Internet trademark auctions are virtual marketplaces where people attempt to sell registered trademarks from around the world. Many of these auction websites attempt to sell U.S. trademark registrations. While some of these marketplaces may be legitimate, some are known to sell invalid registrations. The USPTO is not affiliated in any way with online auctions.
A registration can be invalid for many reasons. If you buy an invalid registration, you have likely not acquired any actual rights to the trademark.
A trademark cannot be transferred without the goodwill associated with its use
The value of a trademark relates to the goodwill associated with it. Goodwill is the reputation of the company and product or service that consumers associate with the trademark. A trademark registration itself has no inherent value apart from the consumer recognition associated with the trademark’s use in commerce for particular goods or services.
A U.S. trademark registration must be sold with its associated goodwill to transfer any rights in the trademark. This requirement helps protect consumers from potential deception by ensuring that the buyer provides goods or services of similar quality and nature as the previous owner.
If you’re interested in buying a U.S. trademark registration, consider: Is there any goodwill to actually transfer and does the sale transaction actually transfer that trademark’s goodwill to me?
Consequences of buying an invalid trademark registration
If you buy an invalid trademark registration, even with any goodwill, you likely will not have any protectable rights in the trademark registration. This is because the transfer does not fix an invalid registration, whether you knew about the defect or not. Here are some examples:
- The buyer can face proceedings that challenge the validity of the purchased trademark registration, including if the applicant (seller and original owner) filed an application and received a registration while knowingly including a falsely signed statement about either intending to use or using the trademark in commerce with the goods or services listed in the application.
For example, the applicant only filed the application to resell the registration on an auction website and never used the trademark in commerce. You purchase the registration. Even though you were not involved in the registration process and did not know about the improper behavior, third parties can file cancellation proceedings or expungement or reexamination proceedings against the purchased registration at the USPTO or could seek to cancel it as part of a court action.
- The application or registration may face administrative sanctions if there is evidence it was part of a scheme to violate U.S. trademark law or USPTO rules. An administrative sanctions order can terminate any involved applications or invalidate any involved registrations.
For example, you use a larger e-commerce platform for your small e-commerce business and need a trademark registration for the platform’s brand registry. You decide to buy a registered trademark because it’s faster than applying for one yourself. If the registration was initially obtained by fraud or violation of the USPTO’s rules, the registration may be or have been invalidated in an administrative sanctions order. If so, the registration becomes essentially unenforceable and cannot be used for brand registry enrollment.
Buyers, do your due diligence
Just like registering a trademark is a legal process, so is buying an already registered trademark. The USPTO recommends consulting with a trademark attorney before buying a registration on a trademark auction site. A qualified trademark attorney can help you research whether the trademark registration is valid; assess the protectability of the trademark; advise you on the conditions required for a legal transfer of the trademark, registration, and associated goodwill; and handle the necessary transactions.