Buying and Selling Trademarks

Businessman in suit hand stamping rubber stamp on document in file folder - Buying and Selling Trademark Concept

Like other forms of intellectual property, trademarks can be bought and sold. However, buying or selling a trademark is much more complex than transferring physical property. It’s crucial to understand the steps that are necessary to take to transfer the trademark between parties — and the ramifications selling your mark can have for your business endeavors.

Should You Sell Your Trademark?

A trademark can be sold as long as it is currently being used in commerce. It should be noted that it is not always possible to sell a trademark that falls under an “intent to use” application. The United States Patent and Trademark Office (USPTO) has strict requirements concerning evidence of use and expects applicants to file a Statement of Use within six months.

Before selling a trademark, you should consider a variety of factors, including the following:

  • The current state of the economy
  • Market demand for the goods and services
  • Your future objectives for the product offerings

When you sell a trademark to another, you make a one-time profit. But it’s essential to be aware that when you transfer your mark, you can also lose the identity your company worked so hard to build. Critically, selling your trademark can bar you from benefiting from the brand’s growth in the future. Depending upon your specific situation and business goals, it may be best to consider a licensing or usage agreement.

How to Sell a Trademark

If you’re selling a business, you might have to sell your intellectual property along with it, depending upon the terms you have negotiated with the buyer. A legally binding assignment agreement should be drafted specifying the terms of the transfer. If the trademark has multiple owners, each will need to agree to the assignment.

The assignment agreement should also list the relevant details regarding the transaction, including the sale price and which party is responsible for paying the fees associated with the transfer. It’s also best to specify a dispute resolution method in the event a conflict concerning the trademark sale arises — such as arbitration or mediation.

In addition, the USPTO must be advised of the trademark assignment. An assignment form must be submitted to the USPTO listing details such as the trademark registration number, a description of the trademark, and the contact information for the seller and the buyer. This can be done with a paper submission or through the Electronic Trademark Assignment System (ETAS). Within seven days of the electronic submission, you will receive an official Notice of Recordation/Non-recordation. If the USPTO finds an error on the document transferring ownership, you may be contacted to correct it in order for the filing to be recorded.

Licensing a Trademark as an Alternative to Selling

If you are thinking about selling your trademark, it’s important to understand that the price at which you sell it isn’t necessarily its permanent value. As a brand gains confidence among its consumer base and a company grows, the value of its intellectual property may increase. Licensing a trademark can allow you to maintain your ownership rights and benefit from future sales of the goods or services connected with the mark.

In contrast with selling a trademark, where you forgo the right to future profits generated from it, licensing allows the trademark owner to receive royalties from the licensee’s use of the mark. There are various types of licensing agreements that can be entered into, based on the objectives of both parties. While an exclusive license gives the licensee sole commercial trademark rights, a sole license prohibits the trademark owner from licensing to a third party. A licensing agreement can also be non-exclusive, allowing the mark to be licensed by outside individuals.

When a trademark is licensed, the mark’s owner is responsible for ensuring the goods or services meet the standards that are expected of the mark. This includes monitoring the mark for infringement and ensuring the quality of the products that carry the mark. Failure to monitor the mark can result in it being deemed abandoned. In such cases, an owner can no longer claim any rights to the mark and other parties may use it without any legal consequences or recourse from the owner.

Contact an Experienced Trademark Attorney

Buying, selling, or licensing a trademark can be complex. It’s essential to have a skilled trademark attorney by your side to ensure your interests are protected. At the Trademark Lawyer Law Firm, PLLC, we are dedicated to providing knowledgeable counsel regarding trademark matters and helping our clients achieve their business goals. Located in Ann Arbor, Michigan, our attorneys work with entrepreneurs and business owners throughout the country. Contact us today to schedule a free 15-minute consultation.