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A Better Partnership

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Nov 2001
01
November 01, 2001

Trademarks: What's in a Name?

Very often, quite a bit. Like proud parents choosing the name for their new baby, most companies and entrepreneurs think long and hard about what name to give their new business or their new product or service. However, what many businesses fail to do is have the name they want thoroughly checked to ensure it does not infringe any rights owned by another, such as trade name (the name under which a company conducts business or is commonly known) or trademark (words, letters, logos or other symbols that allow customers to identify the source of a product or service) rights.

This can lead to disaster! Think of how devastating it would be to your business to spend several years investing all your time and effort in building your recognition and reputation under a name, only to be forced later to change that name, thus losing virtually all of the goodwill you had gained. That is what can, and often does, happen when a business adopts a name without thoroughly checking it first. So, what do you do to prevent that from happening to you?

  1. Have a Search Done. The best protection is to have a full trademark search conducted for you by a knowledgeable attorney before you adopt a name for your business or any particular product or service. (This can even be helpful for names you have already adopted, so that you know what potential pitfalls may be awaiting you.) Such a search will include not only registered trademarks, but also unregistered or "common law" trademarks. "Common law" trademark rights are created by using a name to sell the products or services. These rights exist without any registration. Since the name of a business is almost always used to identify the business's products or services, almost all business names also function as trademarks. That means virtually every business has at least one trademark.

    Many businesses (and attorneys) mistakenly believe that if they are allowed to incorporate under or reserve a corporate name, the name is free and clear to use. Quite the contrary, the state of Michigan, and most other states, will allow a business to be formed under any name so long as it is not the exact same name of an existing corporation, LLC or other entity registered in Michigan or that state and does not consider at all whether the name violates any federal or common law trademark rights. So, while the state of Michigan or some other state might allow you to incorporate under the name Microsoft of Michigan, Inc., federal trademark law, and Bill Gates, will not.

    To be a conflict, the name does not have to be an exact match with the trademark nor do the businesses or products or services have to be identical. A name and its corresponding business have to be only close enough that customers are likely to be confused that one business is the other or believe that one business or its products or services are sponsored, authorized, licensed, or otherwise connected to the other. In other words, using the name MICROSOFTENER for retail computer stores would be a trademark infringement problem even though Microsoft does not operate its own retail outlets. So, search first, and you won't have to ask questions later.

  2. Ensure Your Right to Expand by Registering. While simply using your name may give you common law rights, these rights are limited to the geographic area where the products and services are sold and distributed. If your business is currently local or regional, you could be precluded from later using your name in other areas of the country if other businesses use the name there first. However, you can protect your ability to expand throughout the country by getting a federal trademark registration for your name. A federal registration gives the name owner rights throughout the entire United States as of the date the application was filed.

    Another advantage of registration is that it makes your name more likely to be discovered by others conducting name searches, and, as a result, will discourage others from using that name. A further benefit is that a federal trademark application can be filed on an "intent-to-use" basis before any use of the name has ever begun. Thus, you can take steps to lock up rights in a name nationwide before you actually begin conducting any business under the name. Finally, federal registration gives additional benefits regarding proof of ownership and monetary recovery if the mark ever needs to be enforced against infringement by others.

In summary, a rose by any other name may still smell as sweet, but a business that is forced to change to another name will lose recognition, customers and profits. These headaches can and should be avoided by having the name fully searched before it is adopted and filing a federal trademark application, when appropriate, to ensure the right to expand.

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R. Scott Keller is a partner specializing in trademark law with Warner Norcross & Judd LLP. Warner Norcross & Judd is a full-service law firm with offices in Grand Rapids, Holland, Metro Detroit and Muskegon. Scott may be reached in the Grand Rapids office at 616.752.2479. Because each business situation is different, this information is intended for general information purposes only and is not intended to provide legal advice.

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