Trademarks are Increasingly Used as Collateral

Trademark property transactions graph

Similar to physical assets like cars, real estate and machinery, trademarks may serve as collateral for a loan. A bank or creditor can record their “security interest” in one or more trademarks with the US Patent and Trademark Office (USPTO), which is analogous to the lien a creditor puts on a car when making an auto loan. The USPTO Trademark Assignment Dataset, which captures such recorded security interests, indicates that trademark owners are increasingly using these assets as collateral. Creditors recorded a security interest in roughly 5,700 trademarks in 1985. By 2007, creditors reported a security interest for over 75,000 trademarks, a 13-fold increase in two decades. While the number of trademarks used as collateral collapsed in 2008, likely reflecting the financial crisis, it quickly recovered to 79,000 trademarks by 2012. In fact, for each year since 2003, more trademarks were involved in a recorded security interest agreement than a recorded assignment (or sale) between parties.

It is important to note that these trends reflect only those transactions recorded with the USPTO, which is not required by law. [1] Overall, more research on trademark collateralization is warranted, and the USPTO Office of Chief Economist released the USPTO Trademark Assignment Dataset and related working papers [2] to that end.

[1] Federal recordation is permissive, not mandatory, though statutory and regulatory law provides compelling incentives for parties to record transactions throughout the entire life of a registered mark.

[2] Graham, S., Marco, A. and Myers, A. (2014). “Monetizing Marks: Insights from the USPTO Trademark Assignment Dataset.” SSRN working paper. Crass, D., Czarnitzki, D. and Toole, A. (2016).
The Dynamic Relationship between Investments in Brand Equity and Firm Profitability: Evidence using Trademark Registrations.” USPTO Economic Working Paper No. 2016-1