Registering a company name and securing a trademark might seem like two sides of the same coin, but these two actions serve very distinct purposes and offer different levels of protection and it is important to understand these differences when forming a new company. It’s a common misconception that registering a company name with your state or local government provides a business owner exclusive trademark rights. However, this isn't the case. Here’s why understanding the distinction and conducting thorough trademark clearance searches is essential for any business.

Company Name Registration vs. Trademark Registration

When you register a company name with the appropriate governmental entity, you’re telling the state that you intend to do business under a specific name. This process typically results in the issuance of a certificate of incorporation (for corporations) or a certificate of organization (for LLCs). Here are some key points about company name registration:

1. State-Level Recognition: Your business name is recognized and protected only within the state of registration and only as a business name and not a trademark. Another business in a different state can use the same name without any legal conflicts.
2. Operational Permission: This registration provides legal permission to operate your business within the state but doesn't extend beyond administrative recognition.
3. Limited Scope of Protection: It doesn’t prevent other businesses, even within the same state, from using a similar name in a different industry or sector.

On the other hand, a trademark provides a broader scope of protection. Here’s what trademark registration entails:

1. Federal Protection: Trademarks registered with the United States Patent and Trademark Office (USPTO) are protected nationwide, not just within a single state.
2. Brand Identity: Trademarks protect any word, name, symbol, or device that identifies and distinguishes goods or services of one party from those of others.
3. Legal Recourse: With a registered trademark, you have the legal right to prevent others from using a confusingly similar mark for related goods or services.

Examples of the difference between a company name and a trademark can be illustrated with the following: Delta Air Lines, Inc. is the company name and DELTA is the trademark; Alphabet, Inc. is the company name and one of the company's trademarks is GOOGLE.  A company name is the name under which the corporation conducts business (e.g., the name under which the company enters into contracts, etc.) whereas a trademark is used by the company to identify to consumers the source of the products/services being offered by the company.

The Importance of Trademark Clearance Searches

Before you even register your company name or apply for a trademark, conducting a full trademark clearance search is crucial. This process involves checking databases, including the USPTO’s trademark database and common law sources, to ensure that your desired name or mark isn’t already in use or too similar to an existing one.  Clearing a mark fully before adopting it is critically important in the United States where trademark rights derive first and foremost from actual use of the mark in commerce and not merely from applying to register a trademark.

Here are some compelling reasons why trademark clearance searches should be a non-negotiable step:

1. Avoid Legal Disputes: If you inadvertently choose a name or mark that’s already in use, you could face legal action from the existing trademark holder. This could result in costly litigation or the need to rebrand, both of which can be financially draining and damaging to your business’s reputation.
2. Ensure Market Distinctiveness: A clearance search helps ensure that your brand stands out in the marketplace. A unique name or mark not only avoids legal issues but also helps in building a strong brand identity that consumers can easily recognize and trust.
3. Save Time and Money: Addressing trademark conflicts after you’ve invested in branding, marketing, and product development can be incredibly costly. Conducting a search upfront saves you from these potential expenses and operational disruptions.
4. Strengthen Trademark Application: When you apply for a trademark, the USPTO examines your application to ensure there are no conflicts with existing trademarks. A thorough search before application increases the likelihood of your trademark being approved without objections or rejections.

Steps to Conduct a Trademark Clearance Search

1. Preliminary Search: Start with a basic search using online search engines and social media to see if anyone is using the name or mark you want. This can give you a rough idea of any potential conflicts and is a cost effective first step in the process as it gives you a snap shot of what trademarks are current in use at any given point in time.
2. USPTO Database Search: Use the USPTO’s Trademark Electronic Search System (TESS) to search for registered trademarks and pending applications that might be similar to your desired name or mark.  This is another preliminary, cost efficient step that is recommended before diving into a full clearance search in order to screen out proposed company names/trademarks as it identified obvious red flags associated with a proposed name.
3. Full Clearance Search: Once you have conducted steps 1 and 2 above and it appears that a proposed mark is available the next and final step in the clearance process is conducting a full clearance search, which consists of an expanded search of the USPTO records akin to the searching the USPTO Examining Attorney will conduct in their examination of a pending application, as well as conducting a more fulsome common law search.
   • Common Law Search : Remember, as noted above, trademark rights in the United States derive from actual use of the mark in commerce and not from registration, thus it important to note that not all trademarks are registered with the USPTO. Some businesses may use trademarks based on common law rights (i.e., use in commerce alone). Searching business directories, trade publications, and domain names can help identify these unregistered trademarks.

Conclusion

In the world of business, your brand is your identity.  While registering a company name is a crucial step in establishing your business, it doesn’t offer the same level of protection as a trademark.  It is important to think of registering a company name simply as obtaining permission from the state to conduct business, whereas your trademark is how consumers will identify you and your products and services in the marketplace and it is through your actual use of your trademark in commerce, and not simply registering a business name, where and  how you will obtain rights in the mark and gain exclusivity against third-party use of an identical or confusingly similar mark for the same or related products and services.

Conducting thorough trademark clearance searches is an essential step in safeguarding your brand. It helps avoid potential legal disputes, ensures your brand’s uniqueness, and saves time and money in the long run. Investing in a comprehensive trademark strategy is not just about protection—it’s about laying a strong foundation for your business to grow and thrive in a competitive marketplace. So, take the time to understand the difference, conduct your due diligence, and protect your brand with the right tools and knowledge.

Contact John McElwaine or Chris Casavale with any questions or for assistance.