The decision, as reported by the Mail’s Royal Editor Rebecca English, would appear to give the couple little choice but to re-brand their entire operation.
They had sought to register Sussex Royal as a worldwide trademark and apply it to a range of products including clothing and merchandise.
But it was decided, after conversations with the Queen, the Prince of Wales and senior courtiers that their preferred model was not possible, particularly if the Sussexes were going to spend the majority of their time in North America.
The matter is a very sensitive one and neither the Sussexes’ spokesperson nor Buckingham Palace would comment directly on the decision last night.
On Wednesday, the Palace said only that the use of the word "Royal" is "being reviewed".
It added that discussions are still ongoing and any changes will be announced when Harry and Meghan launch their new non-profit organisation (it WAS going to be called Sussex Royal, the Charity Foundation).
They first used the Sussex Royal name after they created their own household last year when they split from Prince William and Kate at Kensington Palace.
Prince Harry is due back in the UK next month before the Sussexes’ new arrangements come into effect in the Spring.
It’s not know if Meghan and their son Archie will come back with him.
Intense work is still going on in Buckingham Palace to finalise Harry and Meghan’s departure – and this name change is part of the negotiations.