Understanding the USPTO’s Prohibition on Assigning ITU Applications
Wineries and other businesses care about their brands and may choose to file intent-to-use trademark applications from time to time. Intent-to-use applications allow wineries and other applicants to reserve trademark rights for future use, providing a valuable tool for brand development and strategy. However, the United States Patent and Trademark Office (USPTO) imposes strict limitations on the assignment of intent-to-use applications, raising important considerations for wineries and other applicants alike. This blog post discusses the USPTO’s prohibition on assigning intent-to-use applications, its rationale, and its implications for wineries.
Understanding Intent-to-Use Applications
Intent-to-use applications, as the name suggests, allow trademark applicants to apply to register a mark based on the applicant’s bona fide intent to use the mark in commerce in the future. This means that applicants can secure priority rights to a mark before actually using the mark in commerce. As a result, intent-to-use (ITU) applications provide wineries and other businesses with a valuable opportunity to protect their trademarks early and prevent others from registering similar marks. ITU applications are particularly beneficial for businesses that are in the process of developing new products or expanding into new markets, allowing them to secure trademark rights early in the brand development process.
Imagine a passionate winemaker, Sarah, who has spent years perfecting her craft and dreaming of starting her own winery. Sarah has a brilliant plan for her winery, which will be known as FUTURE WINES. Between fundraising, site development, and other preliminary matters, it will be at least two years before she can launch. Several preliminary matters require Sarah to identify her brand (e.g., label printing, licensing with the state alcoholic beverage commission; etc.). Not surprisingly, Sarah is nervous about investing in the FUTURE WINES brand with the possibility of someone else swooping in and establishing prior trademark rights ahead of her.
Fortunately, Sarah can file an ITU trademark application to essentially reserve her chosen brand name, FUTURE WINES, while she prepares to launch her winery. By filing an ITU application with the United States Patent and Trademark Office (USPTO), Sarah can secure priority rights to the FUTURE WINES name (and logo, if she has one), even though she has not started selling wine under that name.
As Sarah continues to work towards opening her winery, she encounters numerous benefits from her ITU application:
Brand Protection: By filing the ITU application, Sarah ensures that the FUTURE WINES name is reserved for her use, preventing others from registering a similar mark and potentially infringing on her brand identity.
Investment and Financing: With the ITU application in hand, Sarah can demonstrate to potential investors and lenders that she has taken steps to protect her brand, enhancing the perceived value of her winery and increasing her credibility in the eyes of stakeholders.
Market Research and Development: While waiting for the ITU application to mature into a full registration, Sarah has time to conduct market research, refine her business plan, and develop her branding strategy. This allows her to make informed decisions about her winery’s positioning, target market, and product offerings.
Flexibility and Timing: The ITU application provides Sarah with flexibility in timing her winery’s launch. She can wait until the optimal moment to launch and later file a statement of use, which is a declaration that the mark is being used in commerce, ensuring that her trademark rights align with her business objectives and market conditions.
Early Brand Recognition: By securing priority rights to the FUTURE WINES name, Sarah can begin building brand recognition and awareness among consumers, even before her winery officially opens its doors. This early brand exposure can help generate anticipation and excitement for her winery’s launch.
In this hypothetical situation, Sarah uses an ITU trademark application(s), which enables her to lay a solid foundation for her future winery, safeguarding her brand identity and positioning her for success. With careful planning and strategic use of trademark applications, Sarah can bring her vision of FUTURE WINES to fruition, delighting wine enthusiasts with her distinctive wines and authentic winery experience.
The Prohibition on Assignment
While ITU applications offer numerous advantages for trademark applicants, the USPTO imposes a strict prohibition on the assignment of these applications. Specifically, in an application under §1(b) of the Trademark Act, 15 U.S.C. §1051(b), the applicant cannot assign the application before the applicant files an allegation of use (i.e., either an amendment to allege use under 15 U.S.C. §1051(c) or a statement of use under 15 U.S.C. §1051(d)), except to a successor to the applicant’s business, or portion of the business to which the mark pertains, if that business is ongoing and existing. TMEP § 501.01(a) (citing Section 10 of the Trademark Act, 15 U.S.C. §1060; 37 C.F.R. §3.16). “The primary purpose of this provision is to ensure that a mark may only be assigned along with some business or goodwill, and to prevent “trafficking” in marks.” Id. That is U.S. trademark law is intended to discourage persons and businesses from squatting on ITU trademark applications.
Rationale Behind the Prohibition
The USPTO’s prohibition on assigning ITU applications serves several important purposes. First and foremost, it ensures that only bona fide applicants with a genuine intent to use the mark in commerce are able to obtain trademark rights. By preventing the assignment of ITU applications, the USPTO guards against the speculative or opportunistic acquisition of trademark rights by entities that have no genuine intention of using the mark in commerce. Second, the prohibition helps maintain the integrity of the trademark registration process and promotes fair competition in the marketplace by preventing the hoarding or warehousing of valuable trademarks. Third, it accelerates the application process for all stakeholders. Applicants who file an ITU application are given approximately three years to start using their applied-for-mark(s) in commerce after the application is allowed by the examiner. Because other applications might be suspended based on an earlier filed ITU application, the prohibition prevents improper ITU applications from slowing down the process.
Implications for Trademark Stakeholders
The USPTO’s prohibition on assigning ITU applications has significant implications for trademark stakeholders, including applicants and assignees. Applicants cannot transfer or assign their ITU applications to another party until they have filed a statement of use or amendment to allege use, thereby limiting their flexibility in managing their trademark portfolios. In Sarah’s situation, Sarah might choose to form one or more legal entities. In a simple situation, where Sarah forms a single entity, Sarah cannot assign the ITU application for FUTURE WINES until she starts selling wine under that name. The issues become more complicated if Sarah forms several entities (e.g., an entity to sell the wine; an entity to hold the wine license; a holding company; etc.).
Conclusion: Navigating the Intent-to-Use Landscape
The USPTO’s prohibition on assigning ITU applications serves as a critical safeguard against abuse and misuse of the trademark registration system. While ITU applications offer valuable benefits for trademark applicants, including priority rights and early protection, the restrictions on assignment help ensure the integrity and fairness of the trademark registration process. As trademark stakeholders navigate the ITU landscape, it is essential to understand the USPTO’s rules and regulations governing assignments and to consult with experienced trademark attorneys when developing trademark strategies and transactions. By adhering to these guidelines and best practices, trademark stakeholders can effectively navigate the ITU landscape and secure valuable trademark rights for their brands.
If you would like to discuss a trademark application or assignment with an experienced trademark attorney, please schedule a consultation here.
