“the fact that defendant received a charter [from the State of Illinois] to use the name ‘Lady Esther Corset Shoppe, Inc.’ does not protect [the defendant].”
Lady Esther, Ltd. sued Lady Esther Corset Shoppe, Inc. for unfair competition based on the defendant’s use of “Lady Esther” in it company name. It appears the defendant argued it was protected from suit because the Illinois Secretary of State approved the formation of its corporation under the name Lady Esther Corset Shoppe. The court rejected this argument in Lady Esther, Ltd. v. Lady Esther Corset Shoppe, Inc., 317 Ill. App. 451, 458 (Ill. App. Ct. 1943).
The Lady Esther case is old, but this point is still valid: the approval of a corporate or LLC name by the Illinois Secretary of State is no defense against claims of trademark infringement. Therefore you cannot rely on the Secretary of State’s approval of the name of your corporation or LLC as clearance that you are free to use the name.
Trademark rights in the U.S. accrue to the person/entity who is first to use the trademark in commerce (or files an intent-to-use trademark application).
First User Wins; Later Incorporation Irrelevant
In 1913, Syma Busiel started a cosmetic business under the name Lady Esther. In 1922, she incorporated her business in the state of Illinois as Lady Esther Company (later changed to Lady Esther Ltd.). Cosmetic sales between 1923 and 1936 totaled 36 million dollars.
In 1926, Ben Seigel and his wife Anna incorporated and began operating the Lady Esther Corset Shoppe selling women’s apparel and jewelry.
The court issued an injection prohibiting Lady Esther Corset Shoppe from using name Lady Esther. The appeals court agreed and stated, “the fact that defendant received a charter [from the State of Illinois] to use the name ‘Lady Esther Corset Shoppe, Inc.’ does not protect [the defendant].”
Do not rely on the Secretary of State’s approval of your corporation name or LLC name as an indication that you are free to use the name. First, have a comprehensive trademark search performed.