Jul 16, 2007 - 09:47:38 CDT
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When Greg Weimer started receiving coupons from his customers for his competition, he became more than a little concerned.
It's because the names of the two businesses were similar: Weimer's business is New Image Tanning, and the new business, located up at Pinehurst, is Image Sun Tanning.
Both were tanning salons; Weimer's was a sole proprietorship, a salon he'd owned for about 10 years. The newer salon was a franchise and owned locally by Zander Tanning, LLC.
Weimer's concern was that the names were too similar and might be too confusing to his customers. In fact, he began receiving phone calls about employment opportunities at the other salon, as well as questions about hours and services.
Attempts to reach the owner of Zander Tanning on his cell phone and at his other job were unsuccessful. Three calls to the franchise office were also unreturned. In a conversation with the owner earlier this year, he said he could not comment and deferred to the franchise office, whose legal department did not return requests for information.
Curious about the similarity between the two business names, Weimer contacted the secretary of state's office about the matter. They were already on it, having denied registration to the newer business because its name, although federally registered, was too similar to Weimer's.
But that's not the end of the story.
Trade name registration is a simple process, requiring filling out an application and paying a small fee. Beyond that, however, businesses must still protect their own name or trademark.
"The protection the statute provides is that the secretary of state may not register another name that is the same as or deceptively similar to a name that is already registered," said Clara Jenkins, director of business information-registration division in the secretary of state's office.
A new business cannot register its name in the state if another has registered a similar one previously, she said. The office sends a letter informing the newer business of the conflict.
After that, however, if the new business, specifically a sole proprietorship, were to choose to continue under that name, it's the existing business that must take the matter to court.
"What he would have to do, is he would have to pursue a court order ..." and the courts would either issue an injunction or move the matter forward, she said.
It's an expensive process, said Syd Spaeth, an attorney with Vogel Law Firm's Fargo office who practices intellectual property law, securities law and business litigation.
"Assuming it doesn't settle and it goes all the way through a jury trial, it could cost $50,000 to $75,000," Spaeth said.
And the process would take more than a year.
"The state does not have any enforcement authority when it comes to forcing someone to desist from using a trade name," Jenkins said. "There are very limited circumstances under which a secretary of state can remove a trade name."
The existing business could always move for an injunction, to convince a judge that it is more than likely to prevail were it to go to jury trial, effectively stopping the other business from continuing under its name.
But even that could be pricey for a smaller business.
Spaeth said he advises most of his clients to register their name or trademark federally, to protect against future problems. The trademark office will search the mark nationally to make sure there's no infringement, preventing future issues.
He said there's also a database that can search for marks that are registered in various states, but is less accurate. Then there's the common law search, as well as searches with Google or Yahoo.
"You do all that, then you should be free to use the mark," he said.
What may matter most in trademark problems is prior rights. A young, federally registered mark does not have rights in the neighborhood of an older, state-registered mark.
"Only the person with prior rights is going to be able to use their mark, but only in their neighborhood," Spaeth said. "(The federally registered corporation, business, will) have to circle them. The person with prior rights gets their little island."
But state registration is different, as another local business owner, Tricia Allen, discovered. Allen was on the receiving end of a letter claiming that her business name, Tricia's Barkery, was too similar to a federally registered name with Sergeant's Pet Food products, based in Omaha, Neb.
Allen said she never thought to search her name federally, having assumed that was something the state did when she registered with North Dakota.
So, while she didn't change the name of her entire business, she did change the name of one of her services involved in making dog treats, to Tricia's Bakery. The other part of her business is Web design.
"I've separated the two aspects of my business," Allen said. "But I'm not changing my business name from Tricia's Barkery. It's still registered through the state, it's still on my checks."
Her advice to new business owners is similar to Spaeth's: Don't just do a state search.
Since reviewing Weimer's situation, Jenkins said the office has since included a provision on most of their forms to clarify that the name being protected is not protected federally, and that they do not do federal searches.
But by the time it gets to the point where two businesses are operating under similar names, frustrations will mount.
"At this point, I don't know if I really have the financial resources to go into this thing," Weimer said. "It's sad that our laws don't have more authority to enforce this."
It's because the names of the two businesses were similar: Weimer's business is New Image Tanning, and the new business, located up at Pinehurst, is Image Sun Tanning.
Both were tanning salons; Weimer's was a sole proprietorship, a salon he'd owned for about 10 years. The newer salon was a franchise and owned locally by Zander Tanning, LLC.
Weimer's concern was that the names were too similar and might be too confusing to his customers. In fact, he began receiving phone calls about employment opportunities at the other salon, as well as questions about hours and services.
Attempts to reach the owner of Zander Tanning on his cell phone and at his other job were unsuccessful. Three calls to the franchise office were also unreturned. In a conversation with the owner earlier this year, he said he could not comment and deferred to the franchise office, whose legal department did not return requests for information.
Curious about the similarity between the two business names, Weimer contacted the secretary of state's office about the matter. They were already on it, having denied registration to the newer business because its name, although federally registered, was too similar to Weimer's.
But that's not the end of the story.
Trade name registration is a simple process, requiring filling out an application and paying a small fee. Beyond that, however, businesses must still protect their own name or trademark.
"The protection the statute provides is that the secretary of state may not register another name that is the same as or deceptively similar to a name that is already registered," said Clara Jenkins, director of business information-registration division in the secretary of state's office.
A new business cannot register its name in the state if another has registered a similar one previously, she said. The office sends a letter informing the newer business of the conflict.
After that, however, if the new business, specifically a sole proprietorship, were to choose to continue under that name, it's the existing business that must take the matter to court.
"What he would have to do, is he would have to pursue a court order ..." and the courts would either issue an injunction or move the matter forward, she said.
It's an expensive process, said Syd Spaeth, an attorney with Vogel Law Firm's Fargo office who practices intellectual property law, securities law and business litigation.
"Assuming it doesn't settle and it goes all the way through a jury trial, it could cost $50,000 to $75,000," Spaeth said.
And the process would take more than a year.
"The state does not have any enforcement authority when it comes to forcing someone to desist from using a trade name," Jenkins said. "There are very limited circumstances under which a secretary of state can remove a trade name."
The existing business could always move for an injunction, to convince a judge that it is more than likely to prevail were it to go to jury trial, effectively stopping the other business from continuing under its name.
But even that could be pricey for a smaller business.
Spaeth said he advises most of his clients to register their name or trademark federally, to protect against future problems. The trademark office will search the mark nationally to make sure there's no infringement, preventing future issues.
He said there's also a database that can search for marks that are registered in various states, but is less accurate. Then there's the common law search, as well as searches with Google or Yahoo.
"You do all that, then you should be free to use the mark," he said.
What may matter most in trademark problems is prior rights. A young, federally registered mark does not have rights in the neighborhood of an older, state-registered mark.
"Only the person with prior rights is going to be able to use their mark, but only in their neighborhood," Spaeth said. "(The federally registered corporation, business, will) have to circle them. The person with prior rights gets their little island."
But state registration is different, as another local business owner, Tricia Allen, discovered. Allen was on the receiving end of a letter claiming that her business name, Tricia's Barkery, was too similar to a federally registered name with Sergeant's Pet Food products, based in Omaha, Neb.
Allen said she never thought to search her name federally, having assumed that was something the state did when she registered with North Dakota.
So, while she didn't change the name of her entire business, she did change the name of one of her services involved in making dog treats, to Tricia's Bakery. The other part of her business is Web design.
"I've separated the two aspects of my business," Allen said. "But I'm not changing my business name from Tricia's Barkery. It's still registered through the state, it's still on my checks."
Her advice to new business owners is similar to Spaeth's: Don't just do a state search.
Since reviewing Weimer's situation, Jenkins said the office has since included a provision on most of their forms to clarify that the name being protected is not protected federally, and that they do not do federal searches.
But by the time it gets to the point where two businesses are operating under similar names, frustrations will mount.
"At this point, I don't know if I really have the financial resources to go into this thing," Weimer said. "It's sad that our laws don't have more authority to enforce this."
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