Legal Issues to Consider When Using Assumed Business Names in Texas
August 16, 2017 by Brown Fox
There are many reasons why you may want to conduct business in Texas under a name that is different from your company’s registered name. For example, rather than creating separate subsidiary entities or dealing with the complexity of a series limited liability company, you may prefer to use multiple assumed names to distinguish different divisions or lines of business within your company.
Whatever your motivation for using assumed names, it is important that you conduct proper due diligence, make the proper filings, and otherwise comply with the laws and regulations applicable to assumed names in the State of Texas to ensure that you acquire and maintain all of the rights in and to your desired names. Below are a few of the legal issues that you should consider and review to help ensure that you are properly conducting business under a valid assumed name.
- Selecting and Searching for Existing Use of Proposed Name
After deciding what you would like your company’s assumed name or names to be, your first step is to determine whether an existing business is currently using that name in the State of Texas. Because assumed name certificates should be filed with the Texas Secretary of State and the county clerk of the county in which the company’s principal office is located, separate searches should be conducted with the Texas Secretary of State and the county in which your principal office is or will be located. As more fully discussed below, it may also be prudent to conduct a search of the trademark and service mark registrations on file with the Texas Secretary of State.
- Filing Assumed Name Certificates
After you have determined that no other business or entity is conducting business under your proposed assumed name, you should file an assumed name certificate with the Texas Secretary of State on one of the Secretary of State’s prescribed forms, along with the stated filing fee. The assumed name certificate must be executed by an officer, general partner, member, manager, representative, or attorney-in-fact of the filing entity.
You should also file an assumed name certificate in the office of the county clerk in the county where the company’s principal office is located. Some counties will permit filing of the assumed name certificate issued to you by the Texas Secretary of State, but most counties prescribe their own form for use in filing an assumed name and require that a separate filing fee be tendered with the county assumed name filing.
- Changes to or Abandonment of the Assumed Name
If any of the information set forth in the assumed name certificate becomes materially misleading at any time after it is filed, you are obligated to correct that information by filing a new assumed name certificate. The type of changes that may trigger the need for a new certificate include changes to the company’s name, location, or type of entity, and the new certificate must be filed within sixty (60) days after the change occurs.
Additionally, if you determine that the assumed name is no longer necessary for your business or that you otherwise do not intend to use the assumed name for any reason, you are obligated to file a statement of abandonment with the Texas Secretary of State and all applicable county clerks.
- Lack of Exclusivity
While filing an assumed name certificate gives you the right to use your assumed name to conduct business within the State of Texas, making this filing does not give you the exclusive right to use that name and does not prevent other businesses from seeking to use that name as well. In fact, because the Texas Secretary of State is not authorized to reject an assumed name certificate on the basis of a name conflict, there may be multiple assumed name certificates on file with the Texas Secretary of State for the exact same name.
Because of this, the Texas Business Organizations Code places the burden of due diligence on the entities using or seeking to use assumed names in the State of Texas. The Texas Secretary of State also makes it clear that merely filing an assumed name certificate does not permit any registrant to use its purported assumed name in a manner that violates the law or infringes on the rightful use of the name by others. It is therefore important that you not only ensure that your desired name is available prior to filing your assumed name certificate, but also that you take appropriate steps to protect your assumed name after the assumed name certificate is filed.
- Trademark or Service Mark Rights
If you want to ensure exclusive use of your assumed name in the State of Texas, and you intend to use the assumed name as a trademark or service mark in the State of Texas, you have the option of applying for trademark rights with the Texas Secretary of State. While the full scope of the conditions ad requirements for registration is beyond the scope of this article, you are generally permitted to register your assumed name as a trademark in the State of Texas if: (a) you are using the assumed name in Texas prior to the application date; (b) the assumed name is distinctive; and (c) the assumed name is not so similar to any currently registered trademark that it is likely to cause confusion or mistake, or be deceptive. By registering your assumed name as a trademark, you will not only put the rest of the State of Texas on notice of your rights in that name, but you will also have a statutory cause of action against any business or entity that infringes on your trademark after its registration.
Filing an assumed name is a fairly simple way in which to differentiate between divisions of your business or otherwise conduct business under an alternate name. However, in order to ensure that you are not infringing on another company’s rights in its assumed name, and that no other Texas business is infringing on your rights in your assumed name, it is important that you conduct the necessary due diligence, make the necessary filings, and conduct regular audits of name filings in the State of Texas. We are always available to answer any questions that you may have and to assist you in your creation and maintenance of assumed names in Texas.