Understanding Common Law Trademarks in Small Business M&A

Common law trademarks can play a significant role in small business mergers and acquisitions (M&A). Unlike registered trademarks, common law trademarks arise from the actual use of a name, logo, or slogan in commerce, even without formal registration. YOu won’t find them by searching the USPTO’s database of registered marks, Here’s what you need to know about common law trademarks in M&A.

What Are Common Law Trademarks?

Common law trademarks are rights that businesses acquire simply by using a mark in commerce. These rights are limited to the geographic area where the mark is used and may not offer as much legal protection as registered trademarks. However, they still provide valuable brand recognition and customer goodwill.

Transferring Common Law Trademarks in M&A

Include in the Purchase Agreement: Common law trademarks should be explicitly listed as assets in the purchase agreement. This ensures the buyer is acquiring all rights associated with the business’s brand.

Conduct Due Diligence: Buyers should investigate the history of the common law trademark to ensure it doesn’t infringe on any registered trademarks and is not subject to any disputes.

Record the Transfer: Documenting the transfer of the trademark in a written agreement provides a clear record of ownership for both parties.

Protecting Common Law Trademarks Post-Sale

Buyers should consider registering the trademark with the U.S. Patent and Trademark Office (USPTO) after the acquisition. Registration offers stronger legal protection and extends rights beyond the geographic area where the mark was used.