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Trademark Considerations in Choosing a Business Name

Meet John Adessi, consultant at Johnson County Community College’s Kansas Small Business Development Center. Below, he discusses how, when it comes to naming your business, a rose by any other name – may have legal thorns.

Obligatory disclaimer time: I’m not an attorney, I don’t play one on TV and I don’t even watch as much Law & Order as I used to!  But I have worked with a number of clients on their due diligence in choosing a name for their businesses and can pass along some tips and insights.

Commonly, a new business owner will check the Kansas Secretary of State’s ‘name availability’ page to run a search on their prospective name and the site will often say the name is available.  The entrepreneur may then search the web for the name and possibly check with domain name registrars to see if it’s available as a .com or other web extension. 

That’s all well and good, but it’s just the beginning. 

The Kansas Secretary of State’s site only checks to see whether the name is in use by another LLC or corporation in Kansas – it doesn’t concern itself with other states or trademarks.  As for domain names, another business may have trademarked a very similar name in the same industry and this information won’t show up when perusing GoDaddy or other domain registrars.

A good starting point for checking for trademarks is the U.S. Patent and Trademark Office’s TESS database – TESS stands for Trademark Electronic Search System – at http://www.uspto.gov/trademarks/index.jsp (and click on TESS, under Tools).  From there, it is relatively easy to conduct a ‘basic word search,’ with the following caveats.

The database checks ‘apples to apples’ and thus often comes back with a message that ‘No TESS records were found to match the criteria of your query.’ However, it is vitally important to try every spelling, version and permutation of a prospective name that you can think of. 

For example, if we run a trademark search on ‘Smith & Sons Plumbing,’ the database says it doesn’t have any matches.  The business owner would be wise to try ‘Smith and Sons,’ ‘Smith & Son,’ ‘Smith and Son’ and so on, as well as just ‘Smith’.

In addition, the ‘generic’ portion of a name (‘plumbing’ in our example) generally cannot be trademarked and, if included in a search, will often cause an overly optimistic ‘no match’ message. Looking for just ‘Smith’ again, we see that there are nearly 2,500 trademarks in the system, and the odds are good that one is a plumber.  

How close can you be? 

That’s a GREAT question for your attorney!  Courts use a subjective standard of ‘would a consumer be confused by the similarity of the name?’  Even more alarming, we have heard of courts deciding that a name was too close if only 15% of consumers would likely be confused.  The short answer is: not close at all.

What’s at stake if I use a trademarked name? 

Best case scenario, you’ll get a cease-and-desist order from the trademark owner’s attorney and you’ll need to find a new name, change signage, business cards, web sites and more.

Worst case, they’ll take you to court for the profits you made using ‘their’ name and in some cases, they can even seek to recoup their legal fees, so you may end up paying for their lawyers!

Can you use an already-trademarked name in another industry? 

Generally, yes.  Trademarks are for a relatively narrow range of products or services (Goods and Services or G&S in the USPTO’s parlance).  Smith Plumbing would likely be OK if there was only an existing trademark for Smith Catering, for example.  Famous brands, however, will take a too-similar name to court for diluting their name even in other industries – so please don’t try to be the Pepsi Plumbing Co.

Should I trademark my business name and what does it cost?

You actually have a common law trademark of your name as soon as you use it in commerce, but that right is limited to your industry and market – and might be difficult to enforce. 

For example, Smith & Sons Plumbing, having been in business here for a while, has the right to use that name in Kansas City for plumbing services.  If you want that right to stretch beyond the area (and you intend to do business beyond the area), you might consider a true trademark.  Filing fees start at $275 for an electronic application, and most entrepreneurs wisely utilize the services of an attorney to navigate the complicated application process, which can take over a year.

So I trademarked my name – I’m set, right?

If someone infringes on your trademarked name, you can’t simply call up the U.S. Patent and Trademark Office and ask them to stop the other party.  The USPTO is simply a registrar.  You’ll need to take the infringing party to court to enforce your trademark, at your expense.

If you’d like to read more, the U.S. Patent and Trademark Office has some great info on the trademark process:  http://www.uspto.gov/trademarks/basics/index.jsp

Trademarks are indeed a complicated process and it cannot be overstated that the services of an attorney familiar with intellectual property issues will be a sound investment.  Small business owners have enough on their plates – they don’t need to deal with a cease-and-desist order or a lawsuit in addition.  Begin the process of due diligence on your own, seek counsel for the majority of the process and you’ll sleep a little bit better at night. Sleep - what a novel concept to entrepreneurs!

 

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