Acquiring a Trade Mark Portfolio – Some Practical Tips

In this article we outline some of our top tips when it comes to acquiring a brand and its trade mark portfolio.  

1. Effective due diligence 

Intellectual property is often, if not always, one of the most valuable assets when it comes to acquiring a retail and consumer business out of administration. Sadly, rolling lockdowns have forced many retailers to shut their outlets, leading to severely disrupted cashflows. However, the positive news is that consumer confidence in a powerful brand can retain enduring value. In particular, trade marks act as a “badge of origin” to distinguish one business from another. Unsurprisingly then, our first tips relate to the importance of an effective due diligence process when assessing a target’s portfolio.

Due diligence of a trade mark portfolio raises a large number of important considerations. We list some headline points below, however we can offer legal support for businesses seeking to assess the value of a trade mark portfolio. 

• Ownership 

• Review what trade mark applications and registrations the target / seller owns. This may sound simple, but complicated and international corporate structures can complicate this process - we can run trade mark searches to identify additional applications and registrations

• Ensure there is a clear chain of title, so you can be certain that the target / seller legally owns those rights. Check the local registries to see if these are aligned

• Maintenance/Renewals 

• Identify registrations that are vulnerable to revocation actions on the grounds of non-use. In some jurisdictions, these can set in at three years post registration

• Consider if your business is interested in maintaining these registrations; are they in your key jurisdictions of interest?

• Check for any imminent renewal deadlines and, if necessary, ensure that the target / seller renews these registrations while the acquisition is continuing

• Again, for any upcoming deadlines post-acquisition, consider whether your business would be interested in maintaining those registrations

• Oppositions/Infringement

• Gather information on any opposition proceedings that the target has issued against applications which are identical or similar to the target / seller’s registrations 

• Similarly, get details on whether a third party has opposed any of the target / seller’s trade mark applications

• You will also need detailed information on any outbound (i.e. offensive) or inbound (i.e. defensive) trade mark infringement proceedings

2. Be three steps ahead when it comes to brand strategy

Whilst effective due diligence can facilitate a successful brand acquisition, a buyer should keep long-term post-acquisition strategy in mind. We recommend analysing the trade marks in detail to determine the true value of these assets. Onboarding a number of trade marks can sound promising, but it can be a long and expensive process to update the local trade mark registers for the whole portfolio, especially if certain registrations are in jurisdictions which you do not plan to operate in.

In addition, the value of a portfolio diminishes if those marks are vulnerable to cancellation and have not been used in the relevant jurisdiction. This can also be problematic where a retailer has an established product supply chain or distribution network in a particular jurisdiction, but it has no registered trade mark protection there. The good news however, is that following a brand audit, gaps in protection can be remedied with new applications for missing goods and services in the relevant territories. Brand audits can also save a business money through a focus on getting protection for the core goods and services.

Finally, and one of the most exciting attributes of retail and consumer brands are their adaptability. For example, a traditional fashion label could expand into new channels, such as homeware, furniture or cosmetics. However, it is not always the case that a target brand will have trade mark protection in these areas. Always consider – does this portfolio cover the goods and services of interest? If not, gaps in protection can be remedied with a filing strategy.

We always recommend running clearance searches prior to commencing substantive work on developing new products, ordering packaging and offering the brand’s products for sale to third party retailers or consumers.  These searches will help clarify the risk of infringement and potential obstacles to registration. 

3. Portfolio management 

Increasing the size of your existing portfolio (whether or not it is already comprised of many marks) will create additional demands on time and resource. Portfolios managed by multiple agents in various jurisdictions can exacerbate this problem, creating additional administrative issues which can be avoided by centralising your portfolio with one agent. Some overseas support will inevitably be required but the more you can streamline the management of your portfolio, the better.