Selling Trademarks: Everything You Need to Know
Selling trademarks involves more than the simple sale of a name. 3 min read
Selling trademarks involves more than the simple sale of a name. It includes other aspects of a business, and it may be a total or partial sale. The transfer of goodwill is a big part of the deal.
What's Involved in Selling a Trademark
Selling a trademark isn't just selling a name or an idea, so it's not equivalent to the selling of domain names on the internet, for example. Not only is the name of the business or product sold in a trademark sale, the goodwill that's associated with that name is also part of the transaction.
Someone who wants to sell a trademark (because he or she is moving onto other ventures or would like to generate extra funds) has to be the intellectual property owner and will have to formally assign rights with the appropriate government office.
The seller has to be the sole owner or has to sell it with the other owners. If the seller wishes to continue using the trademark, he or she will have to get permission from the new owner, in which case they may agree to license it for use.
The seller will identify potential customers. If the business has been successful and it has a lot of name recognition, this will be easy. Potential customers include employees of the business as well as competitors. They might have an interest in keeping the same name and selling products under it.
The trademark sale usually includes additional aspects of the business, such as physical assets and customer lists. It also assigns to the new owner the goodwill that's associated with the mark. This positive connotation increases the trademark's value. If a seller doesn't know who potential customers might be or if he or she wants to estimate the worth of the mark, the seller might want to look into companies that specialize in this area. They handle intellectual properties' sale and valuations.
An attorney will prepare documents to complete the sale or transfer. After the documents are completed, the trademark can then be assigned with the appropriate government entity.
Steps to Take
A trademark owner can transfer, or assign, the mark by following these two steps:
- The owner has to document the transfer between parties.
- The owner has to document the transfer with the U.S. Patent and Trademark Office (USPTO).
Before documenting the transfer with the Trademark Office, parties have to sign a transfer agreement which lays out terms of the transfer. They then have to record the assignment on the online form at the USPTO site.
If the owner doesn't properly transfer trademark ownership rights and/or the buyer commits trademark infringement on another party's mark, the seller may be part of the dispute if he or she still owns the mark (at least on paper, according to USPTO records).
If the trademark transfer was never recorded with the USPTO, the new owner could end up in a dispute with the prior owner.
For unregistered trademarks (which are protected under state or common law), their transfer must include the goodwill that's associated with them. A mark's goodwill represents the recognition consumers associate with it along with its earning power (or, the fact that customers recognize the brand and therefore want to do business with the brand). When that goodwill isn't transferred, the assignment is considered ineffective. As a result, the trademark may be abandoned.
Trademark rights can be assigned outright, meaning total ownership transfers from one party to another, or they can be partial (in some jurisdictions), meaning only a portion of the rights are transferred from one party to another. Depending on the jurisdiction, partial rights may also refer to a portion of the territory or for just some of the services/goods under the registration.
Before transferring trademarks, review the laws and regulations in your jurisdiction, since they differ. You must comply with the requirements in your area or face unpleasant consequences if you don't.
There are a number of reasons someone may want to sell a trademark, including retirement or a desire to go into another line of business. By following the rules and laws in the jurisdiction you're in, you're more likely to have a smooth transaction with no problems.
If you need help with selling a trademark, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Stripe, and Twilio.