So today is the day. You’ve waited forever to quit working for “the man”. You have grabbed the bull by its horns and ready to be your own boss. You have a great concept, a great vision, and a five or ten year plan. And now all you have to do is name your business. Just one little name, that will bring customers or clients in droves. And all of a sudden, all of the energy is gone. You panic. You think of something simple, then something artistic. Something everyone knows. Something no one knows. You ask others. And finally you have the name. The one that is guaranteed to bring you all the success in the world that you have worked so hard for and deserve. You have a tradename!!!
You immediately have an attorney set your company up and you are now official: Great Name, LLC or Great Name, Inc. You have done it! You are now ready for success. The pressure is off and you are ready for business to begin. So what could go wrong???
Your company name or trade name is one of the company’s biggest assets and potential liabilities. The more descriptive or "clever", the more likely the name is already in use (though this leads the way to trademark issues, we shall save that full discussion for another post). If someone has been using the trade name before you or has the name registered as a trademark with the United States Patent and Trademark Office, your company could be in line for a big loss. Many clients want to trademark their name or franchise their business only to realize their trade name has been registered. What is worse is some clients build equity in their trade name, only to receive a cease and desist letter from another company claiming the right to the trade name. Why risk all of your hard work in starting a business, only to be forced to start over because someone else was using the name before you? All of these situations create extremely costly situations for business owners (whether through rebranding, loss of business opportunity through franchising, or a lawsuit for trademark infringement) that can be prevented from the beginning.
So how do you avoid the doomsday scenarios? Make sure no one else is using the name. That is it. If you are going to spend the money and time and energy to start a business, go the extra mile to prevent issues down the road. Do not assume the attorney you hire to form your company has performed a trademark search. Most do not. Have a trademark attorney do a trade name search to let you know what possible threats exist in using the trade name. At minimum, you can perform you own search on the internet and United States Patent and Trademark Office website to determine if the name has been used. However, I have had clients do so, only to find out threats existed. I would hear “but it is located in Nebraska”, or “but they didn’t have a website”, or worse “there were no hits on the first results page”. Take the extra time and money to have your trade name researched by a trademark attorney. You may certainly recognize the value if you don’t. An ounce of caution is worth a pound of cure.