We get asked to set up a lot of entities such as corporations and limited liability companies (LLC’s). Of course, one of the essential first steps for the organizers is to choose a name for the entity. We are frequently asked whether the desired name “is available.” So, one of the first things we do is check with the Secretary of State (SOS) for the state where the entity is going to be formed (typically but not always California in my practice) to see if the name is “available.” The SOS checks its database to see if that there are any entities that are currently using the same name or a name that is so similar that it may cause confusion. If so, the SOS will tell us that the name is NOT available, and the organizers will need to choose a different name. Some clients will respond by organizing under a different name, but then using the “unavailable” name (or a name similar to the “unavailable” name) as a fictitious business name of the entity. So, if the organizer’s want the name “Larry’s Luscious Lollipops” but someone is already using that name as their “corporate name,” some organizers will organize under a different name, say, “Steve’s Sweet Nothings,” but then have “Steve’s Sweet Nothings” do business as “Larry’s Luscious Lollipops.” Of course, such a course of action could lead to problems with the owners of the entity formed under the name Larry’s Luscious Lollipops.”
Furthermore, even if no one in the state of formation (let’s say California) is using the name “Larry’s Luscious Lollipops,” someone in ANOTHER state (let’s say Delaware) may not only be using the name in Delaware, but also have registered a trademark with the US Trademark Office for the name “Larry’s Luscious Lollipops.” Such a trademark registration may provide the Delaware entity the EXCLUSIVE right to use the name “Larry’s Luscious Lollipops” anywhere in the US! Holy smokes Batman! So, you see, there can be several layers to the answer to the question of whether or not an entity name is “available.”
Keep Rocking!
-Lawdog