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Editorial 9 MIN READ

The DBA, revisited: what changed between 2017 and now

A Texas bill moving through the House this spring, a California rule that refuses to centralize, and the federal statute a DBA is still not

The Editors
Staff, Incorporator.org
9 min read Updated
Contents 6 sections
  1. Texas is in the middle of a change
  2. California has not moved and is not about to
  3. New York, Florida, and Illinois, quickly
  4. A DBA is not a trademark
  5. What to do this quarter
  6. Sources

DBA in 2019 is the same instrument it was twenty months ago: a public notice that you are transacting business under a name other than the one on your driver's license or your certificate of formation. What has moved is the plumbing. Texas is in the middle of rewriting where its entities file, California has stayed stubbornly county by county, and the gap between a DBA filing and a Lanham Act trademark is exactly where founders still lose money.

We last looked at the DBA in August 2017. This piece updates the state-by-state mechanics for the five jurisdictions readers ask about most, and revisits the one legal point that keeps causing expensive surprises.

Texas is in the middle of a change

The Texas assumed-name system in April 2019 is still the one it has been since the Business Organizations Code was enacted: an incorporated filing entity (a corporation, LLC, LP, LLP, or a foreign filing entity qualified in the state) that uses a name other than its legal name must file Form 503 with the Secretary of State and, separately, with the county clerk in each county where the entity has or will have a place of business or, if it has none, in every county where it does business. Sole proprietors and general partnerships file only at the county level. The dual-filing rule for entities is the part everyone hates.

House Bill 3609, filed by Representative Martinez Fischer on March 6, 2019 and referred to the House Business & Industry Committee on March 18, is the cleanup. The bill amends Chapter 71 of the Business and Commerce Code to remove the county-level filing requirement for corporations, LLCs, limited partnerships, LLPs, and foreign filing entities. Under the bill as reported favorably out of committee on April 2, the Secretary of State filing becomes the single filing for an incorporated entity. Sole proprietors and general partnerships would still file with the county clerk in the counties where they operate, because those filers have no other public record of existence to point to.

The bill's proposed effective date is September 1, 2019. Whether it clears the House floor, survives the Senate, and reaches the Governor's desk before sine die on May 27 is a live question as this piece goes up. Readers forming a Texas LLC this quarter should assume, for now, that the dual-filing rule still applies: file Form 503 with the Secretary of State (the current fee is $25), and file a separate assumed name certificate in each relevant county (fees vary by county, but are usually in the $15 to $25 range). If HB 3609 becomes law, the county half of that obligation drops off for entities on September 1. It will not drop off for sole proprietors; that part of the system is not being touched.

California has not moved and is not about to

California's fictitious business name (FBN) system is a county-clerk system by statute. Business and Professions Code section 17910 requires any person who regularly transacts business in the state for profit under a fictitious business name to file a statement within 40 days of starting. The statement goes to the county clerk of the principal place of business. Within 30 days of filing, the statement has to be published in a newspaper of general circulation in that county once a week for four consecutive weeks, and an affidavit of publication filed back with the clerk.

Nothing in the 2018 or 2019 sessions has centralized this. The Legislature's last substantive FBN amendments, in 2014 and 2018, tuned the ID-verification mechanics at the counter (to reduce identity fraud and the misuse of other people's addresses). The architecture is unchanged. If you run an LLC called "Harbor Studio, LLC" out of Alameda County and you want to trade as "Harbor Roasters," you file in Alameda County; you publish in an Alameda County paper; you do it all over in five years when the statement expires.

The consequence is that a California entity doing business in multiple counties under the same fictitious name may end up with multiple filings, one per county. There is no state-level FBN registry that supersedes the county filings, and the 2019 Legislature has not introduced a bill that would create one. The publication cost is the lever most small businesses feel: some legal-ad papers charge under $40; some general-circulation dailies in urban counties charge several hundred.

New York, Florida, and Illinois, quickly

New York splits the system cleanly. A domestic or foreign business corporation, LLC, limited partnership, or LLP doing business under a name other than its legal name files a Certificate of Assumed Name with the Department of State in Albany. The filing fee to the state is $25 for corporations. The Department then collects a per-county fee based on the counties listed on the certificate: $25 per county for most counties, $100 per county for New York, Kings, Queens, Bronx, and Richmond. General Business Law section 130 governs the whole regime, including the filings sole proprietors and general partnerships make with the county clerk where they do business. The structure has not changed since our last piece.

Florida is the cleanest of the five. Section 865.09 of the Florida Statutes, the Fictitious Name Act, puts the entire filing with the Division of Corporations at Sunbiz. One filing, one fee ($50 as of 2019), one newspaper-of-general-circulation publication in the principal-place-of-business county. The registration lasts five years and expires on December 31 of the fifth year. The statute is explicit that registration "is for public notice only" and gives rise to no presumption of rights to the name and does not affect prior trademark, service mark, or trade name rights. Florida, helpfully, says this out loud in the statute.

Illinois is the most split of the five. Sole proprietors and general partnerships file under the Assumed Business Name Act at 805 ILCS 405, with the county clerk in every county where they do business, and they publish notice in a newspaper of general circulation in that county once a week for three consecutive weeks, with proof of publication filed back with the clerk within 50 days. LLCs file LLC-1.20 with the Secretary of State in Springfield under section 1-20 of the Illinois LLC Act; there is no publication requirement at the state level. The fee for an LLC assumed name is tied to the year-digit pattern that Illinois also uses for franchise filings, from $150 in a year ending in 0 or 5 down to $30 in a year ending in 4 or 9. Corporations file with the Secretary of State under the Business Corporation Act of 1983. Filers routinely conflate these tracks and file the wrong instrument in the wrong office.

A DBA is not a trademark

Every specific update above exists inside the same constraint that existed in 2017: a DBA filing does not create trademark rights. It never has.

The federal trademark statute is the Lanham Act, codified at 15 U.S.C. sections 1051 through 1141n. Section 1051 sets out the application process for principal-register registration: the owner of a mark used in commerce, or an applicant with a bona fide intent to use a mark in commerce, files an application with the U.S. Patent and Trademark Office, specifies the goods or services, submits a specimen, and pays a fee. Federal registration gives a registrant nationwide constructive notice of the claim under section 1072, a presumption of validity under section 1057(b), and the right to sue for infringement under section 1114 (for registered marks) and section 1125 (for unregistered marks, trade dress, and false designation of origin).

None of that is triggered by filing a DBA. A DBA filing is a notice that a named person or entity is operating under an additional name. It tells the public who is behind "Harbor Roasters"; it does not tell the public that "Harbor Roasters" is exclusive property. Florida says this explicitly. California's statute is silent, but the case law is consistent: an FBN statement "affords no protection" against another user of the same name; it is compliance with a disclosure regime, nothing more. The same is true in every state.

What a DBA does earn you, in the states that recognize it, is common-law trademark rights in the geographic area where you actually use the mark. Those rights exist whether you file a DBA or not, because they track use, not paperwork. Filing the DBA is sometimes useful evidence of first use on a given date, which can matter later in a dispute. It is not a substitute for the federal registration that gives you the remedies under sections 1114 and 1125.

The practical failure mode is the founder who files a Texas assumed name certificate (or a California FBN, or a Florida fictitious name), sees the name appear in a public register, and concludes that the name is now "theirs." Two years later a company in a different state begins selling under a similar mark, the founder calls a trademark lawyer, and discovers that the DBA was never going to stop the second user, that the other side has a federal registration, and that the founder now has a choice between paying the other side's licensing demand and rebranding. The DBA was doing its job the entire time. The founder asked it to do a different job.

If the mark is commercially important to the business, federal registration through the USPTO is the instrument that matches the expectation. It is not cheap, the application is a specialized document, and the office action cycle can run eighteen months. But a DBA is not a cheaper version of it. The comparison we made in our 2016 piece on DBAs versus LLCs applies the same way here: the DBA answers a different question than the question most founders think it answers.

What to do this quarter

Texas: if you are forming an LLC in April 2019, file the Secretary of State assumed name certificate if you need one, and file the county certificates too. Track HB 3609; if it passes, your next renewal in most counties becomes optional. Sole proprietors: nothing about your county filing is changing.

California: assume the FBN filing lives at the county clerk. Budget for the publication. Put the five-year renewal on a calendar the month you file; the clerks do not always send reminders, and a lapsed FBN is a problem when a bank notices during a KYC review.

New York, Florida, Illinois: use the primary filing office your entity type actually sits under, not the one a friend in another state used. The Department of State in New York, Sunbiz in Florida, and either the Secretary of State or the county clerk in Illinois depending on which form of business you are.

And in every state, when the name matters, treat the DBA as a compliance filing and the trademark as a separate project with a separate budget. The state clerk's office is not the USPTO, and no amount of county-by-county filing adds up to what section 1051 does with a single application.

Sources

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