Introduction
One of the most common misconceptions is that if you have a corporate name approved by the Secretary of State then you have the right to freely use the name in commerce. This is simply not the case.
Why Your State Approved Name May Be Infringing Someone Else's Trademark
State agencies that are responsible for assigning corporate, limited liability company, and partnership names like the Secretary of State and commissioner of corporations, are only concerned that there not be two corporations, or limited liability companies with identical names. Trademark law, on the other hand, prohibits the use of any name that is "confusingly similar" to another trademarked name for similar goods or services. Two names are deemed to be "confusingly similar" if there simultaneous use creates a "likelihood of confusion".
Thus, while trademark law may prohibit ABC Computer Company and ABC Computers from co-existing if both sell the same products, the Secretary of State will readily accept the articles of incorporation from both companies since the names are not identical.
Another reason why getting approval from a state agency is insufficient is the fact that it is only concerned about its own office and business names within the state. The Secretary of State is not concerned about other states, other state trademarks, or federally registered trademarks.
Both corporate and trademark attorneys often find themselves explaining this from time to time, typically after a client has received a "cease and desist" letter from a company that has been around longer. Often times the prudent business decision is to give up and use some other name, even though any accumulated goodwill (customer recognition) relating to the previous name will often be lost, and even though one must then throw away stationery, business cards, and all other promotional materials and pay to have new materials printed. Although costly, defending a trademark infringement lawsuit will likely be more costly.
In light of the potential losses that may result, it is generally a wise idea to have a proper trademark search conducted by a professional before investing substantial sums in a proposed new name. Although no search can guarantee the absence of a trademark dispute, it can drastically reduce the risks. (see, How To Select A Good Company or Product Name; see also, Conducting a Proper Trademark Search is Important).
Conclusion
Do not attach any trademark significance to a state agency's approval of a business name (corporate, limited liability company or partnership). In cases where it would be a hardship to have to change the name later, it is wise to consult experienced trademark counsel. The costs associated with having such a search performed will generally be less than abandoning a name previously used at a later date.
