One of the first issues that a new business may deal with when forming a business entity is what to name the company. There are several issues that you need to consider when choosing a name for your business, whether you are operating as sole proprietorship, corporation or limited liability company.
Developing Associated Brand Identification
Many small companies start out using some variation of their own name. This may be the simplest and arguably least creative approach. So if your name is Pete and you are starting an auto body shop, you might call your company “Pete’s Auto Body.” Pretty straightforward. It might work for Pete if the name is available in the corporation office and if there is not another Pete with an auto body shop in town. The downside to this approach is that it does not create a unique “strong” name that can provide depth of protection from a trademark perspective. If Pete lives in a small town and everyone knows Pete, the name actually integrates a marketing component. Everyone knows Pete owns the place and everyone know that he does auto body work.
Creating Credibility and Brand
For companies that want to appeal to a broader market, the locally known name will not help much. They will want to create a unique name that identifies their product or service and that integrates into their marketing. For example, someone selling Widgets online would not get a lot of mileage out of the name “Sam’s Widgets.” The product is identified, but the use of Sam’s name creates a small local business aura that may hurt Sam if he is trying to create the image as the world’s leading supplier of Widgets.
From a trademark standpoint, using your own name in the business name creates very week trademark rights and provides you with narrow, if any, protection against a third party using the name. The strongest name protection arises from names that gather a secondary meaning that the public naturally associates with the product. The strongest names are also unique, made-up words that still identify the product or service. For example, Sam might call his company “Widgetch” or “Widgetorium.” These are new words that are very strong from a trademark standpoint yet identify the product that Sam is peddling. If you add a slogan to the name in advertising, “Widgetech, the Worldwide Leader In Widget Technology,” for example, that creates a believable aura that Sam’s company is the true leader in this area. On the other hand, “Sam’s Widgets, the Worldwide Leader in Great Widgets” does not carry as much strength.
Corporate Name Availability
Corporate name availability in your state is the first legal issue that you should look at. If someone else is already incorporated under a similar name, your corporate documents would be rejected for filing. Usually, you can check availability online or by calling your state’s incorporation office. The incorporation products that our company offers online actually include Ebooks with links directly to name availability resources for your specific state.
Other State Law Considerations
State laws will generally require that a corporate name be distinguishable from existing corporate names. If you do not check for availability first, and someone has already incorporated under your name, your filings will be returned to you and you will need to resubmit using a different corporate name.
Corporate Law Considerations
State law will also include requirements that your corporate name to contain the words such as “corporation,” “company,” or “incorporated” or the abbreviation “corp.,” “Inc.,” or “Co.,” or words or abbreviations of like import in language. This is to clearly indicate that it is a corporation instead of a natural person or partnership. State law may vary slightly on the exact words that are required or permitted, but most states have similar requirements. In addition, your corporate name may not (1) contain language stating or implying that the corporation is organized for a purpose other than that permitted in state corporation laws or the corporation’s articles of incorporation; or (2) contain language stating or implying that the corporation is connected with a state or federal government agency or a corporation chartered under the laws of the United States. State and Federal Trademark Considerations State and Federal Trademark Laws will prohibit you from using a name that is substantially similar to a name that someone else is already using. State law governs within your state. In order for a competing name to have protection it must have been used in interstate commerce. The interstate commerce requirement is fairly simple to meet except with a business that has made absolutely no business communications outside of the state. I think it is fair to say that all online businesses are exposed throughout the world and thus meet this requirement.
Investigating Conflicting Business Names
The first place to start checking for competing names is the Trademark database at the Office of Patent and Trademarks. There, you can search for similar names that have been registered. However, this is not enough to assure that the name that you chose does not infringe upon someone else’s trademark. The reason for this is that Trademark Registration is is not what gives rise to protection Rather, a name is protected under the trademarks laws by using the name. There are benefits to registration. But use of the name in interstate commerce is the act that commences trademark protection. In order to be sure that your name does not infringe, you need to take reasonable steps to make certain that no one else is using the name. This is a more involved process than simply checking the records of the Trademark Office. You can start by doing some searching online. You may find someone with a similar name right away. Then you need to ask whether your use of the name would infringe on the other party’s use. To be morecertain, it is wise to have a common law trademark search performed by a professional search company. The search will result in a comprehensive written report that encompasses a wide range of public records. Even though it is not 100% fool proof, having this search result in your hands will provide you with proof that you took all reasonable steps to avoid infringing on someone else’s use of a name.
Fictitious Names
In order to maintain the separate existence of your company, you will want to make sure that you always do business under your proper corporate name. There is one exception to this. Most state laws permit you to do business under other names called “fictitious names” provided that you file a fictitious name statement as provided in the state’s laws. For example, Sam’s Widgets, Inc., for marketing purposes, my decide to hold itself out as The Widgetorium. This is permissible in most states as long as a fictitious name registration is properly filed.
Protecting Your Name
The fact that you incorporate under a name does not of itself protect your name from use by others. All incorporation means is that no one else will be able to incorporate using the same name in your state. If you consider your corporate name or any other name used in connection with your business to be a valuable asset, you should take further steps to protect the name from use by others such as obtaining state or federal trademark protection if available.