| At VeriTrademark, a common mistake that we see companies make is to confuse trade names with trademarks. Specifically, many companies incorrectly assume that once they have chosen a name and registered that name with the state of incorporation, they have unlimited rights to that name in connection with their business. This is a dangerous assumption and can be quite costly!
Importantly, registering a trade name does not confer any trademark rights on the registrant!!! While some of the most valuable trademarks in the world are company names, choosing and registering a company name does not provide any rights to use that name as a trademark per se.
WHAT IS A TRADE NAME AND WHEN CAN IT BE USED?
A trade name is the name under which a company does business. A company may use a trade name for banking, billing, identification (e.g. yellow pages) and tax purposes, among others.
There are two types of names a company may use for these purposes:
1) The name provided with the state upon registration as an entity (as an LLC or Corporation, for example).
2) An "assumed" name, which must be registered with the state seperately.
Selecting a trade name is not a complicated process and states do not subject businesses to rigorous criteria when approving these names. To the extent that state governments use any criteria at all to reject a name, it is often a matter of ensuring that the business does not misrepresent its industry (e.g. a grocery store using "bank" in the name) or duplicate an existing entity in that state. While procedures vary from state to state, the key point is that state governments never evaluate a trade name as a prospective trademark.
HOW CAN RELIANCE ON TRADE NAMES GET A BUSINESS IN TROUBLE?
Some businesses assume that a registered name gives them the right to use that name for any purpose related to the business. However, when the business is using its trade name to identify its products or services, then the name is functioning as a trademark, and trademark law must be considered. A company has a legal right to use a name as a trademark only to the extent that it does not infringe upon existing trademarks. Keeping others from using confusingly similar names in the future also requires steps such as trademark registration and diligent monitoring and defense.
WHEN DOES A TRADE NAME INFRINGE UPON A TRADEMARK?
Infringement is not always obvious! If your name is sufficiently similar to a registered trademark such that it causes "a likelihood of customer confusion", you could be in a lot of trouble. You might have to change your name, spend money on corrective advertising or even pay for the lost profits of the holder of the registered mark, among other things. Your company should establish a relationship with a good trademark attorney who can help you steer clear of infringement before it takes a costly toll on your business. If you plan on using a name as a trademark, you should first research the name for potential conflicts and register the name as a trademark with the appropriate entities. A good trademark attorney, like the ones at VeriTrademark, can help you sort these issues out economically and keep your business out of trouble.
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