Assignments, Licensing, and Valuation of Trademarks

1. How do I know what my trademark is worth?

The value of a trademark lies in the goodwill associated with that trademark. Goodwill is like the trademark right itself—an “intangible” asset (as distinguished from a “tangible” asset that is a physical asset that can be seen or touched, such as land, buildings, machinery, inventory, and cash) that is part of the value of the trademark owner’s business. It can be quite difficult to assign a monetary value to goodwill because many variables must be considered, such as the duration and extent to which the owner has used the trademark in business.

Some of the most common approaches to/methods of valuing a trademark are: (a) the income approach, which assigns a value to a trademark based on past and expected future profits of the goods/services associated with the trademark; (b) the market approach, which assigns a value based on comparisons of transactions (such as royalties, i.e., license fee rates) involving similar assets; (c) the cost approach, which assigns a value based on the cost of creating a trademark and the cost of replacing the existing trademark with a trademark of equivalent market power; and (d) the relief from royalty method, which estimates the expected royalty savings attributable to the ownership of the trademark.

Many companies specialize in the valuation of trademarks and may provide significant expertise in attributing a monetary value to a trademark.

See also Brand Valuation Fact Sheet

2. Can I sell my trademark?

Yes, you can sell and/or assign (transfer) your trademark. An assignment of trademark rights can be either outright, in that it results in the total transfer of ownership of such rights from one entity to another, or (in some countries/jurisdictions) partial, resulting in the transfer of only a portion of the trademark rights.

The laws governing trademark assignments vary from one jurisdiction to another. The laws and regulations of each jurisdiction where a trademark exists should be carefully reviewed before a trademark assignment is undertaken. Failure to comply with the requirements could lead to unanticipated tax consequences or result in the invalidation of the transfer.

See also Trademark Assignments Fact Sheet

3. Can I retain ownership of a trademark if I allow others to use it?

Yes. You can allow another party to use your trademark in commerce, while still retaining ownership of the mark, by entering into a license agreement with that person or entity.

Licensing of the use of trademarks facilitates merchandising, franchising, and distribution agreements, which play an important role in the way goods and services are distributed, marketed, and sold, both domestically and internationally License agreements may contain provisions governing the term (length) of the license, the territory covered by the license, the royalty the licensee must pay to the licensor for use of the trademark, whether the license must be recorded, whether the license covers all or just some of the goods or services protected by the licensed mark, whether the license is transferable or sublicensable, and whether the licensee has exclusive or sole rights to use the trademark (and if so, in which territory). Many license agreements will also have provisions permitting the licensor to control the quality of the goods or services produced or offered by the licensee under the licensed trademark, which are known as “quality control provisions.” In fact, to maintain your trademark rights  in many jurisdictions it is mandatory  to include quality control provisions in a trademark license agreement and, even in jurisdictions where it is not mandatory, it is always a good idea to include such provisions.

See also Trademark Licensing Fact Sheet.

Additional Resources

Country Guides: Essential Information on Trademark Protection Worldwide
Searchable database of basic information on trademark filing, prosecution, registration, maintenance and enforcement in more than 100 jurisdictions. Membership required.

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