Yep. Before explaining how this happens, a little background information is needed. Every state has an office charged with registering businesses that wish to do business in the state. In Minnesota, that office is called the Secretary of State’s office (hereafter SOS) and registering businesses is one of many tasks it undertakes. The SOS will not permit a company to be formed that has the exact same name as an already registered company, and other rules apply in choosing a name. Once the name is registered, it is yours to use – doing business in Minnesota. It is not reserved for your use beyond the borders of the state.
There is a common misconception that forming an entity at the state level somehow reserves the name in the same way that filing a trademark application with the United States Patent and Trademark Office (USPTO) does. It does not… in fact, on the USPTO website you will see the following caution:
However, a state’s authorization to form a business with a particular name does not also give you trademark rights and other parties could later try to prevent your use of the business name if they believe a likelihood of confusion exists with their trademarks.
Although a trademark is frequently a name (or logo) and may be related to the name of the company, the difference can best be explained by reference to the definition of a trademark. Here is the one provided by the USPTO: “A trademark is generally a word, phrase, symbol, or design, or a combination thereof, that identifies and distinguishes the source of the goods of one party from those of others. A service mark is the same as a trademark, except that it identifies and distinguishes the source of a service rather than goods.”
How do you acquire a trademark? Trademark rights are dependent on USE – to register a trademark a company must prove that it is using the mark in interstate commerce. To add additional protection, a trademark owner may file an application to register the mark with the USPTO. What does the USPTO check when that application is presented? It checks its own records – it does NOT do a state by state check to see if there are any entities doing business under a name that the applicant now wishes to register.
This situation can create problems especially for start up companies. It is important to remind company owners that a business registration in a state (or a name reservation in a state) does not stop another party from registering a trademark using all or some of the company name.
Recommendations: Searching for trademarks that consist of words is fairly easy to do on the USPTO website. Before choosing the business name for a new entity, check USPTO and do a general search on the internet. If someone else is operating a similar business with the name you intend to use, consider choosing a different name.
If you are contacted by a trademark owner claiming you must change your company name, contact an attorney. If your use of the name is prior to the trademark owner, and you have different products in a different area, you will likely prevail.