Re: Company Names

On Mon, 5 Apr 1999, Toni Loftin <tloftin[_at_]hoovers.com> wrote:
>
> Can anyone suggest a source or sources that might give a legal
> explanation about companies having the same name.

This is really a corporate law question. To get a really useful response will require a tad more info about what your question is; if you need it, give that info to the lawyer you consult.

The general outline is that you incorporate in one particular state. If your operations are purely local, there is no need for you ever to deal with other states. It is thus (theoretically) possible to have 51 separate corporations in this country, all with the same name, and all operating purely locally. The reason this would happen more commonly with banks is because under Glass-Steagle (sp?) banks were for a long time restricted to local operations. Apart from banks, think of small businesses that do not get into interstate commerce, like taxi companies (need a license to carry passengers interstate), pizzarias, the local water or phone company (back in the days when we had such things), etc.

Once your company starts doing business across state lines, you have to start thinking about your obligations to that other state or states. There is a series of pretty well settled tests that tend to progress in terms of your presence in the other state, from service of process to taxation to the need to qualify to do business as a foreign corporation in that state (this last is generally required as a condition of suing someone in that state's courts). You don't need much local presence to be subject to service of process under that state's long-arm statute. More, and you're subject to tax (sales & use). Perhaps a bit more and they'll want you to qualify as a foreign corporation, which involves you in corporation franchise taxes (income taxes) and, increasingly, in annual filings of the names of your officers and directors, though the line between sales/use taxes and qualifying can be fuzzy. Having an office in the second state, or a supply of goods, or a regular salesperson regularly calling on customers, and maybe advertising a lot in local newspapers and on local radio stations tends to require you to qualify, for example.

When you try to qualify, the Secretary of State's office checks your proposed corporate name to see if it is in their opinion confusingly similar to any existing domestic corporation or foreign corporation that has already qualified to do business in that state. You can usually reserve the name for something like 60 days, if you need to, and that list is also checked. If State feels there is a likelihood of possible confusion, you either change the name slightly or argue with them. You get a little more leeway if you're using your family name and that's the basis of the confusion (say, for example, Loftin's, Inc.)

This is all pretty routine corporate stuff, so much so that it is, incidentally, the basis for a number of lawyer-service companies that handle the mechanics of filing these papers for lawyers, then reminding you when the tax return and any other reporting obligations are due.

I imagine that it is only when Loftin's, Inc. (the one based in, say, Florida, that has expanded into Georgia and Alabama), and Loftin's, Inc. (the one based in Maine and expanded into New England) encounter the California-based Loftin's, Inc. when all three are looking to expand into the lucrative Kansas market, that you would even start to encounter any issues that involve intellectual property, and then it might be more in the trademark arena. But there could be a race to the Kansas Secretary of State's office to qualify, or at least reserve that name.

Lawyer-service companies used to put out compendiums of case decisions with titles like Qualifying to Do Business as a Foreign Corporation (or In a Foreign State), as freebies for corporate lawyers; now they sell such things. Look in the corporate law section of a nearby law library for a treatise on corporate law and find the chapter on this subject and you'll uncover more than you wanted to know about it.

Also, a stirring from the deep recesses of memory: there is an amazingly clear explanation of the principles of interstate commerce in this context in an old article in the American Bar Association Journal by an author named Stern. I would say that it appeared in the 1950's, and I remember that it won the prize in an ABA contest for best essay on a corporate law subject that year. Perhaps L. Stern? Second choice is late 1940's. Many developments in the law since then, but for a lucid explanation of principles, if you're still interested, you might try this, if you can do the search and find it.

Usual caveats: not legal advice, no lawyer-client relationship, free advice is worth what you pay for it, etc.

Michael J. O'Connor
<mjoconor[_at_]erols.com> Received on Tue Apr 06 1999 - 13:24:50 GMT