One of the most common mistakes in business literature is using the terms “trade name” and “trademark” as synonyms, even though from a legal perspective they have completely different functions, protection mechanisms, and legal effects. Confusing these concepts in practice can lead to competitive conflicts, infringement of intellectual property rights, and even the loss of a significant portion of a company’s intangible assets.

This article, based on the provisions of the Industrial Property Protection Act enacted in 2024, explains the conceptual and practical differences between trade names and trademarks, the conditions and methods of protecting them, and practical recommendations for entrepreneurs and business owners.

Conceptual and Legal Foundations

1. Definition of a Trade Name

According to Clause 4 of Article 95 of the Industrial Property Protection Act, a trade name is any name or title that identifies a natural or legal person who provides goods or services. Based on this definition, a trade name is strictly a name or title and therefore cannot include images, numbers, or similar elements.

In practice, a trade name identifies the enterprise or company producing the products and distinguishes the identity of one company from another. For example, “Pak Dairy Company” or “Refah Chain Stores” are trade names. The purpose of a trade name is to identify the business entity itself and distinguish one company from another.

Unlike a trademark, a trade name can receive legal protection even if it has not been formally registered.

 

2. Definition of a Trademark

A trademark, commonly referred to as a brand, is a sign that distinguishes the goods or services of one company from those of competitors. Unlike a trade name, a trademark may include words, logos, numbers, symbols, combinations of colors, and even (under some laws) scents or sounds.

For example, the Nike “swoosh” logo or the word “Digikala” written in a distinctive font are trademarks. The purpose of a trademark is to distinguish a product or service in the minds of customers and consumers.

 

Key Differences Between Trade Names and Trademarks

Understanding the practical differences between these two concepts is essential for making the right decisions in branding strategy and intellectual property registration.

1. Difference in Concept

A trade name identifies the person or entity (merchant or company). Its role is to introduce the business in commercial relations, contracts, official documents, correspondence, invoices, and similar contexts.

In contrast, a trademark identifies a specific product or service. Its focus is distinguishing products or services in the consumer market, not identifying the legal entity behind them.

Therefore, one company (with a single trade name) can own multiple trademarks for different product groups. For example, a food holding company may operate under one trade name but register dozens of different trademarks for biscuits, beverages, dairy products, and other items.

2. Difference in Registration Authority

A trade name is registered with the Companies Registration Office, whereas a trademark is registered with the Intellectual Property Center.

Trademark registration requires a formal process, including:

  • Filing a trademark application
  • Selecting the relevant classes based on the Nice International Classification
  • Substantive and formal examination by the registration authority
  • Publication of the application
  • Observing the opposition period
  • Issuance of the trademark registration certificate

It is important to note that registering a company does not replace trademark registration. If the company’s name appears on products and is used as a brand, it should also be registered as a trademark in order to obtain full legal protection against competitors.

3. Difference in Duration of Protection

The law does not specify a fixed validity period for a trade name. Therefore, it remains valid as long as the company is not dissolved or continues to conduct business under that name.

According to Article 111 of the Industrial Property Protection Act, the validity of a trademark is 10 years. However, this period can be renewed unlimited times upon payment of the renewal fee.

4. Difference in Transferability

A trademark can be transferred independently. The owner may fully assign the trademark to another party or grant permission to use it through a license agreement.

However, under Article 120 of the Industrial Property Protection Law, a trade name cannot be transferred independently. It may only be transferred together with the commercial enterprise or a part of the business that operates under that name. In other words, a trade name is inseparable from the commercial identity of the business.

5. Difference in Quantity Limitations

A business or individual is typically known by one primary trade name. In practice, each entity should have only one trade name. Using multiple conflicting names for a single legal entity can mislead third parties and create legal liabilities.

In contrast, there is no legal limit on the number of trademarks a person or company may register. A single entity may register multiple trademarks across different classes and for different products.

Essential Conditions for Successful Trademark Registration

To avoid rejection of a trademark application by the Intellectual Property Center, several fundamental conditions must be met under the new law.

1. Being a Sign

The mark must be a visible sign, such as a word or phrase, an image or design, a combination of letters and number or a combination of these elements. Something that exists only conceptually in the mind and cannot be visually represented cannot qualify as a trademark.

2. Distinctiveness

The core concept of a trademark is distinctiveness. A sign that cannot distinguish your goods or services from those of competitors in the consumer’s mind does not fulfill the function of a trademark.

Lack of distinctiveness may occur in several situations:

  • Using purely descriptive phrases with no creative element (for example, “Hazelnut Milk” for dairy products)
  • Choosing signs that have become generic within a trade
  • Similarity likely to cause confusion with previously registered trademarks, especially well-known marks

3. No Deception or Misleading Effect

A trademark must not mislead the public about the origin, quality, type, or characteristics of goods or services. For example:

  • Using the word “organic” for a product that is not actually organic
  • Using the name of a country or city suggesting geographic origin when the product has no connection with that location
  • Using words or signs implying official standards, certifications, or special quality without a factual basis

Conclusion

Trade names and trademarks play complementary but distinct roles in the valuation of a business. A trade name builds the credibility and identity of the provider in the market, while a trademark establishes the reputation of a product or service in the minds of consumers.

Both are valuable intangible assets of a business and play a crucial role in investment processes, mergers and acquisitions, and attracting business partners. Therefore, the strategic design, registration, and protection of these assets are not merely formalities but an essential part of the intelligent management of a company’s intellectual capital.