What is a trade name? Is it protected like a trademark? Can another business use the same trade name as yours?

What is a trade name?

In the US, a trade name is the name of a business or company, whether the business is a sole proprietorship, a partnership or a corporation. A trade name is, generally, not protectable as a trademark unless it is actually used to distinguish and identify the goods or services of a company.

Can a name be both a trade name and a trademark? Yes. Many are. For example, the name Sony, when used on a company letterhead, functions as a trade name. When it is used on TV sets sold in stores it is a trademark.

Can a trade name be protected? Yes, it may be protected under state statutes or principles of unfair competition. But it is not protected as a trademark unless it identifies goods or services.

Is it possible for a company to have a trade name that they cannot use as a trademark? Yes, because it is possible for a chosen trade name to be an infringement of an existing trademark already owned by another company. But what if the trade name I choose for my company has been registered through a government agency, and the registration was approved? How could it be an infringement of someone else’s trademark? Moreover, if the name is already owned as a trademark by another company, how could the state possibly approve it for my trade name? The possibility of this happening highlights a common myth regarding “trade name clearance.” The myth is that trade name clearance equals trademark clearance. It doesn’t. They are not the same.

Trade name registration

If I start a business I may use my personal name for the business or I may choose a fictitious name—fictitious because it’s not my real name. This is my business name or commercial name, my trade name, also known as a DBA (Doing Business As) name. I may register this name through the county clerk’s office in the county where I do business or I may register it through the state. Or, I may hire an accountant to incorporate my business and he or she will file my corporate trade name with the state. This filing process often involves a “name clearance” through which the state or local government agency approves my chosen name for the business.

What is the purpose of this name filing with the government? It’s mainly to inform the government, especially those agencies that levy taxes, of the existence of my business. It also can, at least theoretically, prevent me from taking the same name as an existing company, which could be viewed as unfair competition. But this name clearance is by no means exhaustive. Note this comment on the website of Sterne Kessler Goldstein Fox, a law firm in Washington, DC: “The chosen [trade] name is generally accepted by the state agency unless the register already contains a registration for the same name for another company. In general, the agency does not analyze whether a proposed name is similar to a previously registered name prior to registering it as a business name. The agency typically looks only for exact matches within the states registry (and differences in names can be as minor as the use of Corp. versus Inc.). In some cases a state may even allow companies with the same name to register in the state.” [italics added]

By contrast, a trademark search can be far more extensive. A trademark search is not a matter of simply looking for names that are the same, but will look for names that could be confused with each other. That’s why a search will not just look at the names, but will analyze the products or services represented by the names, and how they are sold. The standard for trademark infringement is whether there is a likelihood for confusion. A likelihood of confusion could exist even if the names are not exactly the same. Further, trademarks may actually use the same terms if there is no chance of consumer confusion (for example, Ace hardware and Ace bandages).

Trademark clearance includes checking not only the trademark registry of the US Patent & Trademark Office, but since each state has a trademark registration process, it will also include a search of the trademark registries in all 50 states. If the product or service is to be offered outside the US, a trademark search will include the registries of other countries as well. A thorough search will also include a search of trademarks in the US that may not be registered (trademark rights are acquired through use, not registration).

In understanding the difference between trade names and trademarks, it can be helpful to note that the two terms normally function as different parts of speech: a trade name is a noun, while a trademark is an adjective. For example, Sony Corporation is a trade name when it refers to the company. Coca-Cola Bottling Company is also a trade name. But when used with goods (Sony televisions, Coca-Cola products) these terms are trademarks and function as adjectives.