In merger or acquisition processes, there are many fronts to consider. Among them, there is one that often takes a back seat but is of great importance: acquiring a trademark portfolio. And to carry out this process with full guarantees, there is the figure of IP Due Diligence.
As we have always maintained, a trademark is the intangible asset par excellence. It represents the distinctive sign that embodies and identifies the company’s effort to differentiate itself in the market. In other words, it is a key strategic and economic asset.
That’s why the process of acquiring a trademark portfolio is vital and should not be overlooked. To carry it out properly and with maximum legal certainty, professional advice is essential to ensure:
- A clear understanding of the actual value and status of what is being purchased (Due Diligence).
- That the transfer of assets is completed with full legal guarantees for the buyer.
Due Diligence, legal audit of trademarks
This is the essential preliminary step, providing a complete overview of the trademark portfolio to be acquired. The analysis includes multiple points that allow a thorough evaluation of the condition and value of these assets:
- Inventory and registration status. To avoid buying blindly, it is essential to have a detailed list of all distinctive signs involved in the transaction, verifying they are in force and properly maintained.
- Ownership and encumbrances. It must be confirmed that the seller is the sole registered owner of the trademarks and whether they are subject to any license or other encumbrance.
- Scope and strength of protection. It is crucial to assess whether the classes and goods/services for which the trademarks are registered align with the company’s actual and future activities. It is also advisable to request proof of use (to avoid cancellation for non-use) and check for similar third-party trademarks.
- Litigation and contingencies. A history of legal proceedings, oppositions, or warnings involving the trademarks should be requested, as well as any existing agreements with other companies allowing the use of similar marks in the market.
- Associated assets. The final —yet no less important— step is to ensure that the transaction includes the transfer of internet domain names and official social media profiles.
After this in-depth analysis, the next step is the drafting and signing of the trademark assignment agreement. This step also requires expert legal advice, as various aspects must be considered —from the scope of the agreement, to specific clauses and warranties.
At PONTI & PARTNERS, we have a large team of highly qualified professionals specialized in transactions involving intangible assets. If you’d like to know more or have any questions, don’t hesitate to reach out. We’re here to help.
