Federal Trademark Registration Important in Mergers & Acquisitions

Federal Trademark Registration Important in Mergers & Acquisitions

Clients, existing and prospective alike, regularly ask: Do I really need a trademark registration or can common law rights be enough.  Typically, we then discuss the benefits of a trademark registration on the Principal Register of the United States Patent and Trademark Office (USPTO), including:

  1. nationwide priority
  2. presumption of ownership in court
  3. presumption of validity in court
  4. incontestability after 5 years
  5. right to sue in federal court
  6. right to recover statutory and/or triple your actual damages plus attorney’s fees
  7. use of the ® symbol
  8. help from the U.S. customs service to avoid counterfeit products
  9. deters unauthorized use of the mark
  10. helps when going after cybersquatters
  11. registration in other countries using the U.S. priority date

However, there is yet another benefit that needs to be discussed by all trademark attorneys.  More so than ever in today’s relatively active merger and acquisition world, we now must also be mindful of what not having a trademark registration means.  It tends to raise questions during due diligence about the exclusivity of ownership of the trademark, albeit in connection with the owner’s goods/services.  It also creates pre-closing, or alternatively, post-closing, obligations that otherwise would not need to be considered.  Finally, as intangible property, trademarks, a form of intellectual property, oftentimes are one of the more valuable components in an M&A deal.  Shouldn’t it be treated as such?

There are too many self-help trademark tools available to entrepreneurs to forego trademark registration for their brand.  Early stage entities can also retain a trademark lawyer who can, hopefully for a flat fee, perform the recommended trademark clearance search and application for registration.  Trademark attorneys experienced in not just trademark prosecution but also in mergers and acquisitions, not to mention trademark litigation, can further advise about the best ways to secure, protect and enforce your trademark rights.

Moral of the story: register your trademark.  In fact, register your brand, product names, and other source identifiers as trademarks early and often.  You will be happy you did when an issue arises or your are fortunate enough to be the target of a merger or acquisition.  Trademark registration should not be one of the choices you have to make as a business owner and, instead, be part of your calculated plan for success.