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Don’t File Your LLC or S-Corp Without Reading This

By Nick Nanton

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Published: 27Jun2007
Word count: 663
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How Choosing the Wrong Business Name Could be the MOST Expensive Decision of Your Career

Ok, so you've decided to start a business, either by yourself, with a couple of friends, or maybe even with a couple of colleagues from your last "corporate gig." You sit down at your first impromptu "business meeting" over a case of cold coke (insert other favorite beverage here) and you start your checklist:

1. Million Dollar Idea: Check

2. Office Space (or an extra room/basement in your house): Check

3. Business Plan: Check

4. Business Name: ...

... a blank stare stretches across everyone's face and thus your business has hit its first of many roadblocks on the road to becoming "The Next Fortune 100 Company." So, you do what every other start-up business does, you start listing words that describe what you do, try to combine them to create something new, brainstorm them and email back and forth over several days, nag every person you come into contact with to get their opinion, and FINALLY someone comes up with a name that everyone loves (or more likely at least everyone can live with it) and "The Business" is born.

Now here's where there is a hidden step that no one probably told you about. Let me explain.

For the purpose of this illustration, let's suppose that you pick the name "XYZBiz" While you're positive that millions of dollars of venture capital, private jets and an office on the 152nd floor of the coolest building downtown are just inches away, there are a couple of things that you may not be aware of… Important things like -- Is there another business called XYZBiz anywhere on earth? Before you file your corporate paperwork, start printing up brochures, buy XYZBiz.com and build your website, this is a serious question that has to be answered.

"Why does it matter?" you may ask. Well, there is a large body of law in the United States, as well as in almost every other nation in the world that prevents competitors from using the same name. So, if there is another XYZBiz operating anywhere in the good old U.S. of A. (we'll leave the rest of the world out of this for now) and if you were to start offering your products and services in the same geographical area (which is a real problem to figure out now that the internet has erased many geographical boundaries), then the other XYZ Biz "impostors" (who are undoubtedly not nearly as good as you) could have a Trademark Infringement Claim against you. And if they were to pursue it, it could be very costly. Because remember, if you are served with a lawsuit, you are REQUIRED to respond to it no matter how ridiculous it may sound. And, as you might have guessed, at this point you will need to hire a lawyer to handle this situation, and I can tell you that this call is much more expensive than the one I'm about to tell you about.

The truth is that this is a very common issue that sometimes goes unnoticed, but often ends up in a costly visit to the courtroom. So, you have two choices, you can wing it or you can opt for the safer route: do a little homework for yourself and then call an attorney who specializes in trademarks. Now, I know that the mere mention of the word "attorney" conjures up many feelings in all of us, but I can assure you there are some very helpful attorneys out there… I can think of at least one right now! And the trademark process is really not that expensive. Certainly it's not nearly as expensive as defending yourself against a multi-million dollar corporation or even worse a "sinking ship" company that is just looking for a way to scrape some money out of anyone they can.

Trust me…or you can learn the hard way for yourself.

© 2007 The TM Lawyers

To get more information on trademarks, go to TheTMLawyers.com. JW Dicks & Nick Nanton, founders of The TM Lawyers are experienced lawyers who have spent a great amount of time working in the intellectual property and licensing fields. The TM Lawyers is a division of Dicks & Nanton P.A. a boutique law firm that specializes in Building Businesses & Brands.

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