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Methods for Trademark Valuations

By Stacey C. Kalamaras and Henry Kaskov
October 01, 2020

Unlike other branches of intellectual property law, where the rights lapse after a span of time, trademark registrations are valuable because they can last indefinitely, so long as they continue to be used in commerce as a distinctive brand to distinguish a client's goods and services. A federal trademark registration is required to take down social media infringers, combat counterfeiters and sell a client's wares in an Amazon seller store. A registration can be helpful when seeking an investment for any start-up or new business, writing cease and desist letters or suing infringers. It significantly increases the value of any license agreement and initial public stock offering, or when it's time to securitize a portfolio or sell the business.

Valuations of trademarks, such as those in the entertainment industry, are most commonly performed in relation to a sale or licensing transaction or for lending and collateral purposes. Buyers and sellers may request a valuation assessment as part of a sale negotiation to ensure they are both getting fair market value for the trademark. Additionally, banks and financial institutions will often require a valuation of a trademark if it is to be used as collateral in a loan or line of credit. Lastly, a purchase price allocation is performed after most business transactions to allocate value to all identifiable IP acquired when businesses combine. In the context of a transaction, the existence of a registered trademark will typically yield a higher sale or licensing price than for a hypothetical identical transaction without the existence of a trademark.

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