Choosing a business name is a major step for a new business. The business name will represent the brand. A business company name needs to fit with an overall marketing strategy that aligns with the intentions of the company founders. For example, if the company intends to introduce a specific line or type of products into the market, the business name should fit strategically with this brand objective. If the company will offer diversified products or services, a name that more closely associated with a single product may be detrimental to consumer brand awareness.
In this article, we will discuss the legal considerations for choosing a business name. Most importantly, we will discuss what it means for a business name to be already in use or taken by another business entity.
Registering Business Name with the State
When a business organizes in a state, it must choose a business name. The name must be available in that state. That is, it cannot be already registered by another business in the state. The business name chosen must also bear the abbreviation for the type of business entity, such as “LLC” or “Inc.” The process begins by searching for the name in the state business directory. This state business directory is generally available on the state secretary of state’s website. If the business name is available, the business can choose the name at the time of organization. If the entrepreneurs are certain that a given name is appropriate, and it does not appear to be taken in the state business directory, they can reserve the name in advance. This allows the entrepreneurs to secure the name before actually undergoing the business organization process. Each state will have specific rules regarding the period of time that organizers can reserve a company name in advance of filing for business organization.
Often a company will register a business name and then carry on business in a state under a separate name. In that case, the state generally requires the business to register the name presented to the public. This is normally called a “Doing-Business-As” or “DBA” filing. This makes the public aware that the business is carrying on commercial activity under a name other than the state-registered name.
Unfortunately, registering a business name in the state of organization is only one step in securing the rights to use the name for operations. Other considerations regard the intellectual property rights associated with the name. Just because the business name is available for registration in a state business directory, it does not mean that the name is available to represent your business to the public.
Trademark law is a complicated area of intellectual property law. Basically, trademark rights allow a business owner to secure intellectual property rights in various forms of expression that represent the company. These forms of expression might include symbols, words, phrases, tunes, shapes, general appearance (known as trade dress), or even colors. For purposes of this article, we are concerned with the company’s name for trademark rights.
There are two methods of securing intellectual property rights in a company’s business name. First, the company may have statutory or common law rights in the name under state law. Each state has its own laws concerning trademark rights for company’s using a name to represent a business or product in that state. If the company meets the requirements for securing those trademark rights, she can bring a legal action in the state to stop any other businesses operating in the state from employing a name that is the same or too similar to her company’s name. The primary standard for similarity concerns whether using the name will result in customer confusion. What is important to remember, when there are conflicting names being used to represent a brand or service, the first company to employ the name in commerce has superior rights in that state. These are the basic rules for trademark rights.
Under federal law, a company can secure trademark rights in a name that applies nationally or in all states. To secure these trademark rights, the company must file an application with the United States Patent and Trademark Office (USPTO). The USPTO will do a national search to determine whether the name or a similar name that would cause customer confusion is already in use. If the company business name is not in use, the company may secure trademark rights in that name. The company must actually employ the name in a commercial activity. This prevents individuals from securing business names and sitting on them to later sell to businesses.
The benefit of seeking federal trademark rights is that the company can now prevent companies in any state from later using a confusingly similar name to represent their business. If the company only secures state trademark protections, they have very few means or methods of preventing companies from employing the same or a similar name. Remember, the company must be the first company carrying on business under that name in every state in which it seeks protection. If another company starts using the same name in a state, it effecting locks out any other company’s using that business name from doing business under that name in the state.
So, this begs the question, “how do you determine if someone already has trademark rights in a name within a given state?” The first step is to do an internet search. A popular search engine, such as Google, is a good start. Look for any companies using the name. This includes looking for company names, website URLs, social media handles, etc. Identify what is the nature of their business and where they are located. Afterwards, do a search on the USPTO website for registered trademark names. If the name being used by a business is not federally registered trademark name, then the name may be open for use in your state. If it is a federally registered trademark name, then you may not use the name without risking infringing upon the registrant’s trademark rights.
LawTrades Can Help With Your Business Name
Navigating the trademark registration process, state and federal trademark law can be a complicated undertaking. The legal professionals at LawTrades are experts in entity formation and intellectual property law. Let us help you along the way.