Choosing a tradename that conflicts with an existing tradename is expensive and disruptive. This nationally applicable guide will help you determine whether your chosen tradename is legally protectable, and provides research tools to determine whether your chosen tradename is available.
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The Law No. 1: Tradename Protection under Common Law
There are two kinds of protection available for tradenames, the first of which is common law protection. The basic rule is that the person who (1) first uses a tradename (2) in a specific geographical area (3) for a specific business purpose, has the exclusive rights to that tradename in that area for that purpose.
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The Law No. 2: Tradename Protection by Registration
The second kind of protection available is registration of your tradename with a governmental agency. Examples of this would be a fictitious business name filing with your county recorder, or registering a trademark with the US Patent & Trademark Office. This type of registration bars anyone from using the registered tradename in the registering agency's jurisdiction AFTER the date of registration. There may be limits on the duration of your protection, the business purpose in which you are afforded the protection. For example, federal trademark protection requires that you have used the tradename "in commerce" before a trademark application is submitted.
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Protection Requirement No. 1: Name is Distinctive and Not Confusingly Similar
Not every tradename is eligible for common law or registration protection: only those that are deemed (1) "distinctive," and (2) not confusingly similar to another tradename, are eligible. Tradenames that are merely descriptive of the goods or services to be provided are not granted protection. Note: domain extensions like .com are considered descriptive.
For example, I trademarked the term "transdental" in 1998 for my dental transactional practice, because at the time of registration "transdental," while evocative of "dental transactions" and "dental transitions," was both distinctive and not strictly descriptive, plus there was no other similar tradename that could be confused with mine.
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Protection Requirement No. 2: Name is First in Area
As mentioned earlier, a tradename must be first in its geographic area in order to have protection. This concept of "first in area" depends greatly on circumstances. Tradename protection applies not only to the area where a business already uses the tradename, but also can extend into areas of the tradename's zone of reputation, zone of likely expansion, and zone of marketing.
"First in area" also applies to your business purpose. The Rose Cafe (a restaurant) does not conflict with The Rose Law Firm (legal services), nor does either conflict with Rose Story Farm (a nursery). However, if Violet Rose wants to open the Violet Rose Bistro, that name could be sufficiently confusing to bar its use in the same area as The Rose Cafe.
IMPORTANT: if you are engaged in an internet business selling regionally, nationally or internationally, your "area" is the area of your proposed sales. Be very careful in researching available names.
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Protection Requirement No. 3: Good Faith vs. Protection Efforts
Sometimes, a tradename's zone of marketing enters into another tradename's zone of reputation or likely expansion. It becomes an issue of determining the Good Faith behavior of tradename 1 vs. Protection Efforts by tradename 2.
Did tradename 1 enter tradename 2's zone with the KNOWLEDGE of tradename 2's prior use and with the INTENTION to exploit tradename 2's reputation? Did tradename 2 have the OPPORTUNITY to protect its name, and once it did so did it ACT (by name registration or complaint) within a REASONABLE amount of time to prevent tradename 1 from using the name in tradename 2's zone?
Obviously, this is a very nuanced, fact specific, area that is contentious and expensive to resolve. This is why it is very important to do your research ahead of time, to confirm that your chosen tradename will not end up in a conflict with an existing tradename, and to complete whatever tradename registrations may be available.
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