Starting a new business venture is not easy. Selection of entity, agreements with founders, fundraising and investments, finding office space, purchasing equipment, materials, and supplies, creating a new web-site, and attracting customers or other relationships is difficult work. Entrepreneurs and new business owners sometimes find the most onerous task in selecting a new organization name. While it is important to select a business name that not only relates and identifies your business, most marketing experts would recommend that you select a name that you can build a brand around. Eventually, as your business grows, you will build a reputation, loyal customer base, as well as a name and logo that uniquely identifies your business. These intangible assets, or "goodwill," become valuable when you consider a sale or buyout of your business or interests.
In addition to the creative and artistic challenges of selecting an entity name, what types of legal issues can arise during entity name selection?
First, and foremost, it may be that an entity with the same name already legal exists in Massachusetts. If the name of your organization, and the organizational type (LLC, Inc., Corp., etc.) has already been selected by another organization, and it remains an active, valid entity, you will not be able to use that name. The Secretary of State for the Commonwealth of Massachusetts will not permit entities operated and owned by different parties to use the same legal organization name. (You can use the same trade name as another organization so long as your organization type is different. Example: You are an LLC, and the other entity is a Corporation). In this instance, your name selection may be limited by another organization's prior use and registration of that name.
Second, your ability to obtain a domain name, for the purposes of identifying your Internet resources (computers, web-site, email server, etc.), may also be limited. In all likelihood, unless you have selected a unique or obscure name, the domain name and extension will not be available for the original top level domains, including .com; .org; and .net. You may have to select a name and extension at a generic top level domain, such as .attorney or .financial. Or you will have to use a variant of your actual entity name, or adopt a trade name (D/B/A).
Finally, and most importantly, selecting the "wrong" trade name can expose your business to a trade mark or service mark infringement cease and desist letter, or infringement action. There are both state common law trade mark laws across the United States, including Massachusetts, as well as Federal trade mark laws, The Lanham Act. These laws and acts make it unlawful for a business that provides similar products or services to use the same or similar name and/or logo of another business that has already secured rights to that name and/or logo. In other words, you cannot profit from the exact use or variation of another entity's name and/or logo. The test for Federal trade mark infringement is whether your use of the trade mark of another can cause confusion to potential customers. If you are opening a fast food hamburger restaurant, you could not use the name "McDowell's" and use a yellow "M" in an Arial font to identify your business without infringing upon one of the most recognizable service marks world-wide.
As described above, selection of a new organization name is not an easy task, and there are some potential intellectual property legal issues that should be evaluated by a qualified business lawyer. If your business needs business startup or business formation services, please contact Attorney Stefan Cencarik at 617-669-9780.