How Do I Transfer a Trademark to My Name When I Buy a Business?

Trademarks are an essential part of business, and most businesses have at least one trademark. This could be – amongst other things – a name, an image, a symbol or a catch phrase.  They differentiate the goods or services of one trader from another, and can form a critical part of the intellectual property assets of a company.

When you’re looking at buying a business, the chances are you’ll want to know that the business has registered its trademarks and that you’re also buying the appropriate trademarks that go along with it.  While it can sometimes depend on the type of sale – generally speaking the sale and therefore transfer of a whole business will also involve the transfer of the associated trademarks.  Once you have ownership of the business, how do you transfer the trademark or trademarks to your own name, how easy is the process, and what type of issues can arise?

What Are the First Steps to Transferring a Trademark Into Your Own Name?

The very first question that needs to be asked is whether the business you are acquiring actually owns a trademark.  Finding out about the intellectual property (including trademarks) that the business owns should be considered during your due diligence when you are in the early stages of reviewing the business and its assets as a potential purchase.

If we assume that the business does indeed have registered trademarks, then they would need to be outlined and provided for in any sale agreement concerning the purchase of the business. Once that document is signed, we can use that agreement to lodge with the Trademarks Office to assign ownership from the original owner over to the new owner. If that agreement does not meet the filing requirements for assignment of trademark rights, we can draft a separate document for both sides to execute and file accordingly.

The document creates the transfer or assignment of rights from seller to buyer. It is then a matter of recording the transfer with the Trademarks Office.

How Easy Is It to Record the Transfer of a Trademark?

If we have the right proof of title document in front of us, it’s quite a straightforward process. The document could be the sales agreement, however if that document doesn’t actually detail the trademarks that are part of the purchase, we’d need to look at putting in place a separate agreement.  This is typically called a deed of assignment, which both parties would execute, and then we would use that document to file with the Trademark’s office in order to record the assignment of the ownership.  The steps for the recording of a change of ownership of a trademark are as follows:

• You or the owner of the trademark need to file the request to record the assignment with the Trademarks Office to notify them of the transfer
• The request must be accompanied by any necessary proof of title documents
• Once the Registrar has recorded the details of the assignment, the new owner’s details will appear on the register and they will be viewed the subsequent owner of the trademark.

In most cases, it is simple to transfer ownership of a trademark, unless there are issues with the sales agreement, a dispute about the assets or with the trademarks themselves.

What Issues Can Occur During the Transfer of a Trademark?

As with any sale of a business, issues can arise when the sales documents are too broad or vague in certain areas.  For example, if the sales documents discuss the sale of assets, but doesn’t include specific details of any trademarks included in those assets, it may require us to have the original owner sign another document that specifies what those trademarks are that are subject of that transfer.  If it is a case of a partnership dissolving, where there are multiple partners in a business, then the transfer documentation will need to list all original owners of the trademark and each will need to sign in order to transfer any trademarks.

Any type of business sale document needs to specify what the trademarks are, or any other IP, including trademark numbers, what the trademark is rather than simply saying all the assets of the business are now sold and transferred to X, Y, Z party in order to rely on the sale agreement in order to record the transfer.

Another issue can arise if the business owner chooses not to sell the trademark as part of the transferal of the ownership.  In these cases, the purchaser needs to determine if the business is something they want to purchase if it will not come with the trademarks. This may alter the value or sale price, because often what people purchase is connected to that brand name or trademark and the goodwill that’s attached to that.

Finally, it can be an issue if you buy a business and discover there are issues with the trademark that has been transferred.  This type of problem is usually discovered during any due diligence process, but if this has not been carried out or the issue was not picked up in the first place, the sale contract may need to be revisited to determine if or what can be done about it.

Whilst typically you will have clauses within that purchase agreement where each person’s either providing warranties to the other or indemnifying the other party in some way there may not be any way to hold the seller accountable for issues, particularly if you failed to carry out proper due diligence ahead of purchasing the business. Each contract is different, but if there was an issue discovered after the fact, you’d need to go back to your specific contract to determine if or what the other party might need to do for you or owe to you in terms of that agreement.

Contact The Trademark Experts

If you’re planning on buying a business or in the process of due diligence for a business, contact us and we can help verify any trademark assets.  Mark My Words Trademark Services has extensive experience in the field of trademark law so if you have any questions in this area please don’t hesitate to contact us and we will be happy to assist.