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Trade Mark Considerations During Mergers and Acquisitions

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Mergers and acquisitions (M&As) are corporate transactions that involve a combination of two or more companies. These complex transactions will often significantly impact the parties’ intellectual property rights, including their trade marks. As such, understanding the intricacies of trade marks and their implications in M&As is crucial for a smooth transition. This article will guide you through four trade mark considerations when undergoing mergers and acquisitions.

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1. Due Diligence and Identifying Trade Marks

Due diligence is a crucial step in the M&A process. It involves a detailed investigation of the potential company you are merging with to identify any potential risks or opportunities. When it comes to trade marks, the due diligence process will include several steps. Let us explore this below.

Identifying and Listing Trade Marks

It is important to compile a comprehensive list of all the trade marks owned by the target company before an acquisition. This list should include all trade marks, including those that are:

  • registered;
  • unregistered; and
  • pending.

It is important to identify any potential issues with this list.

Assessing the Strength and Value

Notably, not all trade marks are equal. This is because certain trade marks will hold greater value owing to their reputation in the market. Therefore, you must assess the strength and value of each trade mark to determine its impact on the overall transaction.

Identifying Licences and Agreements

Companies may license their trade marks to third parties or have similar agreements in place that impact their trade mark rights. It is crucial to identify these licences and agreements during the due diligence stage to understand their implications on the transaction.

2. Trade Mark Transfer in M&As

When a merger and acquisition occurs, the ownership of trade marks will likely need to be transferred to the acquiring company. Outlined below are some essential considerations that you should consider as part of this process.

Assignment Agreements

Parties involved in M&As will usually enter into assignment agreements to execute the transfer of trade marks. These agreements specify the terms and conditions of the transfer, such as the following:

  • cost
  • effective date; and 
  • any associated rights or liabilities.

IPONZ Notifications

When transferring trade mark ownership in New Zealand, you must notify the IPONZ as soon as possible. This ensures that the official records are updated and the new owner is recognised as the legitimate owner of the mark.

International Considerations

The trade mark transfer process can be even more complex where international trade mark registration is involved. This is because it may involve compliance with the laws of multiple regions. As such, careful planning and coordination are required to ensure the seamless transfer of trade mark rights. It is strongly recommended that you seek legal assistance to assist with this process.

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3. Protecting Trade Marks Post-Merger

It is crucial to protect and maintain the acquired trade marks after the M&A transaction. This involves ongoing efforts to protect the value and reputation of the brand. We outline some post-merger considerations below.

Enforcement and Monitoring

Trade mark owners must monitor the market for potential infringements. This includes taking legal action against any unauthorised use of the trade mark to prevent dilution or brand confusion. After the merger, this will be the role of the acquired company. 

Renewal and Maintenance

It is essential to maintain trade mark registrations, particularly ensuring the timely renewal of registrations. Failing to do so can result in the loss of trade mark protection. Therefore, keeping records up to date with IPONZ is crucial.

Brand Integration

Companies may use M&As to integrate their brands. This might involve consolidating multiple brands under one umbrella. Alternatively, it may mean maintaining separate brand identities. You should make all decisions about brand integration with careful consideration of the trade marks in question.

4. Common Trade Mark Issues in M&A

M&A transactions involving trade marks can give rise to various complex issues. It is essential to anticipate and address these challenges effectively. For example, the acquiring company may unintentionally infringe on the trade mark rights of others if it lacks awareness of existing trade marks that closely resemble its own. Appropriate due diligence is necessary to help identify these risks.

Further, the costs of changing trade marks can be extremely high if the acquiring company decides to rebrand after the merger. This includes changes to all advertising and marketing materials. The costs involved should be considered when making such a transaction. 

Key Takeaways 

Mergers and acquisitions are complex transactions that have a significant impact on the intellectual property rights of the parties involved. This includes a significant impact on its trade marks. As such, all parties to mergers and acquisitions must consider:

  • the due diligence process;
  • trade mark transfer;
  • how to protect the trade mark portfolio after a merger; and
  • common trade mark issues that arise in M&As.

If you need assistance protecting your New Zealand trade marks after a merger, our experienced trade mark lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 0800 005 570 or visit our membership page.

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