Naming Protection via Incorporation

As you search for a good new company name, you might also give some thought as to how you protect that name for the long run. While we continue to advocate strongly that the first registered federal trademark you apply for be your company name, there are cases where you can’t get a USPTO registered trademark on a name (e.g. it is judged to be generic or it is confusingly similar to another).

So then we have to look at how the type of company you are creating helps protect your name. If you are creating a simple Sole Proprietorship or Limited Partnership (as many small companies are), then the name registration process provides you little or no protection outside your county. In fact, when you register such a business, the county business office doesn’t even check with other counties in their own state, let alone state incorporation records.

However, if you become an LLC, or incorporate as an S or C Corp, then the actual filing of the name gives you protection in your home state. In fact, some states call your full tradename (the full name you file under) a state trademark. So you have some measure of protection – at least in your own state.

But when you incorporate in a given state, they don’t check with any other states in the USA – not even neighboring states! So you might have just registered a business with a great new name and the full blessing of the Secretary of State, when there is a competing name (or even worse, competing company) just across the river – if it is the state line. There may even be small sole proprietorships in your own state with the same name.

What a mess. Most other countries have a single national business registry, regardless of what kind of business you are. Even Canada is now well along moving to consolidated business registrations nationwide.

What to do? The first thing, of course, that you should have done in advance, is a professional national name check. Other companies with the same name are OK, as long as they are in different fields. But if they have the same name, what happens when you grow up and move into their state? Or, alternatively, they grow bigger and move into your state?

And then there is the very tricky issue of Common Law. Under what is called Common Law, certain rights in any name result simply from usage of that name, registered or not. So if you inherited a name from Grandpa, and have been using it in public trade for many years, you have a lot of rights in that name, even if you or Grandpa never filed any paperwork.

All other things being equal, the rule of first usage applies. In practice, the company with the most money usually prevails… unless the smaller entity can prove a valid US Federal Trademark ownership via the US Patent and Trademark Office (USPTO). Nowadays anyone can apply for a US Federal Registered Trademark online themselves, but a lawyer is advised to ensure you get proper broad coverage – as well as approval on one pass. But do keep some clear sample records of your first usage.

These matters are naturally discussed in the context of legal costs. But legal costs are often insignificant compared to the actual business overhead and marketing costs of having to change your company name.

In short, an ounce of prevention is worth a fortune downstream. Check thoroughly yourself or use a naming agency or a legal service specializing in this field. Many business lawyers are not trademark practitioners and do not do nationwide checks or trademark filings before helping a new entity incorporate.

See Trademark and Logo Searches on this website for details of Brighter Naming’s offerings.

Disclaimer: This article is meant as basic information and guidance only and we are not licensed to provide legal advice. Please consult your own lawyer on all legal matters.

 

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Naming Articles

New brand insider articles from an experienced marketing team. Learn all the basics of naming, branding and trademark registration from these free reports:

August 2016: How to select a naming agency.

July 2016: How to get International Trademark protection.

March 2016: You received a cease and desist letter. Now what?

May 2015: How can one product line have many trademarks?

Jul 2014: What roles do copyrights and patents play in protecting names?

Jan 2014: Predictions for 2014 and Free Offers.

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