There is often a lot of confusion surrounding the terms ‘trademark’ and ‘trade name’. More often than not, these terms are used interchangeably. There is, however, a very significant difference between the two.
A trade name is also referred to as a ‘doing business name’ or a company name or a fictitious name. This means that the name with which an entity does business is called a trade name.
Why is a trade name important? It’s quite simple really. A trade name is important because it is the medium that connects the company to the public. It is used in advertisements and for sales purposes, to enable the public to recognize the entity.
A company or an LLP needs to register its trade name under the government body, as the case may be. Registration endows recognition on the company as a separate legal entity. After registration, the company or LLP can enter into contracts and do business in its registered trade name.
Isn’t that the same thing as a trademark then?
Most definitely not!
A trademark can be a word, phrase, design or symbol that distinguishes goods or services of one person from another. It protects the reputation and the goodwill of the company that owns the trademark. And the company will have the exclusive right to use the trademark. A trademark has to be registered to use the ® trademark symbol next to your trademark.
To make it simple let’s take the example of a fictitious company. A company, ‘Paxtc’ manufactures stationary. They decide to call the pencil manufactured by them ‘Z’. ‘Paxtc’ is registered only as a trade name. If the company registers ‘Z’ as a trademark for their product, no other producer can use the same registered trademark. If they do, it would amount to trademark infringement.
In this example, ‘Paxtc’ is the trade name, ie., the name of the company and ’Z’ is the registered trademark of the pencil produced by them.
Why go for trademark registration when I can just register my trade name?
A lot of people may be wondering about the need for a trademark registration when they have already registered their trade name/business name.
The answer to this lies in the fact that a trademark registration confers complete protection of the registered trademark of a product or entity. Insofar as trade names are concerned, the government body only does not allow for registration of same or similar trade names, it does not actively prevent the use of the registered trade name by another company. This is because the registered trade name of a company can still be used as a brand name by some other company. Another important drawback of only trade name registration is that the government body [Ministry of Corporate Affairs in India] concerns itself only with companies and/or LLP’s. This, in effect, means that a partnership or a sole proprietorship can start a business using a registered trade name.
Let us take the above example; if ‘Paxtc’ is registered just as a trade name and not as a trademark, then any other company can launch a product by the name ‘Paxtc’ or even worse, a Partnership can start a business in the name of ‘Paxtc’. The subsequent company can cash in on the goodwill that ‘Paxtc’ built for itself. In the event of such a situation, ‘Paxtc’ company will have to file a suit for passing off against the Partnership that started using its name. A suit for passing off does not entitle the complainant to damages. If only ‘Paxtc’ had registered their trade name as a trademark they could have sued for trademark infringement and received damages. A trademark registration of ‘Paxtc’ would have prevented anyone from using the name ‘Paxtc’ even for a product.
In order to prevent a similar situation, it is always advisable to register your trade name as your trademark. This will prevent other companies from using the trade name of a company for their own products. Trademark registration provides holistic protection, giving the owner of a trademark a right to prevent the infringement.
While trade name registration is important for the company to become a legal entity, trademark registration is equally, if not more, important to protect the reputation and goodwill of that company. So the next time you get your trade name/business name registered, be sure to get the trademark for your business name, and connect with trademark experts at Intepat!