LLC Business Name vs Trademark (What’s the Difference?)
LLC Business Name and Trademark are related but distinct concepts that serve different purposes in the world of LLC formation and intellectual property protection.
From our experience, even knowledgeable business owners tend to mix LLC business names and trademarks. Although they have similar concepts, their purpose is different.
As a Mergers and Acquisitions specialist, I assisted several entrepreneurs with business formation and trademark registration, and I learned firsthand how to separate the two and why they matter.
To help you better understand how these legal forms serve your business, I decided to put my expertise and knowledge into this guide.
Quick Summary
- An LLC business name represents the official name of an LLC, whereas a trademark grants exclusive rights to use a particular logo, symbol, or name.
- You register an LLC with the Secretary of State or its equivalent agency, while you apply for a trademark through the United States Patent and Trademark Office.
- With a 20.8% failure rate for new businesses in their first year, as reported by Lending Tree, the importance of differentiating your business through a unique LLC name and protected trademark becomes even more critical to avoid becoming part of this statistic.
- When dealing with LLC business and trademark matters, in my opinion, it's important to seek legal guidance to help navigate through the processes effectively.
LLC Business Name vs Trademark
Understanding business titles is essential when forming a company. The distinctions between these two will help you make informed decisions that align with your business goals and legal needs.
1. LLC Name
In the context of the recent business boom, with 1.4 million new establishments reported by the US Small Business Administration between March 2021 and March 2022, a business name becomes a critical piece of intellectual property, prohibiting other companies from registering a similar title [1]. However, a business name can be registered as a trademark.
Here are the distinctions that differentiate an LLC name from a trademark:
- Legal Structure: An LLC name refers to the legal name under which a limited liability company conducts its business activities. It's the official title registered with the state when the company is formed.
- Business Identity: The LLC name is used to identify the legal entity and is required to be unique within the state of registration. It distinguishes one LLC from another and helps establish the company's legal presence.
- Registration: When forming an LLC, the chosen name must be approved by the state's business registration agency. I often check if the preferred business names of my clients are available and not already in use by other companies.
- Geographic Limitation: An LLC's name registration is typically limited to the state where it's registered. Before finalizing the registration, I remind clients that another business in a different state could potentially use the same name.
- Limited Protections: While an LLC business name is protected within its state of registration, it doesn't offer extensive personal liability protection against others using a similar or identical name in other states.
2. Trademark
A trademark is a word, phrase, or logo that identifies a product or service, and legally distinguishes it from other businesses.
Here are the distinctions that differentiate a trademark from an LLC name:
- Intellectual Property Protection: A trademark is a sign, symbol, word, phrase, or design that is used to identify and distinguish goods or services of one business from those of others. It provides legal protection for branding elements [2].
- Exclusive Use: Registering a trademark grants the business owner exclusive rights to use the mark in connection with specific goods or services nationwide. It can prevent others from using a similar mark that might confuse them.
- Protection Beyond Geographical Limits: Trademarks provide broader protection than LLC names. They can extend beyond state boundaries and offer protection against similar marks used in other states as well. When clients wanted to have exclusive rights over the business name of their company across all states, I advise them to register it as a trademark.
- Distinctiveness: To be eligible for trademark protection, I always ensure that the name or symbol is distinctive and not merely descriptive. It should be able to uniquely identify the source of the goods or services.
- Enforcement: A trademark owner has the legal right to enforce their trademark and take legal action against others who infringe upon it by using a confusingly similar mark.
It’s not about how to get started; it’s about how to get noticed.”
– Steve Case, former CEO of America Online
Business Name Protection
When it comes to securing your business title, an LLC name and a trademark work on a "first-come, first-served" basis. Once either one gets approved and registered, no other business entity can use the name.
For added protection, consider a trademark application under federal registration in the United States Patent and Trademark Office [3].
FAQs
Should I Get a Trademark for My LLC Business Name?
Yes, you should get a trademark for your LLC business name if you want prestige, protection, and exclusivity. Seek guidance from a lawyer with experience in trademarks for personalized recommendations.
Can I Trademark My Business Name and Logo Together?
Yes, you can trademark your business name and logo together as long as you file all required documentation.
References:
- https://advocacy.sba.gov/wp-content/uploads/2023/11/2023-Small-Business-Economic-Profile-US.pdf
- https://www.uspto.gov/trademarks/basics/scope-protection
- https://www.uspto.gov/
