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Why Private Label Brands With Registered Trademarks Sell for More

Thu Mar 24, 2022 Intellectual Property

How important is a trademark? It’s a question that we hear quite often, and while there are many answers, one that always comes to mind is the fact that private label brands with registered trademarks are worth more than brands without a trademark. Our firm was involved in a case a few years ago that drives home this point more clearly than any other example we could give you. Our Amazon IP lawyer explains.

We were retained to assist a client in the acquisition of a private label brand. The business they wanted had about 200 SKUs in the toy category. Our firm reviewed its financials and everything was in order. Their mailing list held 500,000 contacts, the website was beautifully designed, and they had a strong following on social media. The seller had invested significantly in creating custom packaging for all their SKUs and the selling price was for a 25-multiple, which was fairly low when compared to similar brands. Our client was excited at the prospect of such a great buy. However, further investigation determined that this was not the deal that it seemed. In fact, we later found out two previous buyers had walked away from this deal before our client. 

So how did we determine this was not the deal that it seemed? One of the first actions we undertook was to conduct an intellectual property assessment for our client. Our investigation determined that the brand being sold did not have a trademark registered with the USPTO. Even worse, the brand was so similar to other already-existing trademarks that there was no chance of obtaining a USPTO trademark. All the money and time invested by the owner were wasted because any potential purchaser would be forced to rebrand. In other words, the seller was stuck with a company that they could not sell because the cost of rebranding would be so significant as to make the deal unattractive to potential purchasers like our client. Nobody wants to buy a company that is potentially the subject of a trademark infringement lawsuit. 

All of this could have been avoided had the seller obtained a trademark prior to starting their business. 

Distinctiveness of Trademarks

One of the reasons our client (correctly) walked away from this purchase was due to the fact that the brand was not unique enough to obtain a trademark. Finding a trademark for your business is a balancing act. You must find one that adequately describes your product but is not close to an already existing trademark. This can be a difficult task, but one an Amazon IP lawyer is more than capable to tackle. 

Speak With An Amazon IP Lawyer at ESQgo

Ensure your business holds its value by speaking with an Amazon IP lawyer at ESQgo. One of our attorneys will sit down with you and get to know you, your business, and your goals. Together we can create a plan for your company which includes making certain your business retains its value by having a registered trademark. We may be reached by calling 888-600-1925 or via our contact page.