Monday, June 22, 2009

Can I Use the Name From a Previous Business?

Dear Rich: I started a business with a partner, we didn't get along, and it folded after six months (we just dissolved the S corp). We didn't register any trademarks. Do you see any problem with using the same name for my new sole proprietorship business? The short answer to your question is that your ex-partner may object and may have the legal basis to prohibit your use. Your ex may also have another concern -- that your use of the same name may create the impression that the two of you are still in business. The legal rules are as follows: the business name -- regardless of whether it's registered -- is an asset of the business unless there's an agreement to the contrary. Normally, when a business closes, the assets are divided and distributed to the principals (or creditors). The Dear Rich Staff recommends that you look through the termination paperwork to see how it deals with intangible assets. If you're not sure what happened to the name and you're now on good terms with your ex-business partner, perhaps you can enter an agreement signing off on any rights to the name. Otherwise, (1) see an attorney to verify your use, or (2) go ahead with your use of the name and wait to see what happens -- your ex may not be able to afford (or may not care enough) to bring a lawsuit. As always we can't predict the likelihood of such a dispute happening (even when we ask our crystal ball).