An important piece of intellectual property that a business has is the name that the company operates under. This is very important for branding, customer recognition and building awareness for the business over time.
That being said, you may notice that there are companies with similar names. Some local businesses may have names that are virtually identical. Even large companies may have similarities, so it is not just a quirk of small business owners. When are businesses allowed to operate under these similar names?
Avoiding consumer confusion
The general goal of regulations on business names is to avoid consumer confusion. It would be unfair to a consumer who believed they were purchasing from a specific company to be manipulated into purchasing from a different company entirely.
As such, the industry in which the businesses operate plays a major role. If a company that makes plumbing supplies has a similar name to a fast food chain, it is highly unlikely that any consumers would be confused in the first place because the industries are so different.
Geographical location can also play a role, especially with local businesses. If there are two small businesses in different states, it is unlikely that consumers would confuse the two – or even be aware that both existed. On the other hand, a business that names itself the same as a widely known international corporation could run into significant problems because consumers would be aware of the larger company, which has a much greater level of popularity.
Finally, business structure can play a role. Sole proprietorships, for example, often do not have the same protections as corporations.
Addressing naming issues
It is important for business owners to understand why these restrictions exist and how they apply. It is also important for those who find themselves involved in an intellectual property dispute to understand all of their legal options.
