When businesses merge or change hands, intellectual property is often at the center of the deal. Trademarks, in particular, represent brand value, consumer trust, and market recognition. Yet one of the most overlooked aspects of any merger or acquisition (M&A) is verifying who actually owns the trademarks involved. A misunderstanding or oversight in this area can significantly reduce the value of a transaction — or even lead to costly disputes later.

At Kinhal Law PLLC, we help business owners navigate this critical stage of due diligence. Whether you’re buying, selling, or looking to expand your company, understanding trademark ownership is essential for protecting your investment and ensuring a smooth transfer of assets.

The Role of Trademarks in Mergers and Acquisitions

Trademarks are often among the most valuable assets in an M&A deal. They embody the goodwill, reputation, and market recognition that drive consumer loyalty. For buyers, trademarks are key to preserving brand continuity and maintaining customer trust after the acquisition. For sellers, properly owned and registered trademarks can enhance company valuation and demonstrate that the business is built on a strong, legally protected foundation.

When trademarks are registered with the United States Patent and Trademark Office (USPTO), they provide nationwide rights that can significantly influence a buyer’s perception of brand strength. However, if a company’s trademarks are unregistered, co-owned, or improperly assigned, these uncertainties can create red flags during due diligence. It’s not just about having a recognizable name or logo — it’s about having clear, documented ownership that transfers cleanly when the deal closes.

Why Trademark Ownership Can Make or Break a Deal

Imagine purchasing a company only to find out later that it doesn’t legally own its brand name. This happens far too often, and it's easily avoidable. Perhaps the trademark was originally registered under a different entity, an individual founder, or a third-party agency that designed the logo. In other cases, there may be pending disputes, expired registrations, or competing claims from other businesses with similar marks.

These ownership issues can derail negotiations, lower the purchase price, or even stop a deal from moving forward. They also create post-closing risks — the buyer may have to rebrand, face infringement claims, or spend years and significant resources untangling ownership rights. From an investor’s perspective, unclear trademark ownership undermines confidence in the company’s ability to protect and capitalize on its brand assets.

Trademark due diligence ensures that every mark being transferred is valid, enforceable, and owned by the correct party. It also helps identify any weaknesses or gaps that should be addressed before finalizing the deal.

Key Steps in Trademark Due Diligence

Thorough trademark due diligence involves more than checking whether a registration exists. It’s about confirming ownership, understanding the scope of protection, and identifying potential risks. A strong due diligence process should include:

1. Ownership Verification:
Confirm that the trademarks are registered in the name of the entity being sold, not in the name of an individual owner, affiliate, or predecessor company. If the marks were ever assigned or transferred, ensure all assignment documents are properly recorded with the USPTO.

2. Status and Validity Review:
Check the registration status and confirm that renewals, maintenance filings, and use declarations are up to date. Any lapse in filing can cause a registration to become abandoned or canceled, thereby jeopardizing ownership rights.

3. Scope of Rights:
Examine the goods and services listed in each registration to make sure they accurately reflect current business operations. A narrow registration may not cover new products or services that were added later.

4. Search for Conflicts:
Conduct clearance searches to identify third-party trademarks that could pose infringement risks or challenges to ownership. This is especially important if the company operates in multiple jurisdictions (or is looking to expand into multiple new jurisdictions).

5. Review of Licensing and Coexistence Agreements:
If the trademark has been licensed to others or is subject to coexistence agreements, review those agreements carefully. These agreements can affect exclusivity, geographic scope, and future enforcement options.

Each of these steps helps uncover potential risks before they become legal or financial liabilities after the transaction closes.

Common Trademark Issues Uncovered During M&A

Many businesses are unaware that their trademark portfolios contain problems until the due diligence process begins. Some of the most common issues include:

• Unrecorded Assignments: The mark was transferred to a new entity, but the change was never recorded with the USPTO.

• Ownership Under an Individual Name: Founders sometimes file trademarks personally instead of under the business entity, complicating ownership during a sale.

• Failure to Maintain or Renew Registrations: Missed deadlines can cause marks to lapse, resulting in loss of rights.

• Pending Oppositions or Cancellations: Active challenges before the Trademark Trial and Appeal Board (TTAB) can affect transferability and enforceability.

• Inconsistent Use: The way a mark appears in marketing materials may differ from how it’s registered, weakening the registration’s protection.

Identifying and resolving these issues early allows both buyers and sellers to negotiate from a position of clarity and confidence. It also helps ensure that the transaction reflects the true value of the business’s intellectual property assets.

How to Prepare Before Entering Negotiations

Whether you’re buying or selling, preparation is key. Sellers should conduct an internal IP audit well before entering negotiations. This involves reviewing all trademark registrations, confirming ownership records, updating filings, and resolving any outstanding disputes (in addition to reviewing their patent portfolio and copyrighted works). Buyers, on the other hand, should request full access to the target company’s trademark portfolio and supporting documents early in the due diligence phase.

For both sides, involving a trademark attorney early in the process is essential. An experienced attorney can identify red flags that might otherwise be overlooked and help draft or review the necessary assignment and transfer documents to ensure a smooth transition. Strong IP due diligence can streamline negotiations, prevent surprises, and increase overall deal value.

How Kinhal Law PLLC Can Help

At Kinhal Law PLLC, we help businesses protect their intellectual property during M&A deals. Our firm ensures that your trademarks — whether registered, pending, or in active use — are properly owned, maintained, and enforceable. We review ownership history, confirm filings, and provide strategic guidance to safeguard your brand’s value before you close any deal.

If you’re buying or selling a business, don’t overlook your trademarks. Trademark due diligence can be the difference between a seamless transaction and a costly legal battle down the road.

Contact Kinhal Law PLLC today to book a free consult and ensure your trademarks are strengthening, not jeopardizing, your next business move.