Not one to mince words, KPS Capital's Michael Psaros offers a ...

06-08,78-85_ACG.qxd 4/6/09 5:11 PM Page 81COMMUNITY COMMENTARYeral registration of a mark include the right tobring an action concerning the mark in federalcourt, the ability to prevent importation of infringinggoods by filing the registrationwith the United States Customs Serviceand the opportunity to use suchregistration as a basis to obtain registrationof the mark outside of the UnitedStates. Federal registration also allowsthe registrant to potentiallyrecover treble damages, attorneys’fees and other remedies.In the first example cited above,the company’s registration of its markwith the USPTO would have placed the thirdpartyapplicant on notice of the company’sownership of the mark. The third party’s applicationwould have been denied by the USP-TO at the outset and would not have appearedin the trademark search results. There wouldno longer be a need for a holdback of any portionof the purchase price at closing and thebusiness owner would have walked away withmore money at closing. If the third party beganusing the mark, the company could file an infringementlawsuit in federal court seeking“There is no question that theregistration of a business’s name,trademark and/or service mark comeswith many benefits and, ultimately,increases the value of the business.”treble damages, attorneys’ fees and otherremedies.Likewise, in the second example, the company’sfederal registration of its mark wouldhave assured the buyer that the company hadexclusive rights to the mark. It also would havehelped pave the way for the buyer to registerthe company’s mark in its home country postclosing.Once a company registers its mark, thequestion becomes how to value it. As notedin a recent roundtable in Mergers & Acquisitions(“Reinventing the Deal,” October,2008), the valuation of intellectualproperty can be difficult.Notwithstanding the difficulty surroundingvaluation, there is no questionthat the registration of a business’sname, trademark and/or servicemark comes with many benefits and,ultimately, increases the value of thebusiness. The cost of registration bycompetent counsel is relatively low,even for a start-up company, and the downstreamproblems that may arise without registrationcan be significant, as illustrated bythe above examples.Denise Walsh is an attorney with Marcus, Brody,Ford, Kessler & Sahner, LLC, while Robert Shepherdis a shareholder with Mathews ShepherdMcKay and BruneauTHE PULSE continued from page 79David Acquavellaacquisitions each year.—————————As to whetheror not it will impactthe M&Aarena, we believethe answer is yes,but we also believethat it willaffect the largerdeals more so thanthe middle andlower markets. Privateequity accountsfor billionsof dollars in crossbordermerger and— David Acquavella,Southeast Investment BankingM&A transactions will decline as a result ofboth increasing costs and much greater governmentoversight.Funding costswill continue torise and therewill also be anew layer ofcosts associatedwith new governmentoversight.Governmentoversightis going to increase,both inthe US and fromsome internationalbody thathas yet to beBetty E. Reedformed. I fear that these oversight groups willgo to the extreme, requiring their approval onany M&A deal involving any entity in any waythat has taken taxpayer money, regardless ofwhether the taxpayers were English, American,etc.These oversight bodies will base their approvalor lack thereof on such issues as potentialjob loss and other “harmful” outcomesto the taxpayer and the taxpayer’s home economy.Think of the recent Chicago factory sitinand what appeared to be capitulation byboth Bank of America and JPMorgan Chase,but on a much larger scale. To avoid this overinvolvement, the parties involved in the M&Atransaction will seek funding from non-traditionalproviders such as sovereign wealthfunds and wealthy individuals such as WarrenBuffett and his billionaire class in orderto avoid the scrutiny and the micro-management.— Betty E. Reed, Principal,Abraxas Business Services—————————February 2009 ACG > MERGERS & ACQUISITIONS 81