For any nonprofit, choosing a name is an important part of getting organized. In some ways it can also be a surprisingly difficult process. Organizations that plan to interact with the public need to spend considerable effort developing a branding strategy, with the organization’s name as just one part. A name may be an important part of fundraising as well. Compared to these broader topics, legal questions around a 501(c)(4)’s name can be relatively simple. But they need to be considered as well to avoid frustration, false starts, and in rare cases, legal trouble. Two topics that are potential sources of difficulty are availability and trademark.
Issue 1: Availability
To qualify for federal tax treatment as a 501(c)(4) organization a nonprofit must be organized as a corporation, trust, or unincorporated association. The choice of entity type is driven by a range of considerations, such as the kind of liability the organization may assume, the long-term plans for the organization, and so forth. Regardless of its form, the organization will need to comply with federal, state, and local regulatory regimes that, among other things, require the business to have a unique name. For example, a California corporation’s name must be available in the Secretary of State’s registry of business entities. Trusts and unincorporated associations may also need to register with the Secretary of State. Before settling on a name it’s important for the organization to explore all the places where its name will need to be available for it to operate.
Issue 2: Trademark
A name’s availability for formal registration purposes is a relatively simple matter to resolve. Trademark can be a trickier area. Unlike the Secretary of State’s names registry, which only looks at whether two names are identical, trademark conflicts can arise between names that are different in many respects but overlap in one or two material ways.
An organization’s formal legal name is not, by itself, a trademark. Trademarks are words, phrases, and drawings that are used in commerce to denote the origin of goods or services. Trademark rights in a name ordinarily only extend to the narrow field where the name used, and only conflict if they are confusingly similar to one-another. For example, Dynamo Dry Cleaners and Dynamo Car Repair can probably coexist without infringing on one-another, because although they use the same term they are using it in connection with different goods and services.
Whether two names conflict requires more than just a cursory glance. For example, some trademarks are considered famous, which gives them protection beyond the ordinary scope. McDonald’s Corporation has a strong trademark claim over the “Mc” prefix. UPS has a famous trademark “brown.” Taking the time to examine these questions before forming an entity can save a lot of trouble.
The Church Law Center of California can help
The Church Law Center of California provides organization and governance advice to churches and secular nonprofits. We work with clients to help them navigate the process of getting organized, including vetting proposed names. To learn how we can help your organization, call us today at (949) 689-0437 or reach out to us through our contact page.