To be successful in business, you need to create a unique identity. Brand names and logos are two essential aspects of this personality. Even though they seem similar, they are not the same and offer varying degrees of legal protection.
Entrepreneurs and business owners need to know the difference between a trade name and a trademark to protect their brand and follow the law. This blog post discusses trade names and trademarks, including what they are, why they’re important, and what the law says about them.
Trade Name vs. Trademark: An Overview
Trade names and trademarks appear similar, but they mean different things. Business owners, especially those just starting, need to understand the difference.
A business and its product must have a brand identity and gain market recognition. So, choose and register trade names and logos carefully. In legal terms, there is a clear difference between the two; a trademark protects a company’s brand, while a trade name is the actual name of a company.
Trade names and registered trademarks are not the same, but businesses should avoid using confusingly similar ones to avoid legal trouble.
Valuation of Trade Name and Trademark
You can use either the income approach or the market method to determine how much a trade name is worth. The income approach method determines the value of a trade name by estimating its potential future economic benefits. Discount the benefits to their present value and eliminate any associated costs.
The market method compares similar trade names that have been sold or purchased to determine their value. A trade name’s value depends on its strength, well-being, and position in the market.
There are different ways to determine a trademark’s worth, such as the cost approach, the market approach, and the income approach. The market method considers how much similar brands sell for, while the cost approach considers how much it costs to make a similar brand.
The income method determines how much a trademark is worth by assessing how much money it makes. Note that a trademark’s value depends on its image, uniqueness, and market position. It is advisable to seek professionals who can help you value the trademark for a better and more accurate result.
Trade Name
A trade name is the legal name that a person running a company decides to use to do business. Different states have different rules about registering a business name, but you must do it with the state government or a county clerk’s office in most cases. The Small Business Administration (SBA) website has a search tool that lets you find out exactly what each state needs to do to register a trade name.
A business needs to register its trade name as part of its branding officially, but that doesn’t give the name legal security or endless use. In several states, registering a trade name does not prohibit someone else from using the same trade name to run a business.
However, the rules for registering trade names are more about letting tax authorities know about your business than protecting your brand name. The main practical reasons for registering a trade name are administrative and financial.
Choosing a trade name requires careful consideration, but it does not provide the same legal protection as registering a trademark. This is because it’s the first thing people will see when looking for your business.
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The Significance of a Trade Name
Trade names are essential for businesses because they help customers remember and stay loyal to their brands. A unique and easy-to-remember trade name helps a company stand out from competitors and increases its visibility in the market.
A strong trade name can also help people remember your brand, build trust with customers, and support the growth and success of your business. Also, having a trade name can protect you legally against competitors who utilize the same name or a name that sounds much like yours. This reduces the chance that your business will fail.
Trademark
A trademark is an important step in ensuring that people know your business in the market. Registering a trademark, which may be an integral component of your trade name or used separately, protects your business’s name, logo, symbol, or slogan against infringement.
The swoosh sign from Nike and the Coca-Cola script from Coke are both iconic logos. Trademarks are easy to spot because they come with the trademark sign ™.
Registering a trademark ensures that an individual or company is the sole user of that mark.
It also establishes that no other entity was using it before the registration and provides legal protection against future infringements by others. Additionally, it keeps you from being sued if someone later claims that you copied a name that was already registered.
The Significance of a Trademark
Brand identities are essential to businesses because they protect people who use names, logos, and other intellectual property. A registered trademark protects a company’s image and reduce customer confusion by prohibiting others from using identical or confusingly similar marks.
A good logo can give a business an edge in the market, help people recognize the brand, and attract returning customers. Businesses find trademarks valuable tools because they can buy, sell, or rent them, boosting their worth and success.
Getting a Trademark Registered
A trademark must be registered separately from a trade name. It can be registered at the state, federal, or international level. Trademark registration at the state level is less complicated and costly, but it only protects trademarks within that state. In India, trademarks are registered with the Office of the Controller General of Patents, Designs & Trade Marks, which functions under the Ministry of Commerce and Industry, government of India.
Registering a trademark globally presents another option. The Madrid Protocol allows one program to operate in over 100 countries. However, the trademark office in each country reviews the application and decides whether the logo meets the necessary criteria for registration.
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Protections
A registered trademark grants the owner the exclusive right to use it. It legally demonstrates that no other company was using the trademark. Additionally, it safeguards the registered trademark from unauthorized use by different businesses. It also protects you legally if someone claims you infringed on a name you already filed.
It’s up to the business to decide whether to register the brand or have an intellectual property or trademark registration lawyer do it for them. Hiring an intellectual property attorney for registration guarantees that they will handle everything accurately and thoroughly. A comprehensive search confirms that no one else is already using the trademark.
The Bottom Line
Although they may look the same, trade names and trademarks are different. A business’s name is its trade name. However, having a trademark means that only you own a particular product or brand. It can be a name, a symbol, a word, a design, or a mix of these things.
Another business may employ a trade name. With it, a brand can thrive, provided it is correctly filed with the authorities. However, whether you go with registering a trade name or a trademark, you need to register for both. This is a vital step in building your brand’s presence. However, they remain safe only when registered as a brand.
FAQs
1. What is the difference between a trade name and a trademark?
A trade name is the official name the company uses to do business. A trademark is a word, term, or sign distinguishes one company’s goods or services from others. A trade name is used for business administration, while a trademark protects brand features legally.
2. What is the difference between a trademark and a name?
A name is any word used to describe a business or product. A trademark is a lawfully protected identifier. It can be a brand name or logo distinguishing one product or service in the marketplace.
3. What is the difference between a trade license and a trademark?
A trade license is permission from the government for a person or firm to run a business in a particular industry. A trademark is a type of intellectual property that prevents people from using brand names without permission.
4. What is the difference between a trademark and a trade secret?
A trademark is a legally protected symbol, phrase, or design representing a brand in the public eye. A trade secret is confidential business information. It provides a company with a competitive advantage and is protected through agreements to maintain its secrecy.
