Is it ever ok to agree to let a group trademark your business name and license it back to you?

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Is it ever ok to agree to let a group trademark your business name and license it back to you?

The group wants to protect our concept and is a non-profit that just wants to guard against misuses. They would pay for trademarking and license back solely to us. They would also do the legal fighting against any copy cats. Still should we want to eventually sell or franchise could that be a problem?

Asked on September 7, 2011 under Business Law, Idaho

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

If they trademark it, they own it. That means you can't sell the trademark, or the good will associated with it, since it's not yours to sell. It means you can't license it to another if you wanted to. It means that when the license agreement terminates, expires, or is breached, unless it's renewed under some terms--which could be very unfavorable to you--you won't be able to use you own business name.

In short, this is a VERY risky proposition. It's also unnecessary: registering a trademark is comparatively inexpensive, and if it's not worth between, say $1,000 and $2,500 (fees; drawings; lawyer costs) to do this and make sure you have all the rights to your own name, then you probably don't have anything worth protecting, anyway.


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