• Chris McCauley, CPA, Esq.

The 3 Questions An Entrepreneur Must Ask Before Choosing A Business Name

Updated: Jul 21, 2019



Choosing a business name is a huge decision. Think about it.

A business name alone could drive potential customers away, simply because they don't know what you're offering (and confusion leads to inaction), or in some cases, your name could even be offensive in some cultures, which would then put your business squarely in the sights of the court of public opinion.

Or worse...

You could spend a lot of time, money and energy to develop a good reputation behind your business name, only to find out that because didn't protect your name, other people are now using your name without your permission to make money, OR you find out someone else has a similar name, and they send you a cease and desist letter, encouraging you to change your name or face legal action.

With all these things to consider, you may be wondering, "what should I keep in mind as I go through my name selection process?" There's a long list of considerations, but there are 3 main questions you should be asking before choosing a business name.

Question 1: Is Your Business Name Available?

Although this question seems like a no-brainer, there are numerous court cases that prove otherwise, so the lesson here is to search, search and search.

Assuming you've put a list of potential business names together, the next best thing to do is find out if someone is using the same or similar name in the market.

One thing to remember, however, is that similarity isn't limited to just the appearance. You'll also want to see if there are other names that sound the same despite different spelling (such as "fun and "phun"), have the same meaning (such as "oso" and "bear," where oso means bear in Spanish), and overall commercial impression (such as "Toys 'R' Us" and "Car 'R' Us").

Failure to recognize these nuances can put your business at risk of being named in a trademark infringement or dilution lawsuit or paying a significant amount of money to rebrand.

You can begin your search on the United State Patent an Trademark Office (USPTO)'s database, which you can find here, and work your way through basic search engines, such as Google or DuckDuckGo, and state trademark databases, to make sure no one is using your business name or a similar business name.

Business Name Search

Although searching for business names isn't required under any law, I highly encourage you search to make sure no other names conflict with the one you're eyeing.

Once you’ve checked the USPTO's database and search engines, you’ll want to check your state’s trademark register. As a backup to the trademark register, you’ll also want to check your state’s corporate name database to make sure there are no LLCs, partnerships, nonprofits or corporations with a business name that's the same or similar as yours. (For more information on state trademark laws and registration, click here.)

After you check your the USPTO and state trademark databases and basic search engines, you'll start to gather an idea on the names you can use, might be able to use and can't use at all. If you find someone using the name you want, and you still want to use yours, you may still be able to use your desired name, but you'll want to check with a local attorney for on potential implications on going forward with that name.

Assuming your name is available, the next step is to find out if you can register your business name for trademark protection.

Question 2: Can You Get Trademark Protection for Your Business Name?

Although your business may not be up and running just yet, imagine the amount of time, energy and money you will need to spend in order to:

  1. get your business name out in front of the public,

  2. gain the trust of prospective customers and

  3. persuade them to give you their hard-earned money.

After you do all of that work, it would be a shame to allow someone else make use of all the goodwill you've generated for your business for their own financial gain. Right?

Fortunately, states and the federal government put in place trademark laws to help prevent the unfair usage of someone's brand and related goodwill.

Trademarks

Trademarks (or service marks for services) are words, phrases, names, symbols or any combination of those used to identify the origin of goods and services and distinguish one seller of goods or service provider from another one.

Popular trademarks include Google®, Apple® and Nike®, and with each one of these names, you probably already have an image in your head about their products, services and reputation. Those images are evidence of powerful branding. Compare those images with a name like Comcast or Time Warner Cable. Different thoughts, right?

So once you choose your own business name, and choose to market goods and services under that name, that name will become your trademark, which will help customers identify the origin of your goods and services.

The better the goods or services offered under your trademark, the stronger your trademark becomes, and over time, your trademark will start to develop a reputation in the minds of consumers. So in the future, when they hear or see your business's name, they'll hopefully think of things like trust, reliability, cool or innovative.

Once consumers begin to associate a positive image with your trademark, you'll want to protect your name from opportunists that will try to leverage your name to sell goods and/or services different from your but under your name and reputation.

As an example of what opportunists do, think for a second of how quickly you could sell cheap t-shirts you made at home with a Nike® logo on it? Now, imagine someone doing something similar but with your business's name on it. This activity, i.e. trademark infringement, is one of several activities we want to prevent from happening to you.

When infringement happens, the strength of your trademark and any positive reputation associated with it can be watered down or completely dissolved. As a result, the image of high quality work associated with your trademark could very easily become an image of shoddiness - all because someone else used your trademark to sell inferior goods and services.

To reduce the chances of infringement and give you a way to punish infringers, both federal and state governments offer trademark protection.

Trademark Protection

As a trademark owner, you may make use of state or federal (or both) trademark laws to protect your trademark. State laws provided initial protection until federal laws came out in 1946. Since the introduction of federal trademark laws, state laws have been slightly overshadowed because of how extensive federal laws are today.

State vs. Federal Trademark Protection

One of the main differences between state and federal trademark laws is that you don't have to register for state trademark protection for state law protection. You'll automatically receive some protection developed through the court system. That means if you are using a trademark that is not functional to a product and will distinguish your product from other sellers, state law will protect your trademark by default. For full statewide protection, however, you can register your trademark with your state in a similar manner as you would with the USPTO. (For more information about state trademarks, check out the link here.)

While state law may have been very useful for businesses before the arrival and availability of the Internet, state law doesn't provide as much coverage nowadays since a lot of businesses indirectly market and sell their goods and services across state lines through the Internet. As a result, federal trademark registration may align better with your long-term strategy.

Benefits of Federal Trademark Registration

A lot of benefits come with registering your trademark with the USPTO, however. Federal registration provides the public with constructive notice that you are claiming a particular mark. As the registrant, you will be presumed to be the legal owner of the mark throughout the U.S., and you'll have exclusive right to use the mark with the goods or services that you've attributed to the mark in your application.

As you can see, a federally registered trademark can provide your business with a valuable asset, and with this much value given, there's a catch, and your trademark must meet certain requirements before it can be registered with the USPTO.

Getting Trademark Protection

In order for a trademark to be eligible for federal trademark protection, the mark must be distinctive. That means it must capable of identifying a specific source for a product or service. When making this distinction, the courts will (i) look to see if the mark fits within one of four categories and (ii) review the marks relationship with the underlying product or service. Those 4 categories are:

  • generic,

  • descriptive,

  • suggestive and

  • arbitrary or fanciful.

A detail explanation of each of these categories is well beyond the scope of this blog, but I'll touch on them briefly, starting with the category consisting of the most distinctive marks.

Arbitrary of Fanciful

An arbitrary or fanciful mark is a mark that bears no logical relationship to the underlying product or service. A perfect example of this is Google®, Nike® and Apple® and their related products, a search engine, athletic gear and computer products. By their very nature, arbitrary or fanciful marks are inherently distinctive and are afforded the most protection.

Of the three examples, Nike® and Apple® are considered arbitrary and Google® is fanciful. Fanciful marks are generally words made up by their owners. In contract, arbitrary marks are words that can be found in common usage, but they have been applied in an arbitrary way.

Suggestive

Suggestive marks require whoever hears or reads it to use his or her imagination to determine the nature of the good or service. An example of suggestive marks is Yeti®. If you're familiar with the tale of the yeti, you may imagine a product that has something to do with the cold since the yeti has been rumored to roam the Himalayas. Yeti® is known for manufacturing coolers for keeping food and drinks cold.

Similar to arbitrary and fanciful marks, suggestive marks are considered to be inherently distinctive and eligible for trademark protection.

Descriptive

Unlike a suggestive mark, descriptive marks do exactly that: describe the underlying product or service. Descriptive marks may describe a function, quality, characteristic, ingredient or other feature of a product or service.

With descriptive marks, you can probably imagine an issue arising when it comes trademarks. People sell the same thing all the time, so couldn't two sellers of the same product want to use the same marks to describe those products.

For example, if you had several apple farmers that sold apples, and one wanted to start selling apples under the brand name "Sweet 'n' Shiny," the USPTO may have an issue with such a name because it is merely descriptive. Granting exclusive rights to use "Sweet 'n' Shiny may prevent other apple farmers from being able to use the same words to describe their fruit too.

The only way a descriptive mark will receive protection is if it has acquired a secondary meaning within the public space. This means that when a consumer hears or reads the descriptive mark they can tell it comes from a single source.

When courts are looking at descriptive marks for the presence of a secondary meaning, they will consider several factors, such as:

  • direct consumer testimony,

  • length of use of the mark,

  • the manner in which the mark is used,

  • media coverage about the product or service,

  • consumer studies, and

  • established place in the market.

Descriptive marks are not inherently distinctive, but may gain distinctiveness over time, and when it does, it can become eligible for trademark protection.

Generic

Lastly, we have generic marks, which are marks that are commonly and regularly used as a name or description for a product or service. Generic marks are not inherently distinctive and will not receive protection at all. Examples are "Light Beer," "Coffee Shop," and "Grocery Store." So you could spend a lot of money and effort on a generic name, but no court is going to permit you to remove a commonly used term away from competitors.

Generic marks are different from descriptive marks in that generic marks connote the basic nature of the product or service whereas descriptive marks describe a quality, function or characteristic. A straightforward example is "Light Beer" and "ULTRA® Light Beer." The former describes the basic nature of a particular type of beer. This is why many beer brands can offer "light beer." Compare this with Michelob's ULTRA® Light Beer, where ULTRA® describes the type of light beer.

Hints for Choosing an Awesome Name that Can Be Trademarked

Make it standout.

While this hint is easier said than done, you can spend a few days thinking about a name that will work for your business. It will need to stick in the minds’ of your prospective customers, and be easy for them to tell other people - that also means easy to spell and say.

Avoid names pertaining to locations.

First, trying to trademark the name of a city with a good or service is difficult. If you wanted to be San Francisco Ice Cream, trademark protection will most likely be declined, at least initially. Second, what if you wanted to open a store in San Jose? Using a city or other type of geographical identifier may limit your ability to grow in certain markets.

Don’t restrict yourself for future product lines.

If you plan to offer a million products under a single name, you don’t want to trap yourself under one name. For example, if you were a technology company, you wouldn’t want to be called InSoftware when you think you might also sell hardware, recliners or something else unrelated someday.

Try to choose a name that’s appealing, catchy and simple.

Your name should be easy for customers to repeat and read. While supercalifragilisticexpialidocious sounds awesome and it's catchy, no customer would want to have to repeat it over and over to friends and family.

Ask for feedback.

Once you think you have the perfect name, ask around. Ask friends, prospective customers and suppliers. See what they have to say about it.

Question 3: Is Your Domain Name Available?

Now that we're heading into the home stretch of this blog, I would be remiss if I don't talk about websites and domain names.

Today, if you’re running a business of any kind, you have to have an Internet presence in order to compete. And yes, this Internet presence must go beyond Facebook, Instagram and Twitter. This means you need your own website, and having your own website means having your own domain name.

So once you've determined your business name is available and there's a good chance it could be protected and registered under federal trademark laws, you'll then want to see if a domain name you like is available.

As a side note, I ran into an issue with the name of my own firm. Since "mccauley.com" was taken, I had to come up with an alternative name, such as "joinmccauley.com." If your first choice is also taken, you may consider including verbs like "get," "buy," "join" or "hire" in your domain name.

To check to see the availability of your preferred domain name, simply type it in your URL bar, and see if it returns a website with an actual business, a placeholder page or something like "this site can't be reached." Examples of the URL bar are in the images below:



While the ideal situation for you may be the availability of a domain name that matches the exact trademark you want to use, that may not be possible or even a good idea, especially if your trademark is long for domain name purposes.

As an example, if you were selling BBQ sauce under the brand "Uncle Ray's Sinfully Spicy Sauce," you may not want to lockdown "unclerayssinfullyspicysauce.com," because (1) it's a lot for a customer to type in on phone and desktop and (2) you may decide to sell non-spicy sauce at some point, so you may need to get another website for other sauces.

The key for your domain name search is finding an available domain name that works best with the trademark you plan to use.

Conclusion

Once you've finished your search for availability, protectability and registrability, you may consider filing a business name reservation in your name to hold your name while you get business formation documents and trademark application in order.

Considering the ramifications of selecting a business name for a trademark, trademarks should not be taken lightly and require detailed searching of trademark databases and the Internet, along with an analysis on whether an existing trademark owner may create legal issues or the USPTO may reject your trademark application. For assistance with your trademark questions, reach out to us here. , and we'll be glad to sit down for a free initial consultation.

Quick Summary

  • Brainstorm. Brainstorm. Brainstorm. Put all your potential business names in a list.

  • Search U.S. Patent and Trademark Office’s trademark database.

  • Check your state’s trademark register.

  • Check your state’s office for filing legal entities.

  • With your list, check domain name registrars to see if it's available for your website.

  • Choose one name from your names that haven’t been eliminated yet.

  • Register your business name.

Please Read: Legal Disclaimer

Loved this post? Hated it? Want to add something to it? Let me know in the comment section.


Chris McCauley, CPA, Esq. is the founder of McCauley Investment Risk & Legal Consulting PLLC, a Seattle-based consulting firm dedicated to helping professional athletes and small business owners guard their earnings and investments. Chris is an attorney licensed to practice in Alabama and Washington and a CPA licensed to practice in North Carolina.

#entrepreneurship #startup #businessformation

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