Claims lawyer Mark Scruggs describes two situations recently involving the same factual scenario, both of which resulted in claims that we resolved by settlement. In each case, the lawyer was hired to form a corporation. He checked with the Secretary of State to make sure the corporate name was available, but he did not do a trademark search, nor did he advise the client of the risk of foregoing a trademark search. Under the common law of trademarks, if a company operates under a particular mark within a particular territory, and the mark is “distinctive,” that company has the right to preclude others from using that mark, or any confusingly similar mark, within that territory. This right is independent of and separate from the right to a particular corporate name.
Checking with the Secretary of State to make sure the corporate name is available is probably not sufficient to fully protect your client. Confirming through the Secretary of State’s office that the corporate name is available will not tell you anything about potential trademark infringement. When asked by a client to help secure rights in a particular name or trademark, consider advising the client that he should also work with trademark counsel to conduct a search to be sure the name is available. The search should include not only prior registrations or applications, but also information about who is actually using the mark in the marketplace. If the client wants to proceed without a trademark search, you should at a minimum advise the client in writing of the risk that he is taking.
For other risk management advice from Mark, follow him on Twitter at MarkScruggsEsq.