One of the frequent topics of discussion when selling or buying a business is "good will." Though often thought of as an intangible, good will is, in fact, marketable. The good will of a business commonly represents years of hard work under a business name or the development and recognition of a logo, service mark or trademark that is readily identifiable.
Although many business owners pay attention to running their business, they often overlook a few simple steps that would help ensure, come the day of sale, that they have a viable and salable good will asset to throw into the mix.
As a general rule, the state of Alaska serves as the gatekeeper to ensure the exclusivity of business names for corporations, limited liability companies, limited liability partnerships or limited partnerships. Once that business name has been filed and accepted by the state, it belongs solely to the business and becomes an asset, which can be bought or sold.
Individuals often do business as a proprietorship without adopting one of the business forms referred to above. People who have used a business name for a long period of time may have created a common law right to use the name, which can be enforced against other users.
Far preferable in the business sense, however, is that Alaska law allows an individual doing business in the state to register the business name with the state. In order to register a business name, one must actually be transacting business under the name being registered.
Alaska statutes set forth the various requirements that must be met in order for a proprietor or any person to register a business name. The state considers a corporation to be a person under the law, so a corporation could transact business under a registered name and reserve that right under the Alaska Business Name Statute.
Separate and apart from the business names, many companies use words, marks, logos and slogans that identify goods or services, associated with a business organization. These cannot be registered as business names, but Alaska law does permit registration of words, logos or combinations thereof as trademarks, service marks or certification marks.
Nevertheless, as you develop your business, to the extent that effort is committed to creating identifiable trademarks or service marks or even word combinations that identify goods and services to the business, one is well advised to undertake the effort to register the mark with the state of Alaska.
Registration forms can be downloaded from the Web sites of the State of Alaska Division of Banking, Securities and Corporations (www.dced.state.ak. usbsc/mark/.htm) and the U.S. Patent and Trademark Office (www.uspto.gov).
Both the state and federal Web sites also provide a search function so that you can do your own trademark search, before undertaking the effort of registration, to determine whether there may be a problem with your trademark registration.
Once a business has made the effort to reserve its business name, trademark or service mark, a bit of effort is required to preserve the exclusive rights to the name.
If one is successful, the possibility always exists for creative adaptations that may, or may not, cross the line of taking advantage of your business efforts and registration. Alaska legal remedies include injunctions to cease using a previously registered business, trademark or service mark, to awarding damages in an appropriate situation.
Where purchasing or selling a business, the good will component of the transaction can have some legitimate substance if it is backed up with validly registered business names and trademarks. The little bit of effort required to do so can often lead to substantial returns as part of a future purchase and sale transaction.
Jim Gorski is a member of the law firm of Hughes Thorsness Powell Huddleston & Bauman LLC. He can be reached at 907-263-8255 or via e-mail at (jmg@htlaw.com).
