973); TMEP 1207.01; 15 U.S.C.S §1052(d); In re Thor Tech, Inc., 113 USPQ2d 1546 (TTAB 2015).

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Seventh Circuit Likelihood of Confusion Factors in Trademark Cases

To determine whether there is infringement in trademark cases, the question is whether there is a likelihood of confusion arising from the defendant’s use of a mark. Courts consider various factors to determine whether there is a likelihood of confusion. In the Seventh Circuit covering Illinois, Indiana, Wisconsin, federal courts consider the following factors:

1. the similarity between the marks in appearance and suggestion;
2. the similarity of the products;
3. the area and manner of concurrent use;
4. the degree of care likely to be exercised by consumers;
5. the strength of the plaintiff’s mark;
6. any actual confusion; and
7. the intent of the defendant to “palm off” his product as that of another.

The Seventh Circuit has also said that “These [factors] are useful insofar as they operate as a checklist to ensure that we do not overlook relevant evidence, but they are a means to an end, not an end in themselves.”

It also said, “No single factor is dispositive.” And “Courts may assign varying weight to each of the factors depending on the facts presented, though usually the similarity of the marks, the defendant’s intent, and actual confusion are particularly important.”

Citations: Bd. of Regents of the Univ. of Wis. Sys. v. Phx. Int’l Software, Inc., 653 F.3d 448, 454 (7th Cir. 2011); Autozone, Inc. v. Strick, 543 F.3d 923, 929 (7th Cir. 2008); Packman v. Chicago Tribune Co., 267 F.3d 628, 642 (7th Cir. 2001); Helene Curtis Indus. v. Church & Dwight Co., 560 F.2d 1325, 1330 (7th Cir. 1977).

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TTAB Admits Wayback Machine Pages to Show Third Party Use of Mark

Tour Management Services Inc. sought to register CHARLESTON HARBOR TOURS for arranging travel tours and cruises and providing boat transport, among other services. Spiritline Cruise Lines opposed the application asserting that the mark was primarily geographically descriptive.

Spiritline sought to introduce printouts from the Wayback Machine of the Internet Archive (Archive.org) to establish that third party websites displayed “Charleston Harbor Tours” on various dates in the past. Spiritline provided a declaration from the office manager of the Internet Archive that the printouts were authentic. The Trademark Trial and Appeal Board (TTAB) admitted the printouts from the Wayback Machine into evidence. The TTAB found that the declaration established that the printouts qualified under the business record exception for hearsay.

The TTAB ultimately refused registration of the mark on the basis that CHARLESTON HARBOR TOURS was primarily geographically descriptive and had not acquired distinctiveness.

Citation: Spiritline Cruises LLC v. Tour Management Services, Inc., Op. No. 91224000 (TTAB Feb. 7, 2020).



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Transferring Goodwill to a New Trademark: Using the Old and New Trademarks Together

Trademark owners develop goodwill associated with their trademarks by using the trademarks in connection with goods/services. Therefore, a name change risks loosing all the goodwill associated with the prior name in the marketplace. One way to mitigate this risk of loss is to use the old and new name together for a time. This will inform the marketplace that the new name is associated with the old. Hopefully some of the goodwill and recognition will transfer to the new name.

Recently Hitachi Power Tool rebranded as Metabo HTP. You can see the rebranding notice that was previously used below a miter saw in this Amazon listing:

This notice is very direct, providing a narrow to the new name and including the words “New Name.” They didn’t have to use “New Name”, but they did to be even more direct beyond the arrow.

You don’t have to use the “New Name” words. You could say Trademark A is now Trademark B. There are a number of options for trying to transfer the goodwill to a new name by using the old and new names together.

Unless the old brand is trying to escape a negative reputation by rebranding, the use of both the new and old trademark together for a time is a good method to try to transfer the goodwill and brand recognition developed under the old trademark to the new trademark.



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Adding a Descriptive Word to a Mark Unlikely to Avoid Confusion When Common Words Are Strong

I previously wrote about the trademark application for BEAST MODE SOCCER. In that case, evidence of third party use was not close enough to weaken the two registered marks for BEAST MODE owned by retired NFL football player Marshawn Lynch.

Another issue in that case was whether the addition of SOCCER in the applied-for mark was sufficient to distinguish it from the registered marks. It was not.

The court said, “When one incorporates the entire arbitrary mark of another into a composite mark, . . . inclusion of a merely suggestive or descriptive element, of course, is of much less significance in avoiding a likelihood of confusion.” 

How was SOCCER word was descriptive of the applicant’s T-shirt goods? The applicant Copeland-Smith was a soccer coach. And he had been training soccer players under his mark BEAST MODE SOCCER, which was registered under another applciation for “coaching services in the field of soccer; providing group coaching and learning forums in the field of soccer.” 

The overlapping elements, BEAST MODE, were strong and the SOCCER element was weak as descriptive. Therefore, the addition of SOCCER to BEAST MODE was not sufficient to distinguish it from BEAST MODE and avoid a likelihood of confusion.

Case: In Re: Copeland-Smith, No. 2018-1968 (Fed. Cir. 2019).

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Inventing the Bicycle: Why Did It Take So Long?

When discovering a solution to a problem, it is not uncommon to think, “Why didn’t I think of this earlier?” The question arises with inventions in general: “Why didn’t someone invent this earlier?”

Jason Crawford attempts to answer that question for bicycles in an post titled, “Why did we wait so long for the bicycle?” He considers a number of possibilities, such as technology factors, design iteration, the quality of roads, competition from horses, and economic factors.

Crawford dates early references to human powered four wheel vehicles to the 1400s. He says it wasn’t until 1817 that that a two wheel ancestor to the modern bicycle was invented by Karl von Drais, which he called Laufmaschine, or “running machine. ” It had a wood frame, no peddles, and was powered by pushing off the grounds with one’s feet. Drais was an aristocrat with free time to tinker.

But the key advance over the Laufmaschine was the addition of peddles, which didn’t arrive for decades (maybe between 1839 and 1860).

U.S. Patent 59,915 for a “Velocipede” issued in 1866.

And chains and gearing reportedly didn’t arrive until still later in the 1880s.

Crawford, considers whether the technology had not yet advanced sufficiently to allow the modern bicycle to become an adjacent possible. In other words, maybe “advanced metalworking was needed to make small, lightweight chains and gears of high and consistent quality, at an acceptable price—and that no other design, such as a belt or lever, would have worked instead.” Further, maybe inflatable (pneumatic) tires, which arrived around 1888, were important.

However, Crawford discounts the technology cause, at least somewhat, after considering other inventions, such as the cotton gin, and the flying shuttle, that took a long time to arrive and their prior invention didn’t appear to be limited by the state of technology.

Crawford concludes the need for economic surplus was one of the main contributors to the delay in the arrival of the bicycle. Nassim Talab has also noted this when he said, “Knowledge formation, even when theoretical, takes time, some boredom, and the freedom that comes from having another occupation.” Talab notes that many inventions originated from the English clergy, whom had extra time on their hands.

Crawford says, “it seems that there needs to be a certain level of surplus to support the culture-wide research and development effort that creates inventions.” He also notes that “Maybe GDP per capita just has to hit a certain point before people even have time, attention and energy to think about new inventions that aren’t literally putting food on the table, a roof over your head, or a shirt on your back.”

This fits with Nicola Tesla’s explanation of the importance of having time to both develop ideas and let them incubate, when he said, “After experiencing a desire to invent a particular thing, I may go on for months or years with the idea in the back of my head.”

Inventing is probably facilitated by (1) sufficient technology advancement to support the invention and adoption of the invention (i.e. the invention and its adoption is within the adjacent possible) and (2) sufficient economic surplus so that persons have time for thinking and tinkering.