Registered Business Name vs. Trademark

One of the first decisions new entrepreneurs make is “What should I name my business?” A lot of brand equity gets built around a business name, so it’s essential to protect that valuable marketing asset. During a presentation to accounting professionals, I discussed trademarks vs. registered business names and the differences in the protection and peace of mind they offer. I believe much of the information I shared may help you, too, as you explore your options for safeguarding your business name.

Let’s Start With Basic Definitions

• Business Name – A business name is just that. It’s the name a company calls itself and by which the public recognizes it.
• Trademark – As defined by the U.S. Patent and Trademark Office (USPTO), a trademark is “A word, phrase, symbol, and/or design that identifies and distinguishes the source of the goods of one party from those of others.” A trademark may also be a combination of the elements mentioned above, such as a logo accompanying a business name.

Business Name Basics

When a limited liability company (LLC) or C corporation applies to register as an entity in a state, the business name automatically gains protection in that state after the state approves the business’s articles of organization (LLC) or articles of incorporation (corporation). The state will not allow other LLCs or corporations to use the registered name within its jurisdiction.

States’ laws have varying guidelines on how different a name must be from other business names. The purpose of restricting similar name use is to curtail deceptively similar business names from causing confusion in the marketplace and creating unfair competition. Some states will allow the same or closely similar names if the businesses using them are in different industries or offer very different services and products.

And sometimes, alternate spellings for a similar name are allowed, even if two companies are in the same line of business. For instance, one state may deem it perfectly fine to register “Linda’s Spa and Salon, LLC” when there’s an existing business registered as “Lynda’s Spa and Salon, LLC.” Another state might consider the name “Linda’s Spa and Salon” deceptively similar to the other business’s name.

Business Name Limitations

Keep in mind that registering a business only prevents other LLCs and corporations from using a business name. Sole proprietorships and partnerships in the state may legally use the name and even file it as a DBA (fictitious name); it’s just that they may not be allowed to form a corporation or LLC under the name. Likewise, an LLC’s exact name cannot be used by another LLC in the state. However, a corporation might be allowed to use the name.

Also, state protection of a business name does not prevent another business from incorporating or forming an LLC using the name in states where the existing business owners haven’t registered their company.

Here is a hypothetical example:

Let’s say Jane registered Epiphany Salon and Day Spa, LLC in Ohio. The state will not allow another LLC to register that exact name within its jurisdiction.

However, John can register Epiphany Salon and Day Spa, Inc. in Ohio, and Debbie can register Epiphany Salon and Day Spa, LLC in Kentucky.

Six Steps to Register a Business Name

1. Understand Business Name Restrictions

Every state has its own set of rules regarding what is and is not allowed in business names.

Most states will not allow a business to:

• Use a name that is deceptively similar to another business name on record.
• Use a business name that misleads the public to believe the company provides something it does not.
• Use derivatives or other forms of prohibited words (for example, adding “ing” to the end of a prohibited word or using its plural form, etc.).
• Include a word that implies professional licensing (such as “Engineer,” “Attorney,” or “CPA”) if the business does not have the appropriate license.
• Include business entity identifiers such as “Incorporated,” “Corporation,” “Inc.,” “Limited Liability Company,” or “LLC” as part of the name if the business is not incorporated or an LLC. Similarly, a business that is incorporated or an LLC must include “Corporation,” “Incorporated,” “Limited,” or an abbreviation (e.g., Inc., LLC) as part of its name.
• Use a name that implies it is a governmental unit or municipality (such as a village, city, or borough) when it is not.
• Use a word that implies a company is a government entity (e.g., Federal, United States, etc.).
• Use words like “bank,” “trust,” or “insurance” unless legally authorized to operate as such by the appropriate government agency.

Here’s a list of some of the words that states have banned businesses from using in their names:

• Alabama , Bank, Banking, Banc, Engineer, Engineering, Olympic
• Alaska , Imply a governmental unit, e.g., a city, village, or borough. Anything that misleads about the business’ purpose is not allowed. Vulgar names are not allowed.
• Arizona , Bank, Banker, Banking, Banc, Banco, Deposit, Trust or Trust Company
• Arkansas , Bank, Banker, Banking, Savings, Safe Deposit, Trust, Trustee, Insurance and Credit Union
• California , Bank, Trust, Trustee, Olympic
• Colorado , Bank, Trust, Trustee, Olympic
• Connecticut- Bank, Insurance Company, Trust Company
• District of Columbia , Bank, Banking, Banc, Insurance
• Delaware , Bank, Banking, Banc
• Florida , Bank, Banking, Banc, Insurance
• Georgia , Insurance, Assurance, or Surety. Bank, Credit Union, or Trust require approval from the Department of Banking & Finance. College or University are also prohibited.
• Hawaii , Financial Institution, Bank, Banker, Banking, Banc, Savings Bank, Savings and Loan, Savings Association, Financial Services Loan Company, Credit Union, Trust Company, Intrapacific Bank, International Banking Corporation, or Trust, Olympic, Olympiad, Citius Altius Fortius, Insurance
• Idaho , Bank, Banc, Banking, Engineering, Engineer
• Illinois , Bank, Banking, Insurance
• Indiana , Bank, Banker, Banking, Savings, Safe Deposit, Trust, Trustee, Insurance and Credit Union
• Iowa , Bank, Banker, Banking, Savings, Safe Deposit, Trust, Trustee, Insurance and Credit Union
• Kansas , Bank, Banks, Banking, Banc
• Kentucky , Cooperative
• Louisiana , Bank, Banker, Banking, Savings, Safe Deposit, Trust, Trustee, Building or Loan, Homestead, Insurance, Casualty, Redevelopment Corporation, Electric Cooperative, and Credit Union
• Maine , Savings, Savings Bank, Bank, Banker, Banking, Trust, Trust Company, Trust and Banking Company, Credit Union, the plural of any of these words or any derivatives of these terms.
• Maryland , Bank, Banker, Banking, Savings, Safe Deposit, Trust, Trustee, Insurance and Credit Union
• Massachusetts , Army, Navy, Marine Corps, Coast Guard, Government, PX, GI, Fire, Police, State or Federal
• Michigan , Bank, Banking, Banc, and Insurance
• Minnesota , Bank, Banker, Banking, Savings, Safe Deposit, Trust, Trustee, Insurance and Credit Union
• Mississippi , Bank, Banker, Banking, Savings, Safe Deposit, Trust, Trustee, Insurance and Credit Union
• Missouri , Cooperative, Bank, Insurance Company, and Redevelopment
• Montana , Bank, Banker, Banking
• Nebraska , Bank, Banker, Banking
• Nevada , Insurance, Bank or Trust, Engineer, Engineered, Engineering, Professional Engineer, Registered Engineer or Licensed Engineer
• New Hampshire , Farmers’ Market
• New Jersey , Bank, Banker, Banking
• New Mexico , Bank, Banker, Banking
• New York , Bank, Banker, Banking
• North Carolina , Bank, Banking, Banker, Trust, Farmering, Farm, Farmer, Insurance
• North Dakota , Bank, Banking, Banker, Trust, Farmering, Farm, Farmer, Insurance
• Ohio , Bank, Trust
• Oklahoma , Bank, Banking, Banker, Trust, Farmering, Farm, Farmer, Insurance
• Oregon , Bank, Trust
• Pennsylvania , Bank, Banking, Banker, Trust, Engineering, School, Insurance
• Rhode Island , Bank, Trust
• South Carolina , Bank
• South Dakota , Bank, Banking, Banker
• Tennessee , Mortgage, Bank, Banks, Credit Union, or Trust
• Texas , Check with the state as there are numerous rules and restrictions
• Utah , Bank, Banking, Banker, Trust, Trustee, Credit Union, Savings, Loan, Education, Institution, Institute, University, College, Building
• Vermont , Bank, Insurance: must register with the appropriate department
• Virginia , Trust
• Washington , Bank, Banking, Banker, Trust, Cooperative, or any combination of the words Industrial and Loan, or any combination of any two or more of the words: Building, Savings, Loan, Home, Association and Society
• West Virginia , Engineering, Doctor
• Wisconsin , Insurance, Trust, Bank
• Wyoming , Education, School, College, Banking

Here are some good tips to make sure you don’t break the rules:

1. Check with the Secretary of State’s office about the rules and restrictions for business names. Entrepreneurs can confirm that the business names they would like to use won’t break the rules by visiting the state government’s website and contacting the appropriate state department for more information.
2. Conduct a corporate name search. Even if the desired name doesn’t have any prohibited words and otherwise meets all the requirements, a business will likely not be able to use it if another company selling similar products or services already uses the name. A corporate name search will help identify any existing businesses that use the name.
3. Conduct a trademark search. Companies that intend to conduct business in more than one state should consider doing a trademark search. That will uncover any existing claims (registered trademarks and applications) on the name at the federal level.
4. Enlist the expertise of an attorney to ensure you’ve covered all the bases. For legal guidance about naming a business, entrepreneurs should seek the expertise of an attorney or another qualified professional. While business name and trademark searches provide some preliminary peace of mind that a name is available, it’s helpful to have an expert assess the availability and viability of a business name before applying to register a business.

2. Brainstorm Business Names

Devote some time and energy into deciding on a business name because it’s one of the most valuable marketing and branding assets a company has for differentiating itself from its competitors. Consider generating a list of perhaps a dozen names. Having various options to choose from will help improve the odds that at least one of the names will be available to register. Also, I recommend that business owners give themself a few days before narrowing down their choices to those that will best fit the business. A name that seems clever and appropriate right out of the gate may sound silly later after some additional thought.

Some additional brainstorming tips:

• Poll other people. Show them the list and let them rank the top five.
• Avoid awkward puns and innuendos. This will help avoid mishaps such as naming a building company something like “Rod’s Erections” or a beauty salon “Get Nailed.”
• Think twice before using a personal or town name. Including a sense of localness may work well for a business satisfied with a limited footprint. However, it may not be a good long-term choice for a company that seeks to grow and expand. For example, “Walton’s 5&10” eventually became “Walmart,” and “Dayton Dry Goods Company” is now Target.
• Choose a descriptive name rather than one that’s generic. Sometimes just adding a qualifier to the main name will help make it unique. For example, the name “Speedy” for a digital device repair store will more clearly represent the business if it becomes “Speedy Electronics” or “Speedy Digital Repair.” Adding a qualifier also allows entrepreneurs more options when the name they like is already taken.
• Go short and memorable rather than long. Coke. Pepsi. Both companies have dropped the “cola” identifier from their names over time. If the legal name is long (Coca-Cola Bottling Company, Inc.), filing a DBA for a shorter version of the company name can help make branding success come easier.

3. Choose Your Business Structure

Many factors influence which business entity type will best serve a company and its owners:

• Where the company will conduct business
• Owners’ wish to limit their personal liability for the debts of the business
• Whether the business owner will have a partner or an investor
• The company’s expected earnings and deductions
• Desire to minimize self-employment taxes
• Business goals
• Owners’ tolerance for compliance formalities
• Registration and administrative costs

4. Choose a State for Registering the Business

Generally, entrepreneurs register their businesses in their home state. Or they select a state known for its business-friendly laws and tax environment. Delaware and Nevada are popular choices for business owners who opt for a state other than the one they live in. Larger companies choose Delaware because it has the most developed and flexible corporate statutes in the country and is considered pro-business.  Nevada has also become popular because of its lack of state corporate income tax, franchise tax, and personal income tax. It also has relatively low fees.

The decision of where to form a business entity should not be taken lightly due to the legal and financial implications. The expertise of an attorney and tax professional can help business owners arrive at a choice that will suit their needs and goals.

5. Draft and File Your Articles of Formation

To register a business and its name, entrepreneurs must complete the paperwork required by the state:

• Articles of Incorporation – Articles of incorporation is a form that states require to set up a C Corporation. Each state has an articles of incorporation (or certificate of incorporation) form available via its website of the state agency (usually Secretary of State office) that handles business filings.
• Articles of Organization – Articles of organization is the document states require to form a limited liability company. The articles of organization is a legal document containing important information about the business. The Secretary of State office must approve the document for the LLC to be recognized as a legal entity.

Note: When entrepreneurs have decided on a business name but aren’t quite ready to register their company with the state, they can file to reserve their business name. Doing so protects it temporarily (generally, 30 to 90 days) until the business entity is formed.

6. Request an Employer Identification Number (EIN)

Having an EIN (also known as Federal Tax ID Number) helps establish separation between business owners and businesses.

Getting an EIN is optional for sole proprietors (if they don’t have employees). But if a business registers as a corporation, limited liability company, or a partnership, it’s required by law to have one.

It’s pretty simple to get an EIN online through the IRS website, or CorXec can handle the EIN application process.

Trademark Basics

The United States Patent and Trademark Office (USPTO) grants trademarks, which identify the source of products or services. A trademark can be a word, phrase, design, or symbol (or a combination of any of them) that distinguishes a company from its competitors. The USPTO can grant trademarks on distinctive names, logos, and slogans.

Anyone who owns a trademark has exclusive rights to use the mark; no one else may use it at the state or federal level if their offerings fall into the same category of goods and services.

Although the trademark registration process is more involved than registering a business name with the state, a registered trademark provides exclusive rights to the name in all 50 states. Trademarks have an unlimited lifespan if the business complies with the USPTO’s renewal requirements.

What Can Be Trademarked?

Trademark registration can be granted on distinctive names, logos, and slogans.

A business can seek a trademark for a product name, company name, company logo, or tagline. For example, the name “Nike,” Nike’s swoosh design, and the slogan “Just Do It” are all trademarks owned by Nike to distinguish their products from other athletic companies.

While Nike Inc. may own the mark on a variety of shoes, clothing, sporting goods, etc., in the U.S., there’s also a Nike Machinery Co., LTD in Taiwan that manufactures LED lights and coolant nozzles. Trademarks in the U.S. are not enforceable in other countries. To protect a business name in another country, a trademark needs to be filed with that country in accordance with the laws there.

Benefits of Registering Trademarks

Are you wondering, “Do I need to trademark my business name?” Technically, “No.” There’s no requirement to trademark a company name. So, is your business name a trademark automatically? No, merely using a distinctive company name is not the same as having a registered trademark. Trademark registration provides several legal and competitive advantages.

Reasons why a company should trademark its business name:

• Constructive notice nationwide of the trademark owner’s claim
• Evidence of trademark ownership
• Treble damages (award a prevailing plaintiff up to three times actual or compensatory damages) in some cases of infringement
• The right to use ® in the trademark
• A streamlined process for securing website domains and usernames on social media sites
• Significantly stronger protection than common law “™” trademarks (a.k.a. unregistered), which makes it much easier to recover intellectual property
• Registration can be used as a basis for obtaining registration in foreign countries.
• Registration may be filed with U.S. Customs Service to prevent the importing of foreign goods that infringe on a federally registered trademark

Steps for Registering a Trademark

1. Identify the “basis” for filing. Most U.S. applicants base their application on either their current use of the mark in commerce or their intent to use the mark in commerce in the future.
2. Upload a “standard character” or “special form” drawing of the trademark. The standard character trademark is words only. The special form has some design elements as well.
3. Accurately list goods and services identified with the trademark. Appropriate classifications can be found in the online USPTO Acceptable Identification of Goods and Services Manual.
4. Pay the filing fee. How much does it cost to trademark a business name? The fee of applying for a trademark and maintaining it depends on several factors, including the initial application filing option chosen, how many classes of goods and services the mark is being registered for, and the filing basis.
5. Submit a “specimen.” The filing party may have to provide an example of the trademark in use, such as on a web page or in some other marketing piece.

Things to Know About Filing a Trademark

Realize that incorporating a business doesn’t guarantee that the business’s name will be approved as a trademark. Also, there are 45 different classifications of goods and services to consider when registering. It’s crucial to select carefully because a trademark is only protected against infringement within the classifications for which it was registered and approved.

The sooner the better is when to trademark a business name. The approval process can be slow. Getting a trademark registered and approved can take anywhere from 9 months to several years, depending on the complexity of the desired mark and other existing conflicting marks. Fortunately, the USPTO allows companies to submit an intent-to-use trademark application, which offers brand protection while waiting for trademark approval.

Intent to Use Trademarks

The USPTO’s “intent to use” trademark application allows a business to file a trademark application before actively using the mark in commerce. It’s helpful because it enables a company to protect its name (or slogan, logo, etc.) before it’s ready to launch its products or services. Submitting an intent to use application sets the filing date as the “constructive use” date for establishing nationwide priority.

The USPTO allows six months from the time a business files its intent to use application to when the company puts its mark in use and files its statement of use.

If a business needs more time, it can request an extension. The USPTO can give up to five six-month extensions (up to three years from first filing an intent to use application) if the company can show good cause for the requests.

After You File for Your Trademark

The USPTO will issue a registration number for checking the status of the application. If the agency has questions or needs additional information or documentation, it will contact the applicant.

After the USPTO approves a trademark application, the business granted the trademark must use it consistently and in a high-quality manner. Why? Because poor use by the trademark’s owner could provide the basis for another company to take it away and use it as their own.

Between the fifth and sixth year after a trademark has been registered, the business owning it must file a  “Declaration of Use” to show it is responsibly and consistently using the trademark. Between the ninth and tenth year, the business must file a combined “Declaration of Use (or Excusable Nonuse)” and “Application for Renewal” to continue ownership of the trademark. A company must refile for ownership of its trademark every ten years.

Risks of Relying on Common Law Rights

Businesses do not have to register their trademarks with the USPTO.

If a company creates a logo or name and wants to convey exclusive use of the mark, it can attach the TM symbol, which provides common law rights. By doing so, the mark is considered an unregistered trademark.

While a company is waiting for the USPTO to approve its trademark application, it can use the common law trademark (™) to indicate to other companies that the mark is spoken for.

However, relying on a common law trademark as the sole means of brand protection comes with risks.

Common law trademark rights:

• Depend on who uses the trademark first.
• Can only be enforced in the geographic area where the trademark is used.
• Are difficult to enforce because no public record of the trademark exists.

It can cause issues if a company begins using an unregistered trademark that another business in the area has been using since an earlier date. Also, a business using an unregistered trademark in one area may find it cannot expand its products or services to another geographic location because another company has already claimed common law rights in that market.

Protect Your Business with CorXec

Your business name literally makes a name for your business and plays a significant role in establishing your brand identity. For help protecting that valuable asset, contact us to talk with one of our experienced business filings specialists. We have helped tens of thousands of entrepreneurs register their business names with the state and apply for registered trademarks with the USPTO. We’re here to help you, too!

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