Before starting a business, the first things a business owner should think about are their business name (also called a trade name) and trademark law. If they don’t, it can be costly.
What are the definitions of a business name and a trademark?
A business name is the name under which a business (whether it be an individual, LLC or corporation) conducts its affairs. A trademark (or service mark), which can be a name (but can be other things, like a logo), is the mark a business uses to distinguish its good and services from that of another business.
Are a business name and trademark the same thing?
Although a business name and a trademark can be the same, it is not a requirement. For example, Nike is both the business name of the Oregon corporation (Nike, Inc.) and the trademark (Nike) placed on apparel created by the company. On the flip side, Apple, Inc. is the business name of the California corporation that owns the trademarks I-Phone, which Apple, Inc. uses in association with its cell phones, and Macintosh, which Apple, Inc. uses in association with its computers.
What is a trademark clearance search?
New businesses conduct a trademark clearance search, which usually includes a review of federal and state databases and the Internet, in order to determine whether another business is using their desired business name in the same manner or as a trademark. An established business may conduct a search when it wants to create and sell a new product or service.
Why is a trademark clearance search important to businesses?
Last week, I spoke with a potential client who conducted business under a certain business name for over 10 years. They had gained a lot of recognition in their industry in their state and elsewhere with this business name. Unfortunately, the potential client had recently received a cease-and-desist letter from a company (in the same industry) that had a registered trademark similar to the business name. The company with the registered trademark had been in business for over 50 years and had registered its trademark almost 20 years ago. The potential client could not pay to litigate this matter, so decided to change its business name.
This example illustrates two important reasons a business should conduct a trademark clearance search. First, it can prevent the business from being sued for trademark infringement, which can be very costly. Second, and perhaps even more important to many than the first reason, it helps a business avoid spending years building its brand to only be forced to change its business name to something unrecognizable to its loyal customers, causing a loss in revenue. This is why I always recommend that my clients conduct a trademark clearance search before they even start running their business.
For more information about legal issues faced by new businesses, read this blog post or contact us at 347-946-0597 or info@jllaw.net.
