How important is a name? As individuals, a name is synonymous with one’s identity. It embraces an individual’s personality and reputation. Is it any different for a company?

Indiscriminately, small and large companies spend significant time and resources developing their brands – the names associated with their goods and services. In most cases, the name of the entity is also the most important, if not only, brand name.

It is the marketing team’s goal, when a company name is mentioned, to have the listener immediately identify the quality and trusted good or service associated with that company. That is what successful branding is all about – the consumer coming to know and trust, and ultimately desire, the good or service represented by that company name. No wonder so much emphasis is placed and resources are spent on branding.

Naturally, you would think that a commensurate amount of resources are spent on clearing and protecting a brand name. Unfortunately that is not the case. In fact, the following is an all-to-familiar occurrence: Joe Smith desires to create an entity through which he will provide his goods and services. Mr. Smith hires an attorney to create XYZ, LLC. After searching the WI Department of Financial Institutions (DFI) for availability, the attorney files the Articles of Organization for XYZ, LLC, and Mr. Smith is off and running. Years pass; tens of thousands are spent on “branding” through website development, use of multiple social media sites, and the printing and distribution of business cards, letterhead, and other marketing materials; and the company is reaping the benefits of having a wonderful reputation of providing quality goods and services. Then, the hammer falls; the fairy tale ends. Mr. Smith receives a cease and desist request regarding the use of XYZ, LLC. Must he abandon his name? Are the tens of thousands (or more) spent in developing XYZ’s name and reputation now wasted? How much will Mr. Smith spend and how long will it take to develop a new name? How much revenue will be lost during the transition?

This scenario has become very common since the internet has brought the world into everyone’s family room and your business into every competitor’s market! Although the analysis is a bit more complicated, the general rule is: first use rules! That is, the first one to use the name is entitled to the name.

An ounce of prevention … The key to avoiding this scenario is proper clearance and protection of the company and/or brand name on the front end of the process. This can be done for a fraction of the cost, expense and lost revenue involved in changing a name after years of using that name.

Whether choosing an entity name or a name for a new product or service line, the name must be cleared for availability – not only with DFI (if being used as the entity name), but also with state and federal trademark databases, other states’ business databases, domain name registries, and common law use databases. That is the only way to ensure the name is not already being used and is available for adoption. If plans are to use the name for business locations and/or providing goods or services in other countries, the name should also be cleared in such other countries.

Once a name is cleared for availability and use, the next step is to protect the name from abduction. Most businesses are adept at registering applicable domains. However, the name should also be registered as a trademark with the United States Patent and Trademark Office (USPTO), and where applicable, in other countries. The most significant benefit of such registration is that the name can be protected as long as it is being used, and after five years of registration with the USPTO, the name can become incontestable on the basis of prior use, trumping the first to use rule.

What’s in a name? Only the very reputation and quality of a company and/or its goods and services. Before adopting a name for a new entity or a new product or service line, be sure the name is available for long-term use by properly clearing the name. Then protect that name from abduction through registration and proper maintenance. Only then will the significant resources spent on branding that name not be in vain.

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Written By:
Attorney Tori L. Kluess

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