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3. COMPANY FORMATION

a. Names

When forming a new company, the first step is choosing a name. The name should appeal to potential customers but not conflict with the names of existing companies.

Making a List

Make a list of at least 10 possible names. Add extra words, numbers, or symbols to make the name more distinctive. For example, if you are creating an entertainment production company, add “Entertainment” or “Productions” to the company name.

Trademark law provides maximum protection to names that are “fanciful”, “arbitrary”, or “suggestive”. Names that are merely “descriptive” receive less protection, and “generic” names are not protected at all. The following table defines these terms and gives examples:

Type	Legal Protection	Definition	Examples
fanciful	highest	made-up word	XEROX, VERIZON
arbitrary	highest	new meaning for an existing word	APPLE computers, PEANUTS cartoon
suggestive	high	suggests the good or service but the connection requires imagination, thought, or perception	TIME magazine, MICROSOFT software
descriptive	low	describes an ingredient, quality, characteristic, function, feature, purpose, or use of the good or service	DENIM jeans, HOT SAUCE salsa
generic	none	common label for the good or service	JEANS, SALSA

Domain Names

Your new company should have a website. Thus, you need to determine the availability of appropriate domain names. For example, if your tentative company name is SYMBIOXIS CLONING, check the availability of www.symbioxis.com and www.symbioxiscloning.com.

If a domain name is already taken, consider purchasing it from the current owner. You can research owner information in the online database at www.whois.net. Another option is to file an action with ICANN or a federal court. In that case, you'll need to prove that the owner registered the domain name in bad faith.

State Agencies

Check for name conflicts in every state where you plan to organize your company and do business. The state agencies often have online databases of registered companies. The appropriate agency is usually the “Office of the Secretary of State”.

If your company name is similar to the reserved or registered name of another company, the state agency may reject your application for registration. You can minimize this risk by reserving your company name or submitting it for approval prior to filing the articles or certificate.

Local Agencies

Local governments often require companies to obtain business licenses and register their fictitious names (“DBA's”). Therefore, when choosing a company name, you should check for conflicts in the databases of counties and cities where your company will do business. The government databases are often available online.

Trademark Databases

The U.S. Patent & Trademark Office in Washington, D.C. (“PTO”) registers trademarks, trade names, and service marks. These items are words, names, symbols, or devices used in commerce to identify a company, product, or service. You should check the online database of the PTO for conflicts with “live” (as opposed to “dead”) marks.

At the state level, the California Secretary of State also registers trademarks and service marks, but not trade names. Trade names may be registered at the county level. Therefore, in order to uncover name conflicts, contact the appropriate state and county agencies.

Note that the databases will not reveal every possible conflict, because U.S. law does not require companies to register their names in order to receive trademark protection.

Also note that trademark law may, under certain circumstances, allow companies to have conflicting names – for example, where the companies provide different products and services or focus on different markets. However, to be safe, your company should build its own brand.

“Common Law” Sources

Because trademark rights arise from usage and not registration, you should also perform a “common law” search for potential conflicts. This means looking at sources other than the government databases.

Do a Google search online. Look in local phone books and newspapers. Check online membership directories of trade associations in your industry.

Or, just hire a company like Thomson CompuMark to do the work for you. The cost will be much less than litigating an infringement dispute and changing your marketing materials.