Whether you’re just starting a new small business or you’re already a successful small business owner, it’s very possible that you’re about to make (or you’ve already made) biggest branding mistake.
Don’t feel bad. You’re not alone, but it’s a mistake you should definitely fix as soon as possible because it could destroy your business.
I’m talking about your business name. If you’re using your business name to promote and sell your products and services in the marketplace, then that business name is also a brand name. That means it serves two purposes and needs to be registered in two different ways – as a trade name and a trademark.
Trade Name vs. Trademark — What’s the Difference?
In simplest terms, a trade name is the name used to register your business to operate in your state. It’s the name used on your bank accounts, tax returns, and other official documents. However, just because you’re able to use your business name as a trade name doesn’t mean that you can use it in the marketplace as a brand.
To use your business’ trade name to sell and promote your products and services in commerce, you need to make sure that no one else is already using that name in a manner which could be considered confusingly similar to consumers.
The only way to ensure that the name is clear for you to use in commerce is to do a comprehensive trademark search. Such a search will determine whether or not potentially conflicting marks are already in use. Importantly, a comprehensive trademark search will find conflicting marks whether or not they’ve been registered as trademarks. This is critical because even if another company hasn’t registered the mark, if they used it first, they have common law rights to it under trademark laws.
Trademark laws were created to protect consumers by eliminating confusion about the company selling specific products and services. A trademark, when registered with the U.S. Patent and Trademark Office, gives you the exclusive right to use your business name in commerce. If another company starts to use the same (or a confusingly similar) brand name to sell products and services like yours, you can stop them from using that name.
Bottom-line, a trademark is completely different than a trade name, and your small business needs both.
What Should a Small Business Do?
The onus is on you, the business owner, to make sure that your trade name isn’t conflicting with any existing trademarks. This is a critical step in building a business and a brand that so many small businesses skip, and the risk is huge. Often, a trademark infringement can be so expensive to recover from that small businesses have to close their doors, but it’s something that never has to happen.
Don’t become another small business disaster story. Make sure you clear your trade name in order to do business in your state and clear your business name as your brand identity by ensuring it doesn’t conflict with any existing marks that are already in use in commerce.
If a comprehensive trademark search reveals that your business name is clear from conflicts, apply for federal trademark protection so you can easily enforce your rights to that name in the future. What you pay to search and register your trademark today is thousands and thousands (possibly millions) of dollars less than fighting a trademark infringement and ultimately being forced to re-brand will cost.
Trademark Photo via Shutterstock
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You mention a “comprehensive trademark search” a couple times. Sounds like a great followup post to explain what that entails.
Robert, I will absolutely write about that for my next post!
Critical defects have been shown, where trademarking holds the maximum importance. In case of infringement of it, severe issues can be suddenly highlighted.
Jaynorth, You’re right. I can’t stress the importance of protecting your brand with a trademark enough. I’ve seen too many businesses and small business owners’ lives destroyed because they didn’t have a trademark for their brand at all or the mark they registered wasn’t registered adequately to give them the protection they needed. Hopefully, my articles here on Small Business Trends will help people avoid making these disastrous mistakes.
Kelley: Could you really have a trade name covered worldwide?
Martin, This is an excellent question, and the answer is yes. Some of the most famous brands in the world are known by their trade names, such as Coca-Cola, Nike, and Apple.
Great article, Kelley. As a branding/marketing consultant, I always tell clients that it’s advisable to engage legal counsel who’s expert in trademark and copyright law to conduct trademark searches and lock down IP rights. Too many times, I’ve seen neglectful execution in this area result in headaches later on.
Plus, there have been times where the infringement has been of secondary trademarks such as taglines, characterss or other properties. Or failure to protect has resulted in infringements from others that they can’t take action to rebuke.
You’re right on all of your points. That’s why simple, knockout searches using free or cheap online services isn’t good enough. I’m so glad to hear that you advise your clients to make sure the brands they want to invest time and money into building are actually clear from conflicts and strong enough to effectively protect and enforce as the business grows. I wish more branding/marketing consultants did the same!
Kelley, I just came across this article – the most articulate explanation of this issue I have ever read! Thank you! I am a marketing consultant working with small businesses. I think you should publish this again on LinkedIn but call it Trade name vs. Trademark. I’m sure it will help many people! I will also tweet to my followers–
Thank you so much, Janice. I’m happy to hear it was easy to understand – that’s my goal! And thank you for sharing! The more people who understand the difference between trade names and trademarks, the better!