Thursday, May 9, 2013

Avoiding Legal Issues When Selecting a Company Name

What's in a name?

For a company it could be everything. The name is the first introduction you have to your future customers. It's a way of building a brand and can matter a lot when it comes to establishing a foothold in the marketplace.

Think of it as planting your flag in the corporate world. The hitch is, if somebody got there before you, you'll be sent back to the drawing board.

The Legalities

The first legal issue is to make sure your proposed company name isn't already being used by another company. When you file articles of incorporation you are looking to qualify to do business and that begins with your company name. In other words, you can't open up a retail store and call it Target.

For instance, your Widget Inc. could survive as Widget Enterprises Inc. You should be cautioned not to pick a name that is too closely associated with a thriving business. That will get you into trademark trouble.

This is why many corporations often use a family name as the "umbrella" under which many other businesses can be created. You are able to perform a search for your business name beforehand to ensure that it is available. You might find that adding descriptive qualifiers can help if the name you want is similar to another.

The Trademark Issue

Right now, somewhere in the world, there is a trademark infringement lawyer preparing a lawsuit. Businesses who have spent millions on developing a brand and setting up a loyal customer base don't want that all their efforts ruined by some cheeky competitor.

Consider this the rule of the "Mc."

McDonald's has done a great marketing job of associating its products with the "Mc" surname. McNuggets, McWraps, McBites, McChicken, McFlurry... you name it and they put a "Mc" in front of it.

You could come along and have a carpet cleaning business that you want to call McCleaner and McDonalds would be well within their rights to haul you into court with a "cease and desist" order mentioning that your "Mc" is diluting their "Mc" brand. And because their "Mc" is first, you will lose.

Don't think that you can get away with a name that might be close to a company with a low profile. All they would need to do is serve you with a lawsuit and your entire business can come to a screeching halt.