Could the name of your new business cost you money? Keep your corporate name unregistered and it just might.
Imagine this: you've chosen the perfect name for your brand new widget business. You've made the name easy to say, hard to forget, and you've checked databases everywhere to make sure that nobody else thought of it first. You've invested vast sums of money in marketing materials and storefront signs. Best of all, you've already impressed new widget customers with your amazing services and they are spreading the word that your business—yes, the one with your fabulously unique name—is the place to go for all their widget needs, bar none.
Then picture this: shortly after your widget shop opens for business, you learn that a guy two blocks over is using the same name, for a strikingly similar widget business. That's your name hanging in his window, by God! Customers are getting confused. Your business begins to drop off and you suspect the other widget guy is getting the customers who were looking for you.
Is this nightmare scenario possible?
Sadly, yes—but only if you don't know how to protect your corporate name properly.
The first thing a new business owner must do is register the name of the new corporation. The procedure for registration varies by state, but generally involves submitting some very simple paperwork to the Secretary of State's office, along with a small fee. The Secretary of State's office will not register two businesses with the same name, preventing later businesses from incorporating in your state under your corporate name. Registration with the Secretary of State's office will also legitimize the corporate identity of your business as a legal entity separate from its founders, and will provide evidence to demonstrate that the name is being used in commerce.
Be aware, however, that a business can incorporate in any of the fifty states, so registering your business in your own state provides only partial protection of your corporate name. To provide greater protection, it is necessary to register the name as a trademark or service mark with the United States Patent and Trademark Office (USPTO).
Registering your new business name with the USPTO provides nationwide notice of your claim to the name as a trademark. Additionally, it invokes the jurisdiction of the federal courts in protecting the name. You can apply to register a new business name as a trademark with LegalZoom. The processing of your application with the USPTO may take more than a year, so this application should be filed as soon as possible. Status of your application may be checked online.
You do not need to wait until your trademark is nationally registered to begin protecting your right to it, however. When using your business name on marketing materials or other written matter, you can demonstrate your claim to the name as a trademark by adding a "TM" at the end. This provides notice that you consider the name to be proprietary and should not be "borrowed" by others. Once you register your business name nationally with the USPTO Office, your name receives the greatest possible protection. You may demonstrate this by including "®" at the end of your business name.
Once you have registered with the USPTO, you must file periodic maintenance documents to prove that the name remains in use and renew your registration. If you cease use of the mark for a period of years, or if you fail to file any of the required maintenance documents on time, you will lose your federal registration and the considerable benefits that go with it.
Next comes the business of "policing" your trademark. Online research and investigation within your own industry determines whether your trademarked business name is being used by others in the same or similar business that might cause customer confusion as to your business identity. In that event, a judicious letter often dissuades the newcomer from using the business name. If a letter is ineffective, the matter may need to be resolved through litigation.
The founding of a new business is a busy time, but don't wait to protect your new business name against infringement. Register with the USPTO and prevent customer confusion. Retain the good will that customers have come to associate with your company's name and first class widgets.
This article was updated in March 2012.