The (Best) Method to the Madness Behind Choosing a Company Name or Mark

Written by Susan Neuberger Weller

The Wall Street Journal ran a print article on July 18, 2013 titled “What’s Behind Those Quirky Startup Names?” in which the author Lindsey Gellman discussed the derivation behind unique startup names such as Mibblio, Kaggle, Shodogg, and Zaarly. One of the reasons for these types of names and spellings, she says, is the need for short, recognizable .com web addresses in a space where more mainstream domain names are no longer available. She also quite correctly notes that choosing a new company name “that’s a made-up word also helps entrepreneurs steer clear of trademark entanglements.” This is not only true when choosing a new company name, but is also true when choosing new trademarks and service marks. Why is that?

Well, to begin with, whether we are talking about a new trademark, a new trade name, or a new company name, there is trouble to be had if any of these is “likely to be confused” with a pre-existing name or mark in use by a third party. This is true whether the name or mark is registered as a trademark, approved as a formal corporate name, or is simply being used in the ordinary course of trade. Rights in the US are based on use, not just registration. Thus, by making up a new word that has no known meaning in any language, there is a reasonably high probability that such an invented word will avoid confusion with any pre-existing marks and names. (Of course, this cannot be assumed, and it is strongly recommended that a full trademark search always be conducted for any new company names or marks under consideration before they are placed into use.)

Another reason that made-up words can be great first choices for company names and marks is that under trademark law principles, these types of marks and names are considered the strongest. Trademarks and service marks are generally categorized as being either “fanciful,” “arbitrary,” “suggestive,” or “descriptive.”  Marks which are fanciful, arbitrary, or suggestive become trademarks immediately upon proper use in commerce.  Descriptive marks cannot function as trademarks upon first usage, but can acquire trademark significance through quantity and/or quality of use.  A “generic” term, which is the common commercial name for a particular product or service, can never be protected as a mark under any circumstances. So what are the differences between these various types of brand identifiers?

 A “fanciful” mark is one that has no recognized meaning when chosen.  Most often it consists of a made-up or invented word, such as those discussed in the Gellman article. These are the strongest types of marks and names because their only purpose is to function as a source identifier.  Examples of such marks include EXXON, KODAK, OCWEN, and SPOTIFY. These marks, which in some cases also function as company names, have no meaning in the English language or any other language. They are completely invented. This makes them unique and very valuable in the world of intellectual property. The story behind the creation of the world famous KODAK mark is that George Eastman’s favorite letter was k because he thought it to be “a strong, incisive sort of letter.”  Beginning there, he and his mother used an anagram game to create a word that encompassed three principal concepts: it had to be (1) short, (2) easy to pronounce, and (3) could not resemble any other name or be associated with anything else. Smart man that George Eastman.

The next level of desired marks is an “arbitrary” mark. This type of mark has a recognized meaning, but that meaning is totally unrelated to the goods or services on or with which it is to be used.  For example, the term “apple” is recognized as a generic term for a piece of fruit. However, this word is also used as a trademark for APPLE computers and, as such, has become an internationally famous “arbitrary” mark, and has no meaning in relation to computer products other than to function as a trademark. “Arbitrary” marks and names are also valuable intellectual property assets.

“Suggestive” marks are the next level down in the trademark spectrum. These types of marks consist of words that “suggest” a characteristic, feature, aspect, concept, function, or other attribute of a product or service without actually describing it outright.  For example, the trademark COPPERTONE suggests that a “copper tone” is a characteristic of the product for which COPPERTONE is a brand name.  It does not, by itself, actually describe the suntan oil product on which it is used. These types of marks are not as highly desirable as are fanciful and arbitrary marks, but they do function as protected trademarks. The chances, however, of venturing into the “confusingly similar” arena gets higher with marks of this type because the chances increase that businesses in the same industry may select the same types of “suggestive” words to associate with similar or related products and services.

The least desirable type of trademark is one that is “descriptive.” A “descriptive” mark is one that describes the function, purpose, size, class, quality, ingredients, or some other feature or characteristic of the goods or services on or with which it is used.  Descriptive terms cannot function as protected trademarks until they become recognized by consumers as the brand name for or an indicator of the source of the goods or services with which they are used, or until they have been in substantially exclusive and continuous use for at least five years.  The mark RESTORATION HARDWARE for a luxury home furnishings store is an example of a descriptive mark which achieved trademark significance over time and eventually became fully protectable as a trademark. However, even if a descriptive mark acquires distinctiveness and becomes fully protected, the underlying words in the mark never lose their descriptive significance.  Thus, the owner of a descriptive trademark cannot prevent others from using the underlying descriptive words in a non-trademark fashion to accurately describe their goods or services.

A generic term is one that is the ordinary, common, commercial unique a product or service.  Generic terms can never become trademarks.  Marks can become generic and lose all trademark significance through improper and unrestricted use by the owner or others.  Examples of terms which originally functioned as protected trademarks, but which have become generic through misuse over time, include aspirin, escalator, and cellophane.

The lesson here is that you do not want your trademark or company name to convey to the public in descriptive terms the nature of your company’s business or specific information about its products or services. Rather, choose a new mark or name that is unique, clever, and which can function as a strong and protected asset of your business from the very beginning. If the word passes the “spell check” test, you may not want it to be your first choice.