A company name is usually the name by which a company conducts public business under for commercial purposes. It is also called a “trade name” or “trading name," and may be different from its legally registered name that is used for formal business documents and contracts.
One main reason why a business may have a company name that is different from the legal name is that its company name may simply be easier to remember and more appealing to the average public consumer. For example, a pharmaceutical company may be legally registered as “Brooks Chemical Producers, Inc.”. However, they may use the company name “Brooks Medicines and Drugs," since this is probably going to be more appealing to the public, as well as easier for the consumers to associate with the company’s products.
Thus, the use of company or trade names is a common practice that can help market a product or service better, and can help deter negative publicity. On the other hand, the use of multiple names can sometimes create legal disputes for the company.
Disputes over company names can cause legal troubles for a business. One of the main disputes in this regard is confusion as to the actual name of the company. The use of the wrong name in a document or contract can often render the agreement void, thereby undoing hours of negotiation due to a technicality in the document.
Other company name disputes may involve:
- Copyright and Trademark infringement: Unauthorized use or reproduction of a company name can lead to legal penalties.
- False advertising: Advertising that causes confusion over a company name can cost a company serious losses in economic revenue. Such confusion can also lead to lawsuits that may result in a damages award for the non-liable party.
- Defamation: Purposefully displaying another business name in an untrue way or illegal manner can result in civil and sometimes criminal consequences. Loss of business reputation can also be a factor in some company name disputes.
- Transfers of ownership: Again, the use of the wrong name in an official document can lead to legal disputes and misunderstandings. An example of this is when the wrong organization is referenced in a transfer or sale of a business.
In order to prevent these types of disputes, a business should always make it clear when they are using their legal name and when they are simply using their popular trade name. This is especially important during negotiations and when referring to the company in a contract or document.
Also, trademark and other infringement-related disputes can be avoided by choosing a company name that is not similar to another company’s name, whether it is their legal name or their company name. While this may make the selection of names more difficult, it will help to avoid costly lawsuits and legal claims in the future.
Company name disputes can be costly and may also result in legal consequences. In order to avoid potential disputes, you may wish to contact a business lawyer for advice on how to choose a proper business name. Your attorney can research your options according to state and local business laws. Also, an experienced business lawyer can help represent you if you need to file a lawsuit due to a company name dispute.