Author- Nandini Bhagat
INTRODUCTION
A trademark is a commercial symbol that supports a company’s attempts to establish its brand. It serves as a mark of distinction and quality that identifies the manufacturer. A trademark, like a logo, may consist just of shape and color, as in the case of McDonald’s golden arches, or it may combine shape, color, and typestyle. A trademark can be used on a logo, and this is regularly done. A trademark, on the other hand, can be a distinct symbol from the company’s emblem. ‘Trademark’ also has a legal definition. In the legal sense, a trademark serves as a means of safeguarding your company’s logos from unauthorized usage.
By trademarking their brand, startups can safeguard it. By protecting one’s intellectual property and differentiating one’s goods and services from those of rivals, one can do so by trademarking their company name. It forbids rivals from stealing or replicating their brand. When a business owns a trademark, it is essential to retain a positive reputation. Strong reputations increase the likelihood that people will work for and for you. Failing to file a trademark application exposes a business to legal action from rivals who have filed a trademark application using the same name, symbol, tagline, or design. A corporation would be forced to alter everything it had produced, including the campaign, the website content, and, to a considerable measure, its brand identity, if this were to occur.
IMPORTANCE OF REGISTERING A TRADEMARK
It becomes very important to register a trademark of your company or brand or logo to protect it from any infringement of its right and possible challenge from any third party in the courtroom. With a registered trademark, you can prove ownership of the entire item and the exclusive right to use, sell, and modify the brand or goods however you see proper. With the use of a trademark, you can safeguard your brand and prevent competitors from piggybacking on your success. Examples of trademarks that can distinguish one person’s goods or services from those of another are the packaging, shape, and combination of colors of products.
When you begin using your trademark in connection with your products or services, you are considered a trademark owner. By using your trademark, you acquire rights to it; nevertheless, these rights are circumscribed and only apply to the region in which you offer your goods or services. You must submit an application to register your trademark with us if you want stronger, nationwide protection. Your brand does not need to be registered.
On the other hand, a trademark that has been registered has greater rights and protections than a trademark that has not. For the homemade jewelry you sell at your neighborhood farmer’s market, for instance, you might use a logo as a trademark. As your business expands and goes online, you might want to apply for further trademark protection.
VALUATION OF A TRADEMARK
A trademark becomes once a trademark is registered; it becomes a company’s intangible asset. It can then be sold, licensed, pledged, and even royalty can be earned on it. The worth of a trademark can be used to determine the overall value of a company in the event of a merger or purchase. Analyzing a brand’s value through its Intellectual Property is a wonderful technique for filtering and deciding on numerous investment opportunities and developing fresh and distinctive marketing strategies that will help further increase the brand’s image. Companies must comprehend the worth of this asset at this point.
A trademark is a distinct intangible asset from goodwill on the balance sheet of a reporting corporation. It results from legal rights (remember, a trademark is essentially a bundle of rights). It can be sold, given away, or licensed without affecting the other assets of the purchasing business. An acquired trademark is recognized by a purchase price allocation (PPA), in which a portion of the price paid by the acquirer for all of the acquired assets is assigned to the trademark using a recognized valuation technique.
TRADEMARK VALUATION PROCESS
The valuation of trademarks is a crucial procedure, particularly in light of the rise in instances when intellectual property and other intangible assets are valued higher than physical assets. To establish prices and terms of agreements for transactions like purchases or sales, licenses, or contributions to partnerships like joint ventures or co-branding initiatives. To aid in developing and putting into practice specific business or individual tax strategies or assuring compliance with tax laws relating to corporate reorganizations, trust and estate difficulties, and intercompany transactions (i.e., transfer pricing).
- Cost Approach – A trademark delivers economic benefits that aren’t always represented at the expense of generating and growing the property because it grants the owner exclusive rights. The cost technique is therefore not always applicable to trademark valuation research.
- Income Approach – Income approach tactics are commonly used in trademark valuation. Many different revenue methodologies and valuation techniques are used in practice. To determine the value of a trademark, figure out the present value of the anticipated future income streams that will be generated by using the mark over its remaining useful life (RUL). The methods used to identify those income sources differ generally.
- Market Approach– Associated with certain goods and businesses, trademark sales are less common than trademark licensing. As financial filings submitted to the Securities and Exchange Commission typically contain information about trademark licensing, there is a good deal of material that is readily available to the general public. The researcher can develop trademark comparison units using this information, most notably a royalty rate.
- Relief from royalty method– According to the widely accepted model, a business is presumed to be immune from paying a royalty if it owns a trademark, allowing for the assessment of a potential royalty payment. This analysis falls under the category of a market approach.
CONCLUSION
The employment of the valuation approach was suggested to make trademark valuation and assessment connected to the relatively investigated hands-on measures easier. With this study, the information actively responds to the development of new business sectors that are relevant to evaluating the industry. As long as the study is systematic and consistent, the industry may benefit from the shifting economic landscape.
