Why Is Every Trademark Marketplace Awful?

Green and purple registered trademark symbol illustration signed by Jeremy Eche. This is what you buy in a trademark marketplace.

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Everybody knows trademarks are worth money, even if they haven’t thought about it much. When Coach bought rival handbag company Kate Spade for $2.4 billion in 2017, they presumably weren’t paying all this money just to get access to factories and designers; they were mainly paying for the “Kate Spade” name and the goodwill consumers feel toward it. That name is, of course, a registered trademark.

Until now, however, trademarks have not been properly commoditized in the same way that other property has. There has been no Zillow or Amazon for trademarks. People have certainly tried to do this, but their attempts have been failures. If you Google “trademark marketplace” and click on the top few results, you’ll see fundamental problems with how these platforms work. These problems include:

1. No Curation of Trademark Listings

The prices listed for the trademarks on these marketplaces have no correlation with their value, and almost all of them are absurdly high. Most trademarks are listed at over $100,000, and maybe a third of them are listed at over $1 million. Virtually none of them are actually that valuable. Most people who own trademarks simply have no idea what they’re worth, and these marketplaces have no incentive to make the sellers choose reasonable prices.

The sorting options on these websites are also terrible; it’s very hard to browse the trademarks available in a productive way, especially with 90% or more of the trademarks being worthless or overpriced.

2. No Verification of Trademark Ownership

The trademark sellers are not verified owners. Trademark marketplaces have a laissez-fare attitude about verifying ownership of trademarks. This means that anybody can list a trademark for sale even if they don’t own that trademark. Buyers have no way of knowing that the person who listed the trademark owns the trademark. It’s not as simple as the making sure the name of the seller matches the name on the trademark registration; it’s very easy to pretend to be the legal owner of a trademark.

3. No Brokering of Trademark Sales

The trademark marketplaces don’t function as trademark brokers and thus do not actually help the parties complete the transfer of the trademark. The buyer and seller are responsible for drafting the trademark assignment agreement and for making sure the funds aren’t transferred until the agreement is signed.

After the would-be buyer reaches out to the seller through the marketplace, there’s also nothing to stop the seller from raising their price, or changing their mind selling the trademark at all. These trademark marketplaces have no mechanism for forcing the seller to follow through with the deal as described in the online listing.

So Why Are Existing Trademark Marketplaces so Bad?

Why don’t existing trademark marketplaces fix the above issues? Because their fee structure doesn’t incentivize functionality. These marketplaces don’t particularly benefit from successful sales, or from buyer satisfaction.

Less Filtering of Listings Means More Revenue

Sellers have to pay a fee to list their trademarks on these marketplaces. There’s no commission structure for successful sales or leads, nor are any fees paid by buyers, so the only incentive these marketplaces have is to get people to list as many trademarks as possible. Existing marketplaces will lose money if they filter for quality, legal ownership, or rational pricing. The more fraudulent or overpriced listings they get, the better, because more listings means more income.

Verification of legal trademark ownership is also time-consuming and difficult, and there’s no reason for these marketplaces to put in the time to do this if they don’t get paid for it.

No Reason to Care about the Buyer Experience or Facilitate Sales

Not only is there an incentive to avoid curating, but there’s also no incentive to market to buyers, to provide a good shopping experience, or to make sure deals don’t fall through. Existing trademark marketplaces only profit from listings, not from sales.

They still make money if the website is impossible for buyers to navigate. They still make money if they don’t promote their sellers’ listings to buyers through ads and affiliates. They still make money if all the deals fall through. Nothing matters except marketing themselves to sellers and convincing sellers to list trademarks on their website with as few obstacles as possible.

Sellers Don’t Blame Marketplaces When Nobody Buys Their Trademarks

One could argue that creating a trademark marketplace where nobody buys anything will eventually cause sellers to stop listing their marks. But think about it:

When you list your brilliant brand name on a marketplace for a million dollars, are you really going to blame the website if nobody buys it for a year or two? Expensive assets take a long time sell. Everybody knows that! I have domain names listed on marketplaces that have been sitting there for years with no offers. I owned ClintonKaine.com and even the Clinton Kaine campaign didn’t want it. I don’t blame domain name marketplaces for this.

People listing trademarks online probably feel the same way. They’re unrealistically hopeful when they list their trademarks for literally 100 times what they’re worth, but when nobody buys them, they figure the right buyer just hasn’t come along yet.

Time for a Better Trademark Marketplace

I’m hoping to fix this depressing situation with my own trademark marketplace, Communer. A marketplace where ownership is verified, bad trademarks are rejected, valuations are required, payments are held in escrow, and transfer agreements are drafted.

I’m in a better position to do this than most people, so I have no excuse for not taking on this project. Not only am I the attorney of record on over 1,500 successful trademark registrations, but I’m a longtime domain name investor as well. This means I have more experience selling brand assets online than most trademark attorneys. Not many people have the legal knowledge, sales experience, and personal interest in doing this right, so I think this is worth pursuing.

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