Trade Names, Legal Names, and Trademarks
Trade names are a popular business tool, but they have nuances worth revisiting from time to time. A trade name is a name that a business uses to identify itself. A trade name is synonymous with a “doing business as” name, an assumed name, or a fictitious name. Trade names are registered at the state level, but they can be affected by federal trademark law.
Trade names are analogous to trademarks. A trademark is a source identifier—it identifies a source of who provides particular goods and services. A trade name is also a type of source identifier because it provides another way to identify a legal entity. Trademarks are a different class of source identifier. Where a trade name is a name for a company that sells goods or services, a trademark is a name for the goods or services themselves. So a trade name of NEBRASKA HEALTH might identify a company, but a trademark of CARE FIRST can describe a particular service program within that company.
Trade names are also distinguishable between a trade name and a legal name. This distinction is easy to understand, but it can be just as easy to confuse when to use a trade name versus a legal name in practice. Like a trademark, trade names are meant to have marketing appeal. In contrast, a legal name will not necessarily have that marketing appeal. A legal name is the actual title under which a company has been formed under state law. So a biotechnology company in Nebraska could have a company name such as, GREATER MIDWESTERN BIOTECHNOLOGY CORPORATION. The legal name is the identifier that must appear in official legal documents for the company, like a vendor contract for laboratory supplies. That same corporation, though, might want something different for its trade name for marketing purposes. For instance, it is possible that GREATER MIDWESTERN BIOTECHNOLOGY CORPORATION becomes better known as MIDWEST BIOTECH. In that case, the corporation might pursue registration for the trade name, MIDWEST BIOTECH, and that corporation would use the trade name in marketing materials. However, when the biotechnology corporation submits government filings or enters contractual arrangements with other businesses, it should identify itself as GREATER MIDWESTERN BIOTECHNOLOGY CORPORATION. Even more precisely, the corporation should say, GREATER MIDWESTERN BIOTECHNOLOGY CORPORATION D/B/A MIDWEST BIOTECH. This is where confusion can arise because, many times, people will just use the trade name for a business rather than the business’s actual legal name. It is better to be clear and technically correct by using a business’s legal name for official legal documents.
When planning to use a trade name, a business should remember to register the trade name with the State where they will use the name. For legal purposes, registering the trade name validates a business’s association of its legal name with that trade name for identification purposes. For enforcement purposes, registering a trade name will provide the registrant business rights to bring a civil action if another party is misusing that name.
Be aware, though, that trade name registration can overlap with trademark law. It is possible for a trade name to be identical or confusingly similar to another business’s trademark. “Confusingly similar” is the standard used to claim trademark infringement, so it is possible for a trade name to infringe on a trademark. Infringement claims are possible even if a State grants a business the registration for a trade name. State registration does not clear a business from the possibility that it infringes someone else’s trademark, regardless whether the trademark is federally registered, state registered, or simply held under common law. For instance, a company may receive a Nebraska trade name registration for CARE FIRST, but if a health care organization in Colorado, Minnesota, or any other state has a federal trademark registration for CARE FIRST, that organization could claim the Nebraska company infringes the federal trademark.
Despite the added layer of complexity presented by trademark law, identifying a trade name and completing the registration process can be worthwhile and is typically simple. States have standard forms for submitting an application. Like most government filings, there will likely be a filing fee for application processing. The price range for filing can vary depending on the State of interest. Trade name applicants should also research and recognize differences in trade name schemes across their States of interest. For instance, in Nebraska, businesses may register a trade name no matter the entity type. In contrast, Iowa has a different setup where corporations and LLCs register for fictitious names with the Iowa Secretary of State, while partnerships and sole proprietorships register for trade names with the county recorder where the business is located.
Knowing these State differences is growing in significance for some industries, particularly health care, because of a high volume of recent mergers and acquisitions. Considering trade name issues should be an important part of the merger or acquisition process, especially when the activity results in a business with a multi-state presence.