Here is just one example
Most small business owners spend many hours agonizing over just the right business name. It has to sound good, be relevant, be marketable … all great things to consider. But few businesses stop to think about the legal aspects of a business name. And, once they have decided on a business name and tweaked their branding and logo, they don’t monitor if anyone else is using their business name, or something similar.
What could go wrong?
Global Aviation Services of Minnesota can tell you what could go wrong. Global Aviation noticed that a company in Canada started using its name. Global Aviation had not federally registered its name as a trademark, and also did nothing to enforce its common law trademark rights. Then, the Canadian company started doing business in Global Aviation’s back yard—working with Sun Country Airlines, based in the Twin Cities Metro area in Minnesota.
As things happen, the relationship between Sun Country and the Canadian company hit some bumps and eventually went south. Lawsuits and regulatory investigations were the next step in that relationship. Even though the legal unpleasantries were meant for the Canadian company, Global Aviation had the same name, and the legal actions were taking place in its backyard, so there was a lot of confusion about which company was which.
This confusion included Global Aviation receiving complaints from Sun Country customers looking for lost luggage, workers from the Canadian company looking for paychecks or compensation for injuries and wrongful terminations, and even an audit visit from the US Department of Labor.
Because of that, Global Aviation was fighting battles it did nothing to start and had no interest in. During the last year, it has invested significant resources in proving that it is the Global Aviation company that wears the white hat, not the black one. This has taken time away from running its operations, resulted in trouble hiring (in an already tight labor market), and the Canadian company even used Global Aviation’s money to pay some of its bills.
The result is a significant expense to Global Aviation that includes easily calculated out-of-pocket expenses and includes costs that are less easily quantified. Costs such as executive and administrative time spent on sorting out the mess, delays in hiring employees, and a hit to its goodwill. These significant hits to Global Aviation’s bottom line could have been easily avoided by engaging an attorney to guide the communication with the Canadian company on business name use, followed up by appropriate legal action and notices to companies it did business with to advise of the situation. I am guessing that Global Aviation would agree that spending a few thousand dollars to stop this would have been a worthwhile investment.
As it happens for many of us, hindsight is 20-20. You can use this information as foresight for your own business development by doing the following:
✓ If you haven’t already, make sure your business name is on solid legal footing. No idea how to do that? Sign up for the Small Business Legal School “Business Name” lesson. It’s a $49 investment and can save you tens of thousands.
✓ If you are risk averse, consult with an attorney to do a name check.
✓ If your business name is on solid legal footing, make sure you have a system in place to monitor usage of your name.
✓ Always have a relationship with a business-friendly attorney in your back pocket.