Name your new business with confidence (and avoid costly legal mishaps)
Coca-Cola, Microsoft, and Apple all have iconic names, recognized worldwide. Rather than merely use a descriptive or generic name, these companies choose to invent new words or make unrelated associations. Coca-Cola created its name from two of its ingredients – coca leaves and kola nuts (the caffeine source). They changed the “k” in kola to “c” and combined them with a hyphen. In 1975, Bill Gates and his business partner Paul Allen invented the word “Microsoft” from two known words relevant to their industry – microcomputers and software. In 1976, Steve Jobs chose a completely unrelated word – Apple – to build the most valuable company in the world. At the time, microcomputers had not hit mainstream use and they intimidated many mainstream consumers. Jobs felt the name “Apple” would be more approachable to everyday users as opposed to names like “International Business Machines” (known today as IBM). Jobs was right.
Using these business giants as our guide, here are three powerful ways to name your new company:
Create a new word from two key ingredients or components in your product or services. This is the Coco-Cola approach.
Create a new word from two key attributes relevant to your industry. This is the Microsoft approach.
Pick a business name unrelated to your products and services or to your industry, but which reflects an intended sentiment (i.e., approachable). This is the Apple approach.
Under trademark law, made-up words like Coca-Cola and Microsoft are considered “fanciful.” And words completely unrelated to your business or industry are considered “arbitrary.” Fanciful and arbitrary words receive the greatest trademark protection. They also take more time and money to build brand recognition in your market because their meanings are not readily apparent to your customers. In contrast, generic words (i.e., naming your soda manufacturing business “Soda”) receive no protection and descriptive business names (i.e., naming your ice cream business “Cold and Creamy”) receive little protection. Additionally, other businesses in your market likely already use the descriptive and generic names you might consider because they’re easy. So, avoid descriptive and generic.
After you settle on a desired business name, you'll want it protected. Here are two key steps to protecting your new business name:
First, make sure your business name can receive trademark protection. As discussed, avoid generic and merely descriptive words. Instead, use one of the three approaches discussed above to create a powerful business name, that trademark law can stand behind.
Second, verify no other business with similar products or services uses your desired name. Trademark law prohibits you from confusing consumers by operating under a business name like another business in the same market. These laws recognize that a business invests substantial sums building brand recognition in a given market. Without trademark protection, new businesses could simply misappropriate the goodwill of an established business by selecting a similar name and making customers think their new business is somehow associated with the existing one.
Here are three quick verification steps:
Perform a Google search for your desired name. Review the search results for businesses with similar names selling similar products and services. Delta faucets, for example, can exist in the same market as Delta Airlines because they sell completely different products and services. In contrast, trademark law would likely prevent a shoe company from using the business name Nuke because it’s deceptively like Nike.
Search the United States Patent & Trademark Office database. This will pull up registered marks. Keep in mind, registration is not a requirement for ownership. A business acquires trademark rights to its name by using it in the marketplace, regardless of whether the business has sought registration. Go to https://www.uspto.gov/trademarks/search. Then click on the button “Search our trademark database (TESS)”. We like to use the second search option, “Word and/or Design Mark Search (Structured).” If your desired business name is two or more words, use the first word as the first Search Term and the second word as the second Search Term. Otherwise, just fill in the first Search Term. In both fields, select “non-punctuated word mark” and then change the operator from “OR” to “AND” and then “Submit Query.” This will pull up similar registered marks or marks that have applied for registration. Be sure to dig into some of the files and review any office actions issued by the trademark office for additional insight.
Finally, consider engaging a trademark attorney to perform a comprehensive trademark analysis. An experienced trademark attorney will not only perform the searches above but will also review trade journals and other sources for potentially conflicting business names.
Third and finally, consider registering your business name as a trademark under federal and state law. If your business will only operate within the geographic borders of a single state (and has no customers traveling from other states), then you likely can only register for a state trademark. Federal trademark registration requires you to have used your mark “in interstate commerce”, meaning between state lines. State registration still offers a lot of benefits, like additional recourse against other businesses who infringe on your rights. Most states have an online process available through their Secretary of State’s website for registering a trademark. If you do operate your business in multiple states or sell products or services across state lines, then you're likely eligible for federal registration. Visit the United States Patent and Trademark Office’s website for detailed steps on obtaining a federal registration. And consider engaging an experienced trademark attorney to avoid any mistakes and to maximize your protection.
A final note about forming your new business. For purposes of this article, we’ll assume you will form a limited liability company (a.k.a. LLC). You’ll form your LLC on the Secretary of State’s website by filing Articles of Organization. In most states, this means filling out an online form. The Secretary of State will ask you to choose a business name. If the Secretary of State approves your name, this does not give you ownership rights to the name. Although the Secretary of State will perform a name review, it only reviews your name to: (a) make sure it complies with its rules (no obscene words, no more than 80 characters, etc.) and (b) verify your name is not nearly identical to another name in its database. The “nearly identical” standard ensures that consumers who wish to file lawsuits against your newly formed business aren’t confused about who to sue. It’s not a trademark analysis.
A second final note on naming your business. A few business owners choose to name their business XYZ Enterprises, LLC or something similar and then apply to “do business as” (DBA) under a different brand name. The Walt Disney Company, for example, does business as just Disney. If you chose to use a DBA name, then you’ll need to file a separate tradename application with your local city or county, based on the local rules.
There you have it. Three powerful ways to create a name for your new business, three key steps to protect your business name and three quick name verification steps. Now, you’re ready to name your business and protect its value!
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