What Is A Trade Name?
A trade name is a name that is commonly used by a business that does not use the full legal name of the business. Although it is usually registered with a state government agency and is commonly referred to as a “doing business as” or “DBA,” it is a “shorthand” business name used for commercial purposes. The state government does not give companies a trade name with a prospective right as granted for a trademark. A trade name is protected only if it is functioning as a trademark to identify and distinguish the company’s goods from those of others.
Trade Name Registration
Although the procedures to register a trade name vary from state to state, registration of a trade name does not involve any complicated process to be approved by a state government. Applicants simply list the name they want to register on the application and pay for the processing fee and the registration fee. There is generally no “clearance” performed by the state agency other than to deny registration for a trade name already registered.
What Is The Difference Between A Trade Name And Trademark?
A trade name is a “shorthanded” name to identify a business other than by its legal name, such as “ABC” (trade name) instead of “ABC Inc.” (legal name). A trade name may also be used to identify a company’s products or services just like a trademark but in order to receive trademark protection, the trade name that is used as a trademark must be protected as a trademark. As mentioned in an earlier trademark article, trademark law gives the most protection to distinctive names, logos, and other marketing devices. In decreasing order of distinctiveness are marks that are: (1) arbitrary and fanciful; (2) suggestive; (3) descriptive; and (4) generic. A business should not assume that its registered trade name gives the company the right to use the trade name for any business purpose and is legally fully protected.
Trade Name Infringement
The test used to determine whether one company’s trade name infringes that of another is whether the use is likely to cause confusion, mistake, or deception among the relevant consuming public just as the test used for trademark infringement. Therefore, if a company’s trade name is sufficiently similar to another’s registered trademark, the test of “likelihood of confusion” is applied to such confusing trade name and a trade name may infringe on a trademark. Misuse of a trade name could also expose a company to liability under federal and state unfair competition laws and consumer protection acts.
Although trade name registration is not a complicated process, companies should be careful about selecting a trade name. If the trade name is infringing another’s trademark, the company using the infringing name might ultimately have to change it and spend extra costs on reparative advertising in addition to defending and paying damages from a trademark infringement lawsuit by the trademark owner. In other words, the business should approach trade name adoption with similar care as it would create trademarks.