Why Trademark Clearance Matters

The New York Times ran an article yesterday about small business owner Chanel Jones, who opened a hair salon in Merrillville, Indiana called “Chanel’s Salon.”  It is commonplace for small business owners to use all or part of their own names when selecting a business name (e.g., Erma’s Café, Smith’s Hardware, etc.), and this practice often presents no problems.  In this case, unfortunately, Ms. Jones happens to share her name with one of the most famous brands in the world, and that brand happens to be used in the same industry.  Unsurprisingly, Chanel Inc., the multinational fashion and beauty giant, sent Ms. Jones a cease and desist letter in July 2013 requesting that she remove the word “Chanel” from her business name.  After sending several follow up letters with no response (according to Chanel), Chanel filed suit against Ms. Jones for trademark infringement and unfair competition, seeking an injunction to prevent her from using the word Chanel in her business name.  The suit is still pending.

Besides being a compelling and dramatic human interest story that has future Hollywood blockbuster written all over it, this case highlights the critical importance of conducting a trademark search and clearance analysis for a prospective business name prior to using it.  As Ms. Jones learned, failure to do proper trademark clearance can result in your business being forced to change its name, face geographic restrictions that prevent expansion, defend itself in a lawsuit, and/or pay damages for infringement.

The case also illustrates the counterintuitive but common misperception that a person “owns” his/her own name and is therefore entitled to use it in a business name.  If a person’s name is identical or confusingly similar to another brand or business name in a related field of use, using that name for a business would be a risky proposition.  If your last name is Miller and you use that name for your brewery, you should consider starting a legal defense fund.  If your given name is Ronald McDonald, you still can’t call your restaurant “McDonald’s.”  And, as the article reports, Chanel Jones probably cannot call her business “Chanel’s Salon.”  Read the full article here.

 By Eric Pouhier (Own work) [CC-BY-SA-2.5 (http://creativecommons.org/licenses/by-sa/2.5)], via Wikimedia Commons.

By Eric Pouhier (Own work) [CC-BY-SA-2.5 (http://creativecommons.org/licenses/by-sa/2.5)], via Wikimedia Commons.

Reposted from The New York Times.