Forced Trade Name: What It Is and How It Works

A forced trade name is a name that a company must use for legal or regulatory requirements. This may occur for a number of reasons, including trademark infringement, confusingly similar business names, or deceptive advertising. When a forced trade name is mandated, the company is required to abide by the laws and regulations laid out by the authority that issued the order.

Trademark infringement is one of the common justifications for a forced trade name. A firm that uses a name that is already protected by another company’s trademark registration may be held liable for damages and made to change its name. This is due to the fact that trademark law safeguards the only use of a name or symbol in connection with a certain good or service. Therefore, it can cause customer confusion and diminish the brand value of the trademark holder if a company adopts a name that is close to or identical to another brand in the same industry.

Due to business name overlap, a forced trade name may also be necessary. This can occur when multiple companies with the same or similar names operate in the same city or state. The state or local government may demand that one or more of the firms change their names in order to minimize confusion and unfair competition. The government may occasionally conduct a lottery or auction to choose which companies get to keep their names and which ones must change.

Since company names are not permanent, they might need to be updated on a regular basis to preserve their legitimacy and prevent infringement. The state or nation where the business is registered determines how frequently the license must be renewed. Business names may need to be renewed every year in some states or every five or ten years in other states. Losing legal protection and the right to operate under a business name are possible consequences of failing to renew a business name.

DBAs, or “doing business as,” are made-up names used by companies to conduct their operations. A sole proprietorship, partnership, or corporation may utilize a DBA to carry on business under a name other than its legal name. Most states prohibit DBAs from using the terms “incorporated” or “corporation,” which are only permitted for organizations that have been formally established. However, if the company is registered as an LLC or LP, some jurisdictions can permit “LLC” or “LP” to be used in a DBA.

The owner or owners of a business must register a fake name with the state or county where the business is located in order to add a DBA. The business name, owner’s name and address, as well as a description of the company’s nature and goals, are normally required for registration. The business can start utilizing the DBA in its advertising, marketing, and other commercial activities as soon as the registration is granted.