Can I Sell My Business and Keep My Trademark?
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Selling a business is a complex decision for any entrepreneur. It's not easy to part with something built with passion. You have to let go of tangible assets like products or services, physical spaces, and employees.
But it may be harder to let go of the brand identity you created, especially after you go through the whole process of registering it as a trademark. That's why many small business owners find themselves asking, “Can I sell my business and keep my trademark?”
This is not a straightforward yes or no question. Luckily for you, there are many options available to business owners. First, you must take inventory of all your intellectual property, including trademarks, patents, and copyrights.
This will be the foundation of the strategy you decide on for your intellectual property assets.
Here are some things you can do with your trademarks and other assets when you decide to sell your business.
Sell your trademark
Trademarks are a form of intellectual property that protects words, names, symbols, sounds, or colors that distinguish goods and services.
To build a brand for your business, you likely created a logo, business name, and maybe even a slogan. These can all be registered with the United States Patent and Trademark Office (USPTO) to give you exclusive legal rights to use them.
As your business and brand expand, your trademark will also become more valuable. It's the legal backbone of your brand. Your trademark represents the elements that the customers identify with.
That's why someone looking to buy your business will likely also want to buy your intellectual property rights as part of the deal. The company assets will usually include your ownership rights over the brand, as the new owners won't want to lose out on brand equity and customer loyalty.
If you decide to sell and wonder how to sell a trademark, you can use a trademark-selling platform. However, we recommend seeking legal counsel from a trademark lawyer before doing this.
If you play your cards right, you can charge a significant amount for your trademarks, depending on the recognition they enjoy in the market. But remember that this will be a one-time payday. By selling your trademark, you relinquish any claims over its future value.
Should I sell my trademark?
A lot of work goes into building a brand. You have to have a concept, introduce it to the market and consumer, create a compelling value proposition, and battle competition. So, if your brand is valuable today, you've likely put much effort into it.
And if you have trademarks related to it, you've likely gone through the whole trademark registration process. With and especially without a trademark attorney, the process takes time, patience, and effort.
So, it may not be easy to say goodbye. While you may get a good amount for selling it along with your business, you may lose out on its future profits. Instead, you can license it to the new owner of your business.
License your trademark
Licensing a trademark means keeping your legal ownership over the mark. But through a contract, you can allow the new owner to use the mark for the business.
Trademark licensing means a registered trademark owner, a licensor or proprietor, allows another party, a licensee, to make and distribute specific products or services under the licensor's trademark agreement.
As the licensor, you could agree to a certain amount of money or royalties. This is usually a percentage of all sales in exchange for allowing the licensee to use the trademark. This will allow you to set terms and profit-sharing rates that work in your favor. Additionally, since you still own the mark, you'll continue to benefit from it even after you've sold the company.
But with ownership comes responsibility. Keep in mind that as the owner, you’re responsible for the mark until the end. This means you must ensure that the goods or services carrying the mark meet the USPTO's standards and that the mark is renewed on time.
You can also follow a similar strategy for your other intellectual property assets, like patents. We recommend hiring a trademark attorney or a lawyer well-versed with intellectual property basics and trademark law, to help you navigate this process.
Consider joint ownership of your trademark
According to US trademark law, two or more people or parties can jointly own a trademark. This means that both owners have equal rights over property or products. On the flip side, they would also share responsibility for the mark.
Joint ownership of a trademark is only granted if the owners have joint control or rights over the goods or services' quality and nature. This means you'll only be able to opt for this if you stay in the company after its sale.
You can consider this option in case of a partial sale or a merger.
Win some, lose some
This step requires you to take stock of all your intellectual property assets and decide which ones to hold on to and which to let go.
Some parts of your IP may be more valuable, so you can take a hybrid approach. You could consider selling the ones you think have reached their peak value and negotiate licensing agreements for others.
If any are of no use anymore, you could also allow them to lapse. If you don't renew your mark at the stipulated time, it’s considered "dead," and anyone else can claim it.
While this is an option, remember that it will not benefit you in any way except by saving on renewal fees. Exploring selling or licensing before you settle for this option is always a better idea.
Hiring a trademark lawyer would make this process much easier and open up more options. Trademark law can be complicated, and trademark ownership transfer even more so. This means you may face challenges in trying to execute any of the above. On the other hand, there may be opportunities to optimize the value of your IP in the sale of your business.
For small businesses, trademarks and other IPs can be some of their most valuable assets.
Ensure you unlock their true value, even if you're bidding them goodbye!
Can you transfer ownership of a trademark?
Trademark ownership transfer is also known as a trademark assignment. A trademark assignment agreement must be drawn up and agreed upon to transfer ownership between the assignor (the existing trademark owner) and the assignee (the new owner).
How much does it cost to transfer a trademark?
The filing fee to transfer a trademark is $40. In the case of an online filing, the transfer is typically processed within one business day. Another option is to file by mail, which usually takes a week to process.
Can I buy someone else's trademark?
Yes, there are some options to do this. You can have the owner assign the trademark to you and own it outright, or you can license some or all of the rights. If purchasing an existing trademark proves expensive, consider purchasing a dead or abandoned trademark.
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Amrusha is a versatile professional with over 12 years of experience in journalism, broadcast news production, and media consulting. Her impressive career includes collaborating extensively with prominent global enterprises. She garnered recognition for her exceptional work in producing acclaimed shows for Bloomberg, a renowned business news network. Notably, these shows have been incorporated into the esteemed curriculum of Harvard Business School. Amrusha's expertise also encompassed a 4-year tenure as a consultant at Omidyar Network, a leading global impact investing firm. In addition, she played a pivotal role in the launch and content strategy management of the startup Live History India.
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