Five Steps to Create, Protect Your Business Name

By Features FOXBusiness

Experts say there's much more to a business name then meets the eye, especially as you grow the company and build your brand. Here, trademark attorneys share the most important steps in picking and protecting your business name.

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Step No. 1 - Get creative

When deciding on a name, keep in mind you can't trademark words that are descriptive or generic.

"You have to be outside the box, don't be too descriptive of what you do," said Frank Natoli, a trademark attorney at New York-based LanternLegal.com, which serves small business owners. 

"You may be able to [use a descriptive name], but you won't be unique, nor could you protect it or stop competitors from using your name."

Instead, Natoli suggests coming up with what's considered a 'fanciful' mark, which are names that are made up, like Kodak and Clorox. Or, create an 'arbitrary' mark, where your name is a real word but it stands for something completely unrelated.

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"For example, Apple is used to describe computers, that's a good [arbitrary mark], that's strong," Natoli said. "But if you use apple to describe a food service business, it would be descriptive. You sell food, an apple is food, so it will not be allowed as a trademark."

Step No. 2 - Do your homework

Once you have a name, go to search engines and type it in, along with your industry, to see what potential competitors surface. Remember to search variations of the name and phonetic equivalents.

"Trademark law doesn't just protect identical marks but also similar marks likely to cause confusion," said Bobby Ghajar, a trademark and copyright attorney with Howrey law firm in Los Angeles, Calif.

Next, search your county and state databases, as well as the United States Patent & Trademark Office, which registers federal trademarks. You can hire an attorney to do the search for you, and it can include a comprehensive 'common law' search, which scans various business directories, yellow pages, etc.

Whether you hire someone or do it yourself, though, don't put it off.

"Too many entrepreneurs ignore the subject entirely until much later," Natoli said. "Every day you're in business is another day invested in your brand."

Step No. 3 - Understand your rights

If you bought a domain name assuming it gives you trademark rights, think again.
"A domain is merely an address. It can be a trademark but it doesn't become one just because you bought the name," Natoli said.

You would have to register the name as a federal trademark to actually protect it. Even then, you're minimizing risk, not eliminating it.

"You could register your name with the government, start investing in that mark and not realize there's a guy in, say, Pennsylvania who has a confusingly similar name and can [potentially] keep you out of his area because he was there first. Your federal registration would give you the right to everywhere else in the federal domain, but not there," Natoli said.

There will be risks no matter what trademarks you have, but you still want to opt for the greatest protection.

Step No. 4 - Start a paper trail

Even if you receive clearance to use a business name locally and nationally, keep all documents that show how long you've been actively using the name. You don't want another business to have an advantage by claiming they were using the name first.

"It's a way to back up your word," Ghajar said. "It's proof that you've been using the name, and how you've been using it over a period of time."

Keep old marketing materials and invoices, and print pages of your Web site, perhaps every six months. Also, document the search efforts you used to clear your business name, in case another similarly named company tries to sue you for stepping into their territory.

"The presence of an attorney clearance letter would be evidence that your infringement could not be willful because you actually went out of your way to search it," Natoli said. "The claim and damages they can receive depends often on whether that infringement was willful, meaning you knew what you were doing."

Step No. 5 - Once you trademark a name — guard it

Simply having a trademark doesn't guarantee protection. You must actively search for infringers and take action, like sending a cease-and-desist letter that tells them to stop using your name. If they fight you on it, though, at least try to understand their position before engaging in a costly legal battle.

"There might be a compromise the entrepreneur can reach," Ghajar said. "It could be an agreement to not expand use of the business name in other fields. It might be that the entrepreneur can make a slight change to the name."

Whether you compromise or wage your bets on a lawsuit, at least do something.

"If you allow people to use a mark that's infringing on yours, it dilutes the power of your mark," Natoli said. "Later someone can claim you're not policing your mark because there are all these marks similar to yours. You don't want to be in that position."

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