Trademarks and trade names are commonly confused by small businesses and young entrepreneurs. Frequently, non-attorneys (and occasionally some attorneys) incorrectly assume that once a business entity is registered with the Secretary of State the company has unlimited rights in the registered trade name. The confusion usually occurs because many businesses use the name of the company, at least in part, as a trademark. Unfortunately, this can be a costly mistake.
Trade names and trademarks are different. Registering a company name with the state at the time a company is organized, or when changing the company name, does not provide trademark rights. To understand why, one needs understand the difference between trademarks and trade names.
Trade names are just the name of the business entity. Companies may have more than one trade name. The name of the company provided to the state in the organizational documents is one type of trade name. A second type of trade name is the d.b.a. (“doing business as”) name which some companies use for different business divisions of the company. In each case, these are merely names for identifying a business and generally used by the company for billing, taxes, banking, or other identification purposes.
Trademarks, on the other hand, are marks used in connection with goods or services in a manner that consumers recognize the marks as identifying a source of goods or services. For trademark rights associated with goods, a mark must be affixed to the goods or product packaging so that that consumers would associate the goods with the mark. Sending out letters with company letterhead does not generally work for this purpose. The same is generally true for service marks. The mark must be conspicuously used in the advertising for the services.
Another thing to consider is that trademarks usually cannot be descriptive of the goods or services for which they are source identifiers. For example, one cannot get a trademark for “BLUE COUCHES” if they are selling blue couches. (There is an exception to this, but it is outside the scope of this article.)
Comparing Trademark and Trade Name Registrations
You may readily recognize that there are some similarities between trademarks and trade names. The similarities are what lead to confusion and the costly mistakes often made by small businesses and entrepreneurs. Obviously, there are instances in which trade names may be used as trademarks –
McDonalds and Sears are good examples – but understanding the differences is most important.
For example, when an applicant files a federal trademark registration application there is an examination process in which an examining attorney evaluates to application to determine if the mark is “descriptive” and whether there is a likelihood of confusion with any other marks registered with the United States Patent & Trademark Office (USPTO). States, on the other hand, do not engage in a trademark examination process when one registers a business name at the time one is organizing a business entity.
In fact, since most States now have online filing procedures for setting up new business entities, what little name examination gets done is generally automated and limited to such things as whether or not another entity has already been organized in that particular state with the exact same name. No examination is done to determine whether any other companies have been organized with a confusingly similar name or to determine whether or not your company name is descriptive. Thus, while you might register the name “BLUE COUCHES, Inc.” with your state for your company name, you may not be able to register it as a trademark with the USPTO for the sale of blue couches.
If you would like to obtain trademark rights in your company’s trade name, seek the advice of competent trademark counsel who can assist you in obtaining a trademark registration and advise you how to properly use your company name in a way that gives rise to trademark rights.