Considering a Purchase, Sale, or Financing? Make Sure Your Trademark Due Diligence is Thorough

Trademark due diligence is the process of analyzing information concerning a company's trademark portfolio and assessing the risks, exposures, and benefits associated with a proposed transaction. In an acquisition, both the buyer and the seller need to ensure that they each are fully informed as to the status of the trademarks at issue. The seller needs to be sure that its trademarks are properly positioned to bring the highest value and the buyer must ensure it is getting what it is paying for. In a financing transaction, the lender must ensure that the trademark assets are sufficient collateral for the loan. In order for each party to position itself for the best outcome, there are a number of issues that must be considered and addressed. To assist in this effort, a basic checklist focused exclusively on trademark and domain name issues is set forth below.

1. Verify the status of all trademark applications and registrations worldwide

This includes, but is not limited to, creating a list of all trademark applications and registrations with all relevant identifying information,  a status check of all outstanding prosecution issues, all active cancellation and all opposition proceedings, verification of outstanding deadlines, checking the accuracy of chain of title and registered address, verifying satisfaction of all maintenance requirements, verification of use and scope of goods/services in each application and registration, checking the status of filed assignments, checking all customs recordations and customs enforcement actions, check status of copyright assignments for logos

2. Create a list of all unregistered trademarks in use

Review company manuals, brochures, catalogs, web sites, product and service marketing and advertising materials, online search results for sales activity, check status of copyright assignments for logos

3. Review status of  trademark watch services
4. Review trademark searches and legal opinions and compare to marks in use
5. Review status of all security agreements in which trademarks are listed as collateral, check status of releases, check status of recordation at the USPTO and state levels
6. Evaluate status of all trademark related claims against the company, whether in active litigation or not, and status of resolutions
7. Evaluate status of all trademark related claims asserted by the company against third parties, whether in active litigation or not, and the status of resolution
8. Review all trademark license agreement to or from the company, all assignments to or from the company, and all consent agreement to which the company is a party
9. Review all trademark surveys , trademark use policies and manuals, and trademark valuation studies
10. Create a list of all domain name registrations

Include each domain name, registrant, contact and administrative contact information, Registrars, all expiration dates, and the status of use

11. Create a list of all active web sites

Include the owner of each web site, all agreements related to the creation, operation and management of the web site, terms of use, legal compliance with relevant regulations

The above checklist is not exhaustive, and is intended to provide preliminary guidance on where to begin the due diligence process should the need arise. The assistance of experienced trademark counsel is highly recommended in connection with any due diligence project.                                   

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