What's in a name?

Many contracting companies use logos, nicknames and trademarks to differentiate themselves from the competition. This strategy often is an integral part of a company's overall marketing efforts and can be effective. But the use of trade names, trademarks and the like carries with it the responsibility of complying with the legal requirements for their use and protecting your ownership of them.

Some definitions

The use of any shorthand reference to a company's name constitutes a trade name. People often refer to a trade name as a DBA (short for "doing business as," or d/b/a). For example, a business with the formal name XYZ Roofing Contractors Inc. might want to only put the name "XYZ Roofing" on the sides of its trucks and on brochures or marketing materials. Or a corporation might have as its formal name John Q. Public Inc. but operate its business as Johnny's Roofing. In both cases, the companies are using trade names.

A trademark differs from a trade name in that a trademark attaches to a particular product or service whereas a trade name is used in connection with an overall business. For instance, a roofing contractor (such as XYZ Roofing Contractors Inc.) might develop a unique catch phrase (such as "this city's best roofers") to be associated with its services. The company is not using a shorthand phrase to refer to the business in general; instead, it is using its mark to refer to its services. In a similar way, the company could develop a logo to be used with its services.

Technically, a trademark applies to a particular product developed and sold by a company. The term service mark applies to marks developed and used in connection with services, such as roofing contracting. However, in every meaningful way, trademarks and service marks are developed and protected in identical fashion, and I will refer to all such marks by using the generally accepted term trademark.

A number of states use the terminology "fictitious name" to refer to circumstances in which a company chooses or is required to use a name other than its legal name to conduct business in a particular state. In some cases, the term fictitious name has the same meaning and import as a trade name or DBA. In other cases, the term refers merely to a requirement that the company adopt a fictitious name to be qualified to do business in the state because another company already has the same or a similar name. Pay careful attention to the meaning that applies to each individual situation.

Protection of trade names

The use and protection of rights in trade names is determined solely by reference to applicable state law. Different states impose different requirements with respect to the ability to use such a trade name and the steps necessary to protect the use of the name from being co-opted by a competitor. You should become familiar with the applicable standards.

For instance, some states have a mandatory filing requirement for protecting trade names; others do not. Among the states that have a filing requirement, some require filing in a central place (such as with the secretary of state's office); others require filing in counties or other local jurisdictions. And the states requiring local filing sometimes mandate filing in every local jurisdiction where the company is operating while others only call for filing in the place where business is principally conducted. To properly protect trade name rights, you must know the local requirements.

Once a trade name is properly established, be mindful of the way in which you use the trade name. The purpose of a trade name is to create an identity or distinction in the marketplace. Therefore, trade names are best used on trucks, equipment, business cards, marketing materials, letterhead, store front signs, etc. But contracts, warranties or other legal documents should be executed using the company's proper legal name though the trade name could be added (for example, XYZ Roofing Contractors Inc. d/b/a XYZ Roofing).

Use and protection

If your company has developed a trademark or logo, how is it best protected? Generally, under state law anyone developing and using a trademark has rights to that mark from the date the trademark is first used in connection with the owner's business even if there is no registered trademark. The important issues relate to the dates of the first use of the mark and whether that use has continued. If you are first and have been using the mark, you have rights that can be protected.

However, winning such a case can be difficult. Evidence has to be gathered to prove the date of first use and continued use of the mark. Further proof may be required to show likelihood of confusion or actual confusion by customers in the marketplace. The case may have to be brought in the defendant's home territory, which could have a negative practical effect because of biases of local judges and juries. Even if you are successful with bringing such a case, you may not be able to recover your attorneys' fees and costs even if the defendant clearly intended to act contrary to your rights to the mark.

Federal trademark registration provides superior rights to trademark owners. The key factors still involve proving first and continued use of the mark. But the federal trademark law ensures you can bring a claim in federal court and also provides statutory damages and a mechanism to recover attorneys' fees in the event you can prove a willful violation of your rights. In addition, the proof process can be more advantageous because as the owner of a trademark registration, you may be entitled to presumptions about your use of the mark and ownership, which the alleged infringer would have to overcome.

The registration process is not onerous, but as with many government programs, there are some important requirements. To be granted registration, the mark's owner must be able to show the mark is not merely descriptive of the goods or services and does not conflict with any existing registered mark.

Often, mark owners will commission a search of the existing trademark office records to obtain as much information as possible before seeking to have a trademark registered. These searches can be informal or extensive, and associated costs vary accordingly. The application process usually takes at least six months, assuming there are no objections to the registration of the mark, and can take longer if there are issues that need to be resolved with the examining attorney in the trademark office. Once registration is obtained, the mark's owner needs to continue to use the mark and make periodic filings to keep the registration in force.

Regardless of whether a trademark or logo is registered, you will be better served if use of the mark or logo is monitored and policed because, as noted, the ownership rights to a mark or logo are derived from use of the mark; therefore, allowing a competitor to use the mark (or something confusingly similar) can negatively affect a claim to exclusive ownership of the mark. Cease and desist letters and lawsuits when necessary can protect exclusive ownership of marks and logos. Diligent enforcement of the mark will be rewarded.

One final point about the use of a trademark: Only trademarks that have been registered with the U.S. Patent and Trademark Office are entitled to have the ^® symbol displayed next to the trademark. If your company has obtained a registration for a trademark, you can and should use the ^® symbol wherever you use the trademark. If you have applied for but not yet obtained a registration or even if you are using a mark in which you intend to assert ownership rights but for which you do not intend to seek a registration, you can and should use the ™ or ^SM symbols in connection with the mark. Use of these symbols demonstrates you intend to assert rights in the mark and can help prove infringement if issues arise.

State law issues

Sometimes, companies are confused about their rights to use a corporate name when that name is similar to a name being used by another business. Typically, a state's corporations department determines whether to allow a new company to use a particular name by applying a "distinguishable" standard. That is, the office determines whether the new name can be distinguished on its records from any existing company's name.

Applying this standard, a state's corporations department might determine a new company can be formed using the name XYZ Professional Roofing Contractors Inc. even though XYZ Roofing Contractors Inc. is an existing company. The names are distinguishable because a computer can tell they are not identical.

However, the name of the new company might confuse the public as to who is providing roofing services. The right to use a particular name when conducting business is not the same as the right to form a business with that name. The standard for using the name typically is a more rigid one: A company cannot use a name or trademark that will likely cause confusion with the public regarding the origin of the goods or services.

In the example, the existing XYZ Roofing Contractors Inc. can and should make efforts to prevent the new company from using the name XYZ Professional Roofing Contractors Inc. Because it had been using the name before the formation of the new business, the older company owned the rights in its name even though it may not have formally registered a trademark.

Website names

Occasionally, a business might encounter a problem reserving a website domain name using the company's name or catch phrase. If the name is being used by someone who legitimately has the right to use the name, not much can be done. However, if the other company has reserved the name in hopes of selling it or causing confusion among potential customers, that could be against the law. Specifically, those actions could be a violation of the Anti-Cybersquatting Piracy Act (which is part of the federal trademark law known as the Lanham Act).

In the early days of the expansion of the internet into the business and commercial world, a number of opportunists reserved internet domain names using the names of existing businesses with the intention of then selling those names at a substantial profit when businesses realized their names were not available. In response, Congress passed the Anti-Cybersquatting Piracy Act, which serves to protect businesses from bad-faith actions with the intent to profit from existing businesses. The statute also can be used to prevent cybersquatters from registering a domain name that is identical to another company's valid trademark with the effect of directing web traffic to the cybersquatter's website as opposed to the site of the company the customer seeks.

Two important points to note under the Anti-Cybersquatting Piracy Act: A trademark does not need to be registered to be entitled to protection, and liability is established by the offending company's use of the domain name to profit from an existing distinctive trademark owned by someone else.

The trademark owner then can demonstrate intentional efforts to cause confusion in the industry, which may well rise to the level of the statute's requisite bad-faith intent to profit from the existing trademark. Therefore, the trademark owner could be entitled to an injunction prohibiting this action, monetary damages for lost business and statutory damages under the Anti-Cybersquatting Piracy Act, including attorneys' fees and punitive damages.

Claim your name

Trade names, trademarks, logos and slogans can be critical to marketplace identification and promotional efforts. To achieve the greatest protection, formal trademark registration often is the best solution and can be well worth the expense. Understanding the differences between these types of valuable intellectual property also is important when deciding on appropriate measures. Once the rights are secured, vigilance and care in enforcement and use of those rights will help preserve these important assets.

Scott D. Calhoun is an attorney with Atlanta-based law firm Hendrick, Phillips, Salzman and Siegel.