What’s in a (Fictitious) Name?
The Pennsylvania Fictitious Names Act generally requires any business that is operating in Pennsylvania under an assumed name, style or designation other than the proper name of the entity using such name to register their fictitious name with the Pennsylvania Department of State. For example, if Freddy is a sole proprietor operating a barbecue stand under the assumed name “Freddy’s BBQ Joint”, the Act requires registration of this fictitious name.
Pennsylvania courts have held that failure to register a fictitious name does not affect the validity of a contract entered into under the fictitious name, however it does preclude an entity from instituting an action in Pennsylvania courts until the registration requirements under the Fictitious Names Act have been met. A civil penalty of $500.00 may also be instituted against the entity for failure to register the fictitious name. 54 Pa.C.S. Section 331.
Continuing with the example above, let’s say that Freddy hasn’t registered his fictitious name with the Department of State, and has entered into a contract with Frank for catering services at a fundraiser using the name “Freddy’s BBQ Joint” and hasn’t been paid. Frank, well aware of the Pennsylvania Fictitious Names Act, could prevent the collection matter from proceeding until registration has occurred, and Freddy could face a fine of $500.00 for his failure to register the fictitious name.
A common misconception is that fictitious name registration acts as a reservation of that name for exclusive use in Pennsylvania – this is not the case, as the Act specifically states that registration “imparts no legal right to the registering entity other than that the conducting of business by it under a fictitious name shall not result in the penalties provided by section 331 (relating to contracts entered into by entity using unregistered fictitious name” as discussed above. 54 Pa.C.S. Section 332.
Even though no exclusive rights to the name are granted by fictitious name registration from the Commonwealth’s perspective, the registration and use of a fictitious name may provide evidence of common law trademark rights.
If you have questions about whether to register a fictitious name or need guidance through the registration process, I recommend contacting an experienced business attorney to provide assistance and advice based on the needs of your business.