How to Best Commercialise Your Trade Mark As An Asset
For many businesses, their trade mark can be a valuable intangible asset. Luckily, when you commercialise your trade mark, you can bring even more money to your business. A trade mark is a form of intellectual property protection that can protect the unique features of your business brand, ranging from your business name to its slogan. Once IP Australia approves your trade mark application, you enjoy the exclusive rights to use, licence and sell your trade mark for 10 years from its application date. To better understand how you can commercialise your trade mark, this article details the benefits of licensing and selling your trade mark.
Licensing Your Trade Mark
As the owner of a registered trade mark, you have the exclusive right to licence your trade mark. Put simply, licensing is a contractual agreement between you (the licensor) and another person or business (the licensee). Under a licensing agreement, you give the licensee the right to use your trade mark for a specific time under certain conditions. For example, you can grant a colleague the exclusive right to use your trade mark for two years, in exchange for a fee.
Generally, there are three main categories of licensing rights. You can grant:
- an exclusive license, where only one party can use your trade mark at any given time;
- a non-exclusive license, where multiple parties can use your trade mark at any given time; and
- a sole license, where both you and one other party can use your trade mark at any given time.
Each category of licensing rights has different benefits depending on your business arrangement. For example, under an exclusive license, the licensee solely benefits from using the trade mark to profit. On the other hand, as the licensor, you might prefer granting non-exclusive licenses to retrieve the most commercial benefits from multiple licensing fees. Ultimately, licensing your trade mark can be useful in various contexts.
Franchising and Licensing
Trade mark licensing typically takes place when you want to expand your business through franchising. Franchising is a business model that allows several businesses (franchisees) to operate under an established brand of another business (franchisors).
The typical characteristics of a franchise relationship include:
- an ongoing relationship where the franchisor assists the franchisee in establishing, maintaining and promoting the franchise;
- the franchisee agrees to operate their business under the rules set out by the franchisor; and
- franchisors licensing their intellectual property to their franchisees in return for an agreed payment.
If you are licensing your trade mark in a franchise arrangement, you can place restrictions that limit the license. For example, you can impose a:
- territory restriction that limits the franchisee’s use of your trade mark to a specific geographical area; and
- product and service restriction that limits the franchisee’s use of your trade mark to a particular class of product or service.
By limiting the use of your trade mark in a licensing agreement, you can retain some control over how your intellectual property is used. Additionally, if you have multiple licensing arrangements and franchisees, imposing complementing restrictions might be necessary. This is to ensure that the franchising arrangement can run smoothly in practice.
Selling Your Trade Mark
If you wish to expand or sell your business, you might also have to sell your trade mark. As the owner of a registered trade mark, you also have the exclusive right to sell your mark. When you sell your trade mark, you are essentially changing who owns the rights to your intellectual property.
This process of altering ownership is an assignment, where you (the assignor) transfer ownership to the purchaser (the assignee). Once you fully assign your registered trade mark, you no longer have the right to use your trade mark. On the other hand, there are ways that you can partially assign your trade mark, meaning you retain some rights to use it. In any event, you should contact a lawyer and see what options for assignment are best suited to your business arrangement.
When you sell a trade mark, you must also consider the value of your trade mark. Typically, the value of your trade mark represents your business’ goodwill. Goodwill can include your business reputation and customer base. When it comes to valuing your trade mark, it is worth hiring an accountant or IP lawyer to provide you with an estimate of your trade mark’s value.
As a trade mark owner, you gain the exclusive right to license and sell your registered trade mark. In this sense, you can commercialise your registered trade mark by:
- obtaining royalties or licensing fees from licensing your trade mark to third parties; and
- making a profit by selling your trade mark.
Frequently Asked Questions
Trade mark registration is the process of applying to IP Australia for a registered trade mark. Once IP Australia approves your application, you enjoy several protections listed in the Trade Marks Act.
When you assign your trade mark, you essentially transfer ownership to your trade mark. You must assign your trade mark if you intend to sell it to another person or business.