CHOOSING A NAME FOR YOUR BUSINESS OR PRACTICE is an important matter. A business name can serve to inform potential customers or clients as to what goods or services you offer. With time, a business name will impart to customers and clients, as well as potential customers and clients, a level of quality and professionalism they can expect from you. So, it is no surprise that entrepreneurs should, and often do, carefully consider their choice of business names in the context of marketing and business development. However, in addition to marketing considerations, the selection, protection, and use of business names implicate legal issues entrepreneurs often overlook or misunderstand.
As a threshold matter, business names are governed by the law applicable to the legal structure of the business (e.g., sole proprietorships, general partnerships, limited partnership, limited liability partnerships, limited liability companies, and corporations). Generally, names for commercial businesses are subject to little regulation, but are usually required to follow the name with a designator which indicates its legal nature (e.g., Ltd., Corp., Inc., L.P., LLP, L.L.C., etc.). Names for professional practices (e.g., accountancy, engineering, dentistry, medicine, law, etc.) are more heavily regulated by applicable law and professional boards and agencies.
Once the entrepreneur selects a “permissible” name, the entrepreneur must then determine whether the name is “available.” Normally, state commercial recording offices will not accept a formation, registration, or reservation document unless the selected name is distinguishable from other names appearing upon state records. If a business name is, in fact, “taken,” it is not difficult to select a distinguishable name. Often, minor variations of a “taken” name will suffice.
The entrepreneur who selects a name that is both permissible and available, and successfully files a formation, registration, or reservation document often falls victim to a popular misconception that such a filing enables the entrepreneur to prevent others from using the name. Although state commercial recording offices may “accept” or “approve” a particular business name in the course of processing filings, such “acceptance” or “approval” does not authorize the use of that name in derogation of another party’s established right in the name. A proprietary “right” to use a business name and the right to preclude others from using the name, can arise from various laws. Most entrepreneurs are generally familiar with federal trademark registration. However, state trademark registration is also available. Even without registration of any kind, limited common law protection may arise through the use of the name in commerce or other legal theories.
Although state commercial recording offices may “accept” or “approve” a particular business name in the course of processing filings, such “acceptance” or “approval” does not authorize the use of that name in derogation of another party’s established right in the name. Thus, even if a name is “available” for state commercial recording office purposes, it is important to conduct a diligent investigation to determine whether others have a “superior” right to use the chosen name.
In conclusion, the selection, protection and use of business names implicate important commercial and legal issues. Accordingly, entrepreneurs will be well served by giving careful consideration to these matters. Please contact the author if you wish to discuss this article or his practice areas.
This article is provided solely for the general interest of the reader. The article and its contents are neither intended as, nor should be construed as, legal advice or opinion. Legal advice and opinion are provided by the firm only upon engagement with respect to specific factual situations.
Barry F. Gartenberg, L.L.C.
Attorney at Law
505 Morris Avenue, 1st Floor
Springfield, New Jersey 07081