Complicated scenario

[jag1975]

What is the name of your state (only U.S. law)? California

I reserved the name of a LLC that was suspended by the Secretary of State, with the intention of filing articles of organization next week.

Today, I spoke with the CEO of the suspended LLC. The suspended LLC has a trademark for its business name. They have offered my money to release the name back to them so they can reinstate the LLC. In the alternative, if I decline, they are threatening a federal lawsuit.

As it stands, they are not able to reinstate the LLC due to my reservation of the name. They can reinstate using a new name.

Have any of you come across a scenario like this?

 

[quincy]

What is the name of your state (only U.S. law)? California

I reserved the name of a LLC that was suspended by the Secretary of State, with the intention of filing articles of organization next week.

Today, I spoke with the CEO of the suspended LLC. The suspended LLC has a trademark for its business name. They have offered my money to release the name back to them so they can reinstate the LLC. In the alternative, if I decline, they are threatening a federal lawsuit.

As it stands, they are not able to reinstate the LLC due to my reservation of the name. They can reinstate using a new name.

Have any of you come across a scenario like this?

If the name you want to use is identifying an existing/active business, the business that is using the name as a trademark can enforce its trademark rights and you could be sued for infringement, this whether the other business has the name registered with the state or not.

Registration of a trademark is not necessary in the U.S. Trademark rights are gained through the use of the trademark in commerce. But you can check to see if the name is a federally registered trademark by checking the federal database.

You can check the United States Patent and Trademark Office's database by going to the USPTO site: https://www.uspto.gov/trademarks-application-process/search-trademark-database

States will permit state registration of any name that is not already registered in their state but the states advise all registrants to first check that the name is not in use and rights-protected.

I suggest you either find another name or review all facts with an IP professional in your area.

 

[adjusterjack]

What is the name of your state (only U.S. law)? California

I reserved the name of a LLC that was suspended by the Secretary of State, with the intention of filing articles of organization next week.

Today, I spoke with the CEO of the suspended LLC. The suspended LLC has a trademark for its business name. They have offered my money to release the name back to them so they can reinstate the LLC. In the alternative, if I decline, they are threatening a federal lawsuit.

As it stands, they are not able to reinstate the LLC due to my reservation of the name. They can reinstate using a new name.

I agree with Quincy.

I suggest you give or sell the name back to the owners or face the distinct possibility of a lawsuit that can put you in the poorhouse with defense costs.

You've only reserved the name, you haven't used it yet. You can find something else.

 

[quincy]

It is actually nice that the existing business has offered money in exchange for the release of the name.

As a note, it is not rare to have two businesses operating under the same or similar name. If consumer confusion is not generated by the dual use, the businesses often can peacefully coexist.

The problem here is that the trademark holder has already threatened legal action. There is no reason to believe the business won't follow through with their threat.

A lawsuit is no way to start a new business but a lawsuit can be a good way to end a new business before it starts. It is easy to avoid the risk of infringing on someone else's trademark by choosing a unique name to identify your business.

 

[jag1975]

If the name you want to use is identifying an existing/active business, the business that is using the name as a trademark can enforce its trademark rights and you could be sued for infringement, this whether the other business has the name registered with the state or not.

Registration of a trademark is not necessary in the U.S. Trademark rights are gained through the use of the trademark in commerce. But you can check to see if the name is a federally registered trademark by checking the federal database.

You can check the United States Patent and Trademark Office's database by going to the USPTO site: https://www.uspto.gov/trademarks-application-process/search-trademark-database

States will permit state registration of any name that is not already registered in their state but the states advise all registrants to first check that the name is not in use and rights-protected.

I suggest you either find another name or review all facts with an IP professional in your area.

Quincy..... Thanks for the reply. Maybe my understanding is off, but I am under the impression after quite a bit of research that since my business is not a related industry I should be okay.

 

[jag1975]

It is actually nice that the existing business has offered money in exchange for the release of the name.

As a note, it is not rare to have two businesses operating under the same or similar name. If consumer confusion is not generated by the dual use, the businesses often can peacefully coexist.

The problem here is that the trademark holder has already threatened legal action. There is no reason to believe the business won't follow through with their threat.

A lawsuit is no way to start a new business but a lawsuit can be a good way to end a new business before it starts. It is easy to avoid the risk of infringing on someone else's trademark by choosing a unique name to identify your business.

This goes along with my last reply************** The issue with coexisting here is that by me reserving the name the LLC can't reinstate under the name. It literally has three choices: 1) Reinstate under a new name, or; 2) Sue me to see if it can get an injunction, or; 3) Pay me to release the name reservation.

I will likely come to terms to release the name. I just wanted some experienced info on the scenario.

 

[quincy]

This goes along with my last reply************** The issue with coexisting here is that by me reserving the name the LLC can't reinstate under the name. It literally has three choices: 1) Reinstate under a new name, or; 2) Sue me to see if it can get an injunction, or; 3) Pay me to release the name reservation.

I will likely come to terms to release the name. I just wanted some experienced info on the scenario.

Releasing the name and choosing another is definitely your legally safest option.

Being in different industries (marketing different goods/services) is one factor considered when deciding if one name infringes on another. Consumer confusion is more likely when goods/services and markets overlap.

What also needs considering will be unfair competition laws and dilution of the first user's mark.

Even if a court ultimately decides your use of the trademark does not infringe on the original owner's rights, there could be an injunction preventing your use of the mark during the course of any legal action, tying up your use of the mark for not only months but years.

All in all, it seems to me to be be a wise business move to give up your preferred name and search for a business identifier that is not in use and whose use is not already being challenged.

Good luck.