When you own a small business, your name is everything. It's on your website, signs, and marketing materials. It's how customers find and remember you. When another business uses a name that's a lot like yours, customers can get confused. And that's bad for your business.
To make sure your name is yours alone, it's important to be proactive. If you've formed a corporation or an LLC, you have some protections against other companies in your state having the same name. But for brand protection, you may want to register your name as a federal trademark.
Name Protection Provided By Business Entity Registration
When you set up your corporation, LLC, or other business entity, you had to choose a name that was “available" in your state, meaning that it wasn't already being used by another business entity. The requirements for name availability vary from state to state, but, in general, states don't allow two business entities with the same, or almost the same, name. This means that once you have formed your business, your state won't allow another company to be formed with the same name.
However, there are limits to the name protection offered by business entity registration. Your state's business formation laws probably will not protect you against another business that uses a similar, but not identical, name that confuses your customers. For example, if you own “In the Clouds Footwear, Inc.," your state may deem it acceptable for a competitor to form a business called “Cloudz Footwear, Inc."
In many states, business formation laws do not regulate “doing business as" or “dba" names used by sole proprietors, partnerships, or even corporations and LLCs. Thus, your business registration may not stop another entrepreneur from doing business under a name that's similar or even the same as yours.
Using your name in business may give you some trademark protection within your locality. You may be able to use these “common law" trademark rights to stop a competitor from using your name locally. But state business entity registration does not in itself offer any trademark protection, nor does it prevent an identically-named business from setting up shop in a neighboring state.
Register a Trademark for Comprehensive Brand Protection
Federal trademark registration is a more involved process than state entity registration, and is used to protect your brand name nationwide. It paves the way for foreign trademark registrations, allows you to register your mark with U.S. Customs and Border Protection to block imports of infringing goods, and gives you the right to sue for trademark infringement in federal court. Federal registration also creates a public record of your trademark ownership, which can make it easier to prove infringement and deter others from using a name similar to yours.
A registered trademark doesn't just protect you against a business that uses your exact same brand name. It also gives you rights against any business anywhere in the country that uses a brand name that is similar and might confuse customers. Under trademark law, names are “confusingly similar" if they look or sound similar and they are used on related types of products or services.
For example, customers might be confused and think that “Clouds Footwear" and “Cloudz Shoes" were made by the same company. But they probably would not be confused by “Clouds Skydiving School," since skydiving instruction and shoes are not typically sold together.
Federal trademark registration is typically more expensive than forming a business entity, the process takes longer, and the United States Patent and Trademark Office (USPTO) will carefully evaluate your application before deciding whether to register your trademark. The USPTO will not register your trademark if it is confusingly similar to an existing mark or pending trademark application, so it is important to do your own trademark search before filing a trademark application.
Business entity registration may be all you need if you have a local, brick-and-mortar business and you don't plan to expand or offer products or services online. But, if you will be doing business across state lines or actively promoting yourself on the internet—or if you just worry about copycat competitors—you may want to also consider trademark registration.