{3:00 minutes to read} This question comes up frequently, especially when we’re working with startups. Whether they’re getting ready to launch, preparing to pitch to investors, or have just recently paid $5,000 for the perfect domain name, there is often a sense of urgency around company formation. But startups should consider conducting a trademark search before forming their company.
One common misconception is that registering a business name or a domain name will provide the owner with exclusive rights to that name, when in fact, each of these filings provide very limited ownership rights if any. The filings don’t give you the right to use the underlying name except as a corporate identifier or an address for your website, respectively. Your rights to use the name as a brand could be trumped by the owner of a registered (or unregistered, in some cases) trademark.
The Benefits of Trademark Registration
Trademark registration is the proper tool for putting others on notice that you’re claiming exclusive rights in a name (see Is Your Trademark Client Protected?). Clearing your company name as a trademark before you form your company, or before you spend $5,000 on a domain name, could save you significant time and money.
Company formation and trademark registration each start with availability searches, but these searches serve very different purposes. With formation, we’re only concerned with identical company names that have already been registered with the Department of State or Secretary of State in your state of formation. This is purely administrative. The only thing that Delaware cares about is that there aren’t two XYZ, Inc. companies in Delaware.
A trademark search, however, is a nationwide search designed to uncover potentially confusingly similar trademarks that could have a substantial effect on your ability to use your company name as a brand. This is a very different analysis. So while your name may be available for purposes of forming a Delaware corporation, you may face significant issues when using that name on your website.
Investors know this. Sophisticated investors don’t stop at “have you filed a trademark application?” Registration can take a year or longer. If your trademark application is still pending, investors want to know about the trademark search. They don’t want you spending their money on fixing naming issues.
If you do decide to form the company before you conduct a trademark search and you later find a problem with the name, you’re not dead in the water. Company names can be changed for a fee, but you’ll also have to go through the time-consuming process of updating your corporate bank account, your website, social media, and other marketing materials such as letterhead, business cards, etc.
And that perfect domain name? It just may have to go back out on the auction block.
If you have any questions regarding naming your company or product, please contact us at 212.360.2307 or info@trademark-counsel.com.
Kelly Weiner
Trademark Counsel
Law Office of Kelly Weiner PLLC
175 Varick Street, Fl 6
New York, New York 10014
(E) info@kellyweinerlaw.com
(P) 212.360.2307