Skimping on Name Game Can Land Small Businesses in Trouble

By Virginia Bridges
The News & Observer (Raleigh, N.C.)

In the beginning, the partners of Chubby’s Tacos made long lists of potential business names.

They thought about a casual Mexican restaurant mixed with something tropical, like Tiki Tacos. Then they did a Web search, only to find the domain name already in use.

“We weren’t getting anywhere with it,” said owner Jody Lytton, who went on to open Chubby’s with then-partner Tony Sustaita.

Then one night, the two went out drinking and played a game that generated potential adult film star names by combining the name of their first pet with the name of the street where they grew up.

In the game, Sustaita’s name was Chubby Herrera. So he said they should name their Mexican eatery Chubby Herrera’s Taqueria. But Lytton said he could barely get that out of his mouth.

“I was, like, ‘What about Chubby’s Tacos?’ ” Lytton said.

With that name, a restaurant chain was born in Durham, N.C., on Cinco de Mayo 2008. But unfortunately for Lytton, now the sole owner, the company was built on a borrowed brand.

Six years later, Lytton is paying the price for using a name legally claimed by another business. His out-of-state expansion aspirations are now limited, and he’s at risk of a lawsuit. So Lytton’s 2014 plans include renaming and rebranding the business, which has four locations in North Carolina and a fifth in the works.

Todd Coats, chief creative officer for Capstrat, a marketing and public relations agency in Raleigh, N.C., said small-business owners should not shortchange the process of coming up with an effective and appropriate moniker.

There are billions of business names already in existence, Coats said, so owners should start by listing hundreds of options.

“This is a quantity game, more than anything else in the beginning,” Coats said. Coats will generate names by mashing up words, trying different variations, prefixes and suffixes.

Owners should consider their intended audience, Coats said, and what they will tolerate.

“Knowing the tolerance of how descriptive it needs to be, and how much leeway you have in the presentation of that will help to determine the vastness of the long list that you are creating,” he said.

A younger audience may be more willing to accept irreverent names, Coats said. But with some products or services, such as hotels, descriptive titles or established brands might be more effective.

Marketing budget is also a consideration, as obscure or made-up names might require a campaign to give it meaning, Coats said.

Small-business owners can narrow their list by asking themselves which names are the most memorable and tell the story of their brand.

“If you sing them out, do they roll off of your tongue, or do they clang around in your mouth?” Coats said.
Owners should search the Internet for similar names and negative connotations, and explore registered names on the U.S. Patent and Trademark Office website.

Once small-business owners identify a viable name, they should consider filing an application for a trademark with the U.S. Patent and Trademark Office, said Justin Nifong, a patent and intellectual property attorney and managing partner with NK Patent Law in Durham, N.C.

A trademark includes names or symbols used to distinguish the source of goods and services. Typically, a trademark is the name of a business, but logos and slogans also qualify. For example, Nike registered its swoosh, and Chick-fil-A registered “Eat mor chikin.”

Federal registration isn’t mandatory and requires a current or future intention for interstate commerce, but has several advantages over common law trademark registration or registration with the state, Nifong said. Benefits of federal registration include an owner’s claim to a mark in a national database, which could deter other businesses from using it, and a legal presumption of ownership in all U.S. states and territories.

Common law trademark rights can be attached to an in-use business name, but the protection is limited to geographic areas in which the company is operating, Nifong said.

The U.S. Patent and Trademark Office will allow companies to register similar marks if their services are clearly different, Nifong said. Delta, for example, is a brand associated with both an airline and bath and kitchen faucets.

But the federal application process seeks to prevent similar products or services from having brands with similar names that could confuse the consumer.

Early on, Lytton did some Internet research on the name Chubby’s. He found restaurants with the name El Chubby’s and The Original Chubby’s in Colorado.

Lytton told himself that no one would confuse those with Chubby’s Tacos in North Carolina.

Now, Lytton is planning to open another restaurant in Cary, N.C., while establishing consistent systems for franchising.

Last year, Lytton reached out to Nifong to see whether he could move forward under Chubby’s.

He couldn’t, however, because El Chubby’s had claimed the federal trademark registration.

In this case, Nifong said, Chubby’s is the dominant word and consideration. Words such as “original” and “tacos” are descriptive and generally have less weight in the trademark consideration process.

If Lytton wants to move forward with any out-of-state expansion, he has to change his name and his brand.
“We are probably OK as long as we stay in North Carolina, but if we start expanding, the (Colorado restaurant) with the rights to Chubby’s would probably come smack us around,” Lytton said.

In mid-December, Lytton announced a name-change contest with a prize of free food for a year.

Lytton received hundreds of entries, with lots of variations of Chubby’s, including Tubby’s, Chunky’s and Chubacabras.
“I was like, ‘Really? How did eight of you come up with Chubacabras?’ ” he said.

Lytton said he wants to get away from the overweight connotation, and a name with a product in the title limits customers from trying other menu items.

Lytton has a few ideas that he’ll start bouncing off people, but he was hoping the contest would deliver one that hit him over the head. The results are indicative of the challenge of finding a strong name.

“I was really, really hoping that something would come in and just wow me,” Lytton said.

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