Why Having a Corporate Name is Not Enough

 

By:   Rob Hassett

Casey Gilson P.C.

Six Concourse Parkway, Suite 2200

Atlanta, Georgia 30328

770-512-0300

Email:  rob@internetlegal.com

 

Background and Summary

This article first appeared on the Netcelerate Home Page sponsored by the Advanced Technology Development Center at Georgia Tech. This article will assist entrepreneurs in choosing a business or company name. They will learn the difference between corporate and company names versus service marks and trade names and why it may be possible to obtain a corporate name that cannot be used as the name of the business owned by the corporation. (3 Pages)

Most business people make the error of assuming that if they are able to reserve a corporate name with the Secretary of State’s office of their State of incorporation that they may safely use that name in the operation of their business. That is not true.

Two different areas of law apply to this situation — the law relating to incorporations and the law relating to service marks.

Corporations are legal entities. Service marks are marks, such as logos, that are associated with a service. Frequently, the corporate name for a company is also used as a service mark. An example of this dual use is “Ford Motor Company.” Conversely, a corporation’s name may differ from its service marks. For example, Atlantic & Pacific Tea Company is a corporation that operates its business under the service mark “A&P.”

Rights in a service mark are obtained by using the mark in conformity with applicable law in connection with the operation of a business or by filing an “intent to use” registration in the U.S. Patent & Trademark Office in Washington (subject, of course, to no one else having prior rights in the mark and all other criteria being met). Those rights can be strengthened by registration in trademark offices of Georgia and other states and by registration in the U.S. Patent & Trademark Office. The purpose of laws relating to service marks is to protect customers from being confused concerning the sources of goods being purchased or services being provided and, in some circumstances, to protect the owner of a service mark from certain activities by others which would likely diminish the value of the mark or the reputation of the company.

Because service marks and corporate names serve different purposes in the eyes of the law and are regulated by two (2) different mechanisms, the name game can easily lead to headaches for the business person.

In making the determination of whether or not to permit incorporation under a particular name, the staff workers at the offices of the Secretaries of State of the various states are required to assure that the name requested is not reserved for and has not been issued to any other company for use as a corporate name in that state. The staff members of a Secretary of State’s office are not responsible for determining whether or not the corporate name requested is being used as a service mark by a different company, is registered in the trademark and service mark division of the same Secretary of State’s offices, is registered in the U.S. Patent & Trademark Office, is incorporated in another state, or is even in the telephone book in the same city. Although a request for incorporation of a famous mark might be denied because the staffer recognizes the names, quite frequently a person can properly and legally incorporate a business under a particular name, but not be able to use their corporate name in the operation of their business because it is another’s service mark.

The consequences to a second user of a previously established service mark would typically be the receipt of a “cease and desist letter” and a demand to change its business name. Under these circumstances, it would ordinarily be necessary for the recipient of the letter to change its business name to avoid a law suit. Such changes can cause substantial losses resulting from lost marketing momentum. Additionally, the second user may also be liable for substantial damages.

Unfortunately, there is no foolproof method for assuring that a name may be used. However, there are on-line computer data base services available for determining whether or not a service mark has been registered with the U.S. Patent & Trademark Office (e.g. www.micropat.com). Service marks registered with the U.S. Patent & Trademark Office are also available on CD ROM on the second floor of the Georgia Tech Library (Georgia Tech is a regional depository for the U.S. Patent & Trademark Office). Additionally, there are computer data base services available for determining not only whether or not a service mark is registered in the U.S. Patent & Trademark Office, but also whether the mark is registered in any state of the United States or has been referred to in numerous publications, including trade publications or other sources. Such an extensive search can be provided by companies such as Thompson & Thompson (800) 692-8833 and Government Liaison Services (800) 642-6564.

In this uncertain area of business planning, it is best to order a comprehensive name and service mark search as discussed above, and have it reviewed by an attorney to avoid misinterpretation.

The information above is provided for general educational purposes and not as legal advice. Laws in areas in which we practice change continually and also vary from jurisdiction to jurisdiction. Therefore no visitor to our site should rely on any of the articles provided for legal advice, but should always consult their own attorney regarding legal matters.

© 1997 Rob Hassett, Atlanta, Georgia. All Rights Reserved.

This entry was posted in Intellectual Property, Law by Rob Hassett. Bookmark the permalink.

About Rob Hassett

Rob Hassett is an attorney in technology, entertainment and corporate law with the law firm of Casey Gilson P.C. in Atlanta, GA. He is a co-author of a leading volume on internet and interactive media law and has taught many classes in the professional education program at Georgia Tech.

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