The Importance of Names – Would it Smell as Sweet?

Twice in the past two weeks I was questioned on trademarks.  “Someone trademarked my business/product name.  What do I do?”  Added to the consternation was that in one of these cases, the individual had incorporated in Texas with the trademarked name.  My return inquiry focused on the value of the name to that individual.  Unfortunately, if you don’t consider trademark issues as you select your company name, you might be forced to select a new name.

Business formation and trademark searches are completely separate.

Business formation is handled by the Secretary of State for the state in which you are filing to conduct business.  These entities DO NOT search the register of trademarks to determine if there is a name conflict.  Rather, they search their own database of companies doing business in that state.  On the other hand, while the U.S. Patent and Trademark office searches trademarks that have been registered or applied for, it does not search the state company name databases.  In order to avoid such a conflict, it is beneficial for you or your counsel to search in both registers to anticipate any conflicts that may arise.

When should you search and/or register a name?

Am I suggesting that all people perform (or better yet have counsel perform) trademark searches before they select their company name?  Yes, generally. If you believe that the brand or company name is intrinsic to the product or service recognition, then it is important that you begin with a name that you can trademark yourself.  Trademarking allows you to prevent others from using the same name on confusingly similar products or services.  On the other hand, there are some occasions where the marketing of a product or a service is so insignificant to the value proposition that it does not merit investing in protection.  Think of these as “working title” names.  (Ironically there are five registered WORKING TITLE trademarks associated with the film company by that name.)  If you choose to go this route, you must be financially and emotionally prepared to part with your working name.  This may often be an agreeable situation for those who are involved in a startup and anticipating drastic marketing changes upon securing venture capital participation.

What’s the bottom line?

Rebranding or executing a license with the trademark holder may avoid catastrophic injunctions and/or monetary damages.  In a trademark infringement action, the mark holder can request that the court award monetary damages  but also that the offending good not be made, shipped or sold.  In the end, the cost of searching and securing a trademark prior to or contemporaneous with a product or company launch is far cheaper than these more drastic remedies.


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