asset acquisitions - Jackson Walker LLP

the seller has many unregistered trademarks, it may want to limit the definition to registeredtrademarks. The buyer should insist that the definition include any unregistered trademarksthat the buyer identifies as important and that all goodwill associated with these trademarksis transferred to the buyer.The owner of a trademark can prevent others from using infringing marks and, insome instances, can recover damages for such infringement.Although trademark registration systems are maintained at both the state and federallevels, trademarks need not be registered at either level. State registrations are of little valueto businesses that operate in more than one state or whose market is defined by customersfrom more than one state.Two of the major benefits of registration at the federal level are “constructive use”and “constructive notice.” The owner of a federal registration is deemed to have used themark in connection with the goods or services recited in the registration on a nationwidebasis as of the filing date of the application. Therefore, any other person who first beganusing the mark after the trademark owner filed the application is an infringer, regardless ofthe geographic areas in which the trademark owner and the infringer use their marks.Federal registration also provides constructive notice to the public of the registration of themark as of the date of issuance of the registration. Because of the importance of federalregistration, the representations in Section 3.25(e)(ii) require the Seller to ensure that it hasobtained federal registration of its trademarks.An application for federal registration of a trademark is filed in the PTO. The PTOmaintains two trademark registers: the Principal Register and the Supplemental Register.The Supplemental Register is generally for marks that cannot be registered on the PrincipalRegister. The Supplemental Register does not provide the trademark owner the same rightsas those provided by the Principal Register, and it provides no rights in addition to thoseprovided by the Principal Register. The buyer should determine whether the seller’strademarks are on the Principal Register or the Supplemental Register. If the buyer learnsthat an important mark is on the Supplemental Register, the buyer should find out why it wasnot registered on the Principal Register. If the mark cannot be registered on the PrincipalRegister, the buyer should consult trademark counsel to determine the scope of protection forthe mark.After a trademark has been registered with the PTO, the owner should file twoaffidavits to protect its rights. An affidavit of “incontestability” may be filed within the sixthyear of registration of a mark to strengthen the registration by marking it “incontestable.”An affidavit of “continuing use” must be filed with the PTO during the sixth year ofregistration; otherwise, the PTO will automatically cancel the registration at the end of thesixth year. Cancellation of a registration (or abandonment of an application) does notnecessarily mean that the trademark owner has abandoned the mark and no longer has rightsin the mark; proving abandonment of a mark requires more than merely showing that anapplication has been abandoned or that a registration has been canceled. Nevertheless,because of the benefits of federal registration, the representations in Section 3.25(e)(ii)require the seller to have timely filed continuing use affidavits (as well as incontestabilityaffidavits, which are often combined with continuing use affidavits) for all of the seller’strademarks.3148166v1- 102 -