Legal Question in Business Law in California

Re: Loss of Use of Name

No. You have several concepts mixed up, and that is clouding your perception of the situation.

First, I don't know exactly what you mean by "didn't file their name properly." Foreign corporations file in California not for any purpose connected with registering or protecting their corporate name here, although admittedly a registration is helpful in protecting the name from use by another corporation here. The main purpose of registration here by a foreign corporation is to qualify legally to do business here. I assume by "did not file their name properly" you probably mean "failed to register." and for sure one of the consequences of failure to register is that another corporation can register under the same name. That's not because California decides that the second corporation has a superior right to the name; it's simply that California has no official notice of the existence of the other business by that name, nor of its interest in doing business here. The first "ABC Corp." to step forward and register and pay the taxes gets to be ABC Corp. in California. The Secretary of State does not involve itself in trademark searches nor does it quation a registrant's right to use a name. If no one else is currently registered as ABC Corp., the name is available.

The loss of the right to register and operate as ABC Corp. in California does NOT have any effect on the foreign corporation's existence in the state of its organization, nor does it have any "veil piercing" significance. If ABC Corp. is a validly existing Nevada, or Maine, or whatever corporation under the laws of its state of incorporation, the mere fact that it cannot register as ABC Corp. in California because some other corporation has grabbed the name first does not have any other effect on ABC Corp., and in fact it can still register and operate in California, but it will have to operate here under a different name. A good business lawyer can tell you how this is arranged.

Further, since the Secretary of State does not decide trademark issues in registering corporations, there is always the possibility that ABC Corp. of Nevada, or Maine, may have a superior right to use the name under trademark law, and could force the California registrant of the same name to cease using the name ABC Corp., clearing the way for the foreign corporation to re-register here under their own name.