Interested in Selling a Trademark? | What Mark Owners Should Know

Hey, are you a business owner or trademark holder? Or, are you just someone who wants to learn more about intellectual property (IP)? Buying and selling trademarks is a topic that many folks are curious about. Is it as straightforward as transferring real estate? Not exactly! The process of selling trademarks may be complicated. There are specific requirements one must adhere to when selling a trademark. Moreover, the parties involved in the transfer of the mark need to fully grasp the implications for their businesses. 

Anyone who has registered a trademark knows that becoming a trademark owner takes time, patience, creativity, and a financial investment. If you are a registered trademark holder – depending on your situation – you might be considering selling your trademark. How can you sell your trademark? Is selling your trademark a good idea for your business and its future? 

Selling a Registered Trademark | Used in Commerce vs Intent to Use

In order to sell a trademark, that mark must be being used in commerce. The goods or services that the trademark applies to must be available for sale on the market. You may be familiar with the phrase intent to use, which comes up during the trademark application process. You can achieve registration with an intent to use a trademark for your goods or services. However, you can’t sell your mark based on that intent. You need to use that mark in commerce first. 

Those who have used their trademark in commerce and wish to sell it should weigh the decision carefully. What are your long term goals and/or objectives for the goods or services your business offers? What’s the demand on the marketplace look like for your offerings? And, is the economy in a healthy enough state at the moment? These are the types of questions that business owners ought to try and answer before selling a trademark. 

Selling Trademarks | One-Time Profit and Brand Identity

As you might’ve guessed, when selling trademarks the opportunity for turning a profit is singular. You make a profit just one time! In addition, after a mark is transferred to another, the original owner’s business may sacrifice their brand identity. The company will no longer have the right to use that trademark. Brand identity is a super difficult thing to achieve and is critically valuable to a company’s success! 

Often enough, business owners who are selling their business may need to also sell their intellectual property, like trademarks. This depends on the unique agreement between the buyer and seller of the business. In any case, when selling a trademark along with a business, your intellectual property attorney will draft a legally binding agreement that specifies the precise terms of the trademark transfer. If the trademark in question has more than one owner, every one of those mark owners will also have to sign off on the agreement between the buyer and seller. 

Trademark Assignment Agreement | Price, Transfer Fees, Transaction, Conflicts

Your trademark assignment agreement, as it’s called, must further state the sale price of the trademark, the party who will pay for the transfer fees, and any other details pertaining to the transaction. To safeguard against the possibility of a conflict, the agreement should include a dispute resolution clause that specifies whether arbitration or mediation will be used to address any conflicts/issues. You’ve got to protect yourself and your business! 

Another part of the process is submitting your trademark assignment to the United States Patent and Trademark Office (USPTO). Your assignment form for the USPTO has to contain the trademark description and the trademark registration number, as well as each party’s contact information. How is the USPTO notified? The form can either be submitted in paper form or via the Electronic Trademark Assignment System (ETAS). After you’ve submitted the assignment form, the USPTO will send out a Notice of Recordation or Non-Recordation (this will happen within a window of seven days if you use ETAS). If it so happens that the USPTO spots an error on the trademark ownership transfer document, they will contact the appropriate party (parties) and indicate what needs to be corrected so that the form may be filed and recorded. 

Alternatives to Selling Trademarks | Is a Licensing Agreement a Better Option?

There are alternatives to selling trademarks! Anyone who is tossing around the notion of selling their trademark should know that the value of the trademark, in terms of price, is not necessarily equivalent to the long term value of that trademark. With company/brand growth and the building out of the customer base, the value of the trademark and any other intellectual property related to the company may also increase. That’s where the option of licensing a trademark enters the picture. Licensing gives mark owners the ability to keep their rights of ownership and then reap benefits of future sales of the goods or services tied to the trademark (in the future). 

Basically, what distinguishes licensing from trademark selling is that owners can get royalties from the use of the mark by the licensee. This means you get to potentially gain a profit in the future! For licensing, mark owners can use different kinds of agreements to establish a deal with the licensee. If you choose an exclusive license, that permits the licensee to have commercial trademark rights (solely). Sole licensing doesn’t allow the trademark owner to license the mark any further to any other third parties. There are also non-exclusive licensing agreements, which do give owners the power to license the mark to more than one licensee. 

Licensing, Maintaining Standards, and Keeping an Eye Out for Infringement

Trademark owners who license their marks are responsible for maintaining the standards of the goods or services tied to the mark. So, you’ve got to look out for infringement and make sure the quality of the offerings associated with the mark are up to par. If you don’t maintain the standards of the mark, it could be then considered to be an abandoned trademark. When a mark is determined to be abandoned, the trademark owner doesn’t have the right to claim the mark anymore and third parties can use the mark – they won’t face legal issues and the owner may not have any recourse. 

Are you interested in buying or selling your trademark? Want to learn more about trademark licensing? Contact our team at Stockman & Poropat, PLLC today! Our attorneys provide a free consultation. You can rely on our intellectual property firm to guide your business forward.

Up next we will be discussing USPTO Trademark Searches.