ORIGINALLY POSTED BY PETER C. LEMIRE ON JUNE 15, 2005
The Incestuous Love Triangle of Entity Names, Trade Names and Trademarks – How to Avoid Being Caught With Your Pants Down
(Part I)
“What is in a name”
“A Rose by any other name would smell as sweet”
Juliet from Shakespeare’s Romeo and Juliet
“What is in a name?” the lovesick Juliet ponders as she gazes out her window. Would a rose really have the same appeal if it was named “Stinky Plant”? In today’s society, recognizable names can be worth a lot of money. For example, in a recently announced deal, guitar giant Gibson Guitar Corporation agreed to pay $14 million for the naming rights to Universal Studio’s Universal Ampathearter. Likewise, entrepreneurs often place great time effort and value in the name that they choose for their company, or trade name that they operate under. Although most business people place great value in the names of their companies, very few actually go through the process that are required to ensure they will have the right to operate under their chosen name. This is the first in a series of entries that briefly examine the interplay between state business registrations (trade names, corporate and LLC names) and federal and state trademark rights, and how a business owner can steer clear from being prevented from using their corporate name in commerce.
Entity Names
When I speak of business entity names, I am referring to the name registered with the Colorado Secretary of State during the process of creating a separate legal entity to operate a business in commerce. Specific examples of business entities include corporations, limited liability companies and certain registered partnerships. All of these entities contain some sort of liability protection that shields some or all of its owners personally from the obligations and liabilities of the company. Currently, in Colorado the Secretary of State will register a name as long as it is not identical to a name already in the data base. The important thing to note is that the state does not conduct any substantive evaluation whatsoever as to the legitimacy or legality of the company’s use of the name in commerce. Therefore, the Secretary of State’s acceptance of the name is not an affirmation or endorsement of the company’s right to use the name in commerce or under some other theory of law. Furthermore, it does not inherently grant the right to prevent some other company from using the same or similar name to describe their company, products, or services. Therefore, a corporation with the name of XYZ, Inc. could be prevented from using that name if another company or individual has a prior or better right (i.e. trademark rights) to the use of the term XYZ in commerce. This could happen even if the other company is out of state and doesn’t do business in Colorado. Likewise, just strictly looking at the law surrounding entity names, our friends at XYZ, Inc. could not prevent the use of XYZ, Corp., XYZ Incorporated, X.Y.Z., Inc. or XYZ, LLC form being used as a company name by another party – even a direct competitor.
In part II of the series we will examine trade names, trade marks and some strategies business owners can use to protect their company names and avoid being caught with their pants down sometime in the future after they have invested time and money in creating consumer awareness and brand recognition.
