When you think of a high-stakes merger or acquisition, your mind probably goes straight to deal valuation, revenue projections, or integration strategy. But there’s one element that’s often treated as a side issue, until it causes real problems: trademarks.
In many M&A transactions, trademarks, despite being some of the most visible and valuable assets, are underestimated. They’re seen as administrative items rather than strategic priorities. But make no mistake: overlooking trademark risks can seriously derail a deal, affect post-acquisition operations, or even lead to litigation and loss of market presence.
Why Trademarks Deserve More Attention in M&A
Trademarks aren’t just logos or legal terms, they’re symbols of trust, market recognition, and reputation. Whether it’s a product name, a service brand, or a company identity, trademarks are what customers remember, recommend, and remain loyal to.
So when one company acquires another, gaining full, clear, and enforceable rights to the brand is crucial for business continuity. That’s why trademarks must be considered early and thoroughly in the M&A process, not after the ink has dried.
Common Pitfalls of Trademark Oversight in M&A Deals
Failing to properly manage trademarks during an acquisition can result in more than minor paperwork issues. It can lead to brand confusion, operational delays, legal disputes, and even financial losses. Here are some of the most common problems:
- Post-Deal Restrictions on Brand Use
Many buyers assume that once a deal closes, they’ll automatically get unrestricted rights to all trademarks. But that’s not always the case.
If trademarks haven’t been transferred correctly, or if they’re subject to third-party rights (such as existing licence agreements), the buyer may find itself unable to use the brand in key markets.
Example:
Imagine acquiring a well-known regional brand, only to discover during rollout in a new market (like the U.S. or China) that the main product name was never registered there. You can’t sell under the name, and instead, you’re forced to rebrand, re-educate customers, and launch new marketing campaigns, all at great cost.
- Inheriting Hidden Liabilities
Poor trademark due diligence can result in the buyer inheriting hidden legal or financial liabilities, including:
- Ongoing trademark disputes or litigation;
- Rights-sharing or co-ownership complications;
- Pre-existing licences or liens;
- Tax liabilities linked to previous IP valuations.
These surprises usually come to light only after the deal is finalised, when fixing them is far more difficult and costly.
Real-World Case: Nokia’s Acquisition of Alcatel-Lucent
After Nokia acquired Alcatel-Lucent in 2016, it faced complicated IP issues, including disputes over ownership and enforcement rights in multiple jurisdictions. These weren’t limited to patents, they also involved trademarks and brand rights, creating post-deal friction and legal exposure.
- Jurisdictional Gaps and Cross-Border Headaches
In cross-border M&A deals, the complexity increases. Trademark systems vary by country, and registration in one place doesn’t guarantee protection elsewhere. In some jurisdictions, a trademark must be formally assigned and recorded for the buyer to have full rights.
If the transfer process is delayed or incomplete, trademark squatters can step in and register the same or similar names, forcing the buyer to spend time and money on legal battles just to use their own brand.
Real Case: Tata Motors and Jaguar Land Rover (JLR)
When Tata Motors acquired JLR from Ford in 2008, the transaction included hundreds of trademarks across dozens of countries. In places like China, delays in re-registering trademarks allowed opportunists to claim similar brand names.
Tata was forced to take costly legal action to reclaim brand rights and protect its market presence. The situation delayed rollout and exposed the company to unnecessary risk—something that could have been avoided with faster, jurisdiction-specific IP action.
What Buyers and Sellers Should Do About It
Both buyers and sellers need to treat trademark transfer and due diligence as core elements of the deal, not side tasks. Here are essential steps to follow:
For Sellers:
- Compile a complete inventory of all trademarks (registered and unregistered);
- Update ownership records and registrations;
- Make sure all IP rights are owned by the target and respective documentation is collected;
- Clarify licensing agreements and any third-party encumbrances;
- Disclose any pending disputes or regulatory issues;
- Evaluate any tax considerations linked to IP assets.
For Buyers:
- Cross-check trademark records with public IP databases;
- Investigate any discrepancies between what’s listed and what’s registered;
- Assess the legal strength and usage history of each mark;
- Check if all agreements regarding creation of any IP object are in place;
- Review for conflicts with third-party brands;
- Forecast costs for transfer, registration, and rebranding (if needed);
- Secure connected domain names and social media handles;
- Ensure that warranties and indemnities cover trademarks specifically.
Why Legal and IP Teams Must Collaborate Early
Too often, the intellectual property team is looped in after the deal structure has already been decided. This results in gaps between legal reality and commercial expectations.
Involving trademark and IP experts early ensures:
- A smooth transfer process;
- No last-minute surprises;
- Complete documentation for enforcement, renewal, and branding;
- That the buyer can legally use the acquired trademarks in all relevant markets.
Whether it’s a share deal, asset purchase, joint venture, or IP licensing arrangement, the trademark strategy must align with the overall transaction structure from the beginning.
Checklist: Trademark Risk Management in M&A
For Sellers:
- Complete trademark inventory
- Ownership updates across all jurisdictions
- Collect IP ownership agreements
- Disclose active or pending disputes
- Resolve outdated licences
- Review brand valuation and IP tax exposure
For Buyers:
- Public record validation of each trademark
- Local registrations in target markets
- Due diligence on IP ownership agreements
- Reps & warranties covering IP
- Domain and digital asset alignment
- Risk forecast for potential litigation
- Cost projection for transfer processes
