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A Rose by Any Other Name Might Not Smell as Sweet: The Process of Choosing and Protecting a Business Name
One of the first major decisions a business owner makes is what to name the new company. Can you imagine Target doing as well if it was still called “Dayton Dry Goods Company”? As you select a name for your new company, there are some things you can do to reduce complications and the possibility of unknowingly infringing on another company’s name. Furthermore, correctly obtaining the legal right to your business name can protect against people either knowingly or unknowingly infringing on your business name later.
Considerations in Naming
When choosing a name, it is important to select something that reflects the goals and core activities of your business. This is good business practice because there is “no second chance to make a first impression.” It also has implications for how you will be able to market in the modern world of internet and social media. You will want to make sure that the name you select is “web ready.” In order to have a URL or web address that is your business name, the name needs to be unique. You will also need to ensure that the name is available as a URL. This can be done by doing a WHOIS internet search or by looking at websites that host web addresses, such as godaddy.com, or by looking at an accredited registrar registry. Also, you want to use a name that has important key words for searchability. Do not fall in love with a name before you have done all you can to be confident that the name is not being used by someone else. The idea is that you want to go through a process before legally staking claim to a name, so it provides the benefits you want.
Types of Names
Below are some important business naming terms to get familiar with before we discuss the process of getting and protecting a name.
- Legal Name
The legal name of a business is the name of the person or entity that owns the business. For a sole proprietorship, this is the name of the sole proprietor. For other structures it is the name of the company as it was used in the filing of the original papers. In Arizona, this would include filings with the Arizona Corporation Commission or Secretary of State. For partnerships it could be the combination of names of the partners or the name used in the partnership agreement. The legal name is the name used to file government forms. (See our article “Deciding on a Business Structure”).
- Trade Name/ “Doing Business As”
A trade name, or a “doing business as” (DBA) is the name by which the business is known. In some cases this is the same as the legal name. It is simpler to use a DBA than to change the legal name of your business, but the better practice is to do your homework when selecting a legal name so that a DBA is not necessary. Businesses morph and grow over time, however, and unexpected changes can sometimes lead to the use of a DBA or sometimes businesses want to use more than one name, and can utilize DBAs to do so.
A trademark falls within the rules and protection of intellectual property law. A trademark legally protects words, names, symbols, and logos that distinguish goods and services. As explained below, registering a trade name is a government process essentially letting the state know you are using a name, but offers relatively weak legal protection. A trade name can be trademarked, however, which provides a greater level of legal protection to the user of the name.
Protecting Your Name
The best way to protect your business name is to register the legal and trade name with your state or county, and then obtain a federal trademark for the name. If you know you want to register your trademark from the beginning, be sure to check name availability for your name before submitting any application. In other words, do not apply (and pay) for a state or federal application to register with the state only to find out that the trademark is not available. Do a name availability search with the Arizona Corporation Commission, then with the Arizona Secretary of State, then with the United States Patent and Trademark Office. Once you know that the name you want is available, then submit your applications.
Unfortunately, successfully registering a trademark involves more detail than we can cover in this article, and the process can get frustrating. Also, it is vital to understand that even successful registration and trademarking a name does not guarantee that you are not infringing. The common law in intellectual property holds that the person who owns the name is the one who first used it, not necessarily the one who first registered or trademarked it. So if there is a company out there that you did not discover in your search who used the name prior to you, they could potentially bring a lawsuit against you for infringement, and could seek damages, if you infringe their mark in the area where it was used prior to your registration.
First, keep good records. Keep a log and copies of all documents when filing for your business name. Keep receipts and proof of when you first used the name, if it was prior to the time that you officially filed for your legal name or DBA. It could be that the accusing company started using the name after you, or cannot prove that they started earlier.
Second, EARLY in the registration/ trademarking process, have an attorney do an entity search and provide a letter. You can have an attorney conduct a search and provide a letter of opinion that the name is available. This will act as an insurance policy if you are ever accused of infringement. This letter can establish that you acted in good faith, having attempted to determine whether the name was in use before attempting to gain legal ownership of it. This may not be a complete win, but could minimize any award of damages to the other side if you are found to have been infringing.
Third, keep aware of companies in your industry that may be using or infringing on your name, and contact a lawyer for advice on how best to proceed against infringers.
Finally, use the appropriate symbols with your name to show your legal claim to it. Use the ™ symbol next to your business name while waiting for your trademark application to be approved. Once it is approved, use the ® symbol to put others on notice of your legal rights to that trademarked name.
Naming your company requires a variety of considerations. Take the time to sit down with an attorney who will make sure that you have considered every angle and effect of this early business decision that will surely have far-reaching implications.
Published By Brad Denton
40 N. Central Avenue, Suite 1400-1532
Phoenix, AZ 85004
GDP Business Blog
Mesa, AZ 85213