Whether Two Businesses Can Have the Same Name Depends on Several Factors
Sometimes, two businesses can legally operate under the same or a similar name. Other times, they can also find themselves in a legal dispute. Whether a conflict exists depends on factors like what each business sells under the name, where each one operates, and whether either has a federal trademark registration for the name.
Please note that this post is about the use of the same business name as a trademark, not merely the same legal entity name. A state entity registration does not create exclusive commercial rights, it has no geographic reach beyond that state, and on its own offers no defense against a competitor who files a federal trademark and establishes nationwide priority. For a closer look at that distinction, the post on trademarks versus trade names covers it in detail.
Trademark Rights Are Tied to Specific Goods and Services
A trademark does not provide a blanket monopoly over a word or phrase. Trademark rights are tied to specific goods and services, and the scope of protection is defined by what the mark is used for. This is why the trademark register can accommodate two businesses using the same name when they operate in genuinely unrelated fields.
A company named ATLAS that sells handcrafted furniture and a company named ATLAS that provides IT consulting services can generally coexist without conflict. The legal test is whether it is likely that an ordinary consumer would be confused about the source of the goods or services. Because consumers wouldn't reasonably expect a tech consultancy to manufacture dining tables, confusion is unlikely, and coexistence is possible.
The picture changes when businesses are in the same or even related industries. If two companies use the same trademark within the same geographic area, a conflict is highly likely. When federal trademark rights are involved (via registration with the USPTO), the relevant geographic area becomes the entire United States. Crucially, the products do not need to be identical for there to be a conflict. They just need to be related enough that consumers might reasonably think they come from the same company.
Geographic Limits of Common Law Rights
A business that has been operating under a name in a specific region has common law trademark rights in that area, even without a federal registration. Those rights arise from actual use in commerce and are enforceable, albeit with significant limitations compared to trademark rights from federal registration.
Consider a bakery in Portland, Oregon operating as THANKS FOR MUFFIN. It has common law rights in the Portland area. If a bakery in Miami opens under the same name without knowledge of the Portland business, both can coexist in their respective markets. Neither can aggressively expand into the other's territory, but it's likely that neither would be required to rebrand as long as they stay in their own lanes. However, those geographic lanes can be difficult to define in practice, and disputes over where they fall are not uncommon.
Federal registration changes the geographic scope issue. A federal trademark registration creates a legal presumption of nationwide priority as of the filing date, regardless of where the registrant actually operates. If the Miami bakery files a federal trademark application for THANKS FOR MUFFIN before the Portland bakery does, and that application registers, the Miami registrant can assert nationwide rights, including in Portland. The Portland bakery may have a defense based on its prior use in that area, but it will bear the burden of proving that earlier use and may be frozen out of expanding beyond its existing territory.
Note that a business with years of local use and no registration can find itself legally outmaneuvered by a competitor who files a federal application first, even if that competitor entered the market later. Federal registration locks in priority nationwide as of the filing date, not the date the registrant started selling in any given city.
First to File vs. First to Use
The United States trademark system is use-based, meaning rights flow from actual use in commerce rather than from registration alone. Federal registration, however, provides constructive nationwide priority as of the filing date. Anyone who starts using a similar mark after that filing date is treated as a junior user, regardless of whether the registrant has yet reached their city or market segment.
A business that has been using a name in commerce for years but has never filed a federal application can find itself on the wrong side of a priority dispute with a later registrant. Prior users have defenses available, but asserting them typically involves legal proceedings that are time-consuming and expensive. Registering proactively is considerably less costly than defending prior rights after the fact.
Coexistence Agreements
When two businesses are already operating under the same or similar names in related fields, a coexistence agreement can formalize the terms under which both can continue. These agreements typically define the geographic territory each party may operate in, the specific goods and services each may sell under the name, and the circumstances under which either party may expand. They are negotiated arrangements that allow both parties to keep their brands while reducing the risk of future conflict.
Coexistence agreements also arise in USPTO examination. When an examining attorney cites an existing registration as a bar to a new application based on likelihood of confusion, the applicant can often overcome the refusal by submitting a consent agreement signed by the owner of the cited mark, confirming the two marks can coexist. Note that a consent should include an explanation of why confusion is unlikely, or it may not have much value with the USPTO. See, for example, the Five Dogs Law blog post on the TTAB decision in In re Ye Mystic Krewe of Gasparilla.
Before Naming Your Business
A clearance search before committing to a business name is the most practical step available. A search covering existing federal registrations, pending applications, and common law uses in your industry will help you assess the risk of using the name. Finding that information before investing in branding, a website, signage, and marketing is considerably less disruptive than discovering a conflict after those investments are made.
If you are already operating under a name that consumers associate with your products or services and you have not filed a federal trademark application, that is worth addressing. Federal registration converts common law rights into a nationally enforceable trademark. The cost of filing proactively is a fraction of the cost of addressing an infringement claim or fighting to preserve rights against a later registrant.
To discuss a specific name or situation, schedule a free consultation with Five Dogs Law.
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