As we head into 2023, you may be feeling an entrepreneurial itch to start or expand your own business venture. Perhaps you are excitedly brainstorming names for your business and looking up the state and federal to-dos to become legitimate. In this vein, I would like to define trade names vs. trademarks: two common business terms that seem similar but are not. 

You will deal with both when establishing a business and developing its brand. Trade names and trademarks perform two different functions, and mistaken beliefs about trade names can lead to intellectual property snags down the road.

Trade Names vs. Trademarks: The Big Differences

First of all,  you may have searched “trade names vs. trademarks,” but they are not really in opposition to each other. In other words, there is quite a bit of overlap. Trade names can be trademarks, and trademarks can be trade names.

The clearest contrast to make when comparing trade names and trademarks is their purpose. A trade name labels a legal business entity. This could be an LLC, partnership, firm – basically, it is the name of your company that you use to file taxes.

A trademark, on the other hand, identifies the source of your goods in the marketplace via logo, symbol, or a word – which sometimes is the trade name itself. For instance, the Coca-Cola company uses its name in its logo, which is a registered mark. But the Target bull’s-eye obviously would not appear on Target Corporation’s tax forms. It is a trademark, unconnected to the trade name.

In non-legal terms, you could see the pivotal difference between trade names and trademarks as the “fun factor.” You want your trademark to stand out and be distinctive, eye-catching, and expressive of your brand. But the trade name for your company might be something as practical as “GREG & SONS LLC.”

State and Federal Registrations Depend on Your Reach of Commerce

Because of their distinct functions, you register trade names and trademarks in different places. If you are conducting business in interstate commerce, you will need to file a trademark application with the USPTO. You can also register trademarks at the state level if you intend to sell your goods or services solely within your state.

In contrast, you will likely register a trade name with a state Division of Corporations when you create the company. Keep in mind that this does not provide trademark protection – or any other kind of protection for your intellectual property assets. You will need to turn to the state Division of Corporations Trademark Office and/or the USPTO for that.

Depending on your state’s regulations, another business could file their trade name as something very similar or identical to yours without repercussions. You will want to claim and register a trademark to really give yourself some enforcement power.

Trade Names vs. Trademarks: Check Twice, Register Both

There is some overlap regarding the legal consequences of trade names and trademarks. If your trade name is too similar to another company’s registered trademark, you could still be accused of trademark infringement and forced to change the name of your company and rebrand.

Whether you are considering a trade name or trademark, remember that, ideally, you want both to distinguish your business from your competitors!

Thus, you will need to conduct a trademark clearance search to determine if other entities or individuals are using a similar or the same trade name and trademarks as you plan to use. This thorough investigation is often much easier with help from an IP professional. It will be worth it in the long run to avoid consumer confusion and set up your business’s foundation right.