Although they may sound similar, it’s essential to know that a “trade name” and a “trademark” are not the same thing.
Yes, they are closely related, but they have some differences.
It’s crucial to understand this information if you want to start a business in the United States, as this is a vital process within a company and its products or services.
Now, let’s explore the differences between these two concepts.
What Is a Trade Name?
A trade name is the name that a sole proprietor or a company uses when conducting business.
It is essential to legally register a trade name. To do so, you should go to the state government or, alternatively, through the county secretary’s office.
Registering a trade name is vital for administrative and accounting purposes, such as filing a corporate tax return with the Internal Revenue Service (IRS).
Unlike a registered trademark, a trade name does not provide legal protection in the same way. This means that a trade name does not grant trademark rights.
The selection of your brand’s trade name should be made carefully, as it is a fundamental and initial step in establishing an identity in the company’s market.
What you must keep in mind is that your brand’s trade name must be unique. You cannot choose a name that another brand already uses, so it’s always a good idea to thoroughly analyze the name you choose and investigate whether it is already in use or not.
For an original name, you should steer clear of the typical “Hamburger Restaurant” or similar names.
Ideally, your brand’s name should have a strong meaning and a unique concept that sets it apart from other brands.
For example: Nike, Adidas, Ikea, etc.
A registered trademark is more associated with brand recognition within its industry’s market. Once you have your trademark registered, you can use the trade name under legal protection, and you can use your own company logos, symbols, or slogans.
This registration goes through a different process, as it needs to be registered at the federal level (unlike the trade name, which was registered at the state level).
Once you register a trademark, your company has the assurance of exclusive use of the trade mark. This is because, before being registered, it was not being used by another individual or entity; hence, official government protection is provided against any other brand that tries to infringe on the registered trademark.
Types of Brand Names
If you’re thinking about what your brand name could be, here are five types of names you can use:
1. Founder’s Name: This is a very classic name that is direct and precise in meaning, nothing metaphorical or abstract, simply the name of the company’s founder.
2. Geographical Names: These are used when the company focuses on a specific area, like a city or a district within a city.
Example: Banco Santander
3. Descriptive Name: This type of name directly describes the type of business. It can also describe the product or service.
Example: Facebook (Face: face – Book: book) Because the application used to work as a kind of digital book where you would flip through different people’s faces.
4. Metaphorical Name: These have a deeper and more abstract meaning that can represent a principle or value of the brand.
Example: Nike, which is a Greek goddess.
5. Acronym and Alphanumeric Names: These names can combine numbers and letters or simply be abbreviated, and they are generally quite descriptive.
Example: KFC (Kentucky Fried Chicken)
Do you now understand the difference between a registered trademark and a trade name?
We are Rex Legal, and we are here to help and guide you through the process of forming a company in the United States.
Contact us, and we will be happy to assist you.