When purchasing or acquiring a trademark from a third party, it is important to take into account the various factors that will affect the validity of the trademark. In order to ensure you’re purchasing a valid trademark, it is recommended to perform thorough due diligence before purchasing or obtaining a trademark to ensure that it is enforceable against competitors in the marketplace. The following is a list of factors that should be considered when evaluating whether to proceed with the purchase or acquisition of a trademark from a third party:
Make Sure That the Trademark Is Valid
To start, you should evaluate a trademark to determine whether it is valid in the first place. In many countries, trademarks must be applied for prior to use in the marketplace in order to be valid. In the United States, on the other hand, trademarks are validated through common law through the process of “common law” or “acquired rights.” What this means is that an unregistered trademark can become valid simply by virtue of its use in the marketplace without having been formally registered by its owner. As a result, it is very important to investigate whether or not the trademark has already been used in the marketplace in order to determine whether or not it has been acquired through common law. If the trademark has already been used in the marketplace, it is most likely that it has been acquired through common law and is therefore valid. However, if the trademark has not been used in the marketplace, then it most likely will not be valid and will, therefore, need to be formally registered with the government in order to be enforceable.
Evaluate the Trademark’s History
It is also important to investigate the history of the trademark in order to determine whether it is properly registered. By investigating the trademark registration history of the trademark in question, you will be able to determine whether the trademark will actually provide protection. If a trademark has been registered with the United States Patent and Trademark Office, then it should provide a significant degree of legal protection against third-party infringement. Also, if a trademark has previously been registered in another country and is still being used in that country, it may provide a similar degree of legal protection as if it had been registered in the United States. On the other hand, if a trademark has not been previously registered anywhere in the world and has only been used by the owner for a limited period of time, it may be more difficult to enforce against third parties who may be infringing upon it.
Acquiring Goodwill of the Business
Most businesses that successfully operate in the marketplace do so because they have been able to build a strong brand reputation over the years. In most cases, this strong brand reputation has been acquired by developing a strong brand identity for the business and allowing it to become well known to consumers in the marketplace. Brand identity is often manifested through the use of trademarks in connection with the business’s products and services. When acquiring a trademark, it’s important that you also acquire the “goodwill” associated with it. Generally speaking, goodwill is an asset of a business that is worth more than the fair market value of the trademark on its own. The value of goodwill reflects the established consumer preference for a particular brand and the fact that it would be difficult for other competitors to successfully displace that brand from the minds of the consumers it serves.
Conducting this due diligence when purchasing a trademark from another business is essential, not only to protecting your best interest, but also in getting a good deal. For any of your intellectual property needs involving trademarks, copyright, or anything else in the automotive aftermarket industry, contact us at (720) 221-4545, or via our website to schedule your consultation.
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