What's in a Name?
In 1999 the business.com URL sold for $7,500,000. Even though this was at the height of the dotcom bubble, it still shows how valuable a name can be.
Just about everyone knows you can't open a hamburger shop and name it McDonalds without hearing from Ronald and his crew. But did you know that in 1988 McDonald's prevented Quality Inns from using the name "McSleep" for a chain of motels? But.. but... McDonalds and McSleep don't sound alike. And... and... McDonalds doesn't even own any motels, unless you count the few long-haul truckers sleeping in their cabs in the parking lot of a McDonalds near the freeway. How could this happen?
In 1986, US Steel spent several bazillion dollars to come up with the name USX. Between picking the name and making the annoucement public a start up telecommunications company registered USX Telecenters as a California corporate name. Not surprisingly, both companies sued each other for the name USX. The case settled with US Steel getting the name and USX Telecenters getting some serious money.
So, get to the point. The point is that business names are valuable, but it's easy to both step on someone else's name and important to protect your name going forward.
Okay then, Nina, give us the quick and dirty 100% foolproof answer. I think not little puppies. This is one of the more complicated and gray areas of business law. To make it a little easier to understand, let's look at this as having two directions -- back and forward; and two modes -- required and voluntary.
Looking back involves making sure you don't violate someone else's name and get hit with a cease and desist letter from another business owner, right after you just spent oodles of bucks on new brochures. It also involves making sure that you have the legal right to start a business with that name (ie that the appropriate governmental agency will let you file whatever you have to file).
Preventing yourself from being sued by another business is voluntary. Making sure you can legally register your business is required.
Looking forward involves using the name in commerce. The rule is "whoever uses a name in a marketplace first, has superior rights to those who might want to use confusingly similiar names in the future." Note, this says nothing about actually registering a trade mark. Use is the key, registration just helps with ease of enforcement. As a refresher, use of the name is required while registration is voluntary.
WAKE UP. I know this can be dry, but it's really important for business owners. The point is, this is a complicated area of law concerning something of value for your business. A blog post is not the place for an exhaustive analysis of this subject, but it is a good place to plant a red flag. Consider it waving. If you want to do more than watch the flag wave, email me (nina@buslaw.com) to discuss the value of your business name.
