Choosing a business name may be more complicated than you think. If you accidentally select a name that’s too similar to another company, the company can sue you for trademark infringement. Trademarks aren’t just limited to a business’s name. A business can also trademark:
- A logo, such as Apple’s iconic apple.
- A domain name, such as a website URL.
- A phrase, such as Nike’s “Just do it.”
- A color, like Home Depot’s distinctive orange hue.
What Counts as Trademark Infringement?
Trademark infringement is when a business uses the name, logo, or domain name of another business without authorization, or uses one that is similar enough to potentially confuse consumers.
In a trademark infringement case, the court will typically first compare the two trademarks for similarities. They will also examine which trademark was established first and whether the two companies sell similar goods or services. Even if your business isn’t directly competing with the other, the original trademark holder can make a reasonable argument that the goods or services may be related in the mind of consumer. When that happens, you could be found guilty of trademark infringement.
For example, let’s say you create a company called Ruff Mutt that makes dog treats. A few months later, you are sued for trademark infringement by a self-serve dog wash company named Ruff Mutts that has been in business for five years. Though you sell a product (dog treats) and they sell a service (dog washes), both companies are focused on dogs and have similar names. The original trademark holder can therefore make a solid case that your name infringes on their trademark and confuses their customers.
Unfortunately, ignorance of the other company isn’t a valid defense. You would likely lose the case and be forced to change your business name – costing you time, money, and potentially some of your customers.
Steps to Avoid Accidental Trademark Infringement
Here are five steps small business owners can follow to avoid a trademark infringement lawsuit:
1. Do your research.
Before you settle on a name, logo, or domain name, make sure it is not already trademarked. You can start the process by checking with the S. Patent and Trademark Office. Check for the exact name you want to use, as well as similar names.
2. Enlist help.
While you may think you’re in the clear if there is not an exact match, that’s not necessarily the case. Before continuing any further, consider hiring a trademark attorney. They have access to other databases, including state trademark records and common law marks. It will also likely cost you less to pay a professional to do a search than it is to defend an infringement that may result in a name change. You can also outsource this work to a trusted trademark search company.
3. Consider general liability insurance.
If you are sued for trademark infringement, general liability insurance can help pay for your legal expenses, including:
- Attorney fees.
- Expert witness testimony.
- Court fees.
- Settlements, or judgments if you lose the case.
4. Register your trademark.
Not only do you want to avoid infringing on another company’s trademark, but you should also consider protecting your own intellectual property. If you’ve established a logo, name, or domain name that is unique and memorable, take steps to protect it by trademarking it.
5. Document your findings.
In case a dispute arises, timestamps and documentation can help support your case. If you can provide documents that prove exactly when you registered your trademark, it can help if you are sued by another, newer company. It can also come in handy if you need to go after another business for infringing on your trademark. By investing some time and money upfront to search for potential trademark conflicts, you could save time, money, and the hassle of rebranding your business.
Rebecca Hosley is a writer for Insureon, an online small business insurance agency. She is based in Chicago and writes frequently about small business insurance and tech startups.