Selling a trade mark may bring you financial benefits, but it can also have lasting implications on your brand identity. Hence, you should understand these losses and gains when planning to sell to ensure the transaction will ultimately benefit your strategic business goals. This article will explain several critical points to keep in mind when you are thinking about selling your trade mark.
1. Your Exclusive Right to Use the Trade Mark
Evidently, the primary consideration will be that you will no longer have the right to use the trade mark. This is because you are selling the right to exclusive use to the new owner, even at your own exclusion.
Alternatively, you may be selling your business, including its intellectual property. If you wish to continue using the trade mark, you would need to specifically identify this in sale negotiations. Then, when eventually assigning ownership of the trade mark to the new owner, a licensing agreement could be drawn within the sale. It should state that the new owner agrees to license the use of the trade mark to you for a specific purpose and amount of time.
2. The Value of the Trade Mark
Just like other forms of property, trade marks are valuable assets. Therefore, knowing their value is essential before engaging in sale negotiations. Generally, businesses who have registered trade marks may have a higher overall valuation than those with unregistered marks. This is because registered trade marks indicate a higher level of legal protection and less vulnerability than unregistered trade marks. It is common practice for businesses to ensure their trade marks are protected (i.e., registered) in preparation or anticipation of selling.
Factors that can be considered when determining the value of your trade mark can include:
- customer loyalty;
- the market share of products or services offered under the trade mark; and
- the historical sale and financial performance of the goods and/or services offered under the trade mark.
Trade marks are often linked to a good reputation and high-quality goods and services, making trade mark valuation similar to conducting a brand valuation. Therefore, factoring in the value of your trade marks is immensely important to achieving the highest possible brand valuation for your business.
Continue reading this article below the form3. Impact on Your Business Operations and Future Strategies
Considering the consequences of selling your trade mark on your current business operations is critical. For instance, the trade mark may be closely tied to your company’s identity or a particular product line. If so, selling it might require a rebranding effort or could lead to a loss of customer trust and recognition. You should evaluate whether the financial benefits of selling the trade mark outweigh the potential operational disruptions and costs associated with marketing under a new trade mark.
As for your future business strategies and goals, you should assess how the sale aligns with your long-term business plans. Selling a trade mark might result in immediate financial gain, but it may also limit your future opportunities as you no longer own the right to use that trade mark. Ensure that the sale supports your overall strategic goals, whether this is to raise capital, streamline your brand portfolio, prepare for a rebrand in the future, or exit a particular market segment.
4. Legal Status of Your Trade Mark
As a formality, you should ensure that you do, in fact, have legal ownership of the trade mark. As the trade mark owner, you are legally entitled to assign it to another person. Furthermore, you can also ensure that the trade mark’s status is registered and that any upcoming renewal fees are either paid if they are due or that this information is at least disclosed prior to the sale of the trade mark.
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Key Takeaways
Selling a trade mark is a complex decision with significant implications for your brand and business operations. Ensure you fully understand the loss of your right to exclusively use the trade mark, accurately value the trade mark, and consider the impact on your business and future strategies. By carefully considering these factors, you can ensure that you are making a well-informed decision that aligns with your business strategy and ultimately benefits you.
If you need help with selling your trade mark, our experienced trade mark lawyers can assist as a part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 1300 544 755 or visit our membership page.
Frequently Asked Questions
If you sell your trade mark without a licence agreement, you will lose your exclusive rights to its use. Furthermore, you may have to undergo a rebranding process and lose the recognisability of your prior trade mark.
Your trade mark is a core part of your business’s brand identity as it distinguishes your goods and services in the market. Thus, your trade mark’s value can be equal or very similar to your brand’s overall value.
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