“What’s in a name? That which we call a rose
By any other name would smell as sweet.”[1]
Shakespeare’s simple statement could not be further from the truth when applied to naming corporations and other legal entities. Although it may not seem legally important, businesses should pay close attention to what they are calling the company, the names under which they are actually conducting business, and how they are signing contracts and other legal documents.
Choosing a Legal Name
Of course, from a marketing perspective, a new business will want to select a name that is easy to remember, easy to spell, and conveys the goods or services it provides.
If the business will be organized as a corporation or limited liability company (LLC), at the time of filing the articles of incorporation or organization it must include the name of the entity. See Minn. Stat. § 302A.111, subd. 1(a); Minn. Stat. § 322B.115, subd. 1(1). Minnesota law generally requires that a corporate or LLC name be expressed in English letters or characters and that it is distinguishable from other companies. See Minn. Stat. § 302A.115, subds. 1(a), 1(d); Minn. Stat. § 322B.12, subds. 1(1), 1(5).
Businesses can check to see if a legal name has already been filed by someone else by searching the business filings or checking the name availability at the Minnesota Secretary of State website. See Minnesota Business & Lien System, Office of the Minnesota Secretary of State. Additionally, if a business desires a specific name, but is not yet ready to file with the State, it can reserve the desired name for up to twelve months, and the reservation may be renewed for successive twelve-month periods. See Minn. Stat. § 302A.117; Minn. Stat. § 322B.125.
The exact language, spelling, and order of a legal name are all important under the law. Corporations and LLCs must include as part of their name an official designation to show their status as a corporation or LLC, such as “corporation”, “incorporated”, “limited”, “limited liability company”, or an abbreviation of such terms. See Minn. Stat. § 302A.115, subd. 1(b); Minn. Stat. § 322B.12, subds. 1(2). Including such designators puts third parties on notice that they are dealing with a legal entity with limited liability protection.
Changing the Entity’s Name
If your client wants to change the legal name of the entity, you can prepare amended articles of incorporation or organization and submit them to the Minnesota Secretary of State through a fairly simple process. See Minn. Stat. § 302A.131; Minn. Stat. § 322B.14; Minnesota Business & Lien System (click on “file renewal or amendment” for further instructions).
Signing Documents for a Legal Entity
One of the primary purposes of incorporating a business is to obtain a “limited liability shield” for the owners, officers, and directors of the company so that these individuals do not assume personal liability for the company’s business debts, contracts, obligations, and liabilities. See, e.g., Minn. Stat. § 322B.303, subd. 1.
One way to maintain the limited liability shield is by making sure that owners, officers, directors, and other agents who can legally bind the company execute legal documents using the exact legal name of the entity (or an assumed name that has been properly registered on the company’s behalf) and the individual’s title as in the following example:
[COMPANY LEGAL NAME]
By: ________________________________
[Type Name of Individual]
Its: ________________________________
[Print Title]
Date: ______________________________
By signing in this fashion, the reader is put on fair notice that the individual signing the document is doing so in a representative capacity on behalf of a legal entity with limited liability protection. Failure to use the legal business name, to follow corporate formalities, or treat the company as a separate legal entity may result in personal liability for the underlying contract or agreement. See, e.g., Victoria Elevator Co. v. Meriden Grain Co., 283 N.W.2d 509, 513 (Minn. 1979) (“Since defendant did not treat the corporation as a separate legal entity, he should not be entitled to its protection against personal liability.”).
Registering Assumed Names
If a legal entity does business under a name that is different from the name listed in its articles of incorporation or organization, it must file its “assumed name” with the Minnesota Secretary of State and publish the certificate of assumed name in a legal newspaper. See Minn. Stat. § 333.01, subd. 1; Minn. Stat § 333.02. As of September 6, 2011, the certificate of assumed name must be renewed each year for the assumed name to be effective. See Minn. Stat. § 333.055. Assumed name certificates that are already on file with the secretary of state on September 6, 2011, however, are exempt from the renewal requirements until expiration of the original ten-year term. Minn. Stat. § 333.055, subd. 1.
For example, a corporation having the legal name of Minnesota Fairway Holdings, Inc. might register the assumed name “Green Pines Golf Course” to describe the golf course it owns and operates. An assumed name is sometimes called “doing business as”, “DBA”, “d/b/a”, “fictitious name”, or “trade name.” Businesses often file multiple assumed names to promote a distinct product, division, or service through unique branding.
Failing to register an assumed name could be dangerous. It could destroy the protections of limited liability for individuals who sign contracts on behalf of the business because third parties may not be placed on fair notice that they are dealing with a legal entity with limited liability. Therefore, even if the only difference between the company’s articles of incorporation or organization and the assumed name is that the business has dropped the “corporation”, “incorporated”, “Inc.”, “limited”, “limited liability company”, “LLC”, or similar designation, the business should still register an assumed name that drops the “corporation” or other designator.
Avoiding Trademark Infringement
Before selecting a name, businesses and their attorneys should also consider how a name might affect others’ trademark rights. Even if the Minnesota Secretary of State accepts the articles of incorporation, articles of organization, and/or assumed name for filing, it is still possible that a third party has acquired prior trademark rights to the name.
Trademark rights can be acquired through registration with the Minnesota Secretary of State, registration with other states, and nationally through the United States Patent and Trademark Office (“USPTO”). See, e.g., Minn. Stat. §§ 333.18 et seq.; 15 U.S.C. §§ 1051 et seq.
More importantly for the new business owner, trademark rights can also be acquired under common law by being the first to use the mark in commerce if the mark qualifies for protection as being distinct or has acquired “secondary meaning” such that the consuming public primarily associates that mark with a particular producer. See, e.g., Schwan’s IP, LLC v. Kraft Pizza Co., 379 F. Supp. 2d 1016, 1020, 1023 (D. Minn. 2005). Additionally, in Minnesota trademark rights can be obtained merely by using the mark in the State. See Minn. Stat. § 333.30. This poses special problems for a business owner when selecting a name, since there is no central registration system for tracking common law trademarks that might be infringed by use of a particular name.
If a business name or assumed name is likely to cause consumer confusion as to the source of the goods or as to the sponsorship or approval of such goods, then the business might accidentally violate another company’s trademark rights by using the name.[2] Thus, it is possible that a business name may infringe the trademark rights of a party whose mark is not registered.
To avoid trademark infringement, a business should carefully research the desired name before registering or using it. This will often require the help of a trademark attorney in conducting a search. Among other places, the business should check the Minnesota Secretary of State website, the USPTO,[3] and the secretary of state websites for surrounding states. In addition, the business should conduct research via the internet, trade journals, industry publications, phone books, and other sources that might identify a competitor using a similar name. As Trademark Professor Kenneth Port at William Mitchell College of Law notes, “there are many pitfalls to be avoided in name or mark adoption, and businesses should take advantage of the search and registration procedures available to them to avoid unnecessary litigation.”
Whenever possible, businesses are better off choosing a unique, arbitrary, or fanciful name rather than a generic or descriptive one because they are inherently distinctive, afforded more protection, and are less likely to infringe other’s trademark rights. See, e.g., Schwan’s IP, LLC, 379 F. Supp. 2d at 1020 (discussing the spectrum of protectability of trademark names).
Conclusion
Starting a business is often an exciting time for the new business owner. While seemingly elementary, business owners can avoid substantial headaches and legal troubles down the road by selecting a distinct name, properly registering the articles of incorporation, registering and publishing assumed names (if applicable), signing contracts appropriately, and avoiding trademark infringement. Taking the time to consider these issues at an early juncture can help business owners pick a memorable name, maximize limited liability protection, and avoid some common legal risks for the new business owner.
If you would like assistance choosing your business name, incorporating in Minnesota, registering an assumed name, or registering a trademark, contact one of the Trepanier MacGillis Battina P.A. business law attorneys.
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About the Author:
Trepanier MacGillis Battina P.A. is a Minnesota trademark law firm located in Minneapolis, Minnesota. Their intellectual property attorneys can be reached at 612.455.0500.
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[1] William Shakespeare, Romeo and Juliet (Act II, Scene II).
[2] The likelihood of customer confusion is the “‘hallmark of any trademark infringement claim.'” Northland Ins. Cos. v. Blaylock, 115 F. Supp. 2d 1108, 1117 (D. Minn. 2000) (quoting Polymer Tech. Corp. v. Mimran, 37 F.3d 74, 80 (2d Cir. 1994)). In evaluating whether a likelihood of confusion exists, the court considers the following factors: (1) the strength of the owner’s mark; (2) the similarity between the owner’s mark and the alleged infringer’s mark; (3) the degree to which the products compete with each other; (4) the alleged infringer’s intent to “pass off” its own goods as those of the trademark owner; (5) incidents of actual confusion; and (6) whether the degree of care exercised by a consumer can eliminate a likelihood of confusion that would otherwise exist. Hubbard Feeds, Inc. v. Animal Feed Supplement, Inc., 182 F.3d 598, 602 (8th Cir. 1999).
[3] The USPTO offers a search database, the Trademark Electronic Search System (“TESS”), where businesses can conduct their own trademark searches free of charge. See Trademarks: Trademark Electronic Search System (TESS), United States Patent and Trademark Office.
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Related Topics:
Minnesota Assumed Name
Minnesota Trademark Litigation
Incorporate in Minnesota
Minnesota S-Corporation
Register Minnesota LLC
Pierce the Corporate Veil