A friend of mine has a small business she’s been operating for the past year. Before she opened her business, she went down to the country clerks office and ran a business name search. She didn’t see anyone having the same name so she registered it as her DBA.
Fast forward a year later and she gets a call from another business saying she’s using their business name. The reason their name didn’t come up in the county search is they’re a Corporation and they are registered with the state. They have been in business for 18 years doing the same thing she’s doing.
They gave her 30 days to change her name or they will litigate…is she screwed?
Business names and corporate names are not trademarks, unless they are used as trademarks. If the corporation has not registered the name as a trademark, they only have common law rights and only in their immediate trading area where the mark is known to consumers. Your friend should seek the advice of an attorney in her area.
Kevin B. Murphy, B.S., M.B.A., J.D. - Mr. Franchise
Trademark law and trade name law, while overlapping, are both discrete bodies of law.
The states create a lot of trade name law -- usually by establishing one broad statute and then, according to the political strength of particular industry groups, by passing lots and lots of statutes protecting the naming rights of the companies working in those politically-powerful industries. Similarly, states very often control the naming rights of companies working in the licensed professions. The adoption, use, and enforcement of trade names are, therefore, very often controlled by state law -- wholly apart and separate from trademark law.
To be clear, trade names are protected from infringement nearly [if not exactly] to the same extent that trademarks are protected. Though, admittedly, trade name infringement claims may arise under state law.
California has passed a statute that directly answers your question. See Business and Professions Code section 14416 at http://j.mp/bapEQF .
In short, if a corporation is registered in, and doing business in, California and it existed before a company using the same name filed a fictitious business name statement for the same or a confusingly similar name, then the corporation's rights in its name trumps the other company's rights to use the name -- and it can, therefore, force that other company to change its name.
A corporate name (registered with the CA Secretary of State) isn't a trademark, and neither is a DBA (registered with the County Recorder), and checking with the County Recorder wouldn't disclose existing corporations, or LLCs, or partnerships, or any other person or company with a trademark, or with the same or a confusing similar domain name (registered with an internet registrar) and internet address.
This other company has been around a lot longer presumably using their corporate name as their trademark, so they have superior "common law" rights to those of you (or your friend), even if they haven't registered the name for a state trademark with the CA Secretary of State, or for a federal trademark with the USPTO. They can't litigate without a trademark registration, however, so you need to check the facts with a lawyer who can evaluate your (or youlr friend's) and this other company's respective rights.
Disclaimer: Please note that this answer does not constitute legal advice, and should not be relied on, since each state has different laws, each situation is fact specific, and it is impossible to evaluate a legal problem without a comprehensive consultation and review of all the facts and documents at issue. This answer does not create an attorney-client relationship.
Cal. Business & Professions Code section 14416 states: "If, as to the same or a confusingly similar trade name, in a county, there are both a corporation entitled to the rebuttable presumption created by Section 14415 and a registrant entitled to the benefit of the presumption created by Section 14411, whichever has filed the fictitious business name statement, filed the articles of incorporation, or obtained the certificate of qualification first in time, and is actually engaged in a trade or business utilizing such fictitious business name, such corporate name, or a confusingly similar name, shall be entitled to the presumption as against the other, that he has the exclusive right to use such fictitious business name, or such corporate name, or a confusingly similar name, as a trade name in the county where the registrant has filed his fictitious business name statement."
So the answer is: yes, you friend is screwed.
Attention: This response is based upon general legal theories and may or may not specifically address issues that affect your individual legal matter or situation. It should not be relied upon outside of the jurisdiction(s) in which the attorney is licensed to practice as each state has different laws. Each situation is fact specific and requires comprehensive legal evaluation following a thorough consultation and review of all the facts and evidence available. This response does not create an attorney-client relationship between the asking and answering parties.
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