Trademark Considerations in the Purchase or Sale of a BusinessSeptember 23, 2025

A trademark or service mark consists of any word, name, symbol, or device (e.g., product design or packaging, color, sound, or smell) that is distinctive and non-functional used by a person or business as a “source identifier”.  In other words, when consumers or potential consumers see the mark, they associate it with the manufacturer or service provider of specific products and services.

In the United States, trademark rights are acquired by use of the mark on or in connection with the sale of specific products or services.  Thus, federal registration is not required to have a trademark right or to bring a trademark claim, although federal registration offers many significant benefits, including, a presumption of validity, priority and nationwide rights, constructive notice of ownership of the mark, the right to use the ® symbol, the right to recover profits, damages, and costs from an infringer, and possibly up to triple damages and attorney fees for trademark infringement or counterfeiting, access to registration with the Customs Border Patrol to stop the importation of infringing goods, and access to various online “brand registries” (e.g., Amazon and Walmart).  In contrast, in many foreign countries, trademark rights are acquired by registration, meaning the person/entity who registers the mark first obtains rights in the mark (with some exceptions such as with famous marks).  Trademark protection is potentially perpetual, although registrations require periodic maintenance filings and/or in-use declarations. 

Trademarks make up a significant asset for any business and thus should be of preeminent consideration in the purchase or sale of any business.  To that end, below is a list of due diligence steps you should take when either selling your business (or a specific line of business) or purchasing a new business (or line of business):

• Identify a list of all registered trademarks anywhere in the world together with a list of upcoming registration maintenance deadlines (your trademark counsel should be able to provide this in a “docketing report”);
• Identify and memorialize a list of any pending trademark applications together with a list of upcoming deadlines for responses to office actions or statements of use;
• Identify and memorialize any common law marks—those trademarks which have been used by the business, although not registered with any state or federal government;
• For all trademarks, maintain a record of the date the mark was first advertised and the date on which sales under the mark were first made, together with any documentary evidence of these dates of first use;
• Store any “clearance” or “trademark search” opinions undertaken;
• Identify and memorialize any pending litigation or potential disputes concerning any of the trademarks;
• Ascertain if any of the marks/registrations have been pledged as security for a credit arrangement, and confirm that if the debt has been satisfied or refinanced, a formal release has been recorded in the appropriate trademark offices;
• Identify any/all contracts involving any trademarks and memorialize and keep an archive of the parties to the agreements, the expiration/renewal dates, and the key terms of the agreements:
  • Consent Agreements (where one party consents to another’s use or registration of a similar mark)
  • Coexistence Agreements (where two parties consent to one another’s use or registration of similar mark and detailing the conditions under which they can operate without confusion)
  • Licensing Agreements (where a trademark owner gives permission to another party to use its mark under specific conditions)
  • Cobranding Agreements (where two parties use each other’s trademarks to market/sell products)
  • Assignment Agreements (where a  trademark owner transfers all rights in a trademark to another party)
  • Distribution Agreements (where a trademark owner gives permission to a third-party to sell products/services under a trademark in a certain territory and under certain conditions)
  • Manufacturing Agreements (where a trademark owner gives permission to a third-party to use a trademark in connection with the manufacture of products)
  • Settlement Agreements (an agreement between two parties involved in a trademark dispute with the terms and conditions of resolution)
  • Covenants Not to Sue (typically made as party of a settlement agreement wherein one party promises not to pursue any legal action against another’s use of a trademark)
  • Franchising Agreements (where a trademark owner gives a third-party the right to use a trademark, the franchisor’s business model and systems under specific conditions)
• Prepare a written Assignment document for all trademarks to be recorded in all relevant trademark offices for all registered trademarks. This document should include the names and addresses of the parties involved (assignee and assignor), a list of all trademark registrations, applications and common law marks to be transferred, and a description of the rights being transferred.  The assignment should be signed by both parties and notarized (note: foreign countries may have additional requirements).

Taking these steps when purchasing or selling a business can help to protect what is arguably some of the businesses’ most important and long-standing assets.  It is helpful to is important to work with an attorney who specializes in trademark law when acquiring or transferring trademarks to ensure that the process is done correctly and that all necessary documents are prepared and filed.

Christine Lebron-Dykeman is Chair of the Trademark Practice Group at McKee, Voorhees & Sease, PLC. For additional information please visit www.ipmvs.com or contact Christine directly via email at christine.lebron-dykeman@ipmvs.com.