For emerging businesses, the business name is often synonymous to its branding. The business name may be used in the first product name, domain name, and advertising. A lot of time, money, and thought can be expended while creating that business name and building goodwill in it. An often overlooked aspect of this process is researching and protecting the business name when it is desirable to do so. Inexperienced business owners frequently believe that because they have formed a corporation, limited liability company, or filed an assumed name certificate with that new name that they are lawfully permitted to use the new name in their branding and that the new name is protected from use by others. This is an incorrect belief and may lead to problems in the future.
One reason why the belief is incorrect is that the standards and requirements for a state permitting a business name to be used are different than the standards for granting a trademark registration. A business may be formed for tax, legal, securities, or other many other non-branding purposes. A business name used for those purposes is not used for branding and not generally publicized and warrants a lower standard in registering that business name. Contrast that scenario with a business name which is explicitly used in advertising and in connection with sales of goods and services to consumers. To illustrate, most of the flying public thinks of American Airlines as a source for travel. However, AMR Corporation, a holding company for American Airlines is not generally recognized by the flying public.
A second reason why the belief is incorrect is that business names, product names, and other sources of brand names are not centrally stored. Brand names can be located in many different registries, or even be unregistered. Today, businesses can more easily reach out to consumers across the country (or world) thanks to the internet. A common example affecting startups is where an internet based business incorporates in one state and focuses its branding efforts in a different state. Thus, a business may incorporate in Delaware and focus its initial branding activity in Kansas. A second startup may later organize in Kansas with a similar name and product. Each business would likely have no problem registering in the respective states. In this case, there may eventually be a clash between the two companies. One of the businesses may be forced to changes its branding and/or compensate the other business for the damage to that business’ brand. For a business with limited funding, this could be a business ending mistake.
In closing, it may be prudent to perform a detailed search, submit a trademark application, and use the new business name. Such action can minimize the chances of unlawfully using another entity’s brand name and increase protection for one’s own brand name.
