What is Trademark Goodwill? | Franchise Law Blog

What is Trademark Goodwill?


The Business Value of Your Trademark

For the successful business and business owner‚ your trademark represents a critical asset that must be properly understood and legally protected. The "goodwill" of a trademark relates to the inherent value of your trademarks – that is the recognition of your mark among consumers and the extra earning power that it generates. 

The following points should assist in more formally understanding trademarks‚ their valuation and the necessity for their protection:

What is a Trademark?

A trademark is‚ simply‚ your business name. Trademarks may be comprised of just the business name itself‚ a logo or a "combined mark" that includes both your business name and logo.

How Are Trademarks Protected?

The moment that you start using a business name or logo in connection with your business is also the moment that you begin to acquire legal rights in and to your mark – this is known as and referred to as a "common law trademark". However‚ you need to be careful because if the business name that you are utilizing was – prior to your adoption – adopted and utilized by a competitor or is the subject of a federal trademark registration then you may be infringing on the mark of another. So‚ before you adopt a trade name or trade mark work with a lawyer to do some research or even do some preliminary research on your own with internet web searches and check out the database of the United States Patent and Trademark Office at www.USPTO.gov. To truly protect your trademarks you must obtain trademark registration with the USPTO. Just incorporating a business and using a particular name is not enough.

What is Trademark Goodwill?

In many ways the term "goodwill" has accounting reference and implication and for the typical small or medium sized business measuring the value of the goodwill associated with a trademark is extremely difficult. In its purest form the goodwill of a trademark should represent the recognition that this mark has with customers and the extra earnings power that it generates‚ i.e.‚ consumers want to buy from you because they recognize your name and brand. Many times trademark goodwill is measured and valued when a business is bought or sold and the valuation associated with the goodwill is measured as the difference between the business purchase price and the value of the businesses tangible assets.

How Do You Protect the Goodwill of your Trademarks?

To protect the value of your trademarks and their associated goodwill you must (a) ensure that you have obtained registration of your trademarks with the USPTO‚ and (b) you ensure that third-parties are not using your trademarks or marks which are "confusingly similar". If you do find instances of third party use and infringement then you must speak to your attorney about sending a cease and desist notice and‚ potentially‚ the commencement of a lawsuit for trademark infringement.

Learn More About Valuing and Protecting Your Trademarks and Brand.

To learn more about proven strategies for protecting your trademarks and the goodwill and value associated with your brand‚ ORDER A FREE COPY OF our guide: "5 Easy Steps to Protect Your Brand".

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