A trademark is a mark, design, logo, word, phrase, or something similar that identifies the commercial source of a product or service. This identification is the minds of the relevant consuming public. Trademarks are a form of intellectual property, and like other forms of property, a trademark can be sold or transferred. Trademarks can also be licensed. In simple terms, licensing can be imagined as a form of renting the trademark out for others to use.
Although uncommon, trademark property rights can also be divided and sold/licensed in part. For example, the sale of national trademark rights, but not international rights. If you need help creating, protecting, or registering a trademark, and if you have been searching for the “best trademark lawyers near me,” call us here at Revision Legal at 231-714-0100 or 855-473-8474. Below is a discussion of the pros and cons of selling a trademark (rather than licensing it).
Why Sell a Trademark?
The main advantage of selling a trademark outright is the guaranteed one-time payment of the price negotiated. As with any sale of a business asset, the sale is permanent (unless the asset is bought back). By contrast, a license is temporary — for the limited time negotiated as long as the licensing fees are paid.
Another “pro” of selling a trademark outright is the avoidance of any costs associated with protecting and policing the trademark from those that would infringe on the trademark and from licensees of the trademark. Failing to protect and police how a trademark is used can lead to the loss or dilution of the trademark. If you sell a trademark, those costs and risks fall on the buyer.
Disadvantages of Selling a Trademark
The main disadvantage, of course, of selling a trademark outright is the loss of greater potential value if the trademark can be developed and marketed to make it stronger, more universally recognized, and more valuable. As a business asset, the value of a trademark can be a significant weight on an asset/liability sheet. Along the same lines, selling a trademark removes the ability to use the value of a solid business asset for collateral and asset financing, which could be used for other aspects of the business (such as stabilizing cash flows). As noted, trademarks are licensed in exchange for licensing fees. The loss of a licensing fee income stream is another potential disadvantage of selling a trademark outright.
There is, of course, no “right” answer to whether it is better to sell a trademark or license it. Nor is there a “legal” answer since these are business decisions that depend on many factors. Your business model is one such factor. Some business models — such as franchising — are ONLY compatible with a trademark licensing regime. Other factors include whether your company has the resources and commitment to developing the full value of the trademark in question, whether the trademark is associated with the core part of your business, the need for the money to be generated from an outright sale of a trademark, the value to your business of ongoing licensing fees, etc.
Contact the Trademark Attorneys at Revision Legal For more information, contact the experienced Trademark Lawyers at Revision Legal. You can contact us through the form on this page or call (855) 473-8474.
