Trademarks, Goodwill and M&A

A trademark includes any word, name, symbol, or device, or any combination, used, or intended to be used, in commerce to identify and distinguish the goods of one manufacturer or seller from goods manufactured or sold by others, and to indicate the source of the goods. In short, a trademark is a brand name.

In Basile Baumann Prost Cole & Assocs., Inc. v. BBP & Assocs. LLC, the court examined the elasticity of the goodwill concept, which can extend to include brand, firm, and even that associated with individual members.

“Goodwill is “the total of all the imponderable qualities that attract customers to [a] business.” “There may be business or professional goodwill, or both combined in one enterprise.” Professional, or personal goodwill, “is good will that is based on the personal attributes of the individual such as personal skill, training, or reputation.” In Maryland, the concept of personal goodwill most often arises in cases involving the distribution of property in divorce, or covenants not to compete.”

“If … consumer satisfaction and preference is labeled ‘good will,’ then a trademark is the symbol by which the world can identify that good will.” “A sale of a business and of its good will carries with it the sale of the trademark used in connection with the business, although not expressly mentioned in the instrument of sale.”

Since goodwill is elastic – and divisible – attorneys in mergers, acquisitions and divestitures would do well to consult with a trademark lawyer to identify issues related to trademark (goodwill) ownership and transfer.

USPTO Notice of Proposed Rule: Additional Specimens And/Or Evidence Of Use May Soon Be Required

Notice of Proposed Rule, 76 Fed. Reg. 40,839, issued by the United States Patent and Trademark Office (USPTO) on July 12, 2011 addresses “proof” that a mark is in use. Specifically, the proposed rules address issues related to the USPTO’s ability to verify the accuracy of the identification of goods and services by allowing the USPTO to require additional proof of use of a mark.

The proposed rules allow the USPTO to require (1) additional “information, exhibits, and affidavits or declarations deemed reasonably necessary to examine” renewal applications and declarations of use, and (2) “more than one specimen in connection with a use-based trademark application, an allegation of use, an amendment to a registered mark, or an affidavit or declaration of continued use.” According to the USPTO, the proposed rules “will facilitate an assessment of the reliability of the trademark register . . . so that the USPTO and stakeholders may determine whether and to what extent a general problem may exist and consider measures to address it, if necessary.”

Although the USPTO indicates that the requirements will not be widely implemented, members of the trademark bar have expressed concerns that the circumstances under which the USPTO may require additional specimens and/or evidence are unclear and that such requests may affect filing deadlines.