Trade Name

Names or designations used by companies to identify themselves and distinguish their businesses from others in the same field.

Trade names are used by profit and non-profit entities, political and religious organizations, industry and agriculture, manufacturers and producers, wholesalers and retailers, sole proprietorships and joint ventures, partnerships and corporations, and a host of other business associations. A trade name may be the actual name of a given business or an assumed name under which a business operates and holds itself out to the public.

Trade name regulation derives from the COMMON LAW of UNFAIR COMPETITION. The common law distinguishes between TRADEMARKS and trade names. Trademarks consist of symbols, logos, and other devices that are affixed to goods to signify their authenticity to the public. The common law of trade names encompasses a broader class of INTELLECTUAL PROPERTY interests, including TRADE DRESS and service marks. Trade dress is used by competitors to distinguish their products by visual appearance, including size, shape, and color, while service marks are used by competitors to distinguish their services from each other. Gradually, the law of trade dress and service marks has evolved into separate causes of action, independent from the law of trade name infringement.

To maintain a CAUSE OF ACTION for trade name infringement, a plaintiff must establish that it owned the right to operate its business under a certain name and that the defendant violated this right by use of a deceptively similar name. The right to use a particular trade name ordinarily is established by priority of adoption. In states that require registration of trade names, a business may acquire the rights to a trade name by being the first to file for protection with the appropriate governmental office, usually the SECRETARY OF STATE. In states that do not require registration, a business may acquire the rights to a trade name through public use, which means that the law will afford protection only if it can be demonstrated that a business and its trade name have become inseparable in the public's mind. Under federal law businesses may acquire the rights to a trade name only through regular and continued public use of an individual name. Federal law will not protect trade names that are used sporadically or irregularly.

Once a business has established the right to use a particular trade name, it must then prove that the defendant fraudulently attempted to pass itself off as the plaintiff through use of a deceptively similar name. Not every trade name that resembles an existing one will give rise to liability for infringement. The law will not forbid two unrelated businesses from using the same trade name so long as their coexistence creates no substantial risk of confusion among the public. For instance, two businesses may call themselves "Triple Play" if one business is a video store and the other is a sports bar and grill. By the same token, the law permits businesses in different geographic markets to use identical trade names, unless the good will and reputation of an existing business extend into the market where a new business has opened.

A greater degree of protection is afforded to fanciful trade names than to names in common use. Generic words that are widely used to describe any number of businesses in the same field may not be appropriated by a single competitor. For example, a professional partnership of attorneys would receive no trade name protection for emblazoning the name "law office" across its front doors. Such a name would be considered generic in nature, telling consumers nothing unique or unusual about that particular business. The same partnership would receive full protection for a name that identifies the firm by the individual names of each partner in the office.

Trade name regulation serves four purposes. First, the law seeks to protect the economic, intellectual, and creative investments made by businesses in distinguishing their trades. Second, the law seeks to preserve the good will and reputation that are often associated with a particular trade name. Third, the law seeks to promote clarity and stability in the marketplace by encouraging consumers to rely on a merchant's trade name when evaluating the quality of its merchandise. Fourth, the law seeks to increase competition by requiring businesses to associate their own trade names with the value and quality of their goods and services.

Both state and federal laws provide protection against trade name infringement. At the federal level, trade names are regulated by the Lanham Trademark Act (15 U.S.C. § 1051 et seq.). At the state level, trade names are regulated by analogous intellectual property statutes and various common-law doctrines. In general, the law of trade name infringement attempts to protect consumers from deceptive trade practices. The law does not treat consumers as unwitting dupes and may require them to make reasonable distinctions between competitors under appropriate circumstances. When consumers have been deceived by use of a deceptively similar trade name, an injured business may avail itself of two remedies for infringement: injunctive relief (a court order restraining one party from infringing on another's trade name) and money damages (compensation for any losses suffered by the injured business).