Business Entity Name, Trade Name and Trademark: What’s the Difference?

Posted by on Jun 26, 2012 in Direct Investment from China, Intellectual Property |

By: Kun Zhao, Esq.

In today’s business climate, recognizable names are extremely valuable. Most businesses are serious about promoting their brands and increasing their publicity. However, many business owners often confuse business entity names and trade names with trademarks. Such concepts are often related but quite different.

Business Entity Names

A business entity name is the legal name registered with the Secretary of State when creating a separate legal entity to operate a business in commerce. One business entity can only have one legal name. When registering a business entity, the Secretary of the State  checks the availability of the legal name for the new entity to make sure that it is distinguishable from the names of other existing business on the records in the office of the Secretary of State. Therefore, the business entity name is a name that identifies a business entity, such as Apple, Inc., Doctor’s Associates, Inc. (owner of Subway franchise) and General Electric Company.

Trade Names

The Secretary of State also allows an individual or business entity to use a name other than its legal name in commerce by registering with the Secretary of State. Such names are called “alternative names,” also known as “trade names.” For example, if one registers a company named ABC, Inc. which operates a seafood restaurant, it would be more appealing to operate the seafood restaurant under the name of “Deep Blue.” If one registers “Deep Blue” with the Secretary of State, then he can use it as the trade name in doing business instead of using “ABC, Inc.” By registering trade names with the Secretary of the State, the public can trace them to ascertain the legal name of the business entity. Therefore, a trade name is basically a substitute of the legal name of a business in commerce.


A trademark is any word, phrase, symbol, design or any combination of those that identifies the source of goods or services. It is often used on goods or services that the business entity provides, such as “GOOGLE” on its digital storage service, “NIKE” on sporting goods, and “Subway, eat fresh” on sandwich wrappers.

Oftentimes business entity names and trade names can be registered as trademarks if they are distinctive and not similar to other trademarks used in the commerce. For example, “Google” may identify Google Inc.’s services for electronic storage of digital media and “Nike” may identify Nike, Inc.’s sporting goods. One business entity can only have one legal name, but can have a number of different trademarks to identify the origin of its products. For example, Google, Inc. owns “YOUTUBE,” “ADWORDS,” “CHROME,” and “G+” to designate various kinds of services.

Business owners should recognize that registering a business entity name or trade name with the Secretary of State does not necessarily mean that one may use the business entity name or trade name freely. The Secretary of the State only makes sure that the business entity name and trade name are distinguishable for the records of existing businesses. However, if there are trademarks out there that are similar or identical to the business entity name or trade name you register, the trademark rights may trump the authorization of use by the Secretary of State.

Therefore, when one chooses and registers a business entity name or trade name, he should take the additional step of ensuring that the name will not infringe any trademark in commerce, especially if he plans on using and registering the business name or trade name as a trademark.

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Importing as a “Finished Goods Kit” Makes a Big Difference

Posted by on May 16, 2012 in International Trade |

By: Kun Zhao, Esq.

On May 26, 2011, the International Trade Commission issued an antidumping duty order and a countervailing duty order against aluminum extrusion products from China (76 FR 30, 650 (May 26, 2011); 76 FR 30, 653 (May 26, 2011), referred to as “the Orders”). The merchandise subject to the Orders includes aluminum extrusions produced and imported in a wide variety of shapes and forms, such as hollow profiles, other solid profiles, pipes, tubes, bars, and rods. Many aluminum products including, but not limited to, drapery rails and rods have drawn the attention of customs officials, who are imposing antidumping and countervailing duties on such products.

Unbeknownst to many importers, the Orders exclude finished goods containing aluminum extrusions that are imported unassembled in “a finished goods kit.” A memorandum from the Department of Commerce dated February 3, 2012 regarding drapery rod kits explained that a finished goods kit is understood to mean a packaged combination of parts that contain, at the time of importation, all of the necessary parts to fully assemble final finished goods and requires no further or fabrication, such as cutting or punching, and is assembled “as is” into a finished product.

The memo further determined that drapery rail kits without including curtains are not a “finished goods kit.” Other memos regarding the scope of the Orders from the Department of Commerce determined that a shower door frames without glass is not a finished good. A retractable awning mechanism kit without textile cover is not a “finished product.”

Thus, the criteria for determining the scope of the exclusion is whether the kits contain all of the necessary parts to fully assemble a final finished good at the time of importation. To ensure that merchandise containing aluminum extrusions is not subject to antidumping and countervailing duty, importers should confirm that:

(1)   The merchandise is packaged in kits and each kit has all necessary parts to fully assemble a final finished good, including non-aluminum parts, such as curtain, glass, textile cover, sheet, etc.; and

(2)   The purchaser order is placed for the kit and not for the parts of the kit; and

(3)   The unit price is offered for each kit and not the breakdown prices for individual parts of the kit; and

(4)   The kit is from one manufacturer or exporting company.

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Right Time to Invest in Commercial Properties in the U.S.?

Posted by on Apr 27, 2012 in Direct Investment from China, Real Estate |

By: Kun Zhao, Esq.

The second annual Chinese Investment in the U.S. Real Estate Forum is scheduled to be held on June 21, 2012 in Los Angeles, California. U.S. real estate professionals will gather there to address the latest trends and opportunities in China-U.S. real estate investments and transactions. Given the current drop in housing prices and a strong and rising RMB, Chinese investors have shown a greater than ever interest in the U.S. real estate market.

Chinese investors are increasingly targeting commercial properties in New York and New Jersey. According to a report, China’s HNA Group, which owns Hainan Airlines, acquired 1180 Avenue of the Americas, a 23-story office building in Manhattan for $265 million, and the luxury Cassa Hotel and Residences near Times Square for $126 million last year. Hong Kong billionaire Cheng Yu-tung’s family also invested in five U.S. luxury hotels in 2011, including Manhattan’s iconic Carlyle, for $570 million.

Chinese investments in New Jersey’s port area have been growing substantially as well. China is the largest source of goods imported through Newark, accounting for 27.8 percent of all goods entering the Port of New York and New Jersey. Chinese investments will continue to grow with the imminent widening of the Panama Canal, the expansion of the New Jersey Terminal, the dredging of New York Harbor and the raising of Bayonne Bridge. All these projects aim to substantially increase the New Jersey’s ports’ capacity to handle more containers. These projects will allow large cargo ships that currently anchor in California to sail directly to New Jersey, which would eliminate the need to deliver goods cross-country via trucking or railway. To Chinese companies, it means that a new distribution center in the east coast will be established.

Resonant with the port expansion in Newark, Chinese companies have invested substantially in in industrial properties near the Port of Newark. According to a real estate newsletter, last November, Sun Taiyang Co. signed a lease for a new 95,542-square-foot industrial facility in Moonachie. Early this year, Asian food distributor, Walong Marketing, renewed its 175,456-square-foot lease at 99 Caven Point Rd. in Jersey City. The facility has served as the company’s east coast distribution center for 10 years and Walong will stay in place for an additional 20 years. Currently, many Chinese companies are seeking to lease warehouses to handle their products. It is anticipated that these companies will need to acquire their own warehouses to accommodate their rapid growth.

The Real Estate Practice Group at Hill Wallack LLP stands ready to handle your real estate issues with the skill and sophistication necessary to achieve the desired results.

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Purchase Money Security Interest-A Useful Recovering Device in International Trade

Posted by on Apr 4, 2012 in Dispute Resolution, International Trade |

By: Kun Zhao, Esq.

In international trade, suppliers of goods often sell on credit to their customers, facing credit risks especially when the customers are experiencing financial difficulties in this economy. Sellers have growing concerns when their customers start to delay payments or even stop payments. How to recover something from the defaulting customer to mitigate the loss is a frequently asked question. The reality is that the delay or failure to pay is often due to the customer’s financial difficulties or even insolvency. If the financially distressed customer files bankruptcy, the seller will probably not receive a recovery, as the customer’s primary lenders normally have earlier-filed security interest in the customer’s assets, including the goods, and therefore have priority in recovery over the seller.

There is a relatively simple protection device that Chinese suppliers have rarely used, called the Purchase Money Security Interest under the Uniform Commercial Code (“UCC”) Article 9 (“PMSI”), which to some extent affords a certain level of protection in securing the seller’s interest in the goods to mitigate the loss if the customer defaults. In some common cases, it could provide Chinese suppliers with superior recovery rights in the goods themselves or the identifiable proceeds from the goods when the customer is insolvent or files bankruptcy. This device is widely used in the sale of large equipment or in a series of sales of goods in inventory for further manufacturing or resale.

A PMSI under UCC §9-103 is defined as a security interest in goods that are taken in collateral to the extent that it secures all or part of the purchase price of the collateral (the goods). In the sale of goods scenario, it is a security interest in collateral created by a seller who secures the obligation to pay the purchase price of goods sold on credit to a customer. A properly perfected PMSI gives the seller of goods on credit with “super priority” in the goods and the identifiable cash proceeds from the goods, trumping other creditors who have a conflicting security interest in the same goods, including those who have earlier-filed security interest in the customer’s assets and inventory in general.

New Jersey and New York have adopted the UCC. The UCC rules for acquiring a PMSI are set out in UCC §9-324. To achieve priority over an earlier-filed security interest in the same goods, the seller and its customer must:

(1)        execute a security agreement, which can be part of the sales agreement. The collateral in the security agreement must relate only to the goods that will be sold to the customer in the future;

(2)        the PMSI must be perfected by filing the appropriate financing statements with the secretary of state or other filing agency in the state where the customer is legally organized when the debtor receives possession of the collateral. In other words, the seller must file the financing statement before the goods are delivered;

(3)        the seller must give written notice to the holder of the conflicting security interest if the holder of that conflicting security interest has filed a financing statement. Any earlier-filed conflicting security interest holder can be found through a UCC filing search at the filing agency in the state;

(4)        This notice must be received by the holder of the other security interest before the debtor receives possession of the purchase-money collateral (the goods), and is valid for a period of five years;

(5)        the notification must state that the person giving the notice has or expects to acquire a purchase money security interest in inventory of the debtor, describing such inventory by item or type.

If sellers have taken proper steps above, they will have priority over earlier, normally superior, security interests that cover the same goods. Sellers will have additional remedies in collecting their receivables, or will have priority to retrieve and resell goods sold on credit for which the customers failed to pay.

Therefore, the PMSI is a valuable tool to help Chinese suppliers in managing credit risks in international trade. It affords Chinese suppliers security rights senior to their customers’ lenders in the goods sold on credit and gives them a better chance to recover at least something rather than nothing.

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House Committee Advances Bill to Assist Capitalization Efforts of Small and Mid-Sized Businesses

Posted by on Feb 28, 2012 in Direct Investment from China |

By Kun Zhao, Esq. On February 16, 2012, the House Financial Services Committee approved the Schumer-Toomey bill, which makes it easier for growing small and mid-sized companies to go public. The measure is aimed to help growing companies raise capital through public markets to spur job creation. The bill would establish an exemption for “emerging growth companies” that have less than $1 billion in annual revenue at the time they register with the SEC for an Initial Public Offering (IPO) and less than $700 million in public float to meet certain SEC compliance requirements for up to five years until they reach the thresholds. These so-called emerging growth companies would be exempted from paying an outside auditor to attest to a company’s internal controls and procedures under Sarbanes-Oxley Act. The bill would allow investors to have access to research reports about emerging growth companies prior to the IPO. It would also permit emerging growth companies to evaluate the possibility of success in a potential offering by allowing some pre-filing communications to institutional investors which are previously prohibited during the so called “quiet period.” The bill also allows filing a registration statement with the SEC on a confidential basis. Under the bill, CEOs and chief financial officers would still be required to be personally liable for the adequacy of the internal controls and procedures that they have certified. A similar bill is pending in the Senate and President Barack Obama has called for Congress to pass it. If passed and signed into law, the bill will ease the compliance obligations for growing companies and substantially reduce the high compliance costs, thereby encouraging small and mid-sized companies to raise capital through public markets.

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