Secretary of State Approval of Corporate Name Is No Defense to Trademark Infringement

“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.

Trademark Conflict? Found My Trademark Registered for Different Goods or Services

If during preliminary trademark searching you find a mark that is registered at the U.S. Patent and Trademark Office, you may wonder whether that will block your ability to obtain a trademark registration or to use your trademark with your particular goods and services. If the goods or services provided under the registered mark are sufficiently different from the goods or services that you intend to provide under your mark, then there might not be a conflict between the registered mark and your proposed mark.

Trademark rights usually don’t extend to all goods and services. But instead trademark rights extend to the goods and services for which the mark is registered or used and similar goods and services. There is an exception to this rule for famous marks, such as McDonald’s or Nike. Famous marks have a broader protection that guards against uses by others even in very different fields. Therefore even though Nike provides athletic gear you cannot start a software company using the Nike mark because it will dilute Nike’s famous brand.

LexisNexisYet many marks are not famous. Therefore the scope of trademark protection will be limited to the goods and services for which the mark is registered or used and similar goods and services. For example, Reed Elsevier operates an company that provides legal research databases among other information services. Reed Elsevier owns the mark LEXIS and LEXISNEXUS for  “computer assisted legal research services.”

LexusAn unrelated company, Toyota, owns the mark LEXUS for automobiles. LEXIS and LEXUS are very similar in sound and appearance, differing only by one letter. However, the differences in the services/goods provided by the respective owners is substantial. An argument can be made that consumers don’t–or at least at the time these marks were first used–consumers didn’t expect a company that provides legal information services to also make cars. This may be changing as cars have more consumer electronics and data integration. But at the time these marks were first used, the service/goods were sufficiently different to avoid a conflict. Therefore, in certain circumstances similar or even identical marks can co-exist when they are used on goods/services that are sufficiently different.

On the other hand, whether there is a conflict between two marks considers, at least in part, focusing on the similarities and does not require that the marks or the goods/services be identical to find a conflict. If Toyota did not provide cars under the LEXUS mark, but instead provided legal information services, then the services provided under each mark would be  similar. It is unlikely that the difference of an “I” in LEXIS and an “U” in LEXUS would avoid a conflict in that circumstance.

There are many instances where a consumer might encounter the mark spoken orally, such as in a radio advertisement or in an discussion among customers. Therefore, all other things being equal, small differences in the marks, which create substantially the same sound when pronounced, are unlikely to avoid a conflict when the goods/services are similar.

Determining whether there is a conflict between marks is very circumstance dependent and often involves the weighing of several factors. However, merely finding a similar or even the same mark registered at the USPTO does not necessarily mean you are blocked from using that mark on different goods or services. Sometimes it does, sometimes it doesn’t. Check with an attorney for guidance on your circumstance.