One of the very first things you do when launching a business is to pick a name that conveys your brand and vision. To express this persona, brand names and logos are undoubtedly two important elements. However, did you know that the business name you use for running your business and the name you use for backing up your products or services may not be the same in legal terms? Many business owners erroneously equate a trade name and a trademark, ruminating that both terms mean the same. They both deal with the same issue, but their meanings are different and provide different levels of legal protection. A clear understanding of these differences is very necessary, first, to protect your brand and, second, to stay out of any potential lawsuits.
Thus, understanding the concept of a trade name and a trademark differently is significant. Apart from being just paperwork, it involves protecting the trust and reputation you acquire over time.
Overview of Trade Name
A trade name is just the official name under which a business runs. It’s the name you register when incorporating your partnership, company, or sole proprietorship. Think of it as the business’s legal identity. This will be the name on contracts, bank accounts, licenses, and other official documents.
In short, a trade name is basically the face of your business to financial institutions and the government. It is used for legal and administrative recognition and not for promotional purposes of the brand.
Overview of Trademark
A trademark, in contrast, is a matter of how customers identify your products or services. It is possible that your brand has a logo, symbol, phrase or word which can distinguish it from the rest of the market. When you register a trademark, you receive a handful of exclusive rights to use the brand for particular classes of goods or services.
Trademarks create emotive imagery with consumers. They represent quality, reputation, and trust. Without a trademark, competitors could copy your logo or name, confuse customers and hurt your brand.
What’s the big difference between a trade name and a trademark?
Trade names and trademarks may appear alike sometimes, but they do different jobs for a business. The following are the key differences between the two.
Regulating Authority
The supervisory authorities for both trade names and trademarks are separate. The Trade name can be registered under diverse acts according to the form of business. One example is the company and LLP that are registered with the Ministry of Corporate Affairs and governed by the Companies Act and the Limited Liability Partnership Act, respectively.
The trademark is registered through the Registrar of Trademarks and governed by the Trademark Act. If the trademark is to be held by an entity, one must first register the business entity’s name, and the trademark can be registered subsequently.
Legal Protection
To protect a brand name, one must register it under the Trademark Act. It provides legal protection for unendorsed use of the brand name. One can easily file a suit against such an individual. If a person has registered a mark as a trade name rather than a trademark, they may need to prove their ownership of the trademark. A registered trademark comprises an asset that establishes your ownership of a mark and provides you with legal protection for the trademark.
Registration Process
Because the regulatory authority is separate, the trademark registration process is different. The trade name is registered in accordance with the applicable provisions, taking into consideration the type of business. Nonetheless, all types of trademarks are registered under the Trademark Act. In the case of LLP and Companies, the Ministry of Corporate Affairs does not accept a similar name.
If the trademark is registered with any name, then the ministry will not accept a similar trade name for LLP and Company. The registration period also differs. A trade name is registered in about two weeks, though trademark registration takes at least 6 months.
Renewal
The trade name, following registration, is registered permanently. Renewing the registration is not necessary. However, a trademark carries a validity of only ten years. In the event it is not renewed within the provided timeline, the owner may give up the trademark, which will allow other people to use the same brand name.
Asset Creation
The trade name is just the name of an entity, while a trademark is a property. The entity undertakes business tasks and enters into contracts under such name. It operates as an administrative function. All other filings and tax registrations are performed under the trade name.
However, the trademark is an intangible asset of an entity. It imparts value to the business. It builds goodwill for the entity in the market. A trademark is used to distinguish a product from others. One cannot enter into agreements or contracts in the name of a trademark.
Scope
- Trade name protection is usually limited to the business registration area.
- Trademark protection extends nationwide and can even be international.
Use
- A trade name is used on legal documents, official communications, and invoices.
- A trademark is used on advertisements, packaging, and branding materials.
| Feature | Trade Name | Trademark |
| Definition | A name by which a company does business. So, a company’s name is a trade name. A trade name is also called a corporate name/ business name/ company name. Mainly, a trade name is followed by a corporate identifier: Corp. (Corporation) and Inc. (Incorporated). | A name under which a company or brand markets its products and services. A trademark can be: Word/Sound/Symbol/Motion/Audio/ Multimedia/Smell/Phrase. |
| Registration Law and Process | The trade name of an entity is registered under the Limited Liability Partnership Act for LLPs, the Companies Act for companies. | The trademark is registered under: Canada: USA: Lanham Act, Canada: Canadian Trademark Law, India: Trademarks Act, 1999 |
| Examples | Trade Name Examples One97 Communications Limited, Mahindra & Mahindra Limited (M&M), PepsiCo, Kirloskar Proprietary Limited | Trademark Examples: Mahindra, Kirloskar, Pepsi, Paytm |
| Lifetime and Renewal | Once registered, a trade name is valid lifelong. | After trademark registration, a trademark’s lifetime is for 10 years. After 10 years, a trademark needs to be renewed. |
| Where to Register/ Regulating Authority | Registration and regulating authority for trade names vary from country to country. It can be: State office, or County office, or Office of their Secretary of State, or Ministry | Trademark registration and regulating authority vary between countries. Some Examples are: Canada: CIPO, Australia: IP Australia Korea: KIPO EU: EUIPO Japan: Japan Patent Office USA: USPTO UK: IPO China: CNIPA India: Office of the Controller General of Patents, DPIIT New Zealand: IPONZ Germany: German Patent and Trademark Office |
| Asset Creation | The specified functions are done under a trade name: Enter into contracts, Administrative functions, Perform business, Tax registration, filing, and payment | Trademark functions are: Differentiate your brand from other competitors, Build a unique business identity, and Provide trademark rights to sue any infringer. |
Wrapping Up
Your trade name and trademark may sound similar, but they play very different roles in the establishment and securing of your business. A trade name helps you to be legal in your activity, while a trademark secures your brand’s image and character. Both are important, but only a trademark registration gives you particular rights and permanent brand protection.
Against such a scenario where competition is almost a war, and brands are just an extension of the self, knowing the difference between the two may prove to be a game-changer for the business success of your undertaking. Implementing proactive measures to protect your trade name and trademark should be the smartest move and, most importantly, a critical step for the future progress of your business and stability in the long term. A trade name displays ‘doing business as’ while a trademark shows the brand name of the goods or services. The finest example is “Paytm”, which is a trademark owned by ‘One97 Communications Limited’.
