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Tuesday, 15 January 2008

101 reasons for not selling your unused trade marks ...

A distinguished friend, colleague and fellow IP blogger has written to the IPKat say that he is doing some research on the ways that people make money from their trade mark portfolios. In this context he writes:

"... there is one aspect that remains somewhat in the dark: the question why companies do not sell or dispose of their non-used trade marks on the open market.

It becomes increasingly difficult to find and subsequently develop a trade mark that is short, attractive, descriptive in marketing terms but legally strong enough, etc. Many players who have such marks but have decided not to use them any more because the underlying business has ceased (e.g. the decision by ING not to use POSTBANK) do not sell but keep their marks in stock and thus risk losing the mark altogether (non-use for five years). The explanations I have heard are not very impressive, like

* trade mark owners see “no need”,

* trade mark owners do not want to burn their fingers by selling a mark that is not being used but which is then made a huge success by the subsequent buyers.

None of these are very convincing arguments, let alone legally sound arguments".
He adds that, even with the aid of Google, he hasn't been able to unearth much literature on the subject. The IPKat came up with the following possibilities:

• Unused trade marks are sometimes variants or brand extensions of existing branded lines. The owner is unwilling to sell them because they are (often wrongly) believed to provide an extra level of protection;

• The act of publicly putting unused marks up for sale sends out a message to competitors, shareholders etc that the registered proprietor is seeking to reduce its commitment to the sector(s) corresponding to the Classes for which the mark is registered;

• There are no clear comparators that indicate what sort of price such a mark might fetch, since most sales of trade marks run in conjunction with the sale of businesses to which they are attached;

• The cost of maintaining an unused mark on the register is trivial, but the knowledge benefits derived can be considerable—for example where the proprietor receives requests for coexistence agreements;

• Most corporations have structures that provide for the supervision and maintenance of IP portfolios, but few have structures that provide for the regular audit of unused and superfluous marks with a view to their disposal.

Having said all this, he wonders if his readers have any more reasons - preferably cogent ones. Please post your comments below or email them to the IPKat here and he'll post them for you.


Anonymous said...

The same reason owners bring suit against another's use of what will likely be deemed an abandoned mark -- the owner does not want a competitor gaining a marketplace advantage leveraged from the still-existing consumer recognition of the mark, or does not want to have its image tarnished in the minds of those who are unhappy with the new product but still associate the mark with the former owner.

Jackie Maguire (Coller IP Management) said...

Owners sometimes do not wish a value to be attributed to a mark when a company is otherwise being disposed of or purchased, as this affects the sale/disposal price.

Filemot said...

Although trademarks have been granted the status of property, they are still tied down to use. In the UK we still have an intention to use declaration that is not entirely worthless. Unlike domain names they are linked to specific goods and services. Moreover governments set an artificially high initial cost to deter the traffickers (lovely word that so 1938). All told it means that its hard to build up a decent stock to open a stall. Long may it remain so. Property they may be but lets not expand it any more so that we damage the original purpose and need. A badge of origin does not work without an origin.

Darren said...

I have advised companies who would love to have the ability to sell their unused trade marks; some of which were never used and have no goodwill and/or there is no risk of a connection or "link" hangover. The difficulty is that trying to sell them is "hit and miss" and often takes more time/cost than it is worth. Perhaps Ocean Tomo have the solution? The Trade Mark Catalogue's business model for selling usused trade marks seems to have collapsed? Perhaps the Queen also has a few ideas; I purchased a registered trade mark from her from a liquidated company whose assets had become vested in the State? My view is that there is an unexploited marketplace for unused trade marks.

Jeff said...

In my experience Jeremy’s final remark that “few [corporations] have the structures that provide for the regular audit of unused and superfluous trademarks” is often the reality. This follows investigation of and discussion with heads of IP and several multinational corporations in the course of my business. One leading multi-brand consumer products group has a “passive” process under which their portfolio is split into active and inactive marks. As the latter come up for renewal, the relevant business leader is consulted and, unless he/she can provide evidence of intent to use/relaunch within a 2-3 year time frame (so driven by business planning horizons rather than legal requirements), the mark is allowed to lapse.
And this despite the fact that recent researchers at Princeton discovered that there is a correlation between stock performance and pronounce-ability of names.
If one overlays the simple maths of available morphemes and pronounceable combinations thereof versus the rate of new trademark registrations, one can quickly understand why naming consultants get away with charging ridiculous prices ($150k for the letter Q, anyone?) and often underwhelm.
Darren wrote:
“…there is an unexploited marketplace for unused trade marks.” I fully agree, and am close to launching the solution!

Jim Davies said...

It’s an interesting question that poses a juxtaposition with what happens with both domain names and(as far as I understand it) patents.

For example, both professional domainers (who warehouse and develop domain names) and corporations (who warehouse domain names too) register defensively extensive ranges of domain names. This can either block the use of often a generic domain by a competitor, store them up for a “rainy day” or provide capital value at some stage. There is no “use” requirement for maintaining a domain, which makes the practice easier to maintain.

However, despite the relatively short time that this practice has been around, there is an established market and ways to value domains. Indeed the strength of this market is evidenced not only by the values obtained ( and its associated directory service at US$345 million being the highest I know of) but also from the reported price of US$65 million paid recently for Moniker – the domain name auctioneers.

Anonymous said...

The laws of supply and demand apply. If someone wants/needs to buy a trade mark from you, you can ask a higher price than if you offer the mark for sale because you don't want it any more!

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