Choosing a Business Name
Dec 26th, 2006 by admin
Proper Grammar and Usage of Entity Names, Trade Names, Assumed Business Names and Trade Marks in Oregon
Once an entrepreneur decides on a name, they must consider how to maximize the value of that name. They may do several things with it. Lately, the first thing they do is get the universal resource locator (URL) or domain name on the Internet by registering it with one of the various registrars. Sometimes they register a trademark of the same name. Then they register with the Secretary of State to form the legal entity, if they think about it.
These events may happen either all at once or over a period of months. But, this process should be done sequentially first to limit liability, and then to preserve the entrepreneur’s right in time. There are differences between owning, registering and defending a name. At the very least, one should understand the differences, provide proper names, and use them correctly in formal documents and pleadings. Unfortunately, improper usage eclipses proper usage with a great many members of the bar.
Ideally, to limit liability, the first thing to do is to form an entity separate from the proprietor with the Secretary of State, thereby creating the “it.” This is, perhaps, the first defense to having an individual be personally liable for their activities in commerce. Only then can the business person look towards proper usage and grammar of the name to maximize the value and effectiveness of the entity.
While choice of entity is a complex and involved process, some basic considerations are available in the matrix listed as Appendix A to this article. A detailed discussion of those complexities and considerations are beyond the scope of this article, but the reader must recognize that a “person” in much of Oregon statutory law includes business entities. Therefore, the person is a noun, but business names and names used in commerce are seldom that simple.
1.0 Real and True Names
Real and True Names are nouns. These are popularly, and, depending on the circumstances, sometimes inaccurately known as “legal names,” “entity names” or “registered names.” Real and True names[2] may also be registered as assumed business names. For example, if a client incorporates as Acme Inc., they may also choose to register the assumed business name, Acme. You must refer to a company’s real and true business name when registering an assumed business name.[3]
Real and True names include surnames with a combination of the individuals given name and initials (this is common in sole proprietorships); names of domestic or foreign corporations, limited partnerships, business trusts, estates, general partnerships, non-profit, limited liability companies, as stated in the articles, amendments or foreign corporation[4] name as registered with the Office of the Secretary of State. This is optional under the statute[5]as the real and true name provides the public with notice of the entity. While a trademark, service mark, and trade name sumltaneously, companies must do so appropriately.
1.1 Real and True Name Punctuation and Search Syntax
Given that the purpose of name registration is to give the public notice of the type of entity, and therefore which laws govern its existence, as long as notice is provided and non-deceptive, that is legally sufficient. For example, Acme Inc. cannot be a limited liability company as Inc. implies Incorporation, and therefore, the corporate form of structure. Recently, law firms were not allowed to have trade names but required to state the constituents of the entity structure. Of course, this is no longer the case.[6] The syntax that is not apparent is how practitioners can limit errors in filings, searching or other matters in representation and due diligence with a client.
When it comes to registering the Real and True name, less is more. Given the searchability of today’s databases, the conventional wisdom in name registration is to omit punctuation. The more commas, periods and spaces in a name, the less likely it will be found or a searcher will find it. For example, registering Acme LLC is preferable to Acme, L.L.C. The probability I will drop a period or comma is obviously greater in the latter. Acme Corp. and Acme Inc. will require the period for traditional clarity, but searches, depending on the search structure used, may omit the period to get the widest group. Please consult the best natural language, Boolean or proprietary search formats of the database. The various state search structures vary widely, and even the United States Patent and Trademark Office has multiple search syntax options and has different data fields between patents and trademarks for basic information (e.g., separate state field in the address section). This makes searches sometimes tedious and susceptible to error. When in doubt, search all entities.
1.2 Virtues in Broad Due Diligence Searches
Do not assume your client is telling you the correct entity. If the client formed the entity, many times the registration has lapsed or they cannot remember whether a limited liability company or corporation was filed. In these cases, search, search Ajax, or if that is too broad to be managed given time restrictions, search under Ajax LLC, Ajax Limited Liability Company, Ajax L.L.C., Ajax, LLC, Ajax, L.L.C., etc.
There are legal reasons[7] and business reasons[8] to choose the format. So syntax and punctuation of real and true entity names must be reviewed with the client based on their intended goal.
2.0 The Assumed Business Name[9]
Assumed business names must be thought of as pronouns. They represent the actual entity, but are not that legal entity – the noun would be the Real and True Business Name. These are also known popularly as “trade names.” Just as “he” may represent the author, “Carl’s Jr.” may represent Carl Karcher Enterprises, Inc., as in the case to be discussed. They are often used, erroneously, as adjectives but they represent the actual “person” under the law. Often, one rarely sees in print “Microsoft Corporation Software,” which would be similar to saying KKR LLP Services. In “trade,” which includes not for profit enterprises, we generally say “Microsoft Software” or KKR Services. Proper usage is demanded by the law if one wants to efficiently prosecute or defend a name, entity or procedural shortcomings of a client.
Registration of an assumed business name is required in Oregon.[10] This is to provide the public with notice of whom they are doing business with. Logically, a service mark must be registered as an ABN if the public cannot determine the Real and True name of the person[11] as they are associated with the good, service or software as used in trade. The exceptions to registrations include foreign corporations issued a certificate of authority prior to September 20, 1985; a partnership that uses surnames; and a group of 10 or more farmers who associate to form an irrigation project. It has been held that the corporate name of a foreign corporation need not be registered with Secretary of State to qualify as “real and true name” for purposes of ABNA.[12]
The statutory example given is generic and, therefore, imprecise: “Any name that a person uses to identify a business that includes a word or phrase that suggests the existence of additional owners, such as ‘Company,’ ‘& Company,’ ‘& Daughters,’ ‘& Associates,’ or a similar word or phrase, is an assumed business name, unless it is the Real and True name of the person that carries on, conducts or transacts the business.” Many are quick to point out “& Associates” seldom implies co-owners in a law practice, for example.
2.1 Statutory Damages and Legal Fees
If one successfully sues someone for failure to register their assumed business name, damages of $500 may be awarded along with legal fees.[13] This memorializes the need to punish those who play the name shell-game with the public. These claims are generally part of another claim or defense, such as failure to give notice, as was the case in a recent “Carl’s Jr.” personal injury case.[14] In that case, a lengthy dissent discusses the nexus between notice and the statutory requirements of registration, although the actual claim for violation of the registration statute of “statutory negligence” was settled. The dissenting judge believed the plaintiff satisfied the written demand requirement when asking for attorneys fees where $5,500 or less is pleaded.[15]
Failure to register is an additional claim that allows legal fees associated with the harm caused by the failure to register. In various fact patterns, exactly where the proximate cause of the harm ends is a point of skill in advocacy.
2.3 County Assumed Business Name Registrations
Assumed business names are a county by county affair [16] and disputes may involve a county by county examination.[17] Generally, one can register an Assumed Business Name for the same fee in all counties. The intent is for businesses to register in all counties where the business will be conducted under that name. Why would one not register in all counties as a matter of course? If one has knowledge of use of the name in various counties, to use that name may create conflict with ones common law trademarks. As will be more fully discussed below, Trademarks are adjectives, not pronouns and not nouns in usage, but are nouns in the actual asset sense.
3.0 Trade Names
A Trade Name is generally an adjective. It is less frequently an adverb, and may be a pronoun or noun, in certain circumstances. A Trade Name is used to denote a company, business or partnership and its goodwill.[18] A trade name is the broadest label under which one can conduct business. Trade Name means a word, name, symbol, device or any combination thereof used by a person to identify the person’s business, vocation or occupation and to distinguish it from the business, vocation or occupation of others. [19] Therefore, a Trade Name need not be associated with a specific good or service to be offered protection. A Trade Name may be an assumed business name.
In Umqua Broccoli Exchange v. Umqua Valley Broccoli Growers[20] the court was concise on the interaction between common law trademark, trade names and corporate names:
Undoubtedly the word “Umpqua or “Um-Qua” is a geographical word. “Broccoli” is a generic term. The plaintiff cannot acquire the exclusive right to the use of either of these words in its corporate name. The word “Umpqua” or “Um-Qua” has no secondary or particular meaning as denoting the business or products of plaintiff. But use of the name in several places, must be used properly to claim common law cross-over protection from corporate name to the product.[21]
3.1 Comparing Trademarks
A trademark means any word, name, symbol, device or any combination thereof adopted and used by a person to identify goods made or sold by the person and to distinguish them from goods made or sold by others.[22] This may be the actual goods where affixation of the marks is possible, like a digital camera, or the container of goods, for example, spelt flour where affixation on the actual goods is not practical.
3.2 Comparing Service Marks
“Service mark” means any word, name, symbol, device or any combination thereof used by a person in the sale or advertising of services to identify the person’s services and to distinguish them from the services of others.[23] This definition uses the term sale or advertising as a label cannot be affixed to services and a label can be affixed to a good. This is an absolute requirement to prevail as “use” may be used on the goods or their containers, or in association with sale or advertisement of the mark.[24] Use must be Bona Fide use. Selling an article every year to preserve the right, or once every five years is unlikely to be Bona Fide use.
Courts often use Trademark, Service mark and Trade Name interchangeably, and therefore imprecisely.[25] The analysis of trademark and trade name infringement, which may give rise to common law rights, is largely the same.[26]4.0 Trade Marks
A trademark is the right conferred on a party to use a source identifier exclusively or to bar others to trade on the good will created by the party that most aggressively uses the mark first in commerce. Trademarks are used as adjectives and sometimes, adverbs, but are actually a noun and receive intangible asset treatment for taxing purposes[27]. Generally, a mark must be used adjectivally to receive the full extent of its legal protections. If not, it may slip into generic use.
For purposes of analysis, terms that are alleged to be trademarks are regarded as falling on a continuum divided into four categories: generic, descriptive, suggestive, arbitrary and fanciful.[28] This continuum begins with the weakest legal protection, for generic marks, and ends with the strongest, those marks that are arbitrary and fanciful.
To help explain these categories, consider a business offering hunting services . Generic use, such as “Fowlers for Hire” Services, enjoys little, if any protection as a trademark, as it leaves nothing to the imagination and would be used by anyone ordinarily describing the good or service. A descriptive mark, such as AccurateTM only has protection if a secondary meaning[29] has been created. One obtains rights in a descriptive term only through actual use that creates a secondary meaning in the marketplace.
A suggestive mark, such as WhackerTM Services, denotes secondarily a particular product or service type and requires imagination to picture the nature of the product. An arbitrary mark, such as EverlastTM , has no logical connection between the name and the good or service. Finally, a fanciful mark is essentially made up, like KillkudosTM , and has no defining use other than the one the creator makes and associates with his goods or services.
Suggestive and arbitrary terms do not require proof of secondary meaning in order to be protectable as a trademark . A generic term refers to the basic nature of goods and, in the majority view, cannot be protected as a trademark[30]. As an example, Kleenex® is a federally registered mark for facial tissues, indicated by the ® symbol, that is used properly (TM is often used for pending or common law claims to use a mark).. Because of the storied history of this trademark, and its owner Kimberley Clark, the mark is used as an adjective to describe a type of facial tissue. To make absolutely sure, we generally see advertising using the format “Kleenex® brand facial tissues.” An example of an adjectival common law mark would be SoftlyTM
Moving Services. Use the mark to describe the good or service, and not as the good or service, which generally is not protectable on the federal level. For example, “Online Bookstore” is not federally registerable but a name like Amazon, generally is. There are a few arguable marks that have been registered federally that require no imagination.
“Mark” is a broad term which may include trademarks, service marks or other things. The mark may be a word, picture, sound, scent or color. A mark is a sensual perceptible identifier that is unique and indicates the origin of the good or service to the public. Overall look-and-feel, color schemes or distinctive designs may be protectable as “trade dress.” To enforce a trade dress claim, the claimant to exclusivity must show the form attained a secondary meaning in the marketplace.[31] The shape of a Weber grill, the layout and design of a McDonald’s restaurant are examples of trade dress.
There are many trademark concepts that are beyond the scope of this article but selection and usage make a difference. For example, marks in a “crowded field,” those with many similar names, such as Acme, Universal, American, etc. are weak, because consumers may have learned to pick carefully from among the marks.[32] Additionally, the case is often won for infringement by the prior user based on confusion. The concept of “reverse confusion”, where a senior user’s market is saturated by a junior user causing the senior user to be wrongly associated with the dominant junior user, occurs in many cases.[33]
4.1 Common Law Trademarks.
Using the mark and creating an evidentiary trail of how the public associates a mark with its source are possible without registration. The mark’s strength exists in its use. Nothing in the statutes undermines a person’s right to the mark, even if there is no registration.[34] Therefore, if a businessperson has not registered, but is able to establish a body of evidence showing that the mark is recognized and used in commerce, the only thing that may be to his disadvantage, may be statutory damages. Damages are available for “registered” marks, including lost profits for intentional infringement.[35]
4.2 State Trade Marks.
For a relatively low fee, regional players can register state trademarks and enjoy some exclusivity in the region. Often names including “Oregon” or a town name may be candidates for state registration where the value and use of the mark outside the state would not justify the expense of a Federal registration. For example, “Wheeler County Dog Walking” may not be used in interstate commerce, therefore, state trademark registration may provide the most robust protection to be hoped for. However, the Corporation Commissioner’s determination of granting a state trademark is not conclusive as the valid right to use the mark. The issuance of a state trademark merely constitutes prima facie evidence of the validity of registration.[36]
4.3 Federal Trade Marks
Federal marks protect goods and services sold in interstate or international commerce. The threshold issue for enforcement is the likelihood of confusion between the source of a chosen mark, with that of another.[37] Much of the discussion on the classes of chosen word applies in the general trade mark discussion above. Generally, you must use the mark to keep it and, generally, if you do not use it for two years, you are said to have “abandoned” the mark. Federally, two years of non-use may be abandonment and three years of non-use is prima facia evidence of abandonment according to Federal law and international treaty.
4.4 International Trademarks
There are limited protections on the international level,[38] with the most robust protections belonging to country by country registration. In the past, this meant hiring counsel in each country where protection was sought. The Madrid Protocol has simplified the application process to some extent, however, for registering trademarks in those countries which are members of the Protocol.[39] While the actual registrations still take place on a country by country basis, the initial registration process is somewhat simplified. The application can be filed through the United States Patent and Trademark office, where it will be certified if it meets the requirements of 37 CFR 711(a). Once the USPTO has certified the application, it is forwarded to the international bureau, along with the appropriate filing fees.
At first glance, this procedural simplicity masks the actual complexity of international trademark protection. First, although the World Intellectual Property Organization systems simplifies the application process, it does not guarantee registration. If an opposition is filed in a country where registration is sought, one must still hire local counsel to assist with the process. Next, there are many considerations both cultural and legal that should be addressed prior to attempting to register marks outside of the United States. These can range from difficult translations of words (which may be offensive in the local language) to the complexity of trademark search process. Finally, even with a streamlined application process, usage and other rules and requirements must be considered according to the local trademark laws. Even if a foreign trademark registration is obtained, vigilance in monitoring the local market as well as compliance with local laws is necessary to continue the protection in that country.
4.5 Domain Names
Domain names are nouns. They represent a location in cyberspace, electronically tangible, and are highly valuable pieces of intellectual property. Depending on their use, a domain name can increase a company’s profile worldwide, and therefore is subject to the risks of worldwide commercial and criminal laws. Trafficking in stolen domain names is a growing problem where names are transferred globally by lascivious entities who hack into registrar’s databases.
A due diligence search must be conducted to eliminate legal risks. Trademark infringement is a risk if one operates a website with a similar domain name offering similar services to a registered or common law trademark. For disputes regarding trademark, litigants may choose to go through a procedural process promulgated by registrants, the UDNDRP forum.[40] This process is not exclusive, nor can it be used for causes of action that do not involve trademark.
Use of domain names and trademarks to assist an inferior mark’s standing or searchability on the internet, may be illegal. This is generally an unfair trade practice under the Lanham Trade-Mark Act.[41] For example, website owners use “metatags” or words embedded in the code of the site to communicate their content to search engines, and increase their ranking in search results. In the Brookfield case, the court discussed the resulting “initial interest confusion” and likened the use of the metatag “moviebuff” (a registered trademark of the plaintiff) to a competitor placing a sign at a freeway exit to divert customers to the wrong store.[42]
Squatting or holding names ransom for large fees has been part of internet litigation since the early days of the world wide web.[43] This has lead to federal legislation to protect the abuse.[44]
There are occasions where another’s trademark is included in a domain name in a manner that may constitute fair use. For example, the domain names stopcompusa.com and bancompusa.com were registered as a forum to criticize the business practices of the company CompUSA. The company initiated a proceeding under the UDRP, but was unsuccessful. The panelist was not persuaded by CompUSA’s arguments of bad faith, and concluded that the company was engaging in “cyber-bullying” in order to stifle criticism.[45] These types of cases are generally distinguished from the rules above on the basis that they are not used to profit from the trademark by deceiving consumers into thinking the site is endorsed or affiliated with the trademark owner, but for some other protected purpose, such as speech or criticism protected by the First Amendment.5.0 Conclusion
Names are important to an organization, and some complexities can be avoided if one understands the proper usage for each category. A recap of the basic guidelines for such usage is as follows; real and true names are nouns, assumed business names are pronouns, trade names are adjectives or pronouns, trademarks and service marks are adjectives (or adverbs) and domain names are nouns. However, the proper usage must always be considered in the context of the legal rules for protection of the words, whether used as a Real and True Name, a Trademark or a domain name.
Appendix A
Business Entity Formation Matrix
Tom Graves
Swider Medeiros Haver LLP
| Sole Proprietor | General Partnership | C Corporation | S Corporation | Limited Liability Company | Limited Liability Partnership | Limited Partnership | Professional Corporation | |
| Limited Liability | NO | NO | YES | YES | YES | YES | (1) | (2) |
| Double Taxation* | NO | NO | YES | NO | NO | NO | NO | (3) |
| Filing Required to Establish the Entity | NONE | NONE | Articles of Incorp- oration |
Articles of Incorp- IRS Form 2553 |
Articles of Organ- ization |
Application for Registration as an LLP | Certificate of Limited Partnership | Articles of Incorp- oration |
| Cost of Filing for Entity Formation in Oregon | N/A | N/A | $50 | $50 | $50 | $50 | $50 | $50 |
| Number of Owners Limited in Number | (4) | NO | NO | (5) | NO | NO | NO | NO |
* “Double taxation” refers to instances where income is taxable both (1) when it is earned by the business entity, and (2) when distributions are made from the business entity to its owners.
(1) A limited partner will not generally be held liable for the obligations of a limited partnership unless the limited partner is also a general partner or participates in the control of the business. (ORS 70.135). However, a general partner in a limited partnership has the same liabilities as a partner in a general partnership. (ORS 70.185).
(2) A shareholder who is licensed to render the specified services of a professional corporation will generally not be held liable for acts committed by employees or unlicensed shareholders of the corporation. However, licensed shareholders can be held liable for acts committed by other licensed shareholders of the professional corporation, when those acts constitute professional services provided on behalf of the corporation. (ORS 58.185).
(3) A professional corporation may be taxed as either a C corporation or an S corporation, depending on the tax election made by the business. If the business is taxed as a C corporation, it may be subject to a flat tax rate of 35%.
(4) A sole proprietorship must have one and only one owner. If two or more “sole proprietors” are effectively the owners of one business, and have not filed with the Oregon Secretary of State as another entity, the entity will be considered a partnership under the law.
(5) A corporation may not elect for S corporation status unless it has 100 or fewer shareholders, who must all be individuals, estates, certain types of tax-exempt organizations, or certain types of trusts.
THE ABOVE INFORMATION IS PROVIDED ONLY AS A GENERAL OVERVIEW AND SHOULD NOT BE CONSTRUED AS LEGAL ADVICE. EVERY BUSINESS IS UNIQUE AND YOU SHOULD ALWAYS CONSULT AN ATTORNEY TO ENSURE PROPER COMPLIANCE WITH THE LAW.
[1] Martin F. Medeiros is a partner at Swider Medeiros Haver LLP, and serves as Chairman of the Oregon State Bar Computer and Internet Law Section, Board Member of the Oregon Law Institute at Lewis and Clark College of Law, and is Vice President and Treasurer of the Board of Portland Community Media.
[6] See, Conduct of David S. Shannon, 292 Or. 339, 638 P.2d 482 (1982) En Banc, (finding use of Shannon and Johnson’s Hollywood Law Center” and Hollywood Law Center, a Branch of Shannon and Johnson” had no tendency to mislead the public as to the identity of the accused law firm.
[7] E.g., customer confusion with a known business may be unfair trade practice. See Lanham Act § 43(a).
[8] For entities doing business in abroad, “LLC” may be a uniquely American consciousness as the LLC was initially created by statute in the State of Wyoming. For this reason, many will not do business with anything less than and entity with a Corp., Inc., Company, Corporation or Ltd. moniker.
[9] ORS § 648.005 (1) “Assumed business name” means one or more words or numerals, or a combination of words and numerals, that a person uses to identify any business that the person carries on, conducts or transacts, if at the time and place that the person carries on, conducts or transacts the business, the person does not conspicuously disclose the real and true name of each person who is carrying on, conducting or transacting the business. Any name that a person uses to identify a business that includes a word or phrase that suggests the existence of additional owners, such as “Company,” “& Company,” “& Daughters,” “& Associates,” or a similar word or phrase, is an assumed business name, unless it is the real and true name of the person that carries on, conducts or transacts the business.
[13] “[T]he plaintiff shall be entitled to recover $500 or the actual costs that the court determines that the plaintiff reasonably incurred to ascertain the real and true name of the defendant, whichever is greater. The court may award reasonable attorney fees to the prevailing party in an action under this subsection.” ORS §648.135(2).
[15] See ORS § 20.080(1) “In any action for damages for an injury * * * where the amount pleaded is $5,500 or less, and the plaintiff prevails in the action, there shall be taxed and allowed to the plaintiff, at trial and on appeal, a reasonable amount to be fixed by the court as attorney fees for the prosecution of the action, if the court finds that written demand for the payment of such claim was made on the defendant not less than 10 days before the commencement of the action * * *.” (Emphasis added by the dissent.)
[17] ORS 648.007 Requirement to register assumed business name and service mark; exceptions. (1) No person shall carry on, conduct or transact business under an assumed business name in a county where the business is located, where a physical facility of the business is located or where an employee of the business is stationed, unless the person has registered the assumed business name as provided in this chapter and maintains a current registration.
[21] McCabe-Powers Auto Body Co, v. American Truck Equipment Company, 150 F.Supp. 194, 113 U.S.P.Q. 217(1957).
[25] See, e.g., Computer Associates International, v. Quest Software, Inc. 333 F. Supp. 2d 688, 695 (N.D. Ill. 2004).
[26] Supra note 15. Trademarks and trade names are protectable under common law on the same principles.
[28] Classic Instruments, Inc., v. VDO-ARGO Instruments, Inc., 73 Or.App. 732, 700 P.2d 677, 226 U.S.P.Q. 894 (1985).
[29] ‘[A] name, mark, or symbol by long and exclusive use and advertising by one person in the sale of his goods * * * may become so associated in the public mind with such goods * * * that it serves to identify them and distinguish them from the goods * * * of others. When such an association exists, the name, mark, or symbol is said to have acquired a “secondary meaning,” in which the original user has a property right which equity will protect against unfair appropriation by a competitor.’ * * *
“ ‘A trade-mark or a trade name may have acquired a secondary meaning in one locality but lack such a meaning in another. Id. at, 685, (citing, Shoppers Fair of Arkansas, Inc. v. Sanders Co., 328 F.2d 496, 499 (8th Cir.1964).
[32] Tse, Saiget, Watanabe and McClure, Inc., v. Gentlecare Systems, Inc. 936 F.2d 580, 1991 WL 108770 (C.A.9 (Or.))
[34] ORS § 647.115 (1) Nothing in this chapter shall adversely affect the rights or the enforcement of rights in marks or trade names acquired in good faith at any time at common law.
[39] A complete list of current member countries as of April 2006 is available at http://www.wipo.int/madrid/en.
[42] Brookfield Communications Inc. v. West Coast Entertainment Corp 174 F.3d 1036, 1064 C.A.9 (1999)
[43] See, e.g., Panavision Int’l, L.P. v. Toeppen, 945 F. Supp. 1296 (C.D. Cal. 1996); and Intermatic, Inc. v. Toeppen, 947 F. Supp. 1227 (N.D. Ill. 1996)
[45] The full text of the decision is available at http://www.arbforum.com/domains/decisions/95082.htm. Decisions for various ICANN Disputes are available at http://www.icann.org/udrp.