Are Trademarks Assets?

The short answer:  Yes and No.

Trademarks do have some characteristics of assets.  Many businesses assign a valuation to their trademarks (be they registered trademarks or unregistered, common-law trademarks).

Understanding Trademarks as Business Assets

Firstly, it’s essential to understand what assets are in the business context. Assets are resources owned by a company that have economic value and can provide future benefits. Under this definition, trademarks certainly fit the bill. They are not just legal protections; they are powerful tools for differentiation in the marketplace, often contributing significantly to a company’s value.

Trademarks can become some of the most valuable assets a company owns. Consider the golden arches of McDonald’s or the swoosh of Nike; these are not just logos but symbols of trust, quality, and lifestyle. They hold immense value because they encapsulate the brand equity—built through years of marketing, customer experience, and product quality—that drives consumer choice and loyalty.

Ownership Comes with Use

You become a trademark owner when you start utilizing your trademark (or brand) in conjunction with your goods or services. By utilizing your trademark, you establish rights in it, but those rights are restricted and only apply to the geographic area where you provide your goods or services. If you want better, nationwide protection, you’ll need to apply to register your trademark. It is not necessary to register your brand.  That said, a trademark that has been registered has more rights and protections than a trademark that has not been registered. For example, you might use a logo as a trademark for the handcrafted jewelry you sell at a local farmer’s market. You may want to pursue extra trademark protection and file an application as your company grows and operates online.

A trademark – registered or unregistered – can be sold, licensed, pledged, and even royalty can be earned on it. The worth of a trademark can be used to determine the overall value of the company in the event of a merger or purchase. Analyzing a brand’s value through its Intellectual Property is a wonderful technique for filtering and deciding on numerous investment opportunities and developing fresh and distinctive marketing strategies that will help further increase the brand’s image. Companies must comprehend the worth of this asset at this point.

You can allow another party to use your trademark in commerce, while still retaining ownership of the mark, by entering into a license agreement with that person or entity.


Licensing of the use of trademarks facilitates merchandising, franchising, and distribution agreements, which play an important role in the way goods and services are distributed, marketed, and sold, both domestically and internationally License agreements may contain provisions governing the term (length) of the license, the territory covered by the license, the royalty the licensee must pay to the licensor for use of the trademark, whether the license must be recorded, whether the license covers all or just some of the goods or services protected by the licensed mark, whether the license is transferable or sublicensable, and whether the licensee has exclusive or sole rights to use the trademark (and if so, in which territory). Many license agreements will also have provisions permitting the licensor to control the quality of the goods or services produced or offered by the licensee under the licensed trademark, which are known as “quality control provisions.” In fact, to maintain your trademark rights in many jurisdictions it is mandatory to include quality control provisions in a trademark license agreement and, even in jurisdictions where it is not mandatory, it is always a good idea to include such provisions.

From these aspects – trademarks are assets.

Trademarks in Bankruptcy Do Not Act as Assets

Bankrupt retailers are frequently party to contracts involving trademark licenses, either as the licensor or licensee. Congress excluded trademarks, including related rights such as service marks and trade names, from the U.S. Bankruptcy Code’s definition of intellectual property (IP); furthermore, the rules that apply to treatment of other IP may not always apply in the case of trademarks. 11 U.S.C. § 101(35A) (defining “intellectual property” as “(A) trade secret; (B) invention, process, design, or plant protected under title 35; (C) patent application; (D) plant variety; (E) work of authorship protected under title 17; or (F) mask work protected under chapter 9 of title 17; to the extent protected by applicable nonbankruptcy law.”).

Trademark licensors and licensees should be aware of the risks that can arise if they or their license counterparty files for bankruptcy.

Regardless of which chapter a debtor files under, one thing is common: the filing of the bankruptcy petition operates as a stay of all actions against a debtor or its property. 11 U.S.C. § 362. Accordingly, after a debtor files for bankruptcy, a licensor or licensee cannot take any action to terminate the debtor’s rights under a trademark license, which is considered property of the estate, without obtaining court permission to do so. The automatic stay does not just prohibit termination of the license, but also other actions seeking to enforce the licensor’s or licensee’s rights against the debtor, such as demands for payments due under the license.

It is important to consult counsel immediately upon a counterparty’s bankruptcy filing to understand how the bankruptcy may affect license rights and what actions might be taken to protect those rights.

Trademark licenses are typically considered executory contracts because the licensor and the licensee generally have significant ongoing obligations under the license. This may include a licensee’s obligations to make royalty payments, comply with restrictions on the use of the licensed trademark, or maintain the quality of products offered pursuant to that trademark, or a licensor’s obligations to protect the trademark against infringement by third parties, monitor the quality of products or services offered under the trademark, or pay maintenance or renewal fees.

However, under certain circumstances, courts have found that perpetual, royalty-free, exclusive trademark licenses were not executory contracts—for example, where a trademark license was granted in connection with a broader transaction, such as the purchase of a business as a going concern.

It is under these bankruptcy conditions in which trademarks do not act like assets, because of how the bankruptcy statute is written.

Therefore, trademarks have aspects of ownership and being assets and some aspects of not being assets.

Do you have questions about registering your trademark? Ask us here at Verna Law by sending an e-mail to or by calling us at 914-908-6757.