Which law firm should you consult for buying and selling U.S. trademarks? Attorney Shen Jinlong warns of three pitfalls that can invalidate the rights—how should the transfer price and the status of the rights be verified?

Find a foreign-related intellectual property law firm with U.S. practice experience and conduct a pre-transfer rights status check—these are the two most important things in buying and selling U.S. trademarks, ahead of price negotiations. The price can be negotiated down, but once the rights status is defective, what you buy may be nothing more than a piece of paper. Attorney Shen Jinlong repeatedly emphasizes three pitfalls in practice: the registration number has been cancelled, the assignment chain is broken, and the classes do not match the goods description. The following explains them clearly in order.

First check the status of the rights, then discuss the transfer price.

Trademark registration with the United States Patent and Trademark Office (USPTO) is not once and for all. Between the 5th and 6th years after registration, a Section 8 declaration of use must be filed; between the 9th and 10th years, a Section 8 plus Section 9 renewal declaration must be filed. If the deadline is missed and the filing is not made within the 6-month grace period, the registration will be directly cancelled. Many sellers at the negotiating table only look at the registration number and do not check the status records in the TSDR system. We generally recommend asking the seller to provide the acceptance receipt for the most recent Section 8 or Section 9 filing, and then checking it yourself on the USPTO website. If the statuses on the two sides do not match, the transaction should be stopped. In addition, a trademark that has been registered for 5 years and in continuous use may file a Section 15 declaration to obtain incontestable status; for a trademark that has not filed one, third parties have more room to challenge it on the basis of prior use, and the basis for price valuation is completely different.

If the chain of transfer breaks once, everything that follows is trouble.

U.S. trademark assignments are governed by 15 U.S.C. §1060. The assignment must be in writing and signed, and it must be recorded with the USPTO (recordation). In practice, the most common scenario is this: the trademark was first registered by Company A; later, Company A was acquired by Company B; the trademark followed the assets, but no one filed the assignment for recordation with the USPTO. Now Company B wants to sell the trademark to a Chinese buyer, but the owner of record is still Company A. At this point, either the historical assignment must be completed retroactively, or Company A must cooperate by signing. If Company A has already been dissolved, the cost of resolving the issue will multiply. We generally recommend that, before signing the acquisition agreement, the buyer first obtain an Assignment Abstract of Title from the USPTO and compare it item by item; every link in the chain must have corresponding recorded documents.

Category and product description—don't just copy the Amazon page.

U.S. trademarks use the Nice Classification, but the USPTO has its own set of acceptable wording for goods and services descriptions (Acceptable Identification of Goods and Services). A trademark registered in Class 9 may cover only phone cases, not chargers. If buyers benchmark against the category on an Amazon listing, they can easily misjudge. The subject matter description in an assignment agreement must be completely consistent with the goods and services on the registration certificate; adding or omitting anything will create hidden risks. If the scope of protection needs to be expanded, filing a new application is more prudent; this point can be combined withU.S. and EU Intellectual Property Legal ServicesLook at the application strategy in it together.

Complete the transfer filing within 3 months; do not delay.

The USPTO has no hard deadline for recording an assignment itself, but if recordation occurs later than a subsequent assignment or security interest, its effect against third parties may be affected. 15 U.S.C. §1060 provides that an assignment not recorded with the USPTO is void against subsequent bona fide purchasers. In other words, if a seller sells the same mark to two buyers, the buyer who records first has priority. We generally recommend completing recordation within 3 months after the assignment agreement is signed, and preparing electronic signatures, notarization requirements, and signatory authorization documents at the same time. The official recordation fee is currently on the order of tens of dollars per mark per class; the specific amount is subject to the USPTO fee schedule, and you should not budget based on old figures from several years ago.

For a trademark under the Madrid System designating the United States, assignment must go through two tracks.

If the target trademark’s protection was obtained by designating the United States under the Madrid System, the assignment becomes more complicated by one layer. The assignment of the international registration must be recorded with the International Bureau of the World Intellectual Property Organization (WIPO), and a replacement application or subsequent designation must also be filed with the USPTO. If the information on the two sides is inconsistent, a situation may arise in which the international registration has been assigned but the right holder on the US side remains unchanged. We have handled many such cases; the timeline is slower than for purely US domestic registrations, and generally an additional 2 to 4 months should be allowed. For matters involving multi-country filings, other countries’ intellectual property legal services can be referenced to make unified arrangements.

How to Verify Pricing: Three Variables Matter More Than the Quote Itself

There is no uniform market rate for U.S. trademark assignment prices; they range from a few thousand dollars to six figures. To assess reasonableness, look at three variables. First, the registration age and Section 15 status: a mark that has been registered for five years and is incontestable commands a clear premium. Second, the number of classes and whether the core classes cover the buyer’s actual business. Third, whether there are pending oppositions, cancellation proceedings, or TTAB litigation; if there are pending proceedings, the price should be discounted, and the proceedings should even be resolved before the transaction. The buyer should run the numbers: filing a new U.S. trademark application usually takes 8 to 14 months from submission to registration, and longer if office actions or oppositions arise, while official fees and attorney fees combined are not low. Buying an existing mark saves time, and that value should be factored into the price, but it should not cause one to ignore the discount for defects in rights.

Several clauses that must be expressly stipulated in the agreement

Do not use templates downloaded from the internet for an assignment agreement. At a minimum, clearly state: the registration numbers and list of classes for the assigned rights; the assignment consideration and payment milestones; the seller’s representations and warranties that the rights are free from defects; the seller’s obligation and deadline to cooperate in recording with the USPTO; and the allocation of liability if third-party claims arise. Warranty and indemnification clauses are the buyer’s last safety net, and the amount and duration must be negotiated. If you need the agreement reviewed, you can use the overseas intellectual property channel or schedule an appointment directly.Shen Jinlong LawyerConduct a transfer due diligence.

When should this deal be abandoned?

In three situations, we generally advise clients to walk away. The registration has been cancelled and cannot be reinstated; the chain of title is broken and the original rights holder cannot be contacted or has been deregistered; or the trademark is subject to a pending TTAB cancellation proceeding and the opposing party’s claim has prima facie evidentiary support. In these three situations, the money the buyer spends will in all likelihood not purchase enforceable exclusive rights. In cross-border transactions, there is an additional risk concerning the authenticity of the seller entity; verifying the company registration information and the signatory’s authority before payment is far cheaper than seeking recourse afterward.

Attorney Shen Jinlong, of the Foreign-Related Intellectual Property Team at Guangdong Zhiming Law Firm, has long handled trademark, patent, and copyright matters in the United States and the European Union, covering proceedings before the USPTO, EUIPO, EPO, UPC, and WIPO. For U.S. trademark assignments and transactions, due diligence, recordation, and agreement review, call the hotline at 0755-25986969 to schedule a consultation.

Disclaimer: This article is based on publicly available legal information and practical experience and does not constitute legal advice for any specific transaction. U.S. trademark laws and regulations, USPTO fee schedules, and examination practices may change; for specific cases, please rely on the opinion issued by a practicing attorney.