By Clifton D. Beech
When seeking to begin a business in Texas, the most common procedure is to complete a Name Availability search through the Texas Secretary of State website, then file an entity with that name if it appears available. However, filing Articles of Incorporation, a Certificate of Formation, and/or an Assumed Name Certificate or “dba” does not give you any rights to use a name in commerce. Filing a formation document with the Texas Secretary of State to create an entity with a given legal name only prevents the Texas Secretary of State from filing a formation document with a name that is the same as or deceptively similar to yours. In brief: filing a formation document (1) does not authorize you to use the name in violation of someone else’s rights to the name; (2) does not prevent someone else from using that name in Texas commerce; (3) does not prevent the Secretary of State or county clerk from filing the same name as an assumed name; and (4) does not prevent the Secretary of State from registering a mark that is the same as or similar to that legal name. Furthermore, filing a “dba” with the Texas Secretary of State or a county clerk merely records information about the underlying business. If the entity is not offering a service or good directly, this may be acceptable for your needs. But if the name or assumed name of the entity is going to be directly related to the offering of goods or services, it is paramount that you have a legal right to such use.
So how do you begin protecting your business name? You acquire common law ownership rights to a mark simply by using the mark in commerce in connection with the relevant goods or services. You can begin claiming a trademark without having filed for registration of it, and you cannot file for registration unless the mark is in actual use. This means that you can begin using the TM and SM symbols to alert the public to your claim immediately. You cannot use the registered mark (“®”) without having registered with the USPTO. You do not have to register your mark at the federal or state level to acquire common law rights to it; however, there are several benefits to registering your mark, including: putting the rest of the state or country on notice, reducing your evidentiary burden when claiming a violation of your trademark, and creating a statutory cause of action instead of relying on common law. If your business is going to operate in interstate commerce instead of focusing on Texas, you should seek to file with the United States Patent and Trademark Office (“USPTO”), as similar benefits will be granted across the United States instead of only in Texas. The requirements to register a mark in Texas are: (1) the mark must be “in use” in Texas before the date of the application; (2) the mark must be distinctive; and (3) the mark cannot be similar to any mark that is currently registered in Texas or at the USPTO so as to cause confusion or mistake.
Without registering the mark, you must show “use in a way sufficiently public to identify or distinguish the marked goods in an appropriate segment of the public mind as those of the adopter of the mark.” This means that, under Texas common law, you must show that you were the first to use the mark in a manner that the relevant public (being potential clients or customers) would recognize your business as the owner of the mark. The most common way to do this is through sales. However, courts may find your use sufficient if there is significant enough advertising and marketing prior to your first sale.
In summary, Texas and federal law protects those who are first to use a mark in a variety of ways. Determining whether a mark is already legally protected or can be legally protected is a significant task that requires due diligence, and, for that reason, we recommend you speak to your lawyer.