Every freelancer needs to decide what to call their business. Sole proprietors often just do business in their own name. Doing so simplifies the business licensing process, can avoid a few minor administrative hassles, and can avoid trademark pitfalls that come with coined terms and clever turns of phrase. Of course, many freelancers, even those who work as sole proprietorships, will want to explore more creative names for their businesses. For those who will be forming legal entities, the choice of name involves additional considerations, because the company’s name needs to be available at the state level before it can be used.
This chapter’s focus is on the legal technicalities of choosing a name, rather than branding considerations. Branding is a complex, nuanced subject. Regardless of the legal form your business will take, choosing a name that represents who you are and what you do is an essential part of marketing yourself to clients. Your company’s name will be all over the place: on your business cards, on your website, on social media. It should resonate and communicate. Take the time to explore the branding advice available on the web. If you have the resources, consider hiring a branding professional to help you sort through your ideas. Talk to your friends and colleagues about your name ideas to get their impressions, and ask them for suggestions. Brainstorm and keep lists. Chances are good that the first few names you pick won’t work, for reasons you won’t recognize until you’ve researched them further.
State Requirements
There are relatively few restrictions on how a legal entity is named. States often will reject names that are offensive (profanity or racial slurs, although a recent Supreme Court case suggests that such limits may be an unconstitutional restriction of free speech1) or misleading (for example, most states don’t allow companies to use the words “bank” or “trust” unless they are going to be in those industries). Knowing your state’s restrictions can be helpful, so you know what to avoid, but it’s unlikely that the handful of restricted words will matter to most freelancers.
A requirement that knocks out many business names is availability. To use a name, it can’t already be taken by someone else in the jurisdiction where the company is registering, whether that’s at the local level for licensing, or at the state level when forming a new entity. Just how close a name can be to an existing name varies from place to place, and can even depend on the person reviewing it. Most jurisdictions will ignore details like punctuation (ABC, LLC blocks ABC LLC), articles (Superstar Editorial LLC blocks The Superstar Editorial LLC), or different versions of statutory suffixes (ABC Inc. vs. ABC Corp.). Most jurisdictions provide online databases of existing names to help you determine if your preferred name is already taken.
Most jurisdictions provide online databases of existing names to help you determine if your preferred name is already taken. Online databases don’t always include names someone else has reserved for future use, so there’s always a chance that your name will be rejected due to one of these “hidden” registrations. To avoid this problem you may need to call or, in some places, submit a written request. Such formal name clearances generally cost $20 to $50.
The Many Pitfalls of Trademark Law
If you plan to use your company’s name to promote your business, you’ll need to consider whether it threatens to conflict with any existing trademarks. Adopting a name that is already subject to another person’s trademark rights can force you to change your company’s name, derailing your branding efforts and costing money and time as you hunt down a new name, get new business cards printed, change e-mail addresses, and build a new website. Better to put in the work beforehand to make sure your name doesn’t cause more trouble than its worth.
By itself, a business’s legal name, as shown on its state registration documents or business licensing documents, isn’t a trademark until it meets the use standard described below. One way to think about the distinction is that a business’s name is a noun, while a trademark is an adjective. A trademark describes something about the goods or services that carry it.
In simple terms, a trademark is a word, phrase, or symbol that is used in commerce to identify the source of goods or services. The law imposes a pretty low bar on what constitutes “use in commerce” for purposes of establishing trademark rights. Putting a name on promotional materials that get handed out to potential clients is one way a name goes from being just a legal formality to being used as a trademark. In the right circumstances, using the name on a website can also meet the use in commerce standard.
State and federal laws prevent someone from adopting a trademark that is confusingly similar to a trademark that is already in use or that someone has claimed for use in the future. Whether two marks are confusingly similar is determined by a complex and varied set of legal standards that, in simple terms, look at whether a hypothetical consumer is likely to confuse the two marks when encountering them in the marketplace. The analysis used to determine the likelihood of confusion considers a range of factors, including the similarity of the marks, the similarity of the goods or services, and the relative strength of the senior mark.2
Ordinarily, owners can only enforce trademark rights in connection with the specific products or services where their trademarks are in use. There are nearly four dozen categories, or classes, of products and services, and the scope of a registration tends to be limited to the specific products or services that use the mark. If Superstar Editorial LLC is an appealing name for your editing business, but your searches turn up businesses in unrelated industries (for example, Superstar Plumbing, Superstar Laundry, and Big Superstar Family Buffet) it might not be a problem, because the other uses of “superstar” have no overlap with your planned line of work. On the other hand, if your search uncovers a registration for Superstar Publishing that specifies editorial services or even something to do with publishing in its description, there may be too much overlap.
Simply knowing the goods and services in the registration of an existing trademark isn’t enough to confirm that it doesn’t pose an infringement risk. The relative strength of the marks needs to be weighed.3 In part this is done by placing the marks within a spectrum of distinctiveness.4 This approach looks at the character of the trademark itself, placing it into one of five categories. The categories, from weakest to strongest are as follows:
1.Generic terms can’t be registered as trademarks, at least in connection with a product they normally refer to. No one can register the term “apple” for apples. A trademark can also become generic through routine use. Aspirin is just one example of a trademark that became a generic term.5
2.Descriptive marks use terms that are directly related to the goods or services involved. For example, “crunchy” for apples. To be registerable, a descriptive mark needs to first establish distinctiveness through its use.
3.Suggestive marks might say something about the goods or services, but they require some mental effort to draw the connection. “Microsoft” is a common example of a suggestive mark.
4.Arbitrary marks generally are common terms used in an otherwise nonsensical context. Think of “Apple” for computers, or “Adobe” for software.
5.Fanciful marks have no meaning other than as a trademark. They are treated as inherently distinctive, meaning they are relatively easy to register and they enjoy the greatest protection from infringement.
The spectrum of distinctiveness can be a helpful way to think about your own business name. Inventing a name that fits within the strong end of the spectrum—something arbitrary or fanciful—can be a way to increase the chances that your name will be available at the state level and not infringe on an existing trademark. On the other hand, if you invent a term and find that someone else is already using it, be careful. The owner of a fanciful trademark holds a lot of cards.
Famous trademarks are given an extra layer of protection against infringement that crosses the usual boundaries between classes. McDonald’s Corporation has a tight grip on terms beginning with “Mc,” making it a risky bet to name your photography business “McPhoto.” Likewise, the camera manufacturer Nikon probably would object to a business calling itself “Nikon Copyediting.” One reason to avoid famous trademarks is that they tend to be guarded by a team of dedicated trademark attorneys. Famousness is a frustratingly fuzzy topic, because you might have no awareness of a name that meets the legal standards of “fame.” That’s why it’s important to look carefully at all potential conflicts.
Personal Names as Trademarks
A personal name is considered descriptive for trademark purposes, meaning that although most surnames aren’t registerable as trademarks, they can become protectable by acquiring distinctiveness. In 1997 basketball legend Kareem Abdul-Jabbar sued a professional football player named Karim Abdul-Jabbar for trademark infringement, on the grounds that the football player’s adopted name would be commercially damaging to the hall of famer’s brand. Even if you choose to do business under your own name, some vetting is still a good idea.
Trademark can be a tricky area to navigate, in part because existing trademarks aren’t necessarily easy to identify. A name’s use of the ® symbol (reserved for registered marks) or the TM superscript is an immediate indication that the owner of the name claims trademark rights. But if you encounter a name that doesn’t have one of these symbols, there are steps you can take to evaluate its status. The U.S. Patent and Trademark Office (PTO) hosts a searchable database (TESS) of all the trademarks that have been registered under federal law.6 States also have trademark registries of their own, and many people who plan to only do business in one state might opt to register with their state instead of going through the expense of a federal registration. But searching these databases isn’t enough, because a trademark owner has rights even if the trademark isn’t registered. So-called common law trademarks that exist outside of the registration system can still be used to force you to change your business’s name.
How much time and money you want to spend on sorting through all this will depend on your appetite for risk. Businesses that will invest heavily in promoting their names as a brand probably should invest the thousands of dollars that’s usually necessary to get professional trademark help. If your branding goals are more modest, the cost of professional trademark advice may be harder to justify. You can go a certain distance by doing your own searches, using Google and searching databases at the PTO and state trademark registries. The trouble is that amateur searches aren’t likely to capture the full universe of potential conflicts. And when your search results come back it can be hard to know if your name really conflicts with a potential match without getting some professional advice.
One partial solution is to hire a trademark screening service to conduct professional searches of your favorite name. These services use sophisticated methods to find potential conflicts that can be difficult to find without specialized skills. They will provide you with a ream of search results, and many of them offer additional analysis for a fee.
The most reliable approach is to hire a trademark lawyer to help you parse the results of your searches. Unless you plan to register your trademark, a lawyer’s analysis needn’t be a hugely expensive process. Still, you must decide for yourself if the risks justify the additional cost.
Should You Register Your Business Name as a Trademark?
Registering your business name or logo as a trademark offers several benefits. It allows you to add the ® symbol to your mark, putting other potential users on notice that you have a claim over your business name. It provides nation-wide protection of your brand, which is useful if you plan to expand your business beyond your home region. It gives you extra leverage to defend your name against potential infringers. And it can help you if you have to sue to protect your name. The downside, of course, is that registration costs money, primarily due to legal fees associated with preparing the paperwork and maintaining the registration. If you do plan to register your business name as a trademark, you may want to explore filing an intent-to-use registration, which allows you claim rights over a name while you invest in its initial promotion. Anyone who plans to register a mark should work with a lawyer at the naming stage to avoid costly false starts.
One Way to Approach the Name Vetting Process
There are lots of great branding resources on the Internet to help new business owners get started on their naming journey. Once you have a list of favorite names, they’ll each need to be evaluated for potential conflicts and risks. Here is one way to approach vetting your list.
1.Impromptu searches. Once you have a list of possibilities, it’s time to search for them using an online search engine. The goal at this point is to weed out names that are already being used enough to have a web presence. Casual searches aren’t enough to reach a reliable conclusion that a name is free for use, but they can quickly identify clear conflicts. Searches can also turn up unexpected problems with a name. To avoid offending potential clients you may not want to choose a name that has an obscene meaning if translated into Spanish, for example.
2.Technical searches. As the list of potential names dwindles, you’ll want to start searching specific places for conflicts:
a.State database. Keep in mind that search tools can lack the sort of fuzziness that makes Google so useful, so you might need to come at the search in a few different ways. Starting with a key term might be a good starting point (searching “Superstar” instead of “Superstar Editorial”). Also, be sure to confirm that your state’s website includes name reservations. If it doesn’t, you may need to call. Many states also offer name preclearances for a fee, though it isn’t usually required.
b.Local database. Your chosen name needs to be available in the county (and city, if it has separate business licensing rules from your county) where you will be doing business; if you work in more than one county, you’ll need licenses in each. Sole proprietorships that adopt names other than their owners’ must file a fictitious business name statement as part of the business licensing process. These filings don’t appear on state websites, but will prevent you from getting a business license unless you first adopt a DBA (short for “doing business as”) name that doesn’t conflict. A DBA adds costs and hassle, as your DBA needs to show up everywhere the company’s formal name appears. Better to adopt a name that you know works at every level.
3.Check into domain names. If you plan to have a website for your business, now is a good time to visit a domain name registrar’s site to see what domains are available that suit your name. Unless your name is something wildly unique, chances are that the most desirable domain name is already taken. Sorry, Superstar Editorial LLC, but “superstar.com” is probably long gone. Instead, play around with variations that you think will work. Although a domain name’s availability might not be a good reason to keep or toss a potential name, having a straightforward domain name can be a valuable marketing tool. A domain like suprstaredtrl.com isn’t easy to remember or spell, but superstareditorial.com might work. If you have your heart set on a specific URL, you might have to pay someone to let you have it.
4.Conduct a trademark analysis of your favorite names. Once a name makes it through all the other types of searches, it’s time to conduct a search of the PTO database (accessible at http://tmsearch.uspto.gov/) to see if anyone has claimed a trademark that’s similar to your preferred name. Search using a few different variations of your name and take advantage of the system’s truncation tools. Chances are good that you’ll see quite a few matches or near matches. You’ll need to dig into each of the matches to see if they are in a related line of work to your own. If after conducting this process you’re not feeling reasonably sure about whether your name is safe from a trademark standpoint, consider hiring a screening service to conduct a professional search and analysis of your preferred name. And if you think the cost is justified, ask a trademark lawyer to look at the search results.
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1 In Matal v. Tam, 582 U.S. ___ (2017), an all-Chinese rock group called The Slants successfully sued for the right to register the band’s name as a federal trademark. The Supreme Court upheld a lower court’s ruling that struck down a provision of U.S. trademark law prohibiting registration of trademarks that “disparage . . . persons, living or dead . . . or bring them into contempt, or disrepute.” Lanham Act, 15 USC § 1052(a) (2017). Among other things, the disparagement clause had been used to prevent racially offensive terms from being registered as trademarks. The court unambiguously stated that the First Amendment protects even offensive speech, raising serious doubts about the validity of state restrictions on offensive terms in business names.
2 Polaroid Corp. v. Polarad Elecs. Corp., 287 F.2d 492 (2d Cir. 1961). Nolo Press provides a good introduction to the likelihood of confusion standards. Richard Stim. “Likelihood of Confusion: How Do You Determine If a Trademark is Infringing?” http://www.nolo.com/legal-encyclopedia/likelihood-confusion-how-do-you-determine-trademark-infringing.html, (accessed August 2, 2017).
3 For examples and further explanation of the strength of trademarks, see Daniel A. Tysver, “Strength of Trademarks,” BitLaw.com (2015), http://www.bitlaw.com/trademark/degrees.html, (accessed August 2, 2017).
4 The spectrum of distinctiveness began with Abercrombie & Fitch Co. v. Hunting World, 537 F.2d 4 (2nd Cir. 1976).
5 Bayer Co. v. United Drug Co., 272 F. 505, 512 (S.D.N.Y. 1921).
6 U.S. Patent and Trademark Office, Trademark Electronic Search System, accessible at http://tmsearch.uspto.gov/.