What Can You Do When a Business Takes Your Business Name in the Same Town?

by Terry Masters
The law prohibits businesses from using similar names that might confuse the public.

The law prohibits businesses from using similar names that might confuse the public.

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Your business name is an asset that distinguishes your company's goods and services in the marketplace. Protecting your right to use a business name is as important as delivering a good product to your customers. State laws protect business names that are properly registered against subsequent users because name duplication can confuse and mislead the public. If you've trademarked your business name under state or federal laws, you have additional protection against misuse.

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Business Name Selection

The name you choose for your small business must comply with the laws of the state where your business is registered or operates. If your business is organized as a sole proprietorship, the law requires you to use your own name to conduct business unless you register a fictitious business name, also called a trade name, assumed name or "doing business as" (DBA). Likewise, a partnership must use the names of the partners as a business name, unless the business registers a DBA. Independent entities such as corporations and limited liability companies file formation paperwork to start transacting business. Part of that process involves selecting a name for the business that is not currently in use by another business in the state.

Name Registration

Typically, the office that registered your company's DBA or accepted its formation paperwork conducts an official search to ensure that the name you wanted to use is available. The search confirms that the state or locality doesn't have another registered company in its database that is authorized to transact business within the jurisdiction under the same name that you selected or a name that is confusingly similar. Any other business that tries to officially register the same name subsequent to your registration will usually be denied, if the name-check system is working properly.

Basic Legal Remedies

Most states make it an offense to run a business under a name that is not its legal name or a properly registered DBA. Potential consequences include fines and misdemeanor criminal charges against the business owner. Reporting the business to the state's business registrar, department of business affairs or local law-enforcement authorities should clear up the matter. If your business prospects are harmed as a result of the name duplication, you may have the option to sue the business owner who willfully misappropriated the name in civil court for damages.

Trademark Protection

Business owners have the option of applying for trademark protection for unique business names that are used to identify products and services in the marketplace. If you have registered your business name under state or federal trademark laws, you have additional protections against infringement. You can sue the other business in state courts with state-based trademark registration. You have access to the federal courts and additional remedies with federal registration, including the possibility of recovering the user's profits and up to three times your actual damages. Even if you haven't officially registered your business name as a trademark, you may have informal protection by being the first to have used the name to identify your products in commerce. Called common law trademark, it provides protection within the area where you've been using the name and can also support a civil case against the wrongful user of the mark.