I was recently asked for advice in naming a business. Specifically, the person had an idea for a name that he thought made the business sound respectable, but there is another business which had a slightly similar name. The other business doesn't do exactly the same thing that he wants to do with his business, though outsiders might not realize that. He wanted to know what he should do.
This is one of those questions that is asked a lot, though honestly not often enough. Many new business owners come up with a name that they fall in love with. They go ahead and get business cards, brochures, flyers, t-shirts, decals for their trucks, awnings for the front door of their business, have the local paper mention them "coming soon," etc. They're invested.
Then they receive a Cease & Desist letter from an attorney representing another business, and end up throwing away all of that "collateral". Time and money wasted. Good will in the community gone.
This can almost always be avoided, or at least it can be a calculated risk. This is why I wish more new business owners asked...
How Should I Name My Business?
The person who asked the question already had an established residential general contractor business. However, he wanted to change the name to something that would be more simple and memorable, such as "ConstructBetter" (not really the name).
Unfortunately, there is already a commercial building company in the same general geographic area with a similar, though not identical name. Anyone in the business knows (according to him) that commercial building and residential general contractors are two totally different businesses, so there isn't any issue, right?
On top of that, he felt like all the good names are already taken, so there really isn't much to choose from.
Should he take the risk? Should he go with that solid name that gets the message across, and risk being sued?
What To Look Out For
First of all, I was being asked to decide if he should take the risk. However, only the business owner can decide if they should take that risk. I can tell them what the risks are, and what the likelihoods of certain outcomes may be, but is it worth it for them? Their own risk aversion, the litigiousness of the particular industry that they're entering, and their personal/emotional attachment to the name that they chose all factor in.
So, what are the risks? Well, it comes down to Trademark and "Likelihood of Confusion."
The other business may have a Federal Trademark, registered with the USPTO. This allows them to enforce their brand (whether it's a product or a service) anywhere in the USA. No one else can use a name, logo, etc., that might be confused with their's anywhere in the country.
The other business may also (or instead) have a Trademark registered with the state (and it may be in multiple states, depending on how significantly they do business in different locations).
An experienced Intellectual Property Attorney can check for the above fairly easily.
However, that other business might not having ANYTHING registered ANYWHERE, and still be a problem. If they are already in business, then they have COMMON LAW rights protecting their name and their reputation. The better known they are, the stronger their rights.
The idea is, we want to encourage businesses to do good work and make good products. How do we do this? By keeping other people from being able to get a free ride on the reputation and name of an already established business.
But They're Different!
Trademark Law is largely about "Likelihood of Confusion." Would someone seeing one business' name or logo be likely to be confused and think that it is somehow related to another business?
In the example above, one must keep in mind that residential and commercial may be different... but some portion of the customer base may still be confused, which is sufficient grounds for a law suit.
You may win the law suit. You may survey dozens or hundreds or even thousands of people and prove in court that no one is confused... but it will cost you A LOT to do so.
You MIGHT win, but you will almost DEFINITELY spend a small fortune doing so.
Why invest in a major business venture if you can't Trademark the name? You're going to be putting your hard work, and your money, into the business. Shouldn't you be able to protect the results of all of that effort as much as possible? Why work hard if someone can still steal the fruits of that labor?
Businesses register with their state's Secretary of State, including registering any name that they Do Business As. Many Secretaries of State will reject names that are confusingly similar to existing ones in that state. However, many will not, unless it is identical. The real question isn't whether you can name your business something, but can you protect that name? Can you get a Trademark, and be able to enforce it WHEREVER your business may grow (Don't you want to be able to grow?).
It is extremely unlikely that the USPTO would grant a Trademark on a very similar name, for a service that would be classified in the USPTO in the same way. Residential or Commercial, the USPTO is going to view them under the same or similar classifications. Additionally, if the name has the same meaning, or sounds similar, it will often not be granted a Trademark.What matters is if they are in a similar category, or one where one business reasonably expects to expand into the other category or area.
Look at it this way: Delta Faucets and Delta Airlines can both coexist and have Trademark protection. Delltah Appliances might be problematic.
The Bigger Point
All of the above is technical, but here is the biggest point I want to stress:
You are going to invest a lot of money and time in your business. You're committing to that business, and to a name. Make it something strong.
In the case of the above example, the names that were already taken were fairly generic and descriptive. "Best Builders". "Quality Construction."
Hard to get Trademark protection for in the first place, and hard to protect down the line. Remember, you cannot get Trademark protection on a generic term, or something that basically just describes what you do. This would be unfair to anyone else wanting to say that they do good work too, or make a quality product.
So, what should you do?
Make something up. Make up something unique and memorable.
"Xerox" is a made up word. It only exists, in any language, because the company created it. It is protectable because it is a unique name for one specific company. *
"Apple" was a word that existed, but it had nothing to do with computers. Now, it is a unique and memorable name for a tech company.
These Trademarks are fairly easy to get, and are very strong to protect. No one can come even close, in any area that competes with them.
Name your company something unique, possibly random, or possibly just something that is meaningful to you. This is your business; let that name be significant to you. Think of "Mercedes." It had nothing to do with cars, or the services offered, or where the cars were made. It did, however, have special meaning: it was the first buyer's daughter's name, and the pseudonym that he raced under.
My advice to the asker that sparked this post, and to anyone looking to start a business, is to pick something random that will be meaningful to you. Looking to the construction company, maybe your significant other loves magnolias. Name it Magnolia Construction, and know that as you build your business and your reputation in the community, it will be a strong name, a memorable one, and a legally defensible one.
Invest in your business name like you're going to invest in your business. It doesn't have to mean anything to anyone other than you, right now. But it will. No matter what it means now, that name will come to mean whatever you make your business mean.
* In fact, Xerox regularly places ads in magazines to remind people that "Xerox" is an adjective. It doesn't mean "copy"; it is a type of machine. Why? Because when a word no longer identifies a source of goods or services, it can no longer be protected by Trademark. "Escalator" used to be a company. So did "Murphy Bed". "Laundromat." "Thermos." "Trampoline." "Zipper." Now, they're just names for things, no matter who makes them.
Don't you dare say "Kleenex"...