By Adam Smith
December 14 2010
The results of the first-ever public trademark auction are in, with estimates suggesting that the event raised just $150,000 through the sale of fewer than 15% of the trademarks on the block. This level of sales has reinforced lawyers' concern over the auction's reliance on intent-to-use (ITU) applications only, not full registrations. John Cuticelli, chief executive of auction organiser Racebrook, is quoted as saying on the day that he is not "disheartened" - but he hasn't returned WTR's calls requesting further comment.
The headline figures are as follows:
"Frankly, I'm surprised that MEISTER BRAU sold for $32,500," said Lana van der Spiegel, senior counsel and head of the global trademarks department at SABMiller, the former owner of the MEISTER BRAU trademark. Miller bought the trademark family in order to incorporate its LITE mark into the Miller brand family, but then disposed of the MEISTER BRAU component. "One has to question the objective of the purchaser, because registration for the mark cannot be secured before a declaration of use is filed." This really is the heart of the matter with this auction: the marks are ITU applications only.
"The buyer may think that MEISTER BRAU has a nice ring to it," van der Spiegel added, "not realising that a very important step must be taken before it can be commercialised and exploited."
Martin Schwimmer, trademark blogger and Moses & Singer partner, weighed in on this technicality last week, noting that "Section 10 of the Lanham Act states that an applicant may not assign a 'pre-use' ITU application (in other words, the applications that Racebrook or its agents own) 'except for an assignment to a successor to the business of the applicant, or portion thereof, to which the mark pertains, if that business is ongoing and existing'." Press reports suggest that Racebrook will assign winning bidders with an interim license for the mark. On his blog, Schwimmer wrote: "This suggests to me that the ITU applicant will likely retain ownership of the application, have the 'purchaser' begin use, then satisfy the user requirement with the licensee's use."
It must be possible to construct a sensible business model around public trademark auctions but legal commentators argue that Racebrook's initial attempt will not significantly change market practice. "I think we will see more auctions," said van der Spiegel. "But it's too early to predict whether they'll become an integral part of trademark practice."
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