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.
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.