What are the main differences between trade names and brand names?

When starting a business or launching a product or service, the choice of a name is very important for recognition, and the trade name and brand name each play their own role. For effective protection, it is good to understand the difference between the two; each has its own identity. While both a trade name and a brand name contribute to recognizability, they differ in purpose, how they are legally protected, and the geographic scope of that protection. In this article, I address these differences.

Distinction company vs. distinction products and services

The first difference between a trade name and a trademark is the purpose. For example, a trade name serves to distinguish the enterprise as a whole from other enterprises in commerce. The trade name may correspond to the name from the deed of incorporation, but this is not always the case. Also, a company can use multiple trade names for different business activities. An example is Unilever Nederland B.V., which also trades under the names Calvé and Lipton.

A trademark, on the other hand, serves as a distinguishing mark for specific products or services of a company. Thus, when registering a trademark name, you must also choose which specific classes of products or services, such as clothing or software, you want to register the trademark name for.

Note that sometimes a name can be both a trade name and a trademark. For example, Calvé is not only a trade name of Unilever B.V., but also the registered trademark of the peanut butter products the company sells.

Rights by use vs. rights by registration

A second difference lies in how protection is obtained. A right to a trade name arises automatically as soon as the name is actively used in business operations, such as in advertising, on stationery or as a domain name. You can choose to register the trade name with the Chamber of Commerce, but this is purely an administrative action and does not in itself create any rights. Nevertheless, registration with the Chamber of Commerce can be useful in preventing or resolving a dispute over the name. By registering, you make it clear that, and since when, you have been using the trade name. This can even be done retroactively, as long as there is proof of that use.

So is every trade name protected just like that? No, the trade name must be distinctive and may not cause confusion with an existing trade name in the same region or industry. In addition, the name must not be misleading or infringe on prior trademark rights. Although a trade name does not require formal registration, a trade name search beforehand can help reduce risks of name conflicts.

Unlike a trade name, you only get exclusive rights to a trademark when it is officially registered with a trademark authority, such as the Benelux Intellectual Property Office (BOIP), the European Union Intellectual Property Office (EUIPO) or the World Intellectual Property Organization (WIPO) for international protection. The trademark authority evaluates the application on formal and substantive grounds, but does not conduct an in-depth examination. It first checks that the application has been filed correctly, including the correct product and service classes and payment of fees. Then the mark is substantively assessed: it must be distinctive, must not be misleading and must not be contrary to public policy.

However, the trademark authority does not check whether the mark has already been registered by someone else. After approval, the trademark is published, after which third parties can object through an opposition procedure. As a result, a trademark may be initially approved, but later challenged. To reduce the risk of conflicts, it is wise to conduct a trademark search in advance. Once approved, the trademark registration is usually valid for 10 years and can be renewed indefinitely.

Protection within work area vs. protection based on registration

A third difference between a trade name and a brand name lies in the geographical scope of protection. A trade name may not cause confusion with an already existing trade name within the same industry. In assessing this, the area in which the company operates also plays a role. For example, a bakery in Amsterdam with the trade name “Bakkerij De Zon” and a bakery in Groningen with the same name can coexist, as long as they are in different regions and do not have a national reputation. In that case, there is little chance of confusion. However, in the digital age, many businesses have an online presence, such as through a web shop, so their sales area is not limited to one region. As a result, confusion may arise more quickly, and a trade name may be legally more likely to conflict with an existing name elsewhere in the country.

The geographical scope of a trademark, on the other hand, is determined by the registration. A registered trademark confers exclusive rights within the entire territory for which it is registered, for example at the national level (e.g. at BOIP for the Benelux territories) or at the European level (via EUIPO for an EU trademark). This means that a trademark owner can enforce its rights against infringing parties regardless of where in that territory the other company operates. This often provides broader protection than a trade name, especially for companies with national or international markets.

Conflicts between trade names and brand names

It may happen that a registered trademark name comes into conflict with an existing trade name. In such a case, it depends on who used the name first and in what context. Generally, the party who first used the name in commerce is in a stronger position. Sometimes this problem can arise because more goods or services are offered under the trademark later in time than initially.

A trade name can provide protection against a later registered trademark, provided the trade name already had some reputation and there is a likelihood of confusion within the same field of activity.

Example: Wendy’s vs. Wendy’s

A well-known example is the conflict between Wendy’s, the American fast food chain, and a small restaurant in the Netherlands with the same name. Although Wendy’s USA is a well-known brand name internationally and had registered the trademark in the Benelux, it turned out that a small Dutch company had previously used the name Wendy’s as a trade name. Because this trade name was previously used in commerce, Wendy’s USA could not enforce its trademark in the Netherlands, despite the trademark registration. This allowed the Dutch Wendy’s to continue to exist, while the American chain could not open branches in the Netherlands under that name.

Questions?

Do you have questions as a result of this article or other questions regarding trade name law or trademark law? Please contact one of our  attorneys by email, phone or fill out the contact form for a free initial consultation.  We are happy to think along with you.