Trade Name vs. Trademark: What’s the Difference?

Trade Name vs. Trademark: An Overview

The terms trade name and trademark sound similar, but it’s important for business owners—especially those in the initial startup phase—to know the difference.

Selecting and registering trade names and trademarks is an important part of establishing a brand presence and recognition in the marketplace for a company and its products, so it’s a process that should be considered carefully. The law makes a definite distinction between the two—a trade name refers to the company’s official name, while a trademark provides a company’s brand with legal protection.

While they may not be the same, companies should avoid choosing trade names that are too close to a registered trademark, as this could expose owners to a potential lawsuit.

Key Takeaways

• Trade names and trademarks identify a business but hold different weight legally.
• A trade name is an official name under which an individual or company conducts business.
• Registration requirements for trade names are geared more toward making the tax collection agencies aware of the business.
• Registering a trademark with the relevant authorities can guarantee its exclusive use and prevent other businesses from using it.
• Trademarks can be the same as a trade name and are easily recognized as they are accompanied by the ™ symbol.

Trade Name

A trade name is the official name under which an individual as a sole proprietor or a company chooses to do business. It is commonly known as a doing business as (DBA) name.

State laws vary on requirements for registering a trade name, but most states require registration either with the state government or through a county clerk’s office. The Small Business Administration (SBA) website provides a search tool for the specific trade name registration requirements in each state.

Registering a trade name legally is an important step in branding for a company, but it doesn’t provide an unlimited brand name or legal protection for the use of the name. In many states, registering a trade name doesn’t prevent anyone else from operating a business under the same trade name, which explains why you may find more than one company named Joe’s Painting and Roofing operating in different cities in the same state.

Important

A trade name does not provide companies with trademark rights, which is a different process altogether.

Registration requirements for trade names are really geared more toward making the tax collection agencies aware of your business than they are toward providing any substantial brand name protection. The practical function of registering a trade name is primarily for administrative and accounting purposes, such as filing a corporate tax return with the Internal Revenue Service (IRS), which is in addition to your personal income tax return.

Although registering a trade name doesn’t provide legal protection in the way that registering a trademark does, selecting a trade name should still be done thoughtfully. That’s because it’s the initial step in establishing an identity for your company in the marketplace.

Trademark

A trademark is a more significant step identified with establishing brand recognition in the marketplace. A trademark can be associated with or part of your trade name and can be used to provide legal protection for the use of names, logos, symbols, or company slogans.

Two easily recognized examples of trademarks are Nike’s swoosh symbol and Coke’s “Coca-Cola” written in its distinctive script. Trademarks are easily recognized as they are accompanied by the trademark symbol ™.

Registering a Trademark

A trademark requires a separate registration from a trade name and can be registered at the state level, federal level, or internationally. Registering a trademark in a state is a simpler, less expensive process but just protects the trademark within that state. For protection across the U.S., it must be registered federally through the U.S. Patent and Trademark Office (USPTO).

It’s also possible to register the trademark internationally. With the “Madrid Protocol,” a single application can be applied to over 100 member countries. However, acceptance isn’t guaranteed in all of those countries. Each country’s trademark office will review the application and decide whether the trademark meets the requirements to be registered there.

Note

It is common practice to register a trademark at the state level in addition to fulfilling federal trademark registration requirements.

Protections

The registration of a trademark guarantees an individual or business the exclusive use of the trademark, establishes legally that the trademark was not already being used by any other business entity, and provides official government protection from any other business subsequently infringing on the registered trademark. It also provides legal liability protection against someone subsequently claiming infringement on a previously registered trademark.

A business can directly register the trademark, or choose to have a lawyer who handles intellectual property law or trademark registration do it for them. Having an intellectual property lawyer handle the registration provides an extra layer of insurance that the registration is done properly and completely and that a thorough investigation has been conducted verifying that the trademark has not been previously registered by any other person or company.

What Is an Example of a Trade Name?

A trade name is the name a business or individual uses to conduct business. Examples include IBM, Walmart, Ford, Nike, and so forth. Often trade names are also trademarked.

What Is the Purpose of a Trade Name?

All companies must go by a name. Trade names are needed to distinguish a business from others. It functions as a form of branding, albeit without necessarily providing legal protection against others using the name, and is crucial for administrative and accounting purposes.

Can I Change My Business Name and Keep the Same EIN?

Yes. If a business changes its name or address, it usually doesn’t need to change its employer identification number (EIN), a unique nine-digit number assigned to a business entity to identify it for tax reporting purposes, as well.

The Bottom Line

Trade names and trademarks can be the same but mean two different things. A trade name is the name of a business. A trademark is a name, symbol, word, design, or a combination of these things that denotes a specific product or brand and communicates exclusive ownership. A trade name can be used by other companies. A trademark cannot, provide it was correctly registered with the relevant authorities.

Both trade names and trademarks need to be registered and represent an important step in establishing a brand presence. However, they are only protected if registered as a trademark.