Before committing to a particular business name, the business owner should be quite certain that the name is legally a "good" one. You do not want to find that the name is already in use by another business, or that the name is not distinct enough for you to be able to protect it from use by other businesses.
Before investing a lot of money on building up name recognition through advertising, business owners need to consider whether legal steps should be taken to establish stronger rights to the name.
The first consideration is whether the protection of the name is an important issue. If the business is a local service business, such as a dry cleaner, and the customers patronize the business primarily because of its location, significant steps to protect the name may not be warranted.
If the name is a brand name used for a product or service that might be sold nationally, protection of the name is much more important. With many businesses utilizing the Internet for business, it has become important to seek trademark registration. The new concern is that another business using the same name may register it first, use it nationally, and limit your business use of the name, even if you were using it first.
If a business has or will have national or international sales and marketing, you should assume that it is important for that business to understand the protection issues and take appropriate steps to protect the business names or trademark brand names that it uses and promotes.
Now, more than ever, even small owner - operated businesses are likely to have national sales and run into problems with conflicting names or trademarks somewhere in the U.S.
Protection of a Name or Trademark
A common mistake regarding a business name is the belief that the filing of a DBA or the registration of a corporation with the Secretary of State protects the name. They dont. Do not assume that any name filings provide protection of the name. Those types of filings are not intended to protect your rights to a name and they only remotely affect the protection of a name from use by others.
The key to creating rights to a name is the actual use of the name in business. The party first using a name or trademark in a particular geographic area in selling a type of product or service has the superior right to the name or mark in that area for that type of product or service. All other considerations of rights to business names or marks have to contend with that basic rule.
Federal registration of a name or mark as a trademark gives the greatest assurance that your rights to the name are superior to the rights of others. But federal trademark registration is registration of the name or mark only as it is used in the sale of goods, and is not intended to protect the business name. The rights to the trademark arise upon the first use of the mark.
What then is the purpose of the Fictitious Name Statement (also called a "DBA" for "doing business as")? The main purpose of this state-mandated filing is the protection of the public through the identification of person doing business under a fictitious name.
Such a filing does not reserve the name or limit others from using the name. When a DBA is filed with the county recorder in California, the recorder's office makes no check of the name to determine whether it is available. There could already be 10 different businesses using the same name in the same county where you file your DBA. And after you file your DBA, there is nothing to stop other business owners from filing DBAs for the same name.
A California statute says that the filing of a DBA gives the filer of a DBA a rebuttable presumption that the filer has the exclusive right to use of the name in the county where the DBA is filed. This sounds good, but in reality a challenger merely needs to carry the burden of proof in rebutting (disputing) your rights. Someone else using the name before you will probably be able to do so.
To get any benefit out of a DBA filing, it is important to check many sources of name information before you select your name or file your DBA. Check the names already filed at each county recorder's office in each county where you will do business to determine whether your proposed name is already in use.
Check phone books, trade association lists, and any other available information to see if anyone else is using the same (or a similar) name in those counties in the same type of business.
Filing articles of incorporation or organization or filing a name reservation with the Secretary of State also does not give you a right to a name. While the Secretary of State's office does a type of name check to prevent the filing of multiple entities with the same name, this step really only affects what you can do with the Secretary of State's office, and is not intended to secure rights to a name.
Keep in mind that even within the same state there may be different types of entities, such as limited partnerships and LLCs, as well as sole proprietorships or partnerships using the same name that do not show up on a corporate name check by the Secretary of State. A filing with a state office neither secures your right to a name nor protects you from claims of infringement by a prior user of the name.
A business already using a name in a particular geographic area will have superior rights to your use of the name, even if you have successfully reserved or filed the name with the Secretary of State.
Thus, the key to having superior rights to a name or a trademark is determining whether the name or mark is already in use and then taking steps to secure your position as the first to use it.
The business which will be marketing or selling its products nationally needs to consider the advantages of federal trademark registration.
Federal Registration of Trademarks
A business which is serious about protecting a trademark for a product or a service mark for a service, will wish to federally register the mark with the Patent and Trademark Office, if it qualifies for federal registration.
Generally, to qualify for federal registration, a trademark or service mark must be a mark not already registered for the same type of product or service. It must be used in interstate commerce, and it must be used for sale of a product or service (as opposed to a trade name that is merely the name of the business). If you will not be providing goods or services in more than one state, or in some manner that affects interstate commerce, federal registration is not available.
Since federal trademark protection is not available for a business name unless it is a brand name used for goods or services, small businesses may be advised to use their product brand as their business name, to get "more bang for their buck."
There are a number of other rules and limitations, and this article does not provide you with all the information you need to determine whether your product or service is registrable. If, after reading this article, you think you should trademark a product or service, contact a trademark attorney to review your options.
A trademark attorney handling your trademark application will have a search done to determine whether the name or logo (or a "confusingly" similar one) is already in use in the same category of products or services.
If the search indicates the name is available, the federal trademark registration will be applied for. Samples of the mark (the name or logo) as used on the product or in promoting the services must be included with the application.
The name or logo will be published and other businesses using similar marks will be given an opportunity to challenge your registration. You can, at that point either fight the challenge or drop the application.
Regardless of whether you plan to use and register your name as a trademark, a business should want to have a good, strong name which is distinguished from other business names. For both trademark purposes and general marketing purposes, the strongest names or marks are those which contain a unique name component, such as Xerox, Exxon, or Kodak.
A name or trademark that consists only of descriptive or other non-unique words is a weaker name or mark than one containing a unique name component.
Terms which are not unique and cannot be protected include words that describe the type of goods or services, such as "advertising," "temporary services," "laboratories" or "school," those like "precision," "quality," and "first," which are descriptive, and geographic terms, such as "West Coast," "California," "Western" or "Pacific."
What protection is provided by the federal trademark registration? First, the presumption that you have superior rights to the mark in all 50 states, even in geographic areas where you have not used it.
However, the rule about superior rights to a name or mark going to the first to use it still affects the trademark. If a business has already been using the same trademark in a geographic area, your later federal registration cannot upset their use in that area, although it can prevent them from expanding and using the name in additional geographic areas.
© 1997 Mary Hanson All rights reserved.