Naming Your New Business - Trademark Optimization

Pop's BBQ, Designs by Jane, Eric's Extracts, Amazon, Lexus...what's in a name? 

The Story

This is the single greatest mistake that I have observed when an entrepreneur starts a new venture. Typically, the discovery of a new product or market fuels the enthusiasm to start a business. And that enthusiasm is important. You need enthusiasm to build a business and to overcome the hundreds of hurdles that are in your immediate future. Move quickly, of course, but move wisely. 

In 2011 I was hired as the President of a 10-year-old e-commerce company that was generating nearly $20MM/yr in revenue. I worked daily with the business owner who was a smart and successful entrepreneur. 

On day five of my new job, I received a cease and desist letter from a law firm representing a person that claimed the name of our business was stolen from him. And we had 10 days to take down our $25,000 building sign, shut down our website, change our letterhead, banking systems, business name and anything that included the name of our business. 

Within the letter, our accuser (who we did not previously know and was now a competitor in our industry, unbeknownst to us) indicated the date the he not only came up with the name of our business, but the date he shared that name with someone who likely shared it with our business founder. 

Fortunately, the date that was claimed by the accuser was after the date that our business began. We proved the use of our name in commerce by finding an old invoice from a printing company that was used to print a catalog bearing our name almost a year before the accuser claimed to have invented it. 

Ironically, the evidence that won the case on our behalf came from the accuser's father-in-law who was an executive at the printing company that printed our catalog. In a show of incredible integrity, he took my phone call, searched his old files, found an invoice from nearly 10 years in the past (an invoice that bore our company's name) sent it to me and asked, "Is there anything else that I can help you with?" I told him that the invoice would suffice and that I was certain it would terminate the lawsuit in our favor. 

He then asked if the name of our accuser was a man by the name of John Doe. To my surprise I said yes, and asked how he knew since I never mentioned names. He said, "That's my son-in-law. He's a good man - just trying to grow and protect his business." Stunned, I asked him if he knew this all along why was he willing to send me the evidence that helped me win? His answer, "I believe in truth. I always let the truth come to the surface freely, and then exert my best efforts towards working with real truth." 

Truly a rare and honorable response. After dismissing the lawsuit, our accuser (and competitor) invited us to lunch to express his apologies. During lunch he affirmed his commitment to his business and the fact that he intended to compete aggressively but always honestly. He really believed the owner of our business stole the name from him, but learned that wasn't the case and was ready to move forward. So were we. 

The Lesson

What if our accuser had been correct? What if your business is finally succeeding and you received a letter like that with a demand to cease and desist using your business name? Your website, signage, product labels, letterhead, emails, etc. etc. etc. It could be devastating. 

What if you spent one year building a product and then showed up at the farmer's market directly across from another entrepreneur that has the same product and the same name? 

Taking a few minutes to ensure that your product name will be secure forever and will allow you to grow should you choose to expand, is worth 1-4 hours of homework. 

Broadly, there are two ways to secure your business name (a trademark) for your protection:

1. Common law rights
2. Federal trademark registration

When you're applying for a federal trademark, you will be asked when your trademark name was first developed and you will be asked the date of the first time you used your trademark in commerce and where. 

Common law trademark rights essentially grant "first-come-first-serve" rights to the trademark owner. In other words, if you used the name, "Bill's BBQ" in the state of Kansas in the window of your truck that pulled a BBQ trailer where you sold your award winning BBQ brisket on July 4th, 2015 at your county fair, then that date becomes your first use in commerce in the state of Kansas. You have to prove it, of course, with pictures, receipts, something that indisputably shows use in commerce of the name Bill's BBQ on that date. If another Bill's BBQ shows up the next year at the same fair (or anywhere in the State of Kansas), you have the common law right to ask him to cease and desist because his name is likely to create confusion with your name. And, if Bill #2 makes a bad brisket, then it could negatively affect the reputation of Bill #1. If you're Bill #1, you have the right to protect and defend your business. 

What if Bill #2 drives across the state line into Missouri and uses Bill's BBQ there before Bill #1 does? Under common law rights, Bill #2 now controls the common law trademark rights to Bill's BBQ in the state of Missouri. This is why Federal registration is important - it goes beyond state lines to provide trademark protection to the trademark's owner in the entire country. 

In theory, if Bill's BBQ #1 creates a flier with "Bill's BBQ Coming Soon To Your State" written on the top, and then sends that flier via certified mail to an address in all 50 states, then that might constitute first use in commerce in all 50 states. This happens regularly and is called "The Poor Man's Trademark".

More common is that as soon as your business has customers in every state that have received your products with your labels, then you have common law rights in that state on the date the first order from the first customer in each state is received. THAT DOES NOT MEAN YOU HAVE INDISPUTABLE RIGHTS TO THE TRADEMARK. It simply establishes the date in each state of your first use in commerce. If another company in that state pre-dated your first use in commerce, that company would have the right. 

Federal trademarks are the best way to get assurance of name and brand protection in every state in the USA. So why not start here? Large businesses usually do. Start ups, on the other hand, may not have the time (it can take over a year sometimes) or the money (it can cost thousands of dollars - usually $1K to $2K at the very least if there are no hiccups). 

If you follow the steps below when creating your business name, it will maximize the likelihood that you will NOT have trademark problems when you grow. Even if you think that your business is going to stay small and stay local - following these steps could save you thousands of dollars in defending against a trademark lawsuit in the future. 

7 Steps to Securing Your Business Name:

1. Visit a URL reservation company. NameCheap has low prices. Godaddy is another. Register.com is another and there are many more. Is your URL already taken in any format including .com, .org, .co, .net, etc.? If so, come up with a new name and keep looking until the URL of your name is available. 
2. Google the name that you want. Do you see other business with that name already? Then move on to another name. When you pass the Google test, move to step #3. 
3. Go to Facebook, Instagram, YouTube, X (previously Twitter), TikTok and any other social media platform that you can and look for accounts that have your business name. Do they exist? If so, go back to step #1. If not, proceed to step #4. 
4. Go to your state's business registry and search for businesses that already have the name that you want. Do you see any that have your name? If so, go back to step #1. If not, proceed to step #5. (You could look at all 50 states if you choose, but the next step will confirm at a federal level.) 
5. Visit the US Patent and Trademark Office (USPTO) and do a trademark search for your name. Do you see anything like your name already in use? Even if there are slight spelling variations, if there is an active registration similar to your name that is "likely to create confusion in commerce", then go back to step #1. Why isn't this the first step? Since the majority of small businesses don't register trademarks with the USPTO, steps 1-4 will help to minimize the likelihood that you are not infringing on someone's common law rights. 
6. It's time to buy your URL. Prices start at under $10/yr and even if you don't think that you will sell via e-commerce, it's smart to lock up your URL just to keep would-be competitors from buying it. Make sure it's the .com version. No need to buy all the other versions unless you want them all, but .com is the most valuable in for-profit businesses. 
7. Secure your business name in every social media platform. Set up a Facebook page, Instagram account, YouTube, TikTok, any social media site even if you never intend to use social media. Secure those accounts just so nobody else can. (Make sure you keep a file of passwords for each so you never forget.) 

You now are the proud owner of a new business name that you know, with some confidence, is likely to never be challenged from a trademark perspective. When your business grows and you have the funding to register your trademark with the USPTO, your filing can be done in some confidence. There are a few important notes related to USPTO trademark registration:

1. Every registered trademark is published for a 90 day dispute window. Attorneys representing clients around the country watch the dispute window daily to ensure that the brands they represent aren't being challenged. Another reason to do the homework above before you start your business. 
2. Trademarks are category specific. Bill's BBQ would be a food service business category and there may be another Bill's BBQ that sells furniture (not food) for BBQ restaurants. This would be a different category and there are thousands of categories. So if you see your business name but its registered to an entirely unrelated category, you still may be able to use it, but proceed with caution and ask yourself this question honestly as a litmus test, "Is my business name likely create any confusion in commerce?". If so, proceed cautiously because the registration in the other category still has first-use-in-commerce common law rights that pre-date yours. If they can prove confusion exists, they will win. 
3. Descriptive trademarks - this is a difficult nuance to manage. Sometimes the business name of your choosing is considered "Descriptive". Say you're starting a car company called, "Fast Cars". That's a descriptive term that can't be trademarked. Lexus, on the other hand, was a new word used in the car category that previously did not exist. So "Lexus" can be trademarked and "Fast Cars" cannot. "Sweet Extracts", "Great Food", "Delicious Desserts", etc. etc. will likely be declined. This does mean that you can use these terms if you choose - but so can anyone else.  

Following the steps above will help you minimize the likelihood of trademark issues in the future. Nothing is certain, of course, but moving forward wisely and methodically will help you each step of the way. It's easy to change your business name today. It's difficult when you're 10 years old and have signs, labels, products, emails, customers and more. So take some time, spend a few hours on research and make a smart first decision. 

Of course, our team can assist with name development and procurement. We can provide up to 5 name options that follow the steps above. If you would like to manage the steps above yourself and simply need a quick consultation about the name you are choosing, we can help you there as well. 

Most importantly - enjoy the journey!

Paul Fulton