Assignment #5 – Rally Round the Trade Name
Peggie Lowery
Strayer University
Law, Ethics, and Corporate Governance – LEG 500
Lynn E. MacBeth, J.D.
March 13, 2011

Trade names identify a business and are used in advertising with a business’s customers and the public. A business’s trade name can be different from the legal name of the business and may or may not be trademarked. Most businesses register their trade name through the state to obtain a tax id number. Business names are critical to a business because it can enhance the success of the business. According to common law, the business that uses a particular trade name first has legal right to that name. Common law protection does not require specific filings with the government (Burgum, 2010).
Explain whether or not the fact that Gabby’s surname is Rally gives her the right to use it any way she wishes.
Gabby does not have unlimited rights to use her surname anyway she chooses. Although Gabby may have filed the proper documents to register her business trade name as Rally’s Pizza with the appropriate government agency to obtain the proper permits, licenses and employer tax ids, she will be subject to trademark limitations since Rally’s Motors has a similar business name in the same geographical area. According to the Small Business Administration, some states require fictitious business names are registered “with the state government or with the county clerk’s office; there are a few states that do not require the registering of fictitious business names” at all (SBA.gov, n.d.). It would behoove new business owners to research a potential business name to ensure it’s not already being used. The Small Business Administration provides some pointers on where to begin searching for existing business names. One can start with their county to see if the name has been registered as a DBA (doing business as). A new business owner can also check with the state to verify if a business name is already being used by an existing corporation or limited liability company. Using various search engines to research potential names on the internet is another suggested method to research a business name. Lastly, one can conduct a free trademark search at Name Protect (SBA.gov, n.d.). In this case, it appears that Gabby did not thoroughly do her research and possibly did not register her business trade name. If this is true, Gabby could be held liable for trade name infringement if Rally Motors decides to sue.
Explain whether or not it matters that Rally is associated with pizza.
On the other hand, Rally Motors cannot keep other companies from using similar names for their business unless they have completed a trademark registration with the appropriate government agency. According to Trademark and Technology lawyer David Bronski (2007), “when the business is using its trade name to identify its products or services, then the name is functioning as a trademark, and trademark law must be considered” (Bronski, 2007). In the 1988 comedy, Coming to America, a local restaurant called McDowell’s is an exact replica of the well-known fast food chain McDonalds. Instead of the Big Mac, McDowell’s had the Big Mic. While McDonalds had McNuggets, McDowell’s has McDuggets. The owner also brags on his Golden Arcs, not to be mistaken for McDonald’s Golden Arches. Although this was a hilarious comedy exaggerating the similarities and differences of a knock-off McDonalds, this is a prime example of how a business can use their trade name to identify its product. Although Rally’s Pizza is not selling cars, we can understand Herman’s concern with consumers being confused with the business names being similar. With that being considered, it would matter that the Rally name is associated with pizza because neither company would have unlimited rights to their trade name unless they have registered for trademark rights.

Explain how important the fact is that Herman started to use the name Rally first in that particular geographical area. The basic rule of trade name protection under common law would apply in this case since Herman started using the trade name “Rally” first in their particular geographical area. In the Connecticut Law Tribune, Fahey & Murphy state that “under this type of protection, when a person or entity first uses a trade name in a specific geographical area for a specific business purpose, they have the exclusive rights to that trade name in that area for that purpose” (Fahey & Murphy, 2010). Business-owners must keep in mind two issues surrounding business names – mandatory government requirements for trade name registrations and optional registrations that provide extended name protection (Roberts, 2006).
Explain what rights you have in your trade name. By registering your business name, it will minimize the possibility of other businesses using the same name. This will also help avoid claims of trade name infringement. Generally sole proprietorships require DBA registrations but may also be required corporations to do the same if they will be operating under both the DBA and the corporate name. To have a business name incorporated, the corporate name must be registered with the appropriate government agency (usually the secretary of state) in the state where the business will operate. This type of registration will also reveal if there are other businesses that have confusingly similar corporate names. One must be mindful that having your business name incorporated do not give exclusive rights to the name because other unincorporated business may already be using it as a trade name, or using the name as a trademark (Roberts, 2006). If a business owner is considering operating their business beyond their local geographic area, they may want to consider seeking additional name protection rights. Also, if the products or services of a business depend on the business size, then it would be wise to obtain additional name protection rights. One can start doing this by performing a wider business name search by researching the federal register for trade and service marks. Issues surrounding business names can be confusing and complicated, and business consultant Carlotta Roberts, suggests seeking individual guidance from your local Small Business Development Center in addition to books and the internet (Roberts, 2006).
Explain what remedies you have if someone else infringes upon your trade name.
Before one can maintain a claim of trade name infringement, West's Encyclopedia of American Law states that “a plaintiff must establish that it owned the right to operate its business under a certain name and that the defendant violated this right by use of a deceptively similar name” (Trade Name, 2005). Going back to the comedy, Coming to America, McDonalds could definitely prove that McDowell’s used a similar name, as well as their trademark to draw consumers to their establishment. Additionally, McDowell’s would be in violation of the Lanham Act, which is the legislation that protects infringement and governs trademark law. When customers have been deceived by use of a deceptively similar trade name, an injured business may seek an injunction and compensatory damages (Trade Name, 2005).

References
Burgum, TL. (2010, April 9). Legally Protect Your Business Name. Businessweek. Retrieved March 12, 2011 from http://bx.businessweek.com/international-trade/view?url=http%3A%2F%2Fscorelancaster.wordpress.com%2F2010%2F04%2F09%2Flegally-protect-your-business-name%2F
Bronski, Danny. (2007, December 16). The Difference Between a Trade Name and a Trademark and Why You Should Care. Retrieved March 12, 2011 from http://biznik.com/articles/the-difference-between-a-trade-name-and-a-trademark-and-why-you-should-care
Fahey, Patrick and Murphy, Susan. (2010, April 19). State Courts Can Handle Trade Name Cases. Connecticut Law Tribune. Retrieved March 13, 2011 from http://www.shipmangoodwin.com/files/Publication/6c792b7f-f35e-487b-b59b-042c1346db2d/Presentation/PublicationAttachment/63255e44-b0c5-4312-af41-0b5d8b87c508/Reprint_FAHEY_041910.pdf
Klein, Karen. What’s in a Name. 2003. Businessweek. Retrieved March 13, 2011 from http://www.businessweek.com/smallbiz/content/may2003/sb20030527_5847_sb006.htm
Register Your Fictitious or "Doing Business As" (DBA) Name | SBA.gov. n.d. Retrieved March 12, 2011 from http://www.sba.gov/content/register-your-fictitious-or-doing-business-dba-name
Roberts, Carlotta. (2006, January 7) Protecting Your Business Name. Retrieved March 13, 2011 from http://www.entrepreneur.com/startingabusiness/startupbasics/namingyourbusiness/article31156.htm
Trade Name. 2005. In West's Encyclopedia of American Law. Retrieved March 13, 2011 from Encyclopedia.com: http://www.encyclopedia.com/doc/1G2-3437704416.html