There is so much conflicting and erroneous information circulating verbally and upon the Internet about fictitious business names (DBAs), corporate names, and trade names, that I feel compelled to present a substantial treatment of the subject in statutory terms, at least for the State of California.
Every person doing business for profit under a DBA must file a fictitious business name statement within 40 days of commencement of business, which is valid for five years from the date of filing, unless it is abandoned, or there is a change in the facts stated in the application (except a change in a registrant's residence address does not cause the statement to expire if that is the only change).
The following circumstances indicate a need to file for a DBA:
· Individual: When the registrant's family name is not part of the business name, and no other words suggest the existence of additional owners.
· Partnerships or other associations of persons: When the surnames of each general partner are not part of the business name, and no other words suggest the existence of additional owners.
· Corporations: When using a name other than the name registered with the Secretary of State.
· Limited Liability Company: When using a name other than the name registered as a limited liability company with the Secretary of State.
· Words that suggest the existence of additional owners: Company, & Company, & Associates, & Sons, & Group, etc.
The purpose of this law is to protect those dealing with individuals or partnerships doing business under fictitious names, and it is not intended to confer any right or advantage on individuals or firms that fail to comply with the law. The filing of a DBA is designed to make available to the public the identities of persons doing business under the DBA.
A DBA statement shall be filed with the clerk of the county in which the registrant has his, hers, or its principal place of business in California or, if the registrant has no place of business in California, with the Clerk of Sacramento County. The registrant may, but is not required to, file in further counties in California. Further filings may be indicated, as discussed after the next paragraph.
The penalty for not filing a DBA is that no legal action in the DBA name may be maintained in court until all filing requirements are completed. Also, please be aware that any person who executes, files, or publishes any DBA statement knowing that such statement is false, in whole or in part, shall be guilty of a misdemeanor and upon conviction thereof shall be punished by a fine not to exceed $1,000.
Here comes the more confusing part. The DBA law was not intended to eliminate duplication or similarity of fictitious names. The County has no authority to refuse a filing on grounds that the same or a similar name is already on file. It is recommended that you review the DBA Index to ensure that the name you choose has not already been registered. The filing of a DBA does not, of itself, authorize the use in California of a DBA in violation of the rights of another, as established under federal or California trademark laws or the California DBA or common law.
The filing of a DBA by a person required to file shall establish only a rebuttable presumption that the registrant has the exclusive right to use as a trade name the DBA, as well as any confusingly similar trade name, in the county in which the statement is filed, if the registrant is the first to file such a statement containing the DBA in that county, and is actually engaged in a trade or business utilizing such DBA or a confusingly similar name in that county. The rebuttable presumption created by this section shall be one affecting the burden of producing evidence. In other words, a same or similar business who can satisfactorily prove that it has previously used a same or confusingly similar name in that county may be able to legally stop you from using your name and make you terminate your registrations for that name.
Similarly, the filing of articles of incorporation in the case of a California corporation (or the obtaining of a certificate of qualification in the case of a “foreign” corporation) shall establish only a rebuttable presumption that the corporation has the exclusive right to use as a trade name in California the corporate name set forth in the articles (or certificate), as well as any confusingly similar trade name, if the corporation is the first to have filed the articles (or certificate) containing the corporate name, and is actually engaged in a trade or business utilizing that corporate name or a confusingly similar name. Thus, the filing of articles (or certificate) shall not of itself authorize the use in California of a corporate name in violation of the rights of another under federal or California trademark laws or the California DBA or common law, including rights in a trade name.
So, if there are both a corporation and a DBA registrant using the same or a confusingly similar trade name in a county, and both entitled to the rebuttable presumption, whichever has filed the DBA or filed the articles (or certificate) first in time and is actually engaged in a trade or business utilizing such DBA, corporate, or a confusingly similar name, shall be entitled to the presumption as against the other, that it has the exclusive right to use such DBA, corporate, or confusingly similar name, as a trade name in the county.
It behooves all businesses to determine prior to filing for a DBA whether other same or similar businesses have previously filed for the same or confusingly similar trade name in each county in which they desire to actually engage in a trade or business utilizing that name. Similarly, businesses should determine whether similar businesses have previously filed for the same or a confusingly similar trade name in each county in which they desire to actually engage in a trade or business utilizing that name, prior to filing corporate articles (or certificates) with the same or confusingly similar trade name.
In both cases above, it also behooves all businesses to determine prior to filing for either a DBA or corporate name whether such name would violate the rights (under federal or California trademark laws and the California DBA or common law) of another business in the same or similar business for a trade name actually engaged in a trade or business utilizing such DBA, corporate, or a confusingly similar name, in the county or counties you wish to do same. Wow, what a mouthful.
Failure to perform the above due diligence puts your business at risk of having to cease using your DBA or corporate name in one or more counties in California, or all of California, where other same or similar businesses have previously used or filed for the same or confusingly similar trade name. This will also eliminate in one or more counties, or all of California, any good will associated with your name prior to having to cease use of your name, confuse your business operations with other names you will have to use in substitution for your name, as well as waste your significant investment in the cost, time and effort initially used to file for your name.
Valuable Tip: The use of a truly unique name (such as “Exxon”) hugely simplifies the complications of all of the above issues, including especially the registration of federal trademarks.
Important Proviso: The above material does not constitute legal advice and should not be relied on. It does not create an attorney-client relationship. Each locality has differing laws. A legal matter cannot be satisfactorily resolved without a comprehensive review and analysis of all the unique facts and laws at issue by an able attorney. Your matter may result in a loss of rights if you do not timely retain such an attorney.
Contact: If you would like to discuss this matter further in a more private forum, please feel free to contact me directly at the email address provided through my firm’s website located at http://www.BealBusinessLaw.com