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Contributing Authors

	Stephanie Chandler Author of The Business Startup Checklist & Planning Guide
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	Tom Severance Author of Business Start-Up Guide
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	Joe Kennedy Author of The Small Business Owner's Manual
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	Steven D. Strauss Author of The Small Business Bible
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Trade Names

New business owners are frequently surprised by the difficulties they encounter in finding a business name that is free for use. The proliferation of product promotion in the mass media has created a minefield of prior existing rights in various names and trademarks. Problems usually arise from actual or possible conflict with the names of other businesses or names used as trademarks to identify services or products already in use by others.

Under trade name and trademark law, a name or mark cannot be adopted or used that is so similar to a prior name or mark that the public would be confused about the source, origin, sponsorship, or affiliation of the goods or services involved. Therefore, a new business should avoid any name that could give rise to the likelihood of confusion.

A trade name is not the same as a trademark. A trade name is the name by which a business is known to the public (e.g., “3M” is the trade name for “Minnesota Mining and Manufacturing Co.”). A trademark is the brand name applied to a particular product or service (e.g., “Tide” detergent). This discussion primarily concerns selection of the name of a business rather than selection of the name for a product. Some principles apply to both, however (e.g., the need to avoid the likelihood of confusion with a prior user of the same or similar name or trademark).

Changing a trade name or trademark after it has been adopted may involve a loss of goodwill, a waste of advertising effort, and incidental costs for changing signs, stationery, and directory listings. By comparison, dropping a name before it has been adopted is relatively cost free. Accordingly, you should err on the side of caution.

Determining Rights in Name

Once the new business entity has been advised of the laws that protect prior users of trademarks and trade names, the next step is to determine whether any prior users may be able to assert such rights. The simplest technique to ascertain prior users is a database search of existing federal and state trademark registrations. Such a search is available from a number of on-line
computer services whose databases typically include pending trademark applications. A lag time exists, however, between the filing of an application and a record of the application appearing on a commercial database.

Although a person may personally conduct such a search, a qualified trademark practitioner best makes the interpretation of a search report. Moreover, because a database search is considered to be only a primary level search, more comprehensive searches are often advisable. A typical second-tier search (a “common law” search) includes non-registered trademark and trade name uses compiled from a large number of sources by a commercial reporting agency. The sources searched are based on the particular industry, goods, or services associated with the proposed name use.