Why Do You Need a Name You Can Legally Protect?
Now that you understand how names are protected using trademarks, we need to discuss why it is important for you to choose a name for your nonprofit that you can legally protect. The reason it is important is that you will be investing hundreds and often thousands of dollars in building your brand around your nonprofit’s name (e.g. buying a website, logo, merchandise, social media, marketing, etc.). Since you will be investing so much money and time, you want to choose a name that will have maximum legal protection to prevent other people from copying your nonprofit’s name and using your good reputation to make a profit.
Your name also needs to be a name you can protect and own legally so that someone else does not sue you for using their name and good reputation.
The law provides that you cannot use a name that is similar to someone else’s trademark to the point where it may confuse the public and make the public think that you are your competitor. This is called “trademark infringement.”
Thus, the entire goal of choosing a name for your nonprofit should not only be to find something you like – but to find a name that is available and does not infringe on someone else’s trademark.
Example:Ashton wanted to start a nonprofit called “Change Foundation, Inc.” He shared his vision with a nonprofit attorney and hired her firm to set everything up. His attorney recommended that he let them do a legal search for the name and apply for a trademark to own the name before forming the nonprofit to make sure there were no issues with the name. Ashton refused.
Aer a few weeks, his nonprofit was registered. He hosted a small dinner at his home with close friends and family. He shared his vision and asked them to donate. That night, he raised $15,000 – not including the $2000 he donated to the nonprofit to cover the costs of the event.
With his newly registered nonprofit, he hired a marketing firm to design a logo, build a custom website, create social media accounts, and make a few high-quality promotional videos sharing the story of his charity. He then hired a digital marketing company to run a series of social media ads featuring the videos and asking for donations.
Within a few weeks, the Change Foundation had thousands of new followers on social media, their promotional video went viral and he had raised an additional $50,000 from the online ad campaign.
That’s when Ashton checked his mail and received a letter from an attorney in New York. The letter demanded that he immediately transfer ownership (usernames and passwords) to his social media accounts (Facebook, YouTube, Twitter) , transfer ownership of his website domain name, destroy merchandise in his online store and immediately stop offering services or engaging in any other activity with the name Change Foundation. The demand letter stated that a nonprofit organization in New York had already registered a federal trademark and owned the name.
Ashton had to give up everything he had worked for, lost the $17,000 that he had invested in building his brand plus the social media followers, donors and volunteers that were connected to the old nonprofit name. He then had to spend the money all over again and rebuild for something that could have been avoided up front by having his attorney do the name search and apply for a trademark to own the name before he started using it.