An organisation's value is no longer based simply on its tangible or fixed assets; more often than not, it is the company’s intangible assets, including brand reputation and goodwill, that create its market value. Without the proactive protection and valuation of those brands however, how can you be sure that you’re correctly capturing their value for reporting or projection purposes, or when negotiating a price for your business in case of sale, takeover or asset disposal?
When a business is buoyant, it’s easy to overlook the need to protect, monitor and measure corporate IP assets. But, the ramifications of not doing so, become all too evident as soon as that business needs to generate finance as part of a growth strategy, takeover, asset disposal or bankruptcy procedure.
The value of a company’s trademark portfolio includes customer trust and loyalty, and brand image and reputation, as well as the revenues generated by the sale of the products covered by trademark rights. Intangible assets such as these can be difficult to assess and capture on a company’s balance sheet. You may feel you know their value to your business, but if you’re unable to substantiate that value during sale, then they become only as valuable as another party is willing to pay.
Putting a value on trademark rights
In order to ring-fence and identify the full value of your trademark rights, companies need to implement a strategy of protection and measurement. This needs to start from the very beginning of the IP life cycle; i.e. in the choice of the mark itself (whether a name, word, image, logo, shape or combination), which needs to work from a legal perspective as well as a marketing one.
Find out more: ‘Best practices in trademark management: a practical guide’.
The limits of those rights also need to be fully noted and understood; for example, any negotiations or coexistence agreements that need to be entered into with third parties, any geographical limits due to cultural and language considerations (conflicts) or gaps in protection or use. Factors such as these can be very important when putting a value on a trademark. So too can be any disputes or infringement claims related to that IP asset, and any licensing or merchandising agreements.
Not all trademarks are created equal; therefore, not all trademarks require the same level of investment. By dividing a portfolio into ‘core’ and ‘non-core’ rights, for example, brand owners can focus their budget on ensuring their most valuable trademark assets are secured.
Those rights also need to be appropriately renewed and maintained. There are countless instances of companies who have sold or bought company brands only to discover that the trademark portfolio behind it was not quite as robust as they had thought; for example, the right had been allowed to lapse or its chain of title had not been properly updated from a prior acquisition.
Given the speed with which action needs to be taken during a merger, acquisition, sale, takeover or bankruptcy procedure, it’s crucial for companies to make sure their IP assets are up-to-date. Only by putting in place a proactive management and measurement strategy now will you be able to ensure that you get a fair price for your IP assets when the time comes to sell, license or mortgage them.
For further advice on implementing a proactive IP portfolio management strategy in your business, speak to your Novagraaf attorney or contact us below.