Trademarks: Vital Differences Between Usa and Australia – Part One

Trade Mark Assignment

In the United States, a trade mark cannot be assigned without the “goodwill” associated with the trade mark. The Lanham Act describes the “goodwill” as “the good will of the business in which the mark is used, or with that part of the good will of the business connected with the use of and symbolized by the mark.”

Trade marks have the principal function of denoting the origin of goods of services. They are a trader’s calling card. Goodwill is different in nature and is a value or custom that arises from a reputation created in the trade mark and goods or services leading to brand recognition and loyalty in the marketplace. A trade mark is a source of goodwill and is not in itself goodwill.

The requirement in the US for trade marks to be assigned with goodwill in the business is to maintain the link between the trade mark and the goodwill which has created the custom, namely the business activity which created the custom attaching to the trade mark. The requirement that goodwill accompany the trade mark ensures that a transferee’s use will not be deceptive and will not break the continuity of the goodwill associated therewith.

In Australia it is possible to assign an application or a registered trade mark without the goodwill of the business. In such cases as there is no business element located in any Australian State, no stamp duty tax implications arise. However if a trade mark is assigned with the goodwill of the business, then stamp duty tax will be payable on the Transfer in the Australian State where such business is located (if any exists). It is highly doubtful that an assignment with the goodwill subsisting in a trade mark would operate to transfer the goodwill in the business associated with trade mark.

Stamp duty tax is a separate issue of Federal capital gains tax which is applicable in the case of a capital gain resulting from the sale of a trade mark.

Trade Mark Applications

In the United States a trade mark needs to be applied for specific goods and/or services and the identification of goods and/or services must be specific enough to identify the nature of the goods and/or services. In Australia it is possible to file for a much broader description of goods and/or services. One of the principal advantages in doing this is that it provides the Registered Proprietor with a much stronger basis for protecting the mark in a trade mark infringement action.

In Australia the making of an application raises a presumption of intention to use and no enquiry is made by the Registrar of Trade Marks as to such intention. However the issue may arise in opposition proceedings on filing of evidence of a lack of intention in good faith to use the trade mark.

A good practice to adopt, if for example you are wishing to file for jeans, is to file for a broader category description such as clothing. Jeans are clothing and there is an intention to use for such goods. A highly experienced local attorney can be the difference between obtaining strong protection and not facing subsequent difficulties in any opposition or litigation. It is a matter of properly drafting a wide coverage to obtain the strongest protection and at the same time avoid any potential problem at a later stage.