In my previous post on my law firm’s blog about appraising trademarks, I gave a very detailed explanation of my formula for determining the value of a little-used or little-known registered trademark that is not being sold in combination with a turnkey, profitable business.
In this post, I want to show you how those principles can be applied in the real world by using examples of trademarks that have actually been sold on Communer.
As a quick recap, here are the important factors I went over for determining what a trademark is worth. Some of these factors are constant and don’t change for different trademarks in the same industry, while other factors are variables that must be determined for each individual trademark.
Factors That Add Value to Trademarks
- Trademark attorney and government fee costs avoided. By buying a trademark, you’re avoiding the legal fees involved in filing a new trademark application. This means you’re saving between $650 and $5,000, which must be factored into the value of an already-registered trademark.
- Trademark application wait time avoided. When you buy an already-registered trademark, you skip about 12 to 18 months of “pending” status for your trademark. This means you can enforce your trademark rights immediately on platforms like Facebook, Google Search, and Apple’s App Store rather than waiting for the registration process to complete. The value of early trademark enforcement access varies by industry.
- Avoiding the cost of a rejected trademark application. Buying a registered trademark means buying 100% certainty of successful registration. An unsuccessful trademark application can be very costly for a business because it usually necessitates changing your brand name. If there’s even a 20% chance of your trademark application failing to reach registration, which seems very optimistic to me, you have to factor in the potential cost of rebranding when you choose between filing a trademark application and buying an existing trademark registration.
- How marketable the trademark is. This is the factor most people think about when they try to appraise a trademark, though their thinking is very limited. Yes, the brand name you buy should be appealing. But it should also be a strong brand name/trademark.
Factors That Can Add or Subtract Value from Trademarks
- Number of sellers vs. number of buyers. If you look at Communer’s trademark listings, you may notice that we have tons of trademarks for sale in industries like clothing and electronics, but very few for sale in other industries like vitamins and hand sanitizer. The rules of supply and demand apply to trademark sales. The ratio of trademark sellers to trademark buyers will greatly affect the value of a trademark.
Factors That Subtract Value from Trademarks
- Reduced choice of name. People who start businesses usually want to choose their own name. Either completely on their own or by browsing thousands of domain names for sale (even though domain names are not brand names). Having to get a “used” brand name reduces the value of a trademark for most entrepreneurs compared to getting to come up with a name themselves.
- High up-front cost. Paying $5,000-$10,000 for an already-registered trademark may save you money in the long run, but it’s still a lot of money to pay at once compared to the $1,000-$2,000 you’d pay to get the trademark application process going for a new name. Even if you buy it on credit, it’s a lot of money to commit to paying when you’re not even sure if your business will succeed. You could also argue that the money would be better spent on marketing or inventory. However you look at it, the high up-front costs reduce the value of registered trademarks for potential buyers.
Valuations for Real Trademarks We’ve Sold
Trademark Valuation 1: Live Again
This trademark was listed for sale on Communer in March 2021 and sold about two months later in May. It’s registered in Class 5 for “Dietary and nutritional supplements, none of the foregoing relating to pain alleviation or pain management.”
Let’s see how this trademark fares when the different valuation factors are considered. I’ll go through them one by one in this case. For the other valuations, I’ll be more succinct.
- Legal and government fees avoided. This trademark is registered in one trademark class so it would not be particularly expensive to register. But you’d definitely want an attorney helping you with a name like this, which resembles a lot of other trademark registrations for vitamins and supplements. So if you buy this trademark, you’re probably avoiding around $1,000 to $2,000 in legal and government fees.
- Wait time avoided. Avoiding the 12-18 month application process is valuable for any brand, but it’s particularly valuable for a vitamin brand. Pharmaceutical products are highly regulated so you want to have all your papers ready when you’re shipping them internationally or trying to sell them in stores. A pharmaceutical brand will likely have an easier time with customs officials, the FDA, and other rule enforcers if they have a fully registered U.S. trademark rather than just a pending application.
- Avoiding the cost of a rejected trademark application. You don’t want to have millions of pills manufactured and shipped only to find out that you’re going to have to change your brand name. So like other industries whose products have a long-ish shelf life, a forced name change is a very painful process to have to go through. It’s certainly much worse than it would be if you were a software company or a service provider.
- How marketable the name is. In some ways, this is a great name, close to the holy grail for supplements. Somehow somebody found a new brand name that contains the terms “well” and “live,” and they successfully registered it as a trademark for supplements. Vitamin brands are always trying to hire my law firm to register names like this, and we almost always have to tell them to come up with a new name. So this name is very desirable for your typical vitamin entrepreneur. On the other hand, because these words are considered so valuable in the supplement industry, this name will be easy to get mixed up with other pharmaceutical brands that also contain the words LIVE and/or WELL. Still, overall, I think most vita-mongers would say this is a good brand name.
- Reduced choice of name. Unless the buyer is absolutely in love with the brand name, every trademark loses some value because the buyer had to choose among a few names rather than getting come up with a new, personally significant name on their own. But as I said above, this is exactly the sort of brand name that many of my trademark clients try to register for their vitamins. So this name loses very little value from this factor.
- High up-front cost compared to filing a new application. Every trademark for sale loses some value because the buyer is choosing to spend thousands of dollars up front that they could use for other purposes. With that said, this upfront cost probably bothers your typical supplements entrepreneur less than somebody starting, say, a restaurant or a clothing brand. From what I’ve seen, people entering the supplements business usually have pretty big war chests and are prepared to spend money on branding.
- Number of sellers vs. buyers. Trademarks for dietary supplements are hard to find on Communer, and they sell out quickly when I list them. So buyers can’t discriminate much when buying them, nor can they look for better deals.
Result: the true valuation for Live Again.
You may have noticed I didn’t use many numbers above. The different trademark value factors are not meant to be calculated mathematically to come up with an exact price; they’re meant to guide a seller to a price that makes sense.
Live Again ended up being sold on Communer for $8,900. This is actually on the higher end for a trademark on Communer. Supplements trademarks are in high demand on Communer, presumably because of the factors described above. I wouldn’t list an unappealing supplements brand for less than $5,000, let alone a desirable one like Live Again.
Trademark Valuation 2: SAIEVZ
This trademark was listed on Communer in October 2021 and sold in December 2021. It’s registered in class 25 for various clothing goods.
Every single factor really works against this trademark, pointing to a low valuation.
First, I’ll be frank: This is not a very desirable name for a clothing brand. It’s almost impossible to spell correctly from memory or from hearing it said out loud, it’s difficult to pronounce (probably like “SAVES”, but who knows?), and it’s just generally not very appealing at first glance. It’s the kind of brand name that people probably have to get used to before they start getting attached to it.
It’s also registered in one class, meaning the upfront filing fees are not very high.
On top of that, I would consider this to be a pretty “safe” name because it has a very unusual spelling and it’s not likely to get rejected for being phonetically equivalent to a proprietary brand name. “SAVES” is a very commonly used marketing word and I can’t imagine SAIEVZ being rejected because somebody owns SAVES for clothing.
In other words, if you’re willing to have a name as phonetically non-distinctive and as hard to spell as this one, then you can probably get away with filing an application for an equivalent name without getting a search report and legal opinion from an attorney. So you’re not saving that much money compared to filing your own trademark application.
On a related note, you’re not really avoiding much risk of rejection by buying this trademark. If you file for a name as undesirable as this, you probably won’t be rejected, so your risk level would be low.
I would also say that most new clothing brands can afford to wait a year or so before reaching registration for their trademark. There isn’t a huge urgency the way there is for some other industries.
Finally, there are tons of apparel trademarks for sale on Communer. So there’s very high supply relative to demand, further reducing how much you can sell a clothing name for.
SAIEVZ ended up being sold on Communer for $1,900. This is about as cheap as trademarks get on Communer. This seems right given all of negative factors discussed above, doesn’t it?
Trademark Valuation 3: Wildfi
This trademark, listed in October of 2021 and sold in March of 2022, is registered for furniture and some household goods in class 20.
There are currently 10 furniture trademarks listed on Communer, a lot fewer than for clothing (46), but a lot more than for dietary supplements (0). So the supply is about average, and I know from experience that the demand is as well.
Furniture is an industry where you really don’t want to have to change your name. The goods aren’t perishable so if you pick the wrong name, you’ll have customers sitting on goods bearing your old name for years, possibly decades. You really want to get it right the first time!
This means that buying a trademark and eliminating any risk of a name change is very valuable for a furniture company, much more so than it is for an industry where your customers have to replace your product every six months or so.
In the past, a speedy registration process probably wouldn’t have been very important for a furniture company, which probably wouldn’t encounter any knockoffs until some traction had been gained. But these days, if you’re selling a chair or a shelving unit on Amazon and it takes off, you could be facing counterfeiters and “listing hijackers” in a few months, making it valuable to have your trademark rights secured as soon as possible.
The name “Wildfi” is a pretty good one, I think. It’s short and easy to spell, pronounce, and remember. It feels like a play on high-tech words like “wifi” and “hifi,” suggesting a reversion to nature in our highly connected world. It’s also vague enough that it lends itself to expansion into a wide variety of products if the company takes off. It’s a good brand name.
We sold Wildfi on Communer for $3,100. I think this was actually a bargain, but that’s the listing price the seller wanted. Still, it’s not far off from the “true” value of this mark, which was probably more like $5,000. A solid, mid-priced trademark.
Conclusion: Your Trademark Isn’t as Valuable as You Might Think
Hopefully these real-world examples of trademark sales have given you a better sense of the value of a registered trademark, which is usually somewhere between $1,500 and $10,000. We usually only list trademarks for more than $10,000 if they’re famous marks or if they come with a valuable .com name as part of the listing.
