Choosing and Checking the Availability of a Business Name

Choosing a business name for your website or blog involves understanding something about federal trademark law -- please see the Trademark for Business Naming section for details. For a helpful general guide to choosing a business name, see FindLaw's Picking a Winning Name for Your Business.

There are a number of ways to check the availability of a name, including doing a basic internet search, searching the list of "fictitious" or "assumed" business names at your local county clerk's office, searching your state's database of "fictitious" or "assumed" business names, and searching the federal trademark database at the U.S. Patent and Trademark Office (free of charge). For details on checking the availability of a business name, see FindLaw's Make Sure Your Proposed Business Name Is Available.

You may already have a domain name for your website or blog. If not, when choosing a business name you should consider whether there is an available domain name that would work well with the business name. You can search for and register domain names by visiting a domain name registrar such as Network Solutions, Register.com, or Go Daddy.

Copyright Ownership of Content in a Business

Under U.S. copyright law, the author of an article or blog post generally is the owner of the copyrights in that work. The same applies for the creator of a video clip or the photographer who takes a photograph -- as a default rule, the creator is the owner of copyright in her work. This rule is subject to a few exceptions, which we discuss in the Copyright Ownership section of this guide. On this page, we will try to give you a rough estimation of who will own what in terms of copyright in articles, posts, video and other content, when work is carried out through each of the pertinent types of business entity:

• Sole Proprietorship: As the owner of a sole proprietorship, you would own the copyright in your articles, posts, and other content. You will also own the copyright in any articles, posts, or other content created by your employees (if any) in the course of their jobs. You would not own the copyright in any articles, posts, or other content created by an independent contractor unless the work fits with in one of nine statutory categories in the copyright statute (scroll down for definition of "work made for hire") and the independent contractor expressly agrees in writing that the work is a "work made for hire."


• Informal Group: There is a great deal of uncertainty regarding who owns the copyright in articles, posts, and other content because of the uncertainty as to the legal status of the informal group. Depending on your legal status vis-a-vis other individuals in the group, you may or may not own the copyright in material that you create, and you may or may not be able to stop co-publishers from continuing to publish your work even after you withdraw from the group. Eric Goldman has done an excellent job applying copyright ownership analysis to co-blogging arrangements in his article, Co-Blogging Law. All these issues are better dealt with in a co-publishing agreement, discussed in the Informal Group section.


• Partnership: The partnership would own the copyright in the articles, posts, and other content created by its employees (if any) in the course of their jobs. The partnership would not own the the copyright in any articles, posts, or other content created by an independent contractor unless the work fits with in one of nine statutory categories in the copyright statute (scroll down for definition of "work made for hire") and the independent contractor expressly agrees in writing that the work is a "work made for hire." As for the works of partners themselves, the law is not entirely clear. It appears that the partnership will own the copyright in works created by the partners in furtherance of partnership objectives, such as publishing a jointly-run website. To confusion, partners can address this issue in the partnership agreement, specifying either that the business or the individual partners will own the copyrights to partner work.


• LLC: The LLC itself would own the copyright in the articles, posts, and other content created by its employees (if any) in the course of their jobs. The LLC would not own the copyright in any articles, posts, or other content created by an independent contractor unless the work fits with in one of nine statutory categories in the copyright statute (scroll down for definition of "work made for hire") and the independent contractor expressly agrees in writing that the work is a "work made for hire." As for the works of members themselves, the law is less clear. Members who make themselves employees of their business entities in return for a salary would probably be considered "employees" for copyright purposes, and thus the LLC would own the copyright in articles, posts,and other content created by the member as part of the job. To avoid confusion, members of an LLC could address this issue in the operating agreement, specifying either that the business or the individual members will own the copyrights to member-created work.


• Corporation: The corporation itself would own the copyright in the articles, posts, and other content created by its employees (if any) in the course of their jobs. The corporation would not own the copyright in any articles, posts, or other content created by an independent contractor unless the work fits with in one of nine statutory categories in the copyright statute (scroll down for definition of "work made for hire") and the independent contractor expressly agrees in writing that the work is a "work made for hire." Shareholders who become officers of the corporation likely would be considered "employees" for copyright purposes, and thus the corporation would own the copyright in articles, posts, or other content created by the shareholder-officer as part of the job.


• Nonprofit Organization: The nonprofit organization itself would own the copyright in the articles, posts, and other content created by its employees in the course of their jobs. There being no "owners" of a nonprofit in a legal sense, the term "employees" likely would include high level officers of the nonprofit and even the founder or director. The nonprofit organization would not own the copyright in any articles, posts, or other content created by an independent contractor unless the work fits with in one of nine statutory categories in the copyright statute (scroll down for definition of "work made for hire") and the independent contractor expressly agrees in writing that the work is a "work made for hire."

If someone else owns the copyright to articles, posts, and other content appearing on your site, then that person may be able to force you to remove the content, for instance, after withdrawal from the business. It could be devastating to your site if you were forced to take down all of this content. As the text above indicates, you don't have to worry about this in the case of employees because the business owns the copyright in their work. In the case of LLCs, corporations, and nonprofits, the term "employee" likely will often encompass high level actors like members, shareholders, and officers who participate in the day-to-day managements of the business. With LLCs and partnerships, uncertainty about who owns copyright can be fixed by express agreement, so you may want to draft the partnership or operating agreement to provide that the business, and not the individual members or partners, own copyright in their work. Alternatively, partners and members could expressly license the firm to continue using their work, even after withdrawal of the relevant individual.

Even absent an express agreement, a court might find that your business has an implied license (i.e., permission) to continue using partner-, member-, or independent contractor-created content on your website. Alternatively, there is a strong argument that a website or blog -- taken as a whole -- is a "collective work" under copyright law and each article or post is a contribution to that collective work. In that case, you may be able to continue publishing any disputed content as "part of that particular collective work, any revision of that collective work, and any later collective work in the same series." 17 U.S.C. § 201(c). For more on collective works, see the Copyright Ownership section of this Guide.

Note: Ownership of copyright is a very complex, fact-specific area of copyright law, and the determination of who is an employee and who is an independent contractor is very difficult to make in the abstract. The material on this page is no substitute for the individual attention of a lawyer who is familiar with your personal circumstances.

Employee Versus Independent Contractor

In the course of operating a website or blog, you might hire people to perform work for you. For example, you might hire someone to design your website or write code for some functionality that you want on the site. You might hire other journalists or bloggers to create content for the site. Depending on the nature of your enterprise, you might even be able to take on volunteers or interns to perform tasks in return for the opportunity to get some experience or training in the field of online publishing. There are nearly limitless ways that you can structure these work relationships, and how you structure them has legal consequences. Quite often, these legal consequences hinge on whether the person that you've hired is an "employee" or an "independent contractor." This is a question of the law of agency, but it affects copyright ownership, personal liability, and tax issues, to name a few.

The information on this page is mainly geared toward the "hiring party," the person who is hiring someone else to perform work. But it applies equally to the "hired party," the person who is hired to perform work. You may find yourself carrying on online publishing activities in the position of the hired party, and you can draw guidance from this information as well.  If you find yourself working as an independent contactor (often called a freelancer), you might find some useful tips in this Salon article: What Every Freelancer Should Know.

When the Determination is Made

The question of whether a hired party is an "employee" or "independent contractor" often comes up after some dispute arises, and someone files a lawsuit. This means that the question won't necessarily be resolved definitively until a court rules on the issue. Before any dispute arises, the parties to an employment relationship can enter into a contract that designates the hired party as an "employee" or "independent contractor," but a court is not obliged to honor that designation if the actual circumstances of the relationship tell a different story. That said, an agreement formalizing the parties' understanding of their relationship may have great weight in a court's determination of the question. It is generally a good idea to create such an express agreement, because it gives both sides more certainty as to their legal status, and will help them meet their respective tax obligations, which must be done without the aid of a court determination. For more on the tax consequences of "employee" versus "independent contractor" status, see the Independent Contractors vs. Employees page on the IRS website.

The Factors Considered

As a general matter, a hired party is the employee of the hiring party when the hiring party controls (or has the right to control) the manner and means of the hired party's performance of work. The fact that work is performed gratuitously does not mean that the hired party is not an employee. Restatement (Third) of Agency § 7.07(3). In contrast, a hired party is an independent contractor when he "is not controlled by the other nor subject to the other's right to control with respect to his physical conduct in the performance of the undertaking." Restatement (Second) of Agency § 2(3). The touchstone, then, is the amount of control that the hiring party exerts over the hired party's work.

Other factors play a role as well. Courts apply a fact-sensitive, multi-factor test in order to determine whether someone is an employee or independent contractor. Some of the factors include:

• the extent of control that the parties have agreed that the hiring party may exercise (and the extent actually exercised) over the details of the work (if a lot, leans toward employee; if not much, leans toward independent contractor);
• whether the hired party is engaged in a distinct occupation or business (if no, leans toward employee; if yes, leans toward independent contractor);
• whether the type of work done by the hired party is ordinarily done under supervision (if yes, leans toward employee; if no, leans toward independent contractor);
• the skill required in the hired party's occupation (if little, leans toward employee; if a lot, leans toward independent contractor);
• whether the hiring party supplies the tools and other instruments used in the work and the place in which to perform it (if yes, leans toward employee; if no, leans toward independent contractor);
• the length of time during which the hired party is engaged by the hiring party (if a longer time, leans toward employee; if a shorter time, leans toward independent contractor);
• whether the hired party is paid by the job or by the time worked (if the latter, leans toward employee; if the former, leans toward independent contractor);
• whether the hired party's work is part of the hiring party's regular business (if yes, leans toward employee; if no, leans toward independent contractor); and
• whether the individuals believes that they are creating an employment relationship (if yes, leans toward employee; if no, leans toward independent contractor).

Other important factors include whether the hired party receives employee benefits, whether the hiring party withholds income and social security taxes for the hired party, and whether the hiring party has the right to assign additional projects to the hired person, all of which support the conclusion that the hired party is an employee. You see these factors in most ordinary employer-employee relationships.

Some Examples

As you can see, it won't always be easy to tell ahead of time if someone is an employee or independent contractor. But some generalizations are possible:

• A "guest blogger" who chooses her own topics, writes and posts content with little or no editorial input from other co-bloggers, and who works from her own home using her own computer would probably not be an employee of the more permanent blogger or bloggers running the site. She would be an independent contractor.
• A staff journalist working for an online news service that receives a yearly salary and employment benefits, who works on stories assigned to him by an editor who exercises substantial editorial oversight, and who works out of the company offices would likely be an employee.
• A photographer who "picks up" individual projects for the same online news service from time to time, gets paid by the project, and who works out of her own home using her own equipment would likely be an independent contractor.

The particular examples are not terribly important. The point is that many factors are involved, but control over the performance of work is the most important one. Despite the complexity of the test, your "common sense" as to who is an employee and who is a "freelancer" will likely serve you well in most instances.

Note: The determination of who is an employee and who is an independent contractor is very difficult to make in the abstract. The material on this page is no substitute for the individual attention of a lawyer and/or accountant who is familiar with your personal circumstances.

Limited Liability

Under traditional American legal principles, an owner of a business was liable for harm caused by the business, even if the owner was not personally involved in causing that harm. Contemporary business law removes this ownership-based pathway to liability for limited liability business structures like corporations and LLCs. If you have limited liability, a plaintiff who wins a court judgment against your business cannot satisfy the judgment out of your personal assets simply because of your status as an owner of the business. Rather, the plaintiff must collect out of assets of the business only, which includes amounts you have already invested in it. Limited liability offers you -- in your capacity as an owner of the business -- protection for your personal assets if one of your co-owners or employees commits an unlawful action that injures someone, such as writing a defamatory article or post. Additionally, it protects your personal assets if someone sues your business for nonpayment of a debt (unless you gave a personal guarantee).

Certain kinds of business entity offer limited liability to owners. Members of an LLC and shareholders of a corporation generally are not liable for the debts and obligations of the business, including liability for the unlawful actions of others acting on behalf of the business. The same goes for those individuals who start and/or operate a nonprofit organization, although they are not considered "owners" or "shareholders" of the nonprofit.

Other forms of business do not offer limited liability, but rather expose their owners to personal liability for the debts and obligations of the business, including for the unlawful actions of others participating in it. Owners of sole proprietorships are personally liable for the unlawful actions of their employees committed in the scope of their employment. Partners are personally liable for the unlawful actions of their partners and employees committed in furtherance of the business. Individuals operating in an informal group may be held personally liable for the actions of others in the group if the group is deemed an informal partnership or an employer-employee relationship is found.

No form of business, however, can insulate you from personal liability for your own misconduct. If you write a defamatory article or blog post, for example, a victorious plaintiff could satisfy the judgment out of your personal assets, regardless of what type of business you adopt.

While limited liability is an attractive feature in a business structure, it often is accompanied by increased costs and hassles in terms of formation and operation of the business. You may want to weigh the benefits of limited liability against these other costs. The larger your business or nonprofit enterprise is (in terms of the number of people participating), the more attractive limited liability becomes. On the other hand, if your business or nonprofit enterprise is small -- say it involves just you creating content and publishing it online -- then limited liability is not such an important advantage because no one else is publishing material (and you're liable for your own content in any event). As a rule of thumb, the more people involved, the bigger the benefit from limited liability.

A caveat: If your business will be engaging in significant activities other than publishing material online, or if the business will take on significant debt in order to finance its operations, then the benefit of limited liability grows in significance, regardless of how many other individuals are involved.

New York City Taxes

While many cities collect income taxes that are separate from and in addition to state and federal taxes, New York City taxes are notoriously complicated and burdensome -- not only re-taxing corporate business profits, but also collecting taxes from otherwise untaxed entities like LLCs, partnerships, and sole proprietorships.

Unincorporated Business Tax

New York City collects an Unincorporated Business Tax on the business income of every unincorporated business (sole proprietorships, partnerships, and LLCs) carried on - wholly or partly - in New York City. If the business can demonstrate that a portion of its business was done outside New York City, that portion will not be subject to this tax. The rate is 4% of taxable income. You must file for and pay this tax if

• You have total gross income of more than $25,000 for a partnership or LLC with more than one member, or more than $75,000 for a sole proprietorship or single-member LLC, prior to any deduction for the cost of goods sold or services performed; or
• You have an unincorporated business taxable income of more than $15,000 for a partnership or LLC with more than one member, or more than $35,000 for a sole proprietorship or single-member LLC.

If your tax is $1,800 or less, a credit is issued for the entire amount of the tax and no tax will be due. If the tax is between $1,800 and $3,200, a credit is allowed in the amount of the tax multiplied by (3200 minus the tax), then divided by 1400.

The website of the New York City Finance Commissioner has tax forms and other information about the Unincorporated Business Tax.

General Corporation Tax

If your corporation does business, employs capital, owns or leases property for business purposes, or maintains an office in New York City, it is subject to the General Corporation Tax. This tax only applies to incorporated businesses (unincorporated businesses are subject to New York City's Unincorporated Business Tax). If the corporation can demonstrate that a portion of its business was done outside New York City, that portion will not be subject to this tax. New York City's General Corporation Tax is imposed at the highest of the following four rates

• 8.85% of net income from New York City sources;
• .15% of total capital allocated to New York City;
• 8.85% of 30% of net income, plus the amount of salaries or other compensation paid to any person, including officers, who at any time during the year owned more than 5% of stock; or
• Minimum tax base of $300.

S corporations are not recognized by New York City and are subject to full corporate income tax.

The website of the New York City Finance Commissioner has tax forms and other information about the General Corporation Tax.

Note: The information contained on this page is meant for general, information purposes only, and CMLP makes no claim as to comprehensiveness or accuracy of the information. Because of the complexity of tax issues associated with starting any business, you are encouraged to consult with a tax attorney and/or accountant to ensure compliance with federal, state, and local tax requirements. The CMLP is not a substitute for individualized legal advice, especially not individualized tax advice.

Personal Liability

Being "personally liable" means that a plaintiff who wins a court judgment against your business can satisfy it out of your personal assets, like your bank account, home, or automobile simply because of your status as an owner of the business. A common reason for a plaintiff to win a judgment against a business is that an employee or other agent of the business committed an unlawful action that injured her. As a general matter, then, personal liability means that your personal assets are exposed if one of your co-owners or employees commits an unlawful action that injures someone, such as writing a defamatory article or post.

Certain kinds of business entity expose you to personal liability for the unlawful actions of others participating in the business. Sole proprietors are personally liable for the unlawful actions of their employees committed in the scope of their employment. [Partnership|Partners] are personally liable for the unlawful actions of their partners and employees committed in furtherance of the business. Individuals operating in an informal group may be held personally liable for the actions of others in the group if the group is deemed an informal partnership or an employer-employee relationship is found.

Other forms of business do not expose you to personal liability for the unlawful actions of others who participate in the business. If you form an LLC, a corporation, or a nonprofit organization you generally will not be held personally liable for the actions of others taking part in the business.

No form of business, however, can insulate you from personal liability for your own misconduct. If you write a defamatory article or blog post, for example, a victorious plaintiff could satisfy the judgment out of your personal assets, regardless of what type of business you adopt.

While personal liability is an unpleasant prospect under any circumstances, the larger your business or nonprofit enterprise is, the more intolerable the risk. The major liability risk for most citizen media sites or blogs is getting sued for defamation. Other significant risks includes legal claims for invasion of privacy, copyright and trademark infringement, and violations of trade secret laws, all of which could arise out of the act of publishing content online. If your business or nonprofit enterprise involves just you creating content and publishing it, then personal liability is not such a serious problem because no one else is publishing material and you're liable for your own content in any event. If your business or nonprofit enterprise is bigger, and involves a number of different people publishing content online (whether they are co-owners of the business or employees), then personal liability for their actions is a more significant problem.

A caveat: If your business will be engaging in significant activities other than publishing material online, or if the business will take on taking on significant debt in order to finance its operations, then the disadvantage of personal liability grows in significance, regardless of how many other individuals are involved.

Piercing the Corporate Veil

A properly formed and operated corporation or LLC offers its owners limited liability for the debts of the business, so that their losses are limited to their investment in the business. In some extreme and rare cases, however, courts hold the owners liable for the debts of the company, including for judgments resulting from lawsuits. In legal terminology, this is called "piercing the corporate veil."

Courts normally pierce the corporate veil in situations where one owner or a small group of owners dominate the management and operation of the corporation or LLC. Without more, the combination of ownership and management is not a problem (indeed, LLCs are designed to be managed that way). The problem arises when one or more of the following factors are present:

• Misuse of Corporate/LLC Funds. Courts look at whether a dominant shareholder or owner treats the assets of the corporation or LLC as if they were his own. This could involve a shareholder or owner intentionally siphoning off company assets for personal benefit. Alternatively, it could involve a shareholder or owner co-mingling company bank accounts and records with her own, and failing to keep good records of transactions between the company and herself. To avoid veil-piercing liability, you should never cause your company to pay you an amount of money that will render it insolvent (meaning, that the company's assets are less than its liabilities or it is unable to pay its bills as they become due). Additionally, you should always maintain a separate bank account for your company and keep separate financial records.

• Undercapitalization. Courts also look at whether a corporation or LLC is undercapitalized. The exact definition of "undercapitalized" is not entirely clear, and the definition changes depending on the nature of the business. However, it is clear that you should never intentionally keep your company in a state where it lacks the assets necessary to pay its creditors. On the contrary, you and the other shareholders or owners (if any) should make a reasonable initial investment in the company. You don't necessarily need to put in so much money that you can cover all foreseeable needs or debts of the business (after all, businesses are permitted to take out loans, and they do so all the time), but you should invest enough so that you take on a "fair" share of the risks of business failure.

• Failure to Observe Corporate Formalities. Courts sometimes consider the extent the owner or owners of a business have disregarded corporate formalities. Among the types of conduct that might constitute "disregard of formalities" are
  • failure to issue stock;
  • failure to have shareholder meetings to elect directors, or to hold director meetings, or to prepare minutes of these meetings; and
  • failure to formally approve or carefully document transactions between the business and its shareholders or members.

This factor generally is more relevant to corporations, because LLCs do not require the same kinds of operating formalities. However, in order to maintain their limited liability protection, LLC members should observe certain formalities, such as keeping detailed financial records and recording minutes of major decisions.

• Fraud. Courts also examine whether the dominant shareholder or owner uses the company to perpetrate a fraud or makes fraudulent representations about the business. As one commentator notes, this category can be seen as "a general catch-all prong which allows courts to disregard a legal entity when they feel like someone has complied with the letter, but not the spirit, of the law." This could involve making misrepresentations about the corporation's financial status, promising that the corporation will perform its obligations while knowing that this is impossible (or intending to do otherwise), or making representations that would lead a creditor to believe that someone, other than the corporation, stands behind a debt. But it could potentially cover much subtler forms of misrepresentation or wrongful conduct. As a practical matter, unless you intend to assume liability yourself, you should never make verbal assurances to creditors that you will pay the debts of the corporation if it is unable to meet its obligations. Most importantly, you should always be upfront and honest when communicating with creditors and/or clients of your business.

The presence of one or another of these factors does not automatically result in piercing the corporate veil. The analysis that courts perform is fact-intensive and unpredictable. The presence of two or more of these factors, however, would make it more likely that a court would disregard the corporate/LLC form and hold you personally liable for the debts of the business.

Note: No piercing of the corporate veil is necessary to hold you personally liable for your own unlawful actions, such as if you write a defamatory article or blog post. In that case, you are independently liable for the injury done. The LLC or corporation may also be liable, but a plaintiff could satisfy the judgment out of your personal assets should the company's assets prove insufficient.

Best Practices for Avoiding Piercing the Corporate Veil

• Never cause your corporation or LLC to pay you an amount that would render it insolvent, or any amount that would seem unreasonable to an outside observer. Document the justifications for large payments made to shareholders or members.


• Keep separate financial records for your business and yourself, and maintain a separate bank account for the business. Avoid borrowing money from the company for personal expenses. If you absolutely have to withdraw funds from the business, make sure that you keep accurate records of how much was borrowed and when you paid it back. Charge yourself a reasonable interest rate for the loan.


• Do not verbally assure creditors that you will personally take on the obligations of the corporation if the company proves unable to do so. Do not blend corporate and personal obligations.


• If you operate as a corporation, make sure to observe the required corporate formalities, such as issuing stock, holding shareholder and board of directors meetings, keeping adequate minutes for meetings, and formally approving and documenting any transactions between the company and shareholders. For more on required corporate formalities, see the Corporation and the Corporate Records sections.


• If you operate as an LLC, the same formalities are not required, but LLC members should observe certain formalities, such as keeping detailed financial records and recording minutes of major decisions.

Tax Obligations of Small Businesses

Federal Obligations

As a small business owner (for-profit), whether a sole proprietorship, partnership, LLC or corporation, you must pay self employment tax and file Schedule SE to Form 1040 if you earn profits of $400 or more in a given year from the business. See the Self-Employment Tax page on the IRS website for details.

If your small business (including a nonprofit) has one or more employees, you will generally be required to withhold federal income tax from their wages. You also may be subject to Social Security and Medicare taxes under the Federal Insurance Contributions Act (FICA) and federal unemployment tax under the Federal Unemployment Tax Act (FUTA). If you are required to report employment taxes or give statements to employees, you need an employer identification number. See the Employment Taxes for Businesses page on the IRS website for details.

If your small business hires independent contractors, you need to report contract payments annually on Form 1099-MISC, which goes to the independent contractor and to the IRS. Please see the Independent Contractors vs. Employees page on the IRS website and the Employee Versus Independent Contractor section of this guide for details.

Additional informational returns requirements may apply to your small business. Check out the IRS Guide To Information Returns for more information.

Partnerships and multi-member LLCs that elect to be treated as partnerships generally do not pay federal income tax at the entity level, but must file Form 1065 annually with the IRS. This return shows the business's income, deductions, and other required information, and must include the names and addresses of each partner or member and each partner's or member's distributive share of taxable income.

Nonprofit organizations that obtain 501(c)(3) exempt status generally do not pay federal income tax, but must file an annual tax return with the IRS, unless their gross receipts are normally $25,000 or less. Organizations beyond the $25,000 threshold with gross receipts below $100,000 and total assets at the end of the year less than $250,000 can file the return on Form 990EZ. Organizations with gross receipts or assets above that must file the return on Form 990. For details, including how to calculate gross receipts, see the Instructions for Form 990 and Form 990-EZ.

State Obligations

States impose additional taxes, withholdings, and informational filing requirements on small businesses. Businesses generally must report any new hires to the state, and take care of workers compensation requirements. See the How to Start a Business section for details on state requirements.

Note: The information contained on this page is meant for general, information purposes only, and CMLP makes no claim as to comprehensiveness or accuracy of the information. Because of the complexity of tax issues associated with starting any business, you are encouraged to consult with a tax attorney and/or accountant to ensure compliance with federal, state, and local tax requirements. The CMLP is not a substitute for individualized legal advice, especially not individualized tax advice.

Trademark Law and Naming Your Business

A trademark is a sign, mark, or indicator used by an individual, business, or organization to identity a product or service as its own and to distinguish the product or service from those of its competitors. A business name generally can be protected as a trademark under federal and state trademark law.

Trademark law is designed to avoid consumer confusion over the trademarks that businesses or other organizations use in connection with their goods and services. Stated briefly, trademark law makes it unlawful for a business to use a trademark (e.g., a slogan, a logo, a name) in connection with a good or service if that use is confusingly similar to another business's use of a trademark. To see how this works, imagine a consumer - Sally. If Sally buys a Dell computer, she can be pretty sure that the computer was made by Dell Computer and nobody else. She can take Dell's reputation into account without worrying that a knockoff company is making shoddy computers with the Dell logo on them because trademark law prohibits that kind of confusing commercial activity and it gives Dell the right to sue for money damages and an injunction if someone does it.

As a general rule, if someone in a similar field to yours is already using a particular business or organization name, you should not use it, nor should you use a name that would be confusingly similar. Traditionally, there was nothing to prevent someone from using a trademarked name in a completely unrelated field or industry (for instance, Delta Faucet and Delta Airlines) because there was no possibility that consumers would confuse one for the other. However, the emergence of something called "anti-dilution" law means that the owner of a "famous" trademark (it means pretty much what is sounds like) can prevent you from using it even in an unrelated industry. Therefore, it probably would not be a good idea to call a blog "Kodak News" or "McDonald'sBlog," unless your website is actually about Kodak or McDonald's (in which case you should read Using the Trademarks of Others section closely). Traditionally, the law also permitted multiple companies to use a given name in different geographical areas of the country, but the global nature of the Internet breaks down the importance of geographical isolation and makes it more likely that an Internet use of a name or trademark could be confusing regardless of where the brick-and-mortar businesses or organizations are physically located. Thus, you probably want to steer clear of a name that is the same or similar to a name used by someone else in your field, even if that person or organization is located far away from you.

The process of naming your business and securing trademark rights can be summarized in three basic points:

1. Choose a name for your business. It should be distinctive, not generic, and should not be close to the name of anyone in a similar business. For details, please see the Naming Your Business: Choosing A Name Capable of Trademark Protection section.


2. Search for others using your chosen name or similar ones. You should search the Internet and federal and state trademark databases, at the very least. You should not use the name if someone in your field or a similar one is using it. You may be able to use the name if someone in an unrelated field is using it, but you should try not to use similar logos, styles, or colors. For details, please see the Naming Your Business: Searching for Trademarks of Others section.


3. Consider registering your chosen business name as a trademark. Registering a state and/or federal trademark has advantages. It is relatively cheap and easy to register a state trademark. Federal registration is more costly, but it is worth considering because of its nationwide effect. For details, please see the Securing Trademark Rights: Registration section.