The terms trade name and trademark might sound similar, but they are distinctive in the kinds of protections they offer under law. You do not necessarily hold a trademark on your trade name, though you can apply for one. Additionally, even if you register for a trade name it does not mean that you are clear of trademark infringement.

These distinctions make it necessary for business owners to understand the vital differences between their trade names and any trademarks they might hold.

Every business has a trade name

A trade name is the name a company uses for official business. The company must register for a trade name with appropriate authorities, usually at the state and sometimes at the county level. This registration is often referred to as a “doing business as” (DBA) or a “fictitious business name.”

In some states, sole proprietorships doing business as the owner’s name don’t have to file for a trade name. But even slight modifications–a John Smith who owns John Smith Plumbers, for instance–may have to file for a DBA.

Restrictions and rights

There are few restrictions when filing for a trade name. Typically a state will only check to ensure two factors:

1. That the trade name does not match any other currently registered trade names.

2. That the trade name does not blatantly misrepresent the business. For instance, the name John Smith Electricians could be rejected as the trade name for a carpentry business.

Once approved, a trade name grants a company the rights to use that name for banking, billing, identification and tax purposes. The business can then decide to use the trade name for other purposes, but that’s where it could find itself infringing on existing trademarks.

Use in commerce

A company can use its trade name on products and services, but not without restrictions. Any use of the trade name to identify commercial products and services is subject to trademark law.

In other words, just because the state approved your trade name does not mean you have any trademark rights. In fact, you might be infringing on an existing trademark, which can result in legal action against your company.

The only way to be sure is to run a trademark search. If your trade name has not already been trademarked, you can then file a trademark application to start the process. Until you complete this process, your trade name will hold no federal rights for use in commerce.