Corporate Name Change Due to Expansion

Posted on August 18, 2008

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As reported in The Birmingham News on August 13, 2008, the owners of Bonedaddy’s, a barbecue restaurant in the Birmingham area, are changing the company name to Sweet Bones Alabama.  The restaurant wishes to expand its restaurant concept outside Alabama state lines.  In planning the expansion, the owners of Bonedaddy’s discovered a Texas-based chain of barbecue restaurants was using the name Bonedaddy’s House of Smoke.  Bonedaddy’s came to an agreement with the owners of the Texas restaurants to change the name prior to the proposed expansion.

Confusingly similar business names are a common problem when
businesses seek to expand their territorial reach, and this sheds light
on the importance of naming one’s business entity.  This decision is
not be to taken lightly because the word or words that make up the
company name serve as the company’s identity to its customers,
suppliers, financiers and competitors.   Both business and legal
considerations should be taken into account when choosing a name.
Business considerations include, but are not limited to the following:
(a) the name should be appealing and easy to use; (b) the name should
be easy for customers to remember; and (c) the name should not limit
the company from expanding its products at a later date, if they so
choose.     

The legal considerations for the business in choosing a name are
just as significant- probably even more so- than the business
considerations outlined above.  A search should be conducted to make
sure that the name is not confusingly similar with: (a) a business
entity registered in the state of formation; (b) a state trademark or
(c) a federal trademark.  A determination as to whether a mark is
confusingly similar to a registered trademark involves a two-step
process.  First, one must look at the marks themselves for
similarities.  Second, one must compare the goods or services to
determine if they are related.  Likelihood of confusion exists when
consumers viewing the mark would probably assume that the goods it
represents are associated with the source of a different product
identified by a similar mark.  The required standard is that the
confusion be probable, and not merely a possibility.

It is always best to try and ensure, to the extent possible, that the
name chosen will not infringe on the rights of another during the
start-up phase.  This will help to avoid a possible cease and desist
letter down the road when large amounts have been spent on advertising
and marketing with the company name.   

Business owners must be aware that incorporating a company within a
state does not equate to trademark protection for the company name.
The filing of the formation documents of the company does not mean that
the business necessarily possesses the legal right to use a name
because federal trademark laws may have granted prior rights in the
chosen name to a third party.  If this is in fact the case, the third
party may be able to ultimately bar your use of the name.  We do have
to note, however, that a search, no matter how well conducted, has
certain limitations and can never be definitive. 

Initially, a very basic federal trademark search may be conducted
online at the U.S. Patent and Trademark Office (USPTO) official
website.  This will reveal registered and pending trademarks filed with
the USPTO.  We also recommend that a more comprehensive search be
conducted for a fee.  This search includes not only lists of federal
and state trademarks, but also domain names and unregistered marks at
common law.  This will give the business owner a wider breadth of what
is out there to better determine if the name choice is feasible or not.

Federal registration is not required to establish rights in a trademark. Common law rights arise from actual use of a mark. Generally, the first to either use a mark in commerce or file an “intent to use” application with the U.S. Patent and Trademark Office has the ultimate
right to use and registration. However, there are many benefits of
federal trademark registration, and these include the following:

  • constructive notice to the public of the registrant's claim of ownership of the mark;
  • a legal presumption of the registrant's ownership of the mark and
    the registrant's exclusive right to use the mark nationwide on or in
    connection with the goods and/or services listed in the registration;
  • the ability to bring an action concerning the mark in federal court;
  • the use of the U.S registration as a basis to obtain registration in foreign countries; and
  • the ability to file the U.S. registration with the U.S. Customs Service to prevent importation of infringing foreign goods.

As you can see, there is more to picking a business name than meets the
eye.  Business and legal considerations both serve as crucial factors
in this process. 

Elizabeth Ritter, Goodrich Law Firm, LLC

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