3 Mistakes to Avoid When Selling an Existing Trade Mark

Angus

• 4 August 2021
• 10 August 2021
• 4 min read

Not being able to hold a trade mark will not limit your ownership rights. Your trade mark is your intellectual property, where the same legal rights protect you against theft as you would receive for a car you own. 

Selling a trade mark is often carried out when a company is bought or sold, and it holds existing trade marks. In these cases, if you were to purchase another company, you as the new owner will acquire a trade mark through transfer as a component of the broader sale. Other scenarios see trade mark owners choosing to sell an unused trade mark to a party that can better use it. This is because if you do not use a trade mark for three years over five years of registration, IP Australia will consider it abandoned. When selling a trade mark, here are a few common mistakes to avoid to ensure a smooth process.

1.  Forgetting to Report the Trade Mark Assignment

It is crucial to notify the IP Australia office regarding a change in ownership of a trade mark. Without notification, the trade mark assignment, goodwill and valuation will not be processed, which can cause problems.

Before confirming the sale or transfer of a trade mark, both parties must negotiate. You should agree on details regarding the sale of your company or your trade mark before reporting the negotiations to IP Australia. This is otherwise known as trade mark assignment, the process of confirming a trade mark’s new owner. Making the request to IP Australia is a critical first step, as this clears up whether the change in ownership will be full or partial.

Full ownership change in this instance entails the transfer of all products and services associated with the mark. In the case of a partial ownership change, the original trade mark owner may keep the products and services portion while only selling the name itself.

In any case, these details are all taken into account via the online assignment tool on the IP Australia website, which requires an assignment request form or partial assignment request form to begin.

2. Not Upholding Goodwill

Due to the role that trade marks play as identifiers for a company, product, or service, you will need to ensure that whoever buys your trade mark upholds the standards and recognition that have already been built.

This is also known as assigning goodwill to a trade mark – in case of disputes, a court will often determine whether the sale or transfer to a new owner is inclusive of this goodwill.

Sometimes, the seller will have to transfer all the assets used in creating the trade mark to the new owner. This guarantees that quality standards are kept up to par. Goodwill ensures that customers are not confused once a trade mark has changed ownership. Failure to provide these assets to ensure the trade mark’s reputation can be a damaging mistake.

3. Not Seeking an Expert for Trade Mark Valuation

Before entering negotiations to price your trade mark’s value, calling upon a trade valuation firm will provide a level of expectation to work off of. This is always preferable to calculating its value yourself. Trade mark value depends on a number of factors, including the trade mark’s:

• market share; 
• historical growth; 
• earning potential; and 
• consumer recognition. 

The knowledge of an expert will provide more confidence during negotiations and often yield you a higher price point. These professionals will also get you a fair price for your trade mark and help negotiations go smoothly.

Key Takeaways

If you sell an existing trade mark, you must report the trade mark sale to the IP Australia office. Ensure that the other party will maintain your trade mark’s goodwill post-sale, and consider hiring a trade mark valuation expert. If you have any questions about mistakes to avoid when selling an existing trade mark, contact our experienced trade mark lawyers on 1300 657 423 or fill out the form on this page.

Frequently Asked Questions