You started your company four years ago and everything is going well when all of a sudden you are handed a cease and desist letter. The letter informs you that you are using another company’s trademark – their company name. What are you to do?
With the world increasingly getting smaller thanks to the internet, it is more common place these days to have two businesses that share the same name. When this happens, it is important to read up on your trademark laws to make sure your business is not at risk. The ultimate goal of establishing trademarks is to prevent consumer confusion. Here are four important questions to address to decide if your business is safe from infringement lawsuits.
1) Who used the name first? Whoever uses the business name first has seniority. If the company that sent you a cease and desist letter opened up their business before you opened yours, then you will be in trouble. However, if the company started using the name after you did, then your company would have seniority because you have been using the company name longer.
2) Who registered the name first? Now just because you have been using the name longer does not mean you are out of the water quite yet. You also need to determine who registered the name first. If you registered the business name before the other company and have been using it longer, then you are trouble free. However, let’s say you have not registered the business name, but have been using the name longer than other company. If the other company registered the trademark then your business will be affected. You can technically still use the company name because you were using it first, but you will be limited to where you can market your business. Your limited market area is determined by where you were conducting business at the time the other company registered the trademark. For instance, if two years ago when they filed their trademark, you were only doing business in the state of Virginia, you would then be only allowed to do business in that one state. All other states and countries would be closed off to you. This could greatly effect your business growth.
3) Does the other company sell the same product or service as your own? If your company and the other company both sell the same product or service then this could cause confusion to consumers. If the other company has already registered a trademark then your company will be in trouble. If your company sells a completely non related product or service from the other company then it does not matter if they have a trademark. Your company will not be in trouble because consumers will have no problem distinguishing your company from the other company.
4) Does your company compete in same market as other company? If your company and the other company both sell the same product or service, but conduct business in different states then this will not be a problem. However, with the invention of the internet this is now becoming a problem. The internet allows companies to conduct business globally. In a situation where two companies compete in the same market and share the same business name then it will come down to who has registered their trademark first.
The best way to avoid getting in trouble is to immediately trademark your business name. Also conduct trademark research before registering to make sure no one else is already using that business name that directly competes in your industry. If you do not wish to pay for the trademark registration, then I would suggest marketing to as many markets as possible before another company comes along and trademarks your business name. As long as you are first in establishing the business name and can prove you were doing business in set markets, then you are trouble-free. Your company name can stay the same and you are able to grow business as planned.