What's In A Name?

Attorneys: Schoumacher, Bruce H.

Related Practices: Corporate/Commercial    Trademarks

Related Industries: Construction

 

Fall 2013

The trade name of a design professional or contractor can be important for developing new business. For example, an architect, engineer or contractor may want a name that grabs attention, is easy to remember, or describes the nature of the business.

A design professional or contractor should pay careful attention to the trade name he or she will use when starting a business. In most states, when a corporation or limited liability company is formed, the organizer selects a trade name and files the appropriate paperwork with the state government agency. When reviewing the paperwork for formation of a corporation or limited liability company, most state agencies do not look to see whether the name selected by the organizer could be confused with another trade name.

An architect, for example, may incorporate a business using the name “Mary Smith and Associates, Inc.” After the corporation is formed, a new corporation may be started by somebody with the same or similar name. For example, a second Mary Smith may come along and form a corporation as “Mary Smith, Architect.”

Obviously, both Mary Smiths may be concerned that the use of the same name may confuse the public and hurt the business of one or both. Ordinarily, when an attorney files paperwork with the state to form a corporation or limited liability company, they do not check trade names for possible confusion. However, more attorneys are recommending that their clients do so.

Once the business is legally formed, then the owners should protect their business name, especially if it is unique. Trade names can be protected by either applying for a state or federal trademark. However, the business owner should consult an attorney experienced with trademarks to determine whether a trade name may be protected under either federal or state trade mark law. In addition, many businesses have websites and their domain name should be registered with the proper domain name registration service.

Not only is it important to try to avoid using a confusing trade name when you start a business, but you also should be aware that trade name confusion can result when you move into new markets. For example, an engineering firm in one city had a trade name which it had actively used in its immediate geographic area. It then established an office in another city a few states away from its home. In the new city, another engineering firm used exactly the same trade name. To avoid confusion among consumers, the engineering firm which had entered the new city decided to adopt a completely different trade name. It retained a consultant to advise it on selection of a new trade name, which was relatively unique. Then, to protect the trade name, it registered it as a federal trademark.

Obviously, if a company has been in business for a number of years, it should take steps to protect its trade name if newer companies use the same or a similar name. The first user of the trade name must register it. Otherwise, it may lose exclusivity in its market and may have to resort to litigation. However, such disputes frequently can be resolved amicably between both parties.

We have only discussed some of the issues which may arise with adoption of a trade name. The organizers of any new company should talk to an attorney working in the trademark and trade name area to be sure it adopts a trade name which will not infringe the name of a potential competitor. They also should talk to the attorneys about the steps they can take to protect their name.

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Reprinted with permission from Business Development Helping AEC Firms Win New Business, Volume 1, Issue 1, October 2013.

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