As simple as choosing a business name is, it has turned out to be one very important aspect to consider while opening a business or registering one. It is a known fact that the name of your business is almost the first thing a person will encounter when they want to patronize your business; even before your store front or your products or services.
If you name your business wrong, it can affect your sales, reputation, and even its chances of success. When selecting a business name, it’s important to decide upon a name that’s easy to remember, descriptive of the business, and attention drawing.
But what if in the bid to get the best name, you pick up a name that is already in use in your state or in another state? How will this affect your business and what will you do in this situation?
Can 2 Businesses Have the Same Name in The Same State?
Yes, it is possible for such a mistake to happen, but if this is allowable within the confines of business law is what we will be exploring. One thing we have to know is that huge companies have invested millions creating their brand, and for this reason, they will be very protective of their brand if they think it is being undermined by someone else using a similar name.
With the world increasingly getting smaller thanks to the internet, it is more common these days to have two businesses that share the same name. This can create a huge confusion for clients of both businesses, so this is not allowed by law. This is especially if they are in the same industry.
It is very rare for two businesses operating in overlapping markets to register similar business names. This is not supposed to happen, but things slip through the cracks. It usually takes either an administrative proceeding with the Patent and Trademark Office (“PTO”) or a lawsuit to resolve the situation.
The outcome is difficult to predict and usually depends on how the situation developed in the first place. Unless you have deep pockets for litigation, you should think very carefully about reaching a negotiated settlement as quickly as possible to keep costs low.
If you determine that you are competitors, then you need to find out who began using the mark first and who registered the mark first. The best case scenario is that you both used and registered the mark first. Alternatively, the next best thing is that you have used the mark first.
This will secure your right to use the mark in the market you were using before the other business registered the mark. If you determine that your competitor has both used and registered the mark before you, then you should probably focus on reaching a negotiated settlement as quickly as possible. This is the only way out for you.
Can 2 Businesses Have the Same LLC in The Same State?
You may be surprised at this but it is fairly common for 2 businesses to have the same LLC. If you’re already successfully running one business under your LLC, it might seem like a bright idea to start a second business under the same LLC. But what does the law say about it?
The advantage of an LLC is the limited liability it affords its owners. When you run two separate businesses under two separate LLCs, the assets and income of each individual company is also protected from any liability risk which might affect the other company.
If you combine two businesses within one LLC, however, the assets and income of each business are no longer isolated from each other, and each is at risk of any legal claims that might be directed against the other.
For Example: Say you run an photography business using the same LLC that operates your lawn care business, and there was a disaster on the lawn of one of your clients, it’s not just the assets and income of your lawn care business that will be exposed to liability.
The assets and income belonging to your photography business will also be exposed to any legal claims which might be filed against your other company as a result of the incident. There is, however, one scenario in which it might make sense to have two businesses under one LLC — and this is the case in which you’re using your LLC as a holding company. A holding company LLC is an LLC which doesn’t have any operations; its main task is to own other companies.
By structuring matters in this way, you obtain two levels of protection. The LLCs owned by the holding company LLC provide limited liability to their owner, the holding company. Since the holding company is also an LLC, it provides its owners with limited liability protection.
Can 2 Businesses Have the Same LLC in Different States?
If someone else is already using your business name but they are formed in a different state, note that you may be able to use their name in your state if the name is not trademarked. To start, you need to make a search to know which names are in use before starting your business.
If you find that someone else in another state is using the name you want to use, then you need to check whether they have trademarked it. If they have not, then you can form a business with that unique name in your state. You also need to verify if it violates trademark rules.
Since businesses are registered at the state level, it is possible for your company to have the same name as a business in a different state.
By choosing the same name as another business, you risk being forced to change your name or even pay monetary damages to the other company. Sharing a name with another company can also make it difficult to register trademarks for your own business.
So, if you want to protect your business name across all states, you will need to trademark it. Trademark laws help shield businesses from unfair competition by protecting logos, symbols, names, and slogans that uniquely distinguish one business from another.
The reasoning behind this is that having two businesses operating with the same name or other identifying features can cause consumer confusion. One business may attract the customers of another simply because the consumer cannot tell the difference between the two.
What to Do When Your Business Have the Same Name With Another Company
When two businesses share the same name in the United States, one way to sort out this issue is to call up the trademark law. The ultimate goal of establishing trademarks is to prevent consumer confusion. If your business shares the same name with another, there are some questions you can use to ascertain if you are safe from infringement lawsuits.
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1. Who started making use of the name first?
You should know that the business that started making use of the name first will be considered first. If the company that sent you a cease and desist letter opened up their business before you opened yours, then you will be in trouble.
However, if you company had started making use of the name before the other company came on board, then your company would have seniority because you have been using the company name longer. To avoid the seniority issue from cropping up, when you are putting together your business plan and have found a business name you want to use, do well to file an Intent To Use application with the PTO.
If you file an Intent To Use and someone starts to use the same or similar business name before you launch, your rights are protected. Thus, “intent to use” applications are an important part of putting together a viable business plan and protecting your interests during the process.
2. Who registered the name first?
Now just because you have been using the name longer does not mean you are out of the water quite yet. You also need to determine who registered the name first.
If you registered the business name before the other company and have been using it longer, then you are trouble free, and the other company has to sort themselves out. However, let’s say you have not registered the business name, but have been using the name longer than other company. If the other company registered the trademark before you, then your business will be affected.
You can technically still use the company name because you were using it first, but you will be limited to where you can market your business. Your limited market area is determined by where you were conducting business at the time the other company registered the trademark.
Take for example, if you started using the business name first, but the other company registered it before you, know that you cannot register the business in any state in the United States again. This then means that you have lost out on expanding your business outside your state.
3. Are both of you in the same industry?
Let’s assume that you and the company you share the same business name with are in the same industry and you make and sell same products or services, then there could be a serious problem. If the other company has already registered a trademark, then your company will be in trouble.
But if your company sells a completely non related product or service from the other company, then it does not matter if they have a trademark. Your company will not be in trouble because consumers will have no problem distinguishing your company from the other company. The both businesses can easily co-relate.
4. Do you both compete in same market?
If your company and the other company both sell the same product or service, but conduct business in different states then this will not be a problem. However, with the invention of the internet this is now becoming a problem. The internet allows companies to conduct business globally. In a situation where two companies compete in the same market and share the same business name then it will come down to who has registered their trademark first.
How to Ensure Your Business Name is Protected Across the United States
If you want to protect your business name throughout the United States, you can do that by filing a trademark. You might think a copyright or patent is appropriate, but they’re used for different purposes:
- Patents protect inventions, not the name of a business.
- Copyrights protect creative works and won’t protect the name of your business.
Once you’ve trademarked a name, it’s protected across the U.S., and if another business were to infringe on your trademark, you can take them to court. Trademark rights are acquired in two ways. One is by being the first to use the mark in commerce. The other is to apply for federal or state trademark registration.
Federal registration means that you file an application with the USPTO. A trademark provides certain benefits beyond those provided by common law, such as creating a nationwide presumption that the trademark is valid and giving you the right to use the trademark nationwide.
Once a trademark is granted, certain filings are required to maintain registration, including renewals and declarations that the mark is still being used. Trademark protection can also be lost if the mark is abandoned, improperly licensed, improperly assigned or becomes generic.
A trusted adviser familiar with trademark law can help you if you decide to take steps to protect your company’s trademark rights
Trademark law is complicated, so it is always a good idea to consult a trademark attorney if you have any questions or concerns regarding your business name. An attorney will be able to conduct more thorough research and offer expert advice on whether you should use a given business name and if and when you should register a trademark.
Trademark attorneys will also ensure proper compliance with all legal requirements and deadlines throughout the trademark process. You can find an attorney by searching the American Bar Association or your local and state bar association for a trademark attorney best suited for you.