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Separation of Corporation and Division

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madpark

Junior Member
What is the name of your state (only U.S. law)? WA

When a division of a corporation, or those employed with that division, decide to branch out on their own, can they take the name that division operated under and use it as the name of their new operating entity?

The division specific name was never registered, but only that corporation has ever used that division's name. It is very specific.What is the name of your state (only U.S. law)?

Who is entitled to use that name once those former employees leave the corporation? The corporation or the former employees?
 


FlyingRon

Senior Member
A "division" is not a legal entity. Either, the company can split forming a new corporation, or the employees can leave and form a new company.

Either way the issue is primarily one of trademarks. If the original company had established trademark rights, they may indeed reserve them against the new entity and sue for infringement.

For example, I work for the Lemon Car Division of the Big Auto Company. If I form a new company called "Lemon Car" and Big Auto chooses to retain their rights to "Lemon" with respect to cars, I could be enjoined from using either that brand (to the point of not being able to market under my actual company name).

Employees don't get trademark rights. Unless the company is amenable to you operating under the existing trademarks, it's best to come up with a new name.
 

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