What is the Value of a Trademark

February 17, 2015 — Leave a comment

Whether you have an existing trademark or are contemplating seeking protection for a mark you intend to use, you may be wondering why it matters and where is the value in a trademark. Well, as various surveys have shown, the value of a brand (which is not the exact same thing as a trademark but it is very close) can be quite high. For example, Google, Apple, and IBM all have brands valued over $100 Billion. Billon, with a “B”!

So, on a more practical level, we want to cover a few items in this post regarding the potential value of your trademark. Keep in mind that the value of your trademark can be linked directly to your goodwill, that is, what power does your mark have in the market to cause individuals to associate your mark with a specific good or service.

Method One – Value Based on Earnings

You can value your trademark by looking at your earnings power. You can look at your company’s past and expected profits as well as at the royalty rates at which you license your mark to other companies. You might also consider the price which you paid to create the mark and the associated goodwill (which is an expense you likely paid over many years while growing your brand).

Method Two – Based on Market Capitalization

Another method, at least for publicly traded companies, is based on the market capitalization of the company. Simply take the number of issued and outstanding shares, multiply that by the market price, and then subtract the company’s liabilities. The resulting number can be attributed to the company’s trademark because investors see the company as worth more than just it’s physical assets and cash flow. That difference can be attributed to the company’s trademark.

Can You Sell Your Mark?

First, you can license (on an exclusive or non-exclusive basis) your trademark to other companies to use your mark on their goods and services. However, you must also maintain some control over the quality of those goods and services or you may lose your rights in the mark.

Second, you can sell your trademark along with your company’s other assets. Essentially, if you are selling your entire company and its assets, you can transfer the name provided you also transfer the associated goodwill.

A Word of Caution

Keep in mind; if you can’t protect your trademark, the value immediately decreases. If other companies can freely use your mark, then there is no reason for them to license or buy the mark from you, and there is no reason for the public to associate your mark solely with your goods and services.

That’s Why a Federal Registration is So Important

The best way to protect your mark is by obtaining a registration with the United States Patent and Trademark Office, or the USPTO for short. The process can take many months but it isn’t overly expensive, if you know where to find help.

At MightyMarks®, that’s all we do – trademark law. We even have a low flat fee filing process to help you save time and to increase the odds of your application being approved.

To learn more, visit us at http://www.mightymarks.com.


Image: Thinkstock/NikWaller
*This article is very general in nature and does not constitute legal advice. Readers with legal questions should consult with an attorney prior to making any legal decisions.

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