In my work as an M&A Broker and Business Valuation Expert, I’ve noticed that many business owners don’t understand how their trade names are protected. San Jose attorney David Burgess recently wrote an article addressing common fallacies in this area, which I felt compelled to pass along …
5 FALLACIES ABOUT PROTECTING YOUR BUSINESS NAME
by David C. Burgess, Esq.
You have worked hard to choose the perfect name for your business. You want to be sure you are entitled to use the name. You also want to prevent competitors from using the same name.
This is one area where a little knowledge is a dangerous thing. Following are some frequent misconceptions:
Fallacy #1: Even though my company’s name is similar to another company’s name, I spell mine differently, so I’m in the clear.
Your business name will be in violation if it is confusingly similar to the name of another business. Among the factors considered is whether the sight, sound, or meaning of the two names is similar. Starting a new beverage company and calling it Pep$i or Pepsee will not work.
Fallacy #2: Since I got the domain name I wanted for my business, the business name is mine.
Not necessarily true. Obtaining a domain name does not defeat the rights of someone who has been previously using the name for their business. In fact, the prior user may be able to force you to give up the domain name.
Fallacy #3: I successfully filed a fictitious business name statement (DBA), so I own all rights to the name.
There is a rebuttable presumption that the first person to file a DBA has the exclusive right to use the name. But a DBA filing has several limitations:
• DBAs are filed on a county-by-county basis, so any protection only extends to the county in which you file the DBA.
• Even if you are the first one to file a DBA in a county, another business that can prove it has previously used the same (or a confusingly similar) name in that county can stop you from using your business name.
• A county normally will accept any DBA form that is properly completed and will not reject a statement even if a DBA for the same or a similar name has been previously filed in that county. So, before filing a DBA, you should search the county records to see whether a conflicting name is already on file.
Fallacy #4: The California Secretary of State (SOS) approved my Articles of Incorporation, so no one else can use the name of my corporation.
The SOS will accept a corporate name so long as it is not the same as or deceptively similar to the name of an existing California corporation or a foreign corporation qualified to do business in California, and the name is not misleading to the public. The SOS does not check corporate names against:
• Names of other kinds of entities on file in California, such as limited liability companies (LLCs) or limited partnerships.
• Names of corporations or other entities filed in other states.
• Federal or state trademark or service mark registrations.
• DBA filings.
Having your corporate Articles filed simply means that no other corporation can register with the California SOS using the same or a similar name. It gives you no rights to the name beyond that.
Fallacy #5: I filed a federal trademark for my business name, so I have absolute rights to the name, at least in the United States.
Registering a trademark creates the presumption that you own the mark. Registration confers a number of other benefits, including the ability to bring an action concerning the mark in federal court and obtain certain kinds of damages. But rights to a business name ultimately belong to the first person to use the name, whether or not that person ever registered it as a trademark. While federal registration is advantageous, it is not definitive.
Choosing and protecting your business name is a complex matter. It is important to consult with a qualified professional up front to avoid inconvenient and expensive disputes later.
For further information David C. Burgess, Esq. can be contacted at firstname.lastname@example.org.