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Consumer confusion matters when choosing a business name

On Behalf of | May 29, 2024 | Business & Commercial Law |

When choosing a business name, you have to be careful not to pick something that has already been protected as a piece of intellectual property. This means you generally can’t pick the same name as major corporations that have worldwide brand recognition. You are free to start a department store if you would like, for instance, but you certainly could not name it anything close to “Walmart.”

However, you will sometimes see businesses that do have very similar names. A common example is Delta Faucets and Delta Airlines. But you may also see small businesses in your area using generic names or names that are fairly similar to other establishments. A coastal town may have multiple businesses with variations of “The Island Inn” or “The Islander” or something of this nature. How is this permitted?

Avoiding consumer confusion

To understand why this happens, you need to know the main goal of these types of intellectual property laws: Avoiding consumer confusion. Your business cannot infringe on another company’s brand identity, and doing so would manipulate consumers into buying from your business when they thought they were buying from a different company entirely. You would create consumer confusion.

But this doesn’t always happen with small local businesses. They may be unknown in other geographical locations. They may also work in different industries. This is why Delta Faucets and Delta Airlines can both exist. A consumer who is looking to buy from one will not be confused and buy from the other.

Naming a business can be complicated, and new business owners need to be well aware of all of their legal rights and obligations.