Can you buy a trademark? Considerations when buying a trademark...

Can you buy a trademark? Considerations when buying a trademark...

  • 09 April, 2024
  • Nyall Engfield

Buying an existing trademark rather than filing for a new one has pros and cons.

This choice comes with its own set of advantages and disadvantages, depending on your business needs, the market you're entering, and the specific trademarks available. Here's an in-depth look at the pros and cons of buying an existing trademark instead of filing for a new one.

Pros of Buying an Existing Trademark

1. Immediate Market Presence and Brand Recognition

Buying an established trademark grants immediate access to a brand that may already be recognized by consumers. This can be especially valuable in crowded markets where establishing a new brand from scratch can be challenging and expensive.

2. Avoiding the Registration Process

The process of registering a new trademark can be lengthy, taking anywhere from about 10 months to almost two years (with office actions). Buying an existing trademark bypasses this waiting period, allowing you to use the trademark immediately after the purchase is completed.

3. Reduced Risk of Opposition

When you file for a new trademark, there's always the risk that it will be opposed by the owners of similar trademarks. Buying an existing trademark can reduce this risk, especially if the trademark has been around for a while and any opposition would likely have already occurred. However, a potential purchaser will need to perform due diligence to avoid possible lawsuits from the previous use of the mark, and ensure that the mark was consistently in use.

4. Access to Existing Customer Base

An existing trademark may come with a built-in customer base familiar with the brand. This can provide a ready-made market for your products or services, potentially saving significant marketing and customer acquisition costs.Established brands can provide huge premiums, and multi-billion dollar companies exist purely on buying and exploiting brand names.

5. Legal Protection and Goodwill

An established trademark has legal protections and potentially valuable goodwill associated with it. This can include customer loyalty, brand reputation, and other intangible assets that can be beneficial to your business.

Cons of Buying an Existing Trademark

1. Cost

How much is a trademark worth? Buying an established trademark can be significantly more expensive than registering a new one, especially if the trademark belongs to a successful brand. The upfront cost may be prohibitive for some businesses, particularly small startups. New trademarks can be filed for a low flat fee.

2. Due Diligence and Hidden Liabilities

When buying a trademark, it's crucial to conduct thorough due diligence to uncover any potential legal issues, such as pending litigation or claims of infringement. There may also be hidden liabilities, such as contracts or obligations entered into by the previous owner that are tied to the trademark.

3. Integration Challenges

Integrating an existing trademark into your business might not be straightforward. There could be challenges in aligning the brand's existing identity and reputation with your business model, values, and future direction.

4. Potential for Negative Association

An existing trademark might come with negative associations or a tarnished reputation that can be difficult to overcome. This could require significant effort and resources to rebrand or rehabilitate the trademark's image.

5. Geographic Limitations

The rights to an existing trademark may be geographically limited, restricting your ability to use the trademark in certain regions or countries. Expanding the geographic scope of the trademark might require additional filings and potentially dealing with conflicts in other jurisdictions.

6. Cultural and Market Misalignments

A trademark that resonates well in one market or culture might not have the same appeal in another. If your target market is different from the one the trademark was originally established in, you may face challenges in making the brand relevant to your audience.

7. Risk of Dilution

If the previous owner granted licenses to the trademark, or if it was used in a way that weakened its distinctiveness, there's a risk of dilution. This can make it harder to enforce the trademark against infringers and diminish its value.

8. Rebranding Costs

Even if you're buying an existing trademark, you might still need to invest in rebranding efforts to align the brand with your business strategy, which can incur additional costs.

9. Reliance on Previous Owner's Reputation

Your business might become overly reliant on the reputation established by the previous owner, which could be a double-edged sword. Any change in public perception of the previous owner could indirectly affect your brand.

There are some trademark marketplaces which offer registered trademarks for sale, and others offer to buy registered trademarks.

The decision to buy an existing trademark instead of filing for a new one should be made after carefully considering these pros and cons. The right choice depends on your specific business goals, the nature of the trademark in question, and the market environment you're operating in. Consulting with a trademark attorney can provide valuable insights and help you navigate the complexities of buying a trademark. Ultimately, whether you decide to buy or file, the goal is the same: to secure a strong, protectable brand that supports your business's growth and success.

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