Choosing a name for your business

The business name is one of the first and most important decisions in starting a business. However, business owners often have different ideas of what a name will do for their business. Is the name simply a moniker? Will the name develop into a strong brand? Will the name provide national recognition? Business owners should be aware of the importance and potential of the name of the business. In choosing a name, business owners would be wise to consider the various marketing and legal implications of using a proposed business name.

Marketing Considerations

Businesses change and grow over time. For this reason, business owners should choose a name that will be applicable and useful even if the business deviates from its foreseeable path. The following considerations will be useful in choosing a name that will best serve your business.

Consider the possibility that your business will grow and expand beyond its local boundaries. Avoid names that include cities or states because customers may believe that the business’s services are limited to a specific geographical area. A name that is relevant in any jurisdiction will facilitate expansion. You should also consider the possibility that you may want to sell your company in the future. A recognizable brand increases a company’s value.

Also, visualize how the name will look on a logo, on a sign, and online. A name that is long or difficult to read may be damaging to the brand. Clear and concise names are more visually appealing and memorable.

Know your audience. Some businesses may require professional names while others may need a simple or casual name. A name that is either too formal or informal for your audience may alienate your customers.

Before deciding on a business, research the state business records in the state in which you intend to initially do business.  Generally, every state has an online database which a business owner can search to determine if there are any conflicts with a proposed business name.  In additional to searching state business records, a business owner should conduct a domain name search.  Nearly every business today has a presence on the web. Clear and relevant domain names help attract customers while unclear or irrelevant domain names may confuse and deter customers.

Trademark Considerations

When deciding on a name, business owners should consider registering the business name as a trademark, either on the state or federal level, or both.   Federal trademark registration provides a registrant the exclusive right to use a trade name in connection with a good or service throughout the United States. However, not all names are eligible for trademark registration. Trade names that are already federally registered or that are generic will not receive trademark protection. Business names should be distinct. Not only will a distinct name be easier to register, it will distinguish your business.  Trade names that are not used in more than one state are not eligible for federal trademark protection.  When federal trademark protection is not available, a business owner should consider what registration options are available in the state in which the business owner intends to operate.

There are different categories of names that have varying chances of being successfully registered. Fanciful, arbitrary, and suggestive marks provide the greatest trademark protection. Fanciful marks are usually made-up words or names. Brands that use fanciful marks include Kodak, Pepsi, and Spotify. These names provide the greatest protection because competitors are unlikely to create and use the same or similar word. An arbitrary mark refers to a name that has no relation to the services that the business provides. Examples include Yahoo!, Uber, and Apple. These have an increased chance of achieving registration since the names are unlikely to fall into the same industry classification as other brands using the similar name. A suggestive mark is a name that hints at the services of the business. Examples include Netflix, PayPal, and Lyft. These provide an increased likelihood of protection because they are inherently distinctive. Suggestive marks also provide built-in marketing since the names encourage customers to mentally connect the name to a product.

Descriptive marks may also receive trademark protection in limited circumstances. Descriptive marks expressly describe the products or services that the business provides. Descriptive marks also include surnames and geographical locations. Though descriptive names may receive trademark protection, they may only receive protection after acquiring secondary meaning. This means that the words or name must have meaning beyond their original significance. Examples of descriptive marks include App Store and Bank of America. Initially, these types of names would be difficult to register because they would otherwise inhibit competition by eliminating names that best describe the type of business. Imagine the difficulty for the owner of a  a tire shop if he or she was unable to use the words “tire shop” because someone else had already registered the name “TIRE SHOP.” Prohibiting the use of “TIRE SHOP” in the owner’s name would most certainly be detrimental to the operation and marketing of the business. Note, however, that after a long period of continuous use and heavy advertising, a business may be able to achieve trademark registration in what would otherwise be considered a descriptive name. Names that have acquired secondary meaning include the Wall Street Journal, International Business Machines (IBM), and Walt Disney.

Business names require intense thought and consideration. In naming your business, keep an open mind in evaluating your business’s vision and goals. Also, be sure to take the steps to protect your business name  from competitors through registering your business name as a trademark on a state or federal level.

Kuzmich & Associates is located in Tempe, Arizona.  We assist many businesses throughout the state with a variety of legal issues, including employment contracts, leases, contract review and business transactions.  Need an experienced business law attorney? Contact us.

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