Lanham Act § 10(a)(1), 15 U.S.C.A. § 1060(a)(1), provides that an intent to use (ITU) federal trademark application cannot be assigned before the applicant files a verified statement of use, unless that part of the “business” connected with the mark is also transferred. The “business” must be “ongoing and existing.” The purpose of this limitation on assignment of an application is to prohibit “trafficking” in marks: the buying and selling of “inchoate” marks which as yet have no real existence. An exception exists when the entire business or related division of the company that filed the ITU application is sold along with the ITU trademark application.

Where an applicant files a federal trademark application in their own name (as an individual) and then later assigns it to a corporation, there is a substantial chance the trademark registration is invalid. If the applicant was an ITU, it would violate the anti-trafficking in trademark rule (see above). Additionally, if it were an in-use application, then there would be a substantial question of fact that anyone would commercialize a brand as a sole proprietor and not through a corporate entity or partnership.