Should I Sell My Trademark?

This really is the sixty-four-thousand-dollar question.

The answer varies per scenario. It really depends on what situation you and your company are in that matters. In truth, each decision has both its rewards and pit falls. It’s a balancing act determined by your needs verses those things you want. Hopefully, this article will help you make an informed decision that will reap you many benefits no matter if in the long or short term.

Trademarks are considered intellectual property and just like any other property, intellectual property can be licensed, bought, sold, inherited, or otherwise transferred through legal transactions.  If you are wishing to retain certain rights when it comes to your intellectual property, then licensing may be the best bet. However, if you are no longer interested or simply can’t keep your trademark for economic, retirement, or health reasons or unforeseen events, then selling the rights to the property can be viewed as the most viable option. However, while selling intellectual trademark property can be a great way to make an instant profit, you must take into consideration the value of this one-time sale over the potential lucrative multiple payouts that comes with licensing.

Trademarks, as defined by the United States Patent Trademark Office, protect specific words or phrases, names, designs, symbols, sounds, or colors that identifies and distinguishes goods and services apart from other corporate goods or services. Think Mercedes Benz logo. The fact no description or picture is provided here is proof of a trademark’s power. You instantly can visualize the Mercedes’ trademark because of the constant exposure you have experienced and the public acceptance of the brand as symbolizing excellent quality and superior craftsmanship.

The importance of a trademark in garnering a public identity cannot be understated. They literally are a company’s soul or identity or brand if you will that has taken years to establish. With this in mind, the decision to sell or license your trademark carrys the weight of this identity with it. With selling, you give up this entitlement, but with licensing, you hand it over to someone else the same way a person entrusts the care of their child. It takes a lot of trust to make this commitment and a lot of duties and responsibilities come into play and a violation of any of these can lead to trademark infringement.

In order to sell a trademark, the process encompasses more than the modest sale of a name. It involves so much more as with any other aspect of selling a business such as the transfer of stocks. Most importantly, for the bottom line, is the transfer of goodwill as a major aspect of the deal. Goodwill involves the value of certain intangible non-monetary resources of the business. Intangible assets include customer loyalty, brand reputation, trademark effectiveness, and other non-measurable assets that all count as goodwill. As you can see, the more recognizable the trademark, the more valuable the company based simply on the assessed goodwill. Most importantly, trademarks cannot be sold in of themselves to be used for something else entirely. They have to be reassigned along with the new ownership of the business or product the trademark represents. The trademark owner or owners all have to agree to sell the trademark and the buyers have to guarantee they will not soil or otherwise ruin the trademark’s reputation and value.

A dead trademark is one the Patent and Trademark Office doesn’t distinguish anymore. Once a trademark has been deemed dead (in other words, abandoned), individuals and companies can then claim it and register and use it for their own purposes. The original trademark owner has no rights to the dead trademark and can no longer use it or seek protection for it—much less sell it.

Trademark licensing for the purposes of a legal transaction is considered a merchandise contract. The owner of the trademark, or licensor, in exchange for sharing the trademark, earns a profit or royalties. You see this type of activity all the time with professional sports teams and movie studios who wish to capitalize on the popularity of their franchise on a given moment. The Star Was licensing agreement is very lucrative as is the Dallas Cowboys one because both brands are highly recognizable and toy and clothing manufacturers wish to piggyback on their popularity.  The necessity for trademark protection arose under the Trade Marks Act of 1995, that mandates that licensors must keep financial and quality control over the authorized use of their trademarks. If they don’t, they can lose their rights to them. This is where licensing agreements get tricky—especially for an individual or small company. Enforcing or monitoring quality control of your trademark is time-consuming and expensive, especially if you have to hire an outside law firm for the task.

However, there are pluses to licensing. For example, it gives you a deep reach into new markets without the cost where your corporation can grow through your partner’s marketing and distribution channels. It can also increase brand recognition by giving your trademark a new appearance through placing it on new products and other consumer conduits resulting in an increase of attentiveness among consumers.

So, there you have the breakdown for whether you should sell or license your trademark.

Selling involves a nearsighted, one-time profit and the loss of a lucrative identity you have spent years building. Whereas, licensing offers long-term capital, but at the cost of regulatory paperwork and the trusting of an outside entity to protect the brand from being sullied. In addition, the added expenditure to monitor this entity for quality control issues can be quite expensive. No matter what choice you make, there will always be pluses and minuses. Choosing wisely means being informed with the best information possible. Hopefully, this article helped you in assessing your priorities as to what’s best for you at this moment.