A trade mark gives the owner an exclusive right to use the registered brand name and/or logo for a period of 10 years, renewable for subsequent 10-year periods without a limit in time.
There are countless examples of logos or names we identify with and have welcomed as part of our daily lives when we look around. Businesses have invested infinite resources into connecting with their consumer market and becoming the brand of choice for their buyers. Imagine how you would feel if McDonald’s was promoted by Kernel Saunders or if the purple colour associated with Dairy Milk was instead used on packets of Maltesers – it just makes your head spin, does it not?
So, trade marks are not just boring legal issues. They are there to protect the name or image built through an invaluable effort by businesses to create a brand and a reputation. So, what happens when a business wishes to take over another trade mark?
Say, for example, a rapidly growing startup wishes to purchase an existing trade mark, or a company wishes to transfer trademark ownership to an individual director or subsidiary. Is this possible?
The short answer is yes, ownership of a trade mark can indeed be moved from one entity to another. Transferring ownership is known as a trademark assignment. To complete the change of ownership, a trademark assignment agreement must be drawn up and agreed upon between the assignor (the existing trademark owner) and the assignee (the new owner).
The longer answer, however, is more complicated as several legal complications should be considered before you transfer ownership.
If you are selling or buying a trade mark then you need to ensure that you get the right price for the right registration. There are several valuation methods to consider when pricing an intangible asset that, in itself, has no clear financial value.
One of the most common approaches to trade mark valuation is referred to as the ‘cost approach’. This is where your valuation is based on the costs incurred in creating the trade mark itself, which could include labour costs, research and development, testing, regulatory approval and registration, to name a few.
Another way of valuing a trademark license is the ‘income approach’ or ‘revenue approach’. This involves calculating the prospective income that a trade mark may generate for the business, as well as the costs involved with generating that income. This method is considered a better option in situations where clear financial projections are available, otherwise is can be difficult to judge how much a business will earn in years to come.
Finally, you may wish to consider the ‘market approach’ to brand value. This method of determining a licensed trademark value is based on a brand’s track record and current performance within a particular market. The market approach also takes into account the sale or purchase of other licensed trademarks to get a benchmark value for comparable assets.
A well-drafted IP contract is vital when transferring ownership. You want to ensure that terms relating to all aspects of the trade mark and its resemblance are covered and that both the benefits and the liabilities that could arise in the future are clearly agreed upon.
You’ll also want to confirm the legal formalities surrounding a successful transfer and the trade mark itself:
More to consider than you first thought, right? The complexity of issues like legal ownership changes of intellectual property rights usually requires a specialist lawyer to consult throughout the process, plus draft and review documents, contracts and more. After all, you don’t want to get something wrong, or not account for a particular situation, and then run the risk of a costly dispute in the future.
If you’d like help with a trademark assignment, or anything to do with transferring the ownership of intellectual property, including trade marks, design rights and copyright, we’re here to help. This is an area we specialise in. Get in touch with our IP team today using the form below and organise your free consultation.
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