Why the name of your business could land you in court

Picking out a name for a Pennsylvania business seems like a no-hassle proposition, especially compared to the legal hoops a business owner has to jump through in filing the correct paperwork, drawing up articles of incorporation, and preparing the right bank accounts. However, you might find a hidden liability sneaking up on you just by naming your business. It seems strange to believe, but giving your business the wrong name may actually land you in court.

Given the large number of companies that exist, there is a chance that when you pick out a name for your business, someone else might have picked that name before you did. Having the same name as another business can confuse potential customers when they search for your company online. Also, according to Findlaw, a business that has already chosen the same name as your business has likely filed it as a trademark, which is protected under federal law. The other business may decide that you have infringed on their trademark and could take legal action against you.

First, you may receive a cease and desist letter from the attorney of the other company. This means you will have to stop using the current name of your business at once and remove all mention on it from your advertising. The other party may pursue other actions, such as asking for monetary damages resulting from your use of their trademark. Even if you do not have to pay damages, you will still have to invest resources into changing your business name that could have gone into financing regular business operations. 

Your best bet is to research the business name that you want before you actually register it as your own. A Findlaw piece recommends several ways to research business names. A simple and easy first step is to simply enter the name into an online search engine. It is also wise to look for very similar business names, as a company with a similar name may still decide to sue you.

However, a business name search should not stop with an online search engine. There are a number of company name lists available from your local and state government that should also be checked. These include the fictitious name database, which can reveal fictitious business names that might not be discovered on an online search engine. If your business falls under the LLC, limited partnership or corporation, the state should also have a list of those businesses. Also, a search of the U.S. trademark database can also reveal registered trademarks that could be infringed on, including company names.

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