As a new business, you want to create a lasting impression on your customers. Building a strong brand that resonates with your customers is an important part of doing exactly that — and having a unique business name, tagline, or logo is crucial for building brand awareness.
Whenever a customer sees Apple’s logo, for example, it immediately conjures up the experiences that person has had with the brand.
Apple’s famous logo is an example of a trademark. A trademark is a unique name, phrase, symbol, or sound registered in the name of a business. Trademarks help companies protect their intellectual property and give them exclusive usage rights.
Finding a brand name or symbol could be a long, tiresome project. Then, the process of registering your new trademark can take over a year. If you don’t want to wait that long, you may consider buying a trademark instead.
While it’s faster than registering a new trademark, the process can be complicated. Learn how to spot a safe trademark purchase, close the deal, and avoid common pitfalls.
Which trademarks are safe to buy?
The United States Patent and Trademark Office (USPTO) approves new trademarks. You may buy an already registered trademark or one under application for registration. But you must know which federal trademarks are safe to buy.
It’s not just enough to have an approved trademark registration. The trademark owner needs to maintain the trademark. For example:
- The trademark must be in commercial use
- The trademark owner must file the renewal and declaration of use forms
If you buy a registered trademark that hasn’t been used for a long time or renewed, you might be unable to defend your trademark rights if another business claims it.
Trademarks under application
There are two trademark application filing basis types — “use in commerce” and “intent to use.”
Use-in-commerce applications are for registering trademarks that are already used for products or services. An application owner may transfer these applications to another owner.
Intent-to-use applications are for registering trademarks that have never been used in commerce.
If you want to buy such a trademark, the owner must first file an amendment to allege use or a statement of use with the USPTO to show they have used the mark in commerce. This discourages people from registering trademarks just to resell them.
Buying a dead or abandoned trademark application isn’t a good idea. There’s a high chance that another business might claim this mark.
Pros and cons of buying a trademark
While buying a trademark offers many benefits, it can have some disadvantages. Evaluating the pros and cons will help you go through the process more confidently.
Advantages of buying a trademark
- Saves time compared to a new trademark registration
- Avoids the complicated process of finding a unique company name or mark
- Transfers the existing goodwill of the mark
- Eliminates the risk of the trademark getting rejected, wasting your branding efforts
Disadvantages of buying a trademark
- May be difficult to find a trademark that matches your brand identity
- Could be costlier than registering a new trademark
- Might hurt your business if the original trademark owner had a negative reputation
- Has a challenging valuation process since the mark is an intellectual property
Now that you know the pros and cons of buying a trademark, here’s an important question:
Is buying a trademark name worth it?
All trademarks start as a name or a symbol — nothing more. But over time, customers will begin to associate specific values with a brand’s trademark. When customers see the trademark of a customer-friendly brand, they might remember their good experience with the brand, for example.
With this in mind, it can be worth buying a trademark if the trademark is a good match for your mission and vision. On the other hand, buying a random trademark that doesn’t suit your brand’s personality probably isn’t a great idea and probably wouldn’t be worth it.
It’s also not worth spending money on a trademark from a poor-quality company, as customers’ negative sentiments about this company could hurt your business. You should also steer clear of trademarks with legal disputes, which could be transferred to you.
How to buy a trademark
If you’ve decided to buy a trademark, you must first determine what kind of mark you need. Search USPTO and other trademark databases and choose a mark. The next step is to ensure the trademark has no legal dispute. After purchasing the trademark, you need to register it with the USPTO.
While these steps seem straightforward, you must pay attention to many details. Here’s a closer look at the process:
Step 1: Determine the type of trademark you need
A trademark is not just a catchy tagline or beautiful logo. It will be a significant part of your brand identity. The first step in buying a trademark is deciding what it should convey to your customers, like:
- Your brand’s qualities
- Type of goods or services
- Your brand’s vision or mission
Next, determine the attributes of the trademark you’re looking for. For example, you might want a short, fun name to convey your brand’s personality. Or you might need a phrase with a profound meaning. For a logo, determine the imagery and colors you’re looking for.
Step 2: Search trademark databases
Next, review existing trademarks to find one that suits your business. The USPTO’s Trademark Electronic Search System (TESS) is the best place to start your search. You’ll find registered trademarks and applications in TESS.
You should also search for existing trademarks in other sources, like:
- USPTO’s supplemental register
- Assignments on the Web (AOTW)
- State trademark databases
- US Securities and Exchange Commission filings
- Amazon and other online selling platforms
- Domain names and social media handles
Searching for an existing trademark can be quite the time-consuming process. Hiring a law firm specializing in trademark search services may be a good idea.
Step 3: Assess the trademark and make an offer
After you find a trademark you’re interested in, check to see if any similar trademarks exist and are used in commerce. Legal disputes could arise if two or more businesses claim rights over a trademark.
You also should check how the trademark has changed owners and if there are any ongoing issues with the previous owners. You can check the chain of ownership on the USPTO website.
Next, ensure the trademark owner is currently using this trademark in commerce and has filed renewal and usage declaration forms with the USPTO. You might be able to get a trademark that isn’t in commercial use or that hasn’t been maintained for a cheaper price. Still, there is a risk of another business claiming it.
“In the absence of clear documentation demonstrating how the [trademark] seller monitored and enforced its trademark rights, the buyer may be purchasing worthless trademarks,” says Alyssa J. Devine, CEO and founder at Purple Fox Legal, a business law firm.
It’s also good to check if the mark is a common law trademark. That means another business has the right to the trademark through common use, even if it hasn’t registered the mark with the USPTO. You may also want to search international trademark databases to check usage outside the US.
After assessing the trademark, approach the current owner and start negotiating a deal to buy the trademark.
Step 4: Create an assignment agreement
Trademarks are intellectual property just like other assets, such as real estate. So, after negotiating a price for the trademark, it’s time to execute a sales contract through an assignment agreement.
When you buy a trademark, you buy not only that particular mark but also the common law rights and the goodwill associated with it:
- Common law rights: The rights to a trademark obtained through long-term usage
- Goodwill: The inherent value of the mark that comes from the relationship consumers have with it and its earning power
The assignment agreement should include clauses to specify that the seller is transferring you the common law rights and goodwill along with the trademark. An assignment agreement could be complicated, so you might want a trademark attorney to prepare or review these documents.
Step 5: Record the assignment with USPTO
You should register the trademark with the USPTO after signing the assignment agreement. While it’s not mandatory, registering a trademark assignment in the Electronic Trademark Assignment System (ETAS) will give you the right to resell the trademark.
You must complete the registration within three months of purchase.
Before you register the assignment agreement using the ETAS, ensure you have the following information and documents ready:
- The full name of the owner
- The name and address of the purchaser
- The serial number of the trademark property
- Sales documents
Tips for buying a trademark
Here are some tips for navigating the trademark purchasing process:
- Hire a trademark attorney to check the mark's validity and draft a sales contract
- Ensure the owner has maintained the mark
- The mark’s goods or services category should match your goods or services
- Conduct a thorough search to ensure the trademark is unique to avoid legal disputes
- Ensure your sales agreement transfers the common law rights, usage rights, and goodwill
Buying a trademark instead of applying for a new one might help you kick-start your business. But it comes with a lot of complexities and legal work. Seeking legal advice on your trademark purchase can make the process go more smoothly.