the name game
What’s in a name? In business, basically everything. So when it’s time to select your business name, do it carefully, keeping in mind the rights of others. This is the surest way to avoid receiving that dreaded cease-and-desist letter advising that you do not have the legal right to use your trade name.
The first step in this name game is to make sure that the name you have chosen is legally protectable. Keeping in mind that the purpose of a tradename is to distinguish your products or services from those of others, only those names and related logos or “marks” which are “distinctive”, rather than merely generic or descriptive, qualify for legal protection. For example, “The Yoga Studio” or “The Yoga Teacher” are not legally protectable, as they are both generic and descriptive and would not serve to distinguish you from another yoga studio or teacher.
Once you have selected a trade name that is distinctive enough to warrant protection, the next step is to determine whether anyone else owns that name. The fact that “your” name has not been formally trademarked however, does not necessarily mean that the name is available. Unlike other countries where ownership of a trade name is based on the date of registration of such trade name with the official registering agencies, ownership of a trade name in the United States is based on the date of the first use of such trade name in interstate commerce. In other words, the first person to use a “distinctive” trade name or trademark in interstate commerce is the legal owner of such trade name or trademark, whether or not they registered for formal federal or state trademark protection. Registration of the servicemark or trademark with the federal and state trademarking agencies does not determine ownership. Rather, ownership is based on timing, or as lawyers are known to say, “first in time, first in right”.
The rights of the first user of a trade name, whether or not it is registered with the United States Patent and Trademark Office and/or any state registration agencies, are powerful. Specifically, if the first user is actually using the name, s/he can legally require a subsequent user of the same or any confusingly similar name and/or mark to “cease and desist” from using such name or mark. With this fear in mind, larger companies have been known to spend enormous sums reviewing telephone directories in every small town across the country to assure themselves that no one is operating under their intended trade name before they invest their dollars in branding.
While reviewing every telephone directory across the country is probably not necessary for the small yoga business owner, it is important to search additional databases to determine whether someone might be using the name, but has chosen not to register for formal trademark status. There are a number of services that offer trademark availability searches at costs ranging from a few hundred to several hundred dollars. In the alternative, you can, in many cases, undertake this search yourself. The United States Patent and Trademark Office website, uspto.gov, allows you to review all federal trademark registrations and applications. Additional databases include Google and the Secretary of State’s Office for those states in which you intend to do your yoga business, insuring that no one has formed a corporation or other entity in such states using your intended name. (The mere fact that you might be able to form a corporation under your desired name does not mean that you then own the name. A prior user can still require you to legally change your corporate name.)
Once you have established that the name is available, it is important to use the name in connection with the operation of your business in interstate commerce. This means that you must put the name out to the public by some means that crosses state lines. This would include selling or advertising your goods or services in other states.
As mentioned above, federal trademark protection is not a prerequisite to use or ownership of a trade name. However, there are certain advantages to federal registration: the possibility of obtaining attorneys fees if someone infringes on your registered trademark and the right to use the ® symbol, which is intended to put all would-be infringers on notice of your rights.
Because your trade name might ultimately become one of the most valuable assets of your business, the time and money spent to insure that you have the right to claim that name as your own is time well-spent. Furthermore, and because it is always possible that a prior user might appear notwithstanding your diligence, consulting with legal counsel is always the ounce of prevention precluding the need for a pound of cure.
This article is intended to present an overview. Readers should always consult with legal counsel regarding their particular legal issues.
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