The difference between a “trade name” and a “trademark” is actually a bit complex. This is because, from a legal standpoint, a trade name is distinct from a trademark and each serves a separate legal function. However, from a commercial business standpoint, they can become blurred since both serve the business purpose of helping to identify the business, create a commercial brand and generate customer loyalty. Indeed, often a trade name becomes a trademark. Here is a quick summary of the differences and some circumstances when a trade name is the correct choice for your business.
Legally, a trade name is the same thing as a “doing-business-as” name. As a hypothetical, imagine Elaine Jackson is a sole proprietor operating a small fine furnishings store at a physical brick and mortar location, but also with an online presence. The sign on the store and name of her eCommerce business says “Elaine’s Fine Furnishings.” This is Jackson’s trade name and her doing-business-as name. She is operating her store AS — that is, doing business AS — “Elaine’s Fine Furnishings.” In many jurisdictions, Jackson would be required to file papers at her County Recorder’s Office to register her “doing-business-as” name. This is generally required for reasons related to business transparency and to provide notice to litigants with respect to the proper party to sue in the event of litigation.
By contrast, a trademark identifies a particular commercial source of goods or services. A trademark can be a mark, symbol, logo, design, a word or a phrase. Under the right circumstances, a trade name like “Elaine’s Fine Furnishings” COULD be a trademark, but the trade name must function as a trademark. That is, the words must, in the minds of consumers, identify Jackson’s store as the specific commercial source for furniture products. Certainly, as a startup, this hypothetical trade name would NOT function as a trademark since most consumers have not yet heard of Elaine’s Fine Furnishings. Over time, that may change and Jackson’s trade name can become a trademark eligible for registration with the US Patent & Trademark Office.
As can be seen, even though the same words are being used, the words have different legal significance when used as a trade name versus when used as a trademark. However, as noted, a trade name and a trademark serve similar business functions — to identify the business to consumers.
There are several other salient differences between trade names and trademarks. Trade names have a very limited purpose — to name the business — and most businesses have only one trade name. Further, a trade name exists because a business made a choice to use the name, the name continues in existence even if the business is not operating and others may be able to use the same name. By contrast, many businesses own several trademarks, and trademarks can be used for many different commercial products/services. For example, a food company might have one trademark for the company name but distinct trademarks for its line of cookie products, breads, frozen food offerings, condiments and more. However, unlike a trade name, a trademark must be used. Failure to use a trademark will cause it to be deemed abandoned. And, unlike a trade name, any given trademark can be used only by one business.
So, which is right for your business?
Generally speaking, there are several circumstances where using a trade name is the correct choice (and may be legally required). These are:
- When a business is a sole proprietorship and the business is operating under a different name
- When a business has a corporate name — such as ABC Corporation — but is doing business under a different name — such as Acme Business Computers
- When a business is just starting and its trade name is not yet functioning as a trademark
- When a business is not yet certain on which brand it wants to grow — such as “Elaine’s Fine Furnishings” or an alternative like “Elaine’s Elegant Furnishings”
- When a business might want to operate two locations under two different names
- And more