Naming your business is usually one of the first things many entrepreneurs do, probably because its a lot more fun than some of the other stuff you have to deal with at the beginning, like keeping the lights on. Legal rights related to names can be confusing, though – if you aren’t careful, you can end up thinking you have more rights to your brand name than you actually do. Below you will find information about the different categories of names, how they overlap, and the key differences you need to understand.
Trademarks identify your business to consumers – your trademarks may or may not be your organization’s legal or assumed names. Legal names identify your business as an distinct entity to the state and the public. Assumed names identify all the names other than its legal name used by your business to the state and the public. Trademarks offer protection for your brand, while legal names and assumed names don’t really offer any brand protection but do help business entities maintain limited liability.
Below is a chart that explains what each type of name does and whether registration is required.
A trademark is not always a name, but it often is. Unlike legal names and assumed names, trademarks actually offer your control and protection over your brand. While your legal name identifies your company as a distinct entity that exists, and assumed names notify the world that your business is using a name other than its legal name, trademarks identify your business to its customers. Thus, a trademark need not be a legal name or necessarily even an assumed name – just whatever name or names you use to communicate your identity to consumers.
For that reason, trademark rights grant you the right to prevent others from using your trademarks in ways that are likely to confuse consumers. That doesn’t mean you can stop every business that might use one of your trademarks – the key issue is whether it creates a “likelihood of confusion.” Likelihood of confusion is a complex analysis, so suffice it to say that while trademark rights offer protection against a business infringing on your trademark, there will also be occasions when a business can use your trademark without issue.
Is trademark registration required?
No, but there are a lot of benefits to registration that often make it worthwhile even though it is not required. Trademarks exist regardless of whether they are registered – businesses create trademark rights by using a name, device, or other symbol in commerce. Registrations are optional at the federal and state level, but federal registration in particular grants benefits that make registration highly desirable for many businesses.
What does a trademark protect?
Trademarks protect against the unauthorized use of a name that is likely to cause confusion to consumers. For instance, if Acme Inc. owns the trademark rights to “Acme Anvils” for its stores, and another retail establishment begins using the name “Acme Anvils Unlimited,” then Acme Inc. can probably force Acme Anvils Unlimited to change its name because its so similar to “Acme Anvils” that a lot of consumers are likely mislead to believe they’re the same store.
Every business that uses an entity structure such as an LLC or a corporation must choose a name to include on its formation documents. For instance, the articles of incorporation might name the business “Acme Inc.” This is it’s legal name.
The legal names of businesses that don’t use an entity structure, like a sole proprietorship or a general partnership, use their owners’ names as a legal name. So, if a man named Henry Case opens a store as a sole proprietor, the legal name of the store is just “Henry Case.” From a legal perspective he is the store.
What Does a Legal Name Protect
It does not prevent others from using your business’s legal name in their marketing or as a general business name, nor does it protect against someone from forming a business with the same name in another state. Each state is its own island, in this regard, and there can be 50 entities in 50 different states with the same name.
Businesses operating as entities, such as LLCs, must register their legal name with the state during formation. Non-entity businesses such as sole proprietors and general partnerships do not need to take any steps to establish a legal name, obviously, since they use their owners’ names.
An assumed name is a name used by a business that is not its legal name. If “Acme Inc.” does business under some other name, such as “Bobmart,” that is an assumed name. Even dropping the “Inc.” from the legal name and doing business as “Acme” is technically an assumed name.
For sole proprietors and general partnerships, whose legal names are their owners’ names, any other business name is an assumed name. If a sole proprietor named Henry Case uses the business name “Casemart,” then Casemart is an assumed name.
What Does an Assumed Name Protect
For legal entities, registering an assumed name prevents others from registering the name for another entity in the state.
More importantly, it ensures that the entity maintains its liability shield even if it was doing business under an assumed name instead of its legal name – failing to register assumed names with the state can lead to piercing the corporate veil.
For non-entity businesses in Michigan, registering the assumed name is usually a condition to lawfully doing business in a county. Additionally, certain permits, licenses, and government contracts may require submission of a valid certificate to conduct business under an assumed name of an applicant business.
Assumed names do not prevent others from using your business’s assumed name in their marketing, or as an unregistered assumed name. Nor do they protect someone from registering an assumed name in another state – assumed names exist solely at the state or local level.
Assumed Name Registration Requirements
Michigan and most states require businesses and nonprofits to register their assumed name. In Michigan, businesses that are legal entities such as LLCs or corporations register their assumed names with the state. Non-entity businesses such as sole proprietorships and general partnerships must register their assumed names with the counties where they operate.