Tesla shows that little things in a name can be everything. But trademarks are hard to establish, and feed off a company’s first accomplishments. Name changes – even small ones – have big implications.
Tesla announced that it is changing its name from Tesla Motors to Tesla. When they founded the company around the beginning of the century, the “motors” part of the name no doubt was critical. Perhaps they wanted to be seen as an alternative automobile company, and the founders no doubt liked the majesty of including the term “motors,” like General Motors. Only big companies can make and sell cars, and adding Motors helped reinforce Tesla’s place, and aspirations, in the industry.
Now, 13 years later, Tesla feels handcuffed by “motors” since it is finding other markets for the batteries it developed as part of its electric car business. With its solar-powered roof tile home battery systems from its acquisition of Solar City Corp, Tesla is more than cars. It seems like a natural to drop “motors,” and besides, like with most marks, people tend to refer to the company by its first name, if the second part is a more descriptive term, like “motors.” But if your mark is “General Motors,” then you are unlikely to be referred to as “General,” since “General” is, well, so general. I think of the scene in the 2000 movie The Adventures of Rocky and Bullwinkle (high-minded literary analogies are my stock-in-trade, and I don’t mind repeating them), when a meeting takes place with several characters by the names General Admission, General Foods, and General Store.
Generally speaking, names like “general something” are about bigness, leaning on public recognition of General Foods (waning), General Motors and General Mills, among others. If you want to sound big for certain products – or are at least targeting people old enough to remember when nothing connoted bigness like the phrase “who do they think they are, General Motors?” – even a term like “general” may have valuable connotations. (Before we write off General Motors' place as a cultural icon, we should note that they still own almost a thousand trademark registrations in the USA alone.)
But if your mark is a combination of a fairly uncommon term like Tesla, plus a common word like motors, people will shorten your name. If it is important to you to be always known by both names, you need to work like heck to consistently market yourself that way and be prepared to have to correct people, even customers. Otherwise, the free market of words will chose your moniker for you.
Tesla is hardly the first to drive down this road. Remember when Apple was Apple Computer? Did dropping "Computer" help it flourish in areas like music players and cell phones? Who can say? There could be something appealing about a company selling phones which is a “computer” company. But from a purely trademark standpoint, Apple's decision seemed easy, since “computer” did not bring much to the dance.
Who remembers that Starbucks was once Starbucks Coffee, Tea and Spice? Or that Nintendo was preceded in time by the catchy Marufuku Co. Ltd. when it began life in the late 1800’s, then Nintendo Playing Card Company? They changed to Nintendo a couple generations ago. These changes were ultra-long term evolutions.
Note this type of name change is never without risk. Unless your business has recognition created by hundreds of millions or billions in value of combined advertising and free media coverage, dropping any part of your name may not be a winning proposition. If you have established a reputation for a single product, being chained to a name which suggests a more limited product offering does create issues. If you have success with one product under one name, and you want to leverage your name to a different product, will customers know for sure this is the same company they felt they already knew, or does even a small change cause consumers to worry if this is some different “Tesla” company? With Tesla, for the reasons already discussed, there may not be a big risk. But if you are not Tesla, think long and hard, and then long again, about whether there is more benefit to transferring your brand‘s goodwill to another product than tinkering with the name. The value of not only keeping your goodwill going but building on it, by expanding your portfolio, may well (and likely does) far outweigh the “comfort level” of being sure your name does not become misdescriptive of what you do.
Legally, the consequences become striking. What makes a mark strong is a combination of sales and advertising, which leads to consumer awareness. Even better is a mark which can be applied to not just one industry but to several. Then, even if an outsider in a third unrelated industry tries to adopt a mark similar to yours, you have the ability to argue “yes we’re known for SAAS, and yes we’re also known for tax consulting, but our consumers certainly could think the people using our same mark for online ticket selling are us.” Where a name spans more than one field, it is only reasonable that a consumer would think that businesses are related. This not only is logical; it is the way trademark law operates. Building goodwill is a compounding event, like interest. Plus, using the term “reasonable” in the law is always a good idea. It is the ultimate standard, so using the word makes everything you say sound more sophisticated.
Then there is the practical cost. Tesla Motors owns dozens of federal trademark registrations and no doubt has an unmanageable number of other governmental filings. All of these have to be changed. The legal cost associated with a smaller enterprise's change is proportionally less, but still is a time and money zapper.
There are times when a name change is appropriate. Sometimes your product or service offerings will evolve or even pivot entirely to take away some or much of the appeal of the original name. But it is hard and costly work to nurture trademark rights. Those rights may be your most valuable asset. A new name may be able to springboard off of your original name if you are just dropping or changing one portion. But any change in your mark is creating a weak point that some potential competitor down the road can try to exploit against you. The strongest trademark rights are beneficiaries of progressive and perpetual care and feeding of the same mark. You compromise your rights by veering, even a little bit, into another lane.
Partner Jess Collen published "Tesla Changes Its Name: Don't Try This at Home" on Forbes.com. Jess is a contributor on the site and regularly writes on trademarks, branding, copyright, advertising, and patent law.
You can read the full article on the Forbes website.