For SMEs, Distinctiveness Is Crucial for Brand Identity and Reputation

Published: December 15, 2021

Emily Haas Michael Best & Friedrich LLP Raleigh, North Carolina, USA Public Information Committee—Bloggers Subcommittee

Choosing a name for a new company or organization may be one of an entrepreneur’s most important decisions when starting a business. A business’s identity and reputation help build consumer trust and encourage customers to return, especially in a competitive business landscape. A strong, distinctive name starts things off on the right foot.

The key is to watch out for hidden pitfalls in selecting and registering a trademark of the name for the business. While a brand owner’s first inclination may be to choose a name that tells the customer what the company or organization is, this can lead to confusion and potential legal issues.

For example, an upscale café on Main Street may want to call itself “The Main Street Café.” This seems simple: the name tells the customer the type of restaurant and its location. Unfortunately, because all businesses can identify and describe the products or services they offer, the Main Street Café cannot stop another café on Main Street from describing itself as “a Main Street Café” in its advertising.

The Main Street Café does not have a unique identity to differentiate itself from the competition. To avoid this confusion and to prevent another business from legally encroaching on its trademark, it is important to select a name that does not merely describe the business.

So how then will a customer know what the business offers? One solution is for the owner to both choose a unique trademark and adopt a tagline that describes the business.

Using the same Main Street Café example, the company could consider registering a trademark for a name like “Verandah,” with the tagline “Your Neighborhood Main Street Café.” The unique name sets apart the café from other similar businesses on Main Street and provides its own distinct identity, while the tagline explains what the business is.

Similarly, a crab restaurant in a beach town may want to use the name “Crab House,” which signifies a specific type of restaurant. Due to the lack of distinctiveness surrounding the “Crab House” name, this restaurant can’t stop another crab house from calling itself a “crab house.”

To help customers identify this business, the owner of the crab restaurant should consider a more distinct name that ties in with the theme and should complement the name with a tagline that tells customers that this restaurant is a crab house. For example, the owner might use a surfing theme and call the restaurant “Cowabunga,” with the tagline “The Best Crab House on the Shore.”

Both examples would set the businesses apart from similar ones by using a distinct name that alerts customers to exactly what they can expect from this business.

Trademark Searches and Distinctiveness

Many entrepreneurs select a trademark that not only distinguishes a company’s goods or services but also reflects the spirit of the company.

Consider a business’s goals and mission to ensure that the new mark is consistent with that vision and is easily understood, recognized, and remembered.

For example, a café that sells coffee and coffee beans may want to use a mark that contains the words “coffee” or “espresso,” while the graphics may include a coffee cup or bean. But if the mark looks like a competitor’s existing logo, it does not serve the function of distinguishing the business’s products or services.

During the planning stages of a new business, entrepreneurs should consider distinctiveness to avoid customer confusion and potential legal issues later. The more distinctive the trademark, the stronger the legal protection it is likely to receive.

Therefore, it is important to conduct a thorough search of registered trademarks—both names and logos—in the same goods or services class/subclass as the new business. This can help ensure that the desired mark is distinct for the goods and services being marketed and will help the company or organization stand out and grow. Learn more about trademark searching in INTA’s Fact Sheet “Selecting and Registering a Trademark: Considerations in Selecting a Trademark.”

Although every effort has been made to verify the accuracy of this article, readers are urged to check independently on matters of specific concern or interest.

© 2021 International Trademark Association

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