Buying, Selling and Licensing Trade Marks

Trade marks are logos, words or other signs associated with branding a business or its products or services. One benefit of trade mark registration is that it allows, like any tangible property, for trade mark ownership to be assigned.

Buying and selling trade marks

A trade mark can be bought or sold through transfer of business ownership. The ownership of a trade mark can be transferred in the event of sale of a business as part of the inventory. The party to whom the trade mark will be transferred is called the assignee, and the ownership of the registered trade mark is transferred to the assignee by a trade mark assignment agreement.

The conditions under which the registered trade mark is purchased dictate the terms and obligations included in the assignment agreement. In the case that the assignee will not use the trade mark directly, a supplementary agreement is needed to ensure that the trade mark will not be subjected to non-use disputes or removal.

Importantly, the transfer should be reflected on the trade marks registry, otherwise, the assignee may not be able to claim the benefits of trade mark ownership, such as initiating legal action against infringing parties.

Licensing trade marks

Trade marks can also be licensed by a legal agreement that gives a third party the right to use the trade mark. For the licensor, licensing agreements can provide access to new and broader markets, distribution of workload and responsibilities, and partnerships. The licensee, in turn, is able to benefit from the goodwill and reputation that the trade mark has already gained in the market. For example, Subway, which is one of the world’s largest single-brand restaurant chain franchises licenses its trademark to its franchisees.

Typically, as per the terms of a license agreement, the licensee must ensure that the quality of the goods or services associated with the trade mark remains unchanged and up-to-standard.

Valuing trade marks

Several aspects should be considered in determining the value of a trade mark. A base consideration is the cost of applying for the trade mark and successfully registering it. The most important consideration is the investment made in establishing the brand. Market research can show how much others would be willing to pay for comparable products. The impact of the use of the trade mark in increasing sales is also a consideration.