Barring a case of trademark hoarding by bad faith owners, there are several reasons why a trademark owner might decide to sell a mark. It may be due to a shift in focus to other areas of business or the trademark may no longer align with the owner’s branding strategy. The decision to sell may also be dictated by other factors like brand revolution, market demand and retirement. Or, it could be that the owner just wishes to monetize the trademark’s value or no longer wants to use the mark.

“If he does not sell the mark, once any third party challenges it by non-use cancellation, he could not maintain it. If he sells the mark, he will get some benefits from this sale and this mark will be used by another party. It is a triple-win by the owner, the buyer and the society,” explained Lina Li, a partner at Jadong IP Law Firm in Beijing.

A trademark can only be sold by the owner of the rights to that mark – whether said owner is an individual, business or other entity.

Anybody can also make the purchase – an individual, company, association or body of persons, corporate or incorporate. This includes the employees of the business enterprise that is selling the trademark as well as its business competitors.

“In China, as for the assignee or buyer whose nationality is not Chinese, anyone or any legal entity can buy a trademark. As for the assignee or buyer whose nationality is Chinese, any legal entity that is active can buy a trademark, while the natural persons not only need to have civil capacity but also be authorized to engage in business activities in accordance with the law. The assignee’s ID card and business activities certificate would be verified,” said Xia Zheng, founder of AFD China in Beijing.

For example, if the assignee is an individual industrial and commercial household, they can use either the trade name indicated on their Individual Industrial and Commercial Household Business License or the operator’s name as the name of the assignee. “When recording the trademark assignment before the CNIPA, the copies of the assignee’s ID card and Individual Industrial and Commercial Household Business License should be submitted,” Zheng added.

Steps involved in selling and purchasing marks

The process of selling and purchasing marks process typically involves due diligence. “Both the buyer and seller should conduct thorough due diligence to assess the trademark’s value, legal status and potential risks. It is important to bear in mind that trademarks are territorial in nature,” said Ren Jun Lim, a principal at Baker McKenzie Wong & Leow in Singapore.

Selling and buying also involves negotiation, with the parties negotiating the terms of the trademark sale. These include the purchase price, payment structure and any conditions or restrictions.

A legally binding assignment agreement is also put in place. The terms of the sale set out in the agreement include the transfer of trademark rights.

Filing with the relevant IP offices is, of course, also an important step in the process of trademark selling and buying. “The assignment of a trademark may need to be updated in the respective countries’ registers to reflect the change of ownership,” Lim said.

Several online marketplaces facilitate the purchase of trademarks on a global scale. One of these is RedCoin. Based in the United Kingdom, RedCoin has been engaged in the acquisition of trademarks since the late 1990s.

“We use built-in trademark data APIs to do the work of providing the necessary formal information, so when a seller enters the registration number and the associated country, the system auto-populates the platform with all the official data. All the seller has to do is enter the price, whether they will negotiate on that price and any other information they think may be useful. They can add connected domain names to the listing too,” said Gavin Hyde-Blake, the London-based co-founder of RedCoin.

“For buyers, it is even more straightforward. There is a search page for people to search by term, class and territory – and if there are some marks they want to keep an eye on, there is a watchlist facility to bookmark interesting listings. Buyers get to deal directly with the seller through a messaging system, negotiating the price with them and being able to send and receive contract agreements and assignment documents,” Hyde-Blake added.

Would our interviewees recommend a client sell a trademark?

According to Rahul Bajaj, an attorney at Ira Law in New Delhi, there is no blanket answer to this question.

“Whether a client wishes to assign a trademark is a call that must be taken based on the consideration of multiple factors,” Bajaj said. “These include the value that the mark is able to fetch, the impact that assigning rights in the mark would have on the assignor’s IP portfolio and business more generally and the motivations for why the assignor is considering the assignment of the mark.”

Lim agrees.

“Selling a trademark can be beneficial if the client wishes to monetize its intellectual property, shift focus to other areas of business or if the trademark no longer aligns with their branding strategy,” he explained. “However, it is crucial to consider the potential loss of exclusive rights and the impact the sale of trademarks will have on the client's brand identity. Therefore, the decision to sell a trademark should be one that is based on a comprehensive evaluation of the client’s business strategy.”

“Actually, if the mark is not their house mark, it does not enjoy high reputation, and the client does not use it frequently, we will suggest the client sell the mark,” Li said. “This mark may face non-use cancellation and the client may lose it in the future.”

In terms of the lifecycle of trademarks, when a mark is at the end of its life, brand owners are now able to break out of the lapse-or-renew loop and proactively sell something that they no longer need, Hyde-Blake said. “The process gives trademark holders and IP professionals real options for positive action for portfolios and allows real change in the strategic approach to marks. Selling removes renewal and maintenance costs from businesses and allows for a new revenue stream from dead assets that can be reinvested into new IP.”

Would they recommend a client to buy a trademark instead of creating one? Our interviewees said this also depends on a host of factors – the client’s specific needs and goals, budget, potential benefits and risks associated with purchasing a mark.

“Buying a trademark can be a strategic decision, especially if the client seeks to acquire an established brand with a strong market presence. Purchasing an existing trademark can save time and resources compared to creating a new one from scratch. Additionally, an acquired trademark may already have a loyal customer base and brand recognition, which the client can build on to further develop their business,” said Lim.

However, Lim also added that clients aiming for brand originality and who prefer to have greater creative control over the name, design and brand strategy of their business might choose to create a mark from scratch instead.

“Generally speaking, it may make sense to create a new mark, based on an analysis of the marks that are already registered, as opposed to becoming an assignee of a mark since acquiring a trademark may entail its own set of expenses and a thorough due diligence,” said Bajaj.

“We suggest that the client create a new one instead of buying,” revealed Li. “The reason is that before buying, the client must do a lot of investigation work such as the total numbers of marks filed by the owner and affiliated companies, and whether they have assigned their marks to different third parties, whether or not the mark is pledged, whether the mark is frozen by a court, etc.”

Generally, buying a trademark can save time and resources compared to creating a new brand from scratch, but the purchased mark may have potential legal disputes, such as infringement litigation or disputes of ownership, Zheng added.

According to Hyde-Blake, pre-owned marks could potentially have vital prior rights to provide protection and comfort to the buyer. “A brand owner can begin using a pre-registered mark as soon as they legally own the mark – a much quicker process than waiting for an application to clear, so the path to market for products or services is quicker and easier,” he said.

Tips for trademark buyers and sellers

Our interviewees offered the following tips for trademark sellers and buyers:

1. Before selling, the trademark owner should investigate the adversary, including their business mode, main products/services, legal actions involved, and others.
2. Before buying, one should investigate as well and get information on the following: the total number of marks filed by the trademark owner/their affiliated companies, whether they have assigned their marks to different third parties, that the mark is not pledged and that the mark is not frozen by a court, among others.
3. If the buyer is a foreign company, it will be more cost-effective to conduct the negotiation through a third party.
4. Parties should carefully assess the type of assignment they would like to enter into. In India, according to Bajaj, there are three types of assignments under the country’s trademark alw. These are:

• Complete assignment. All the rights flowing from the trademark are assigned.
• Limited assignment. Only some rights are assigned. These include the rights over that trademark without respect to a particular good/service or particular classes
• Assignment with or without goodwill. The assignor can either assign the goodwill associated with the mark to the assignee or choose to retain the same with itself, while assigning rights in the mark.

5. Compute the cost intelligently. “It is critical to intelligently compute the cost of the trademark for the purpose of assignment,” said Bajaj. “There are two methods commonly deployed for this purpose. Direct cost, which is based on the actual cost incurred by the assignor on the mark and indirect cost which takes into account the brand image and customer awareness of the mark.”

Under the indirect approach, the following approaches are typically used:

• Cost approach. The cost incurred in positioning the brand
• Income approach. The estimated income that the mark may generate based on a projection as to its useful life
• Market-based approach. The value of the mark is ascertained based on the value of similarly situated marks in the market

Trademark buying and selling in Asia

Assignment of trademarks is fairly common in India, where a registered mark which has not been used for at least five years from the date of registration, may be vulnerable to cancellation for non-use.

In Singapore, the practice of selling and purchasing trademarks occurs primarily in the context of business acquisitions, mergers or the transfer of IP assets.

In Asia in general, there is a generally high acceptance of the practice. “It’s something the Asian market is used to and open to. The further westwards from there, the more conservative people seem to be about the practice at the moment – although the interest we're generating shows the appetite may be changing elsewhere to catch up with the Asian market,” Hyde-Blake said.

It didn’t seem that way at first though. Hyde-Blake acknowledged that RedCoin initially focused on Europe, its home ground in IP investigations for the last 15 years. “We were, I'm sorry to say, a little parochial in our outlook,” he confided.

Yet, one week after opening the platform, the realization set in: The business of buying and selling marks was more global than they thought. “We were receiving calls and emails from contacts in other parts of the world,” Hyde-Blake recalled, “and we soon widened our platform to include North America and Asia.”

The 2023 International Trademark Annual Meeting (INTA) in Singapore, in which RedCoin participated, reinforced this decision. “We had an overwhelmingly positive response from attendees and showed IP is a ‘Glocal’ market – one that is both simultaneously global and local. The experience was both encouraging and educational and showed that Asia is an important market for us,” explained Hyde-Blake, adding that sales used to be undertaken as one-off deals where a buyer approached a trademark holder to acquire a specific mark for a specific project.

“Asia is the area currently showing the strongest interest in terms of buyers,” he continued. “They are also increasingly heavily represented on the selling side and the platform currently has a large number of marks from South Korea and India. We are getting enquiries in from potential Asian buyers, including from China, South Korea and Singapore, so it's an area that is high in activity for us at the moment.”

Trademarks, anyone?