• Assigning “Goodwill”

    by  • July 23, 2008 • trademark

    In the United States, an assignment of a trademark is invalid if the “goodwill” is not also assigned with the mark, but there’s no requirement that any tangible assets be transferred. So what exactly does it mean when agreements recite something like “Assignor does hereby assign to Assignee all rights, title and interest in and to said mark, including the goodwill of the business symbolized by said mark”?

    What makes a “trademark” more than just a word or a pretty picture is the goodwill, its association in the consumer’s mind with a particular entity. In the U.S. case Bouchat v. Baltimore Ravens, a court found that the Baltimore Ravens football team logo was a copyright infringement of a design Bouchat had submitted to the team. Bouchat claimed damages for the sales of goods with the Ravens logo, but the court held that the revenue from logoed goods was attributable entirely to factors other than the infringement of the copyright, specifically, to business and consumer interest in NFL football. It’s this consumer association that is the “goodwill” in the mark.

    Assigning the “goodwill” in a mark is therefore a redundancy; what else would the assignee getting when it acquires a “mark” rather than a word or design? But in some countries trademarks are assigned expressly without the goodwill, which is contrary to this understanding: how could one be getting a “mark” if one is not getting the goodwill?

    I can think of several answers: first, the “goodwill” NOT assigned in other countries is not the goodwill associated with the mark, but other business goodwill, i.e., arising from location, customer lists, favorable trading or governmental relationships, etc. The statement that the goodwill is not being assigned means only that these other types of goodwill remain with the assigning business. Or it could be simpler; it means simply that the trademark is being assigned without any tangible assets (but then why call it “goodwill”?). Another theory is that an assignment without the goodwill is just the equivalent of obtaining a forbearance from suit from the original trademark owner; the former owner will be barred from making a trademark-based claim against the assignee but is not ratifying that the consumer association necessarily exists or that the assignee will be able to successfully exploit the benefits of it (such as, for example, a case where it is using the mark for unrelated goods). Third, and somewhat related, is that the assignment is only of the government grant of rights and all the advantages arising from it.

    What does it mean in various countries to assign a mark without the goodwill? Is there really any difference between U.S. practice and practice in other countries, other than we have to insert specific words in our agreements?