Name Game: Why Registering a Trade Mark is Smart

ABCLAWYERSIf you’re a business owner, imagine this for a moment: you operate a business in the same area for many years; you work hard to build your reputation as a reliable and trustworthy business; although competition is hot, you have nothing to worry about­­­—your name is well established and you’re ahead of the game because of your strong credentials in the community. Years go by until one Monday morning (bad things always happen on Monday mornings) you receive a letter from a law firm you have never heard of before. Thinking that perhaps this is a cheque from your American uncle who mentioned you in his will, you discover that this is a “cease and desist” demand from someone represented by a solicitor, who, you’re informed, had registered a trade mark exactly like your business name. He now operates a business similar to yours and wants you to change your business name or shut down your business altogether—whichever you prefer.

If you think this is a far–fetched scenario, think again—according to section 21(1) of the Trade Marks Act, a “registered trade mark is personal property.” It follows then that trade marks, a type of intellectual property, in a legal sense are the same type of property as cars, household goods, business inventory, shares and many other kinds of tangible and intangible property. Once a trade mark is owned by someone, its ownership is protected by law and you can do nothing about it unless the law was breached to claim the trade mark’s ownership in the first place.

Compare this to a business or company name. Australian Securities and Investments Commission (ASIC) tells us that a “business name is simply a name or title under which a person or entity conducts a business.” Just like your personal name is not your property, your business or company name is not your property either, in a legal sense that is. IP Australia, the Australian Government agency that administers intellectual property in this country, further informs us that “business names do not provide proprietary rights for the use of the trading name.” To put it another way, registering a business or company name will not give you the ownership of that name.

In practice, what it all means is that the same word or combination of words can be registered as a business name, company name, domain name or a trade mark by four different persons and the trade mark owner will have the stronger footing in court if a dispute arises. Please note the word “owner”—in law, only property can be owned and trade mark is the only property here.

From our experience dealing with business owners, it appears many do not understand the true purpose of business name registration which is not much more than the means for the consumers and other traders to identify a particular business entity by a convenient name rather than an ABN. Registering a business name does not give you exclusive rights to it nor, and this is just as important, immunity from infringement of others’ rights to it. Since the registering process only involves a check against exact or similar match of other business names, registering a “wrong” name might infringe on someone else’s property, such as a trade mark, without you even realising it. It doesn’t automatically mean that you’ll be liable for a monetary compensation if this happens, but what it does mean is that, most likely, you’ll have to change your business name and bear all the financial and other costs usually associated with such a serious rearrangement (think of new stationary, signage, website and other expenses).

Similar to business names, a company name is nothing more than a legal identity of a company and does not confer any rights to it. To register one, it must not be identical to any other company or business name registered with ASIC. One key difference with company names is you’re not required to specify a field of business activity a company is going to trade in when you register it because there could be many. Which is why it’s difficult for business name applicants to know for sure if there is any potential conflict they are not aware of when they apply for a business name.

Enter a trade mark. A trade mark is a sign used to distinguish goods or services provided by one person from goods or services provided by any other person (section 17 of the Trade Marks Act). The sign, of course, can and often does include words. A trade mark owner has the exclusive right to use, licence or sell the trade mark in Australia and this right is protected by both legislative and common law.

A very important feature of trade marking a business—it gives immediate protection of ownership even before the commencement of business activity. Which is why hijacking your well established business is a real possibility if it’s not protected by a trade mark, that is, by law.

If you believe your business is worth protecting, we at Hollingworth & Spencer Lawyers will be happy to advise you on how this protection can be achieved in the most effective way.

Due to the impact of specific facts on any given case please treat this information as a general guide and not as legal advice. If you require advice on how to adequately protect your security rights please contact Adam Robinson on 07 3123 5700.

Small business owners – plan now or pay later!

How you get into your business now can have drastic financial implications for everything from the day to day running to how you get out of it later.  The earlier you start planning the greater your ability to take advantage of the array of concessions and exemptions offered for tax, duty and superannuation.

small business planningGetting into small business – plan ahead!

Business restructures can involve capital gains tax and stamp duty implications, which will increase with the value of a business. It follows from this the best time to plan an effective structure of your business is before it begins trading or otherwise as early as possible. The longer you leave a restructure the greater the tax liabilities to be incurred as your business continues to (hopefully) grow in value.

Getting out – more than just a for sale contract!

When planning your business structure it needs to take into account more than just your current circumstances and tax needs. Are you married? How long do you plan on staying in business? How big will it grow? What is to happen in the unfortunate event of illness or death to a key member? What will happen in the event of bankruptcy?

These are just some of the factors which will impact upon which structure is best for your future needs.

Business acquisition of its rented premises?

Does your business rent premises which you may be able to purchase in the future? The ability to purchase may be easier than you think but you should always receive advice before signing on the dotted line.

Changes in the last few years have opened up the ability of Self-managed Superannuation Funds (SMSF) to borrow in order to acquire real property. This can enable your own SMSF to acquire the whole or part of your business premises but not where you already own it! Your business will then lease the premises from your SMSF. The main benefits of using a SMSF to acquire your premises are:

  1. Asset protection – generally your superannuation fund and property held by it will be safe from creditors in the event of bankruptcy.
  2. Less tax – income for a SMSF is taxed at a lower rate than for a company and generally lower than a trustee of a trust or individual. Your SMSF can also claim a deduction for the interest on loan repayments.
  3. Tax deductions – Your business will still be able to claim a tax deduction for rent paid to your SMSF. If your business purchases the property itself would only be able to claim interest on repayments as a deduction.

Due to the impact of specific facts on any given case please treat this information as a general guide and not as legal advice. If you are small business owner and curious about how we can help achieve your goals please contact Adam Robinson.

Employment Agreement Fundamentals

Employment Agreement Fundamentals: an Employee or an Independent Contractor?

Imagine, as an employer, you enter into an employment agreement with what you think are independent contractors. You lay down the terms and the conditions of the employment relationship including a specific stipulation that the workers are contractors and not employees; the workers you want to employ agree to these terms and the work gets under way. Time passes by, all is going well until one day several workers attempt to claim entitlements which are usually associated with employees and not contractors such as annual and long service leave. You point out to the employment agreement you have with the workers and refuse to pay. Next thing you know you’re looking for a law firm to represent you in court. employment agreementsAnd here is the bad news – you lose all the way to the Full Court of the Federal Court. Sounds unreal? Maybe, but this is exactly what happened in ACE Insurance Ltd v Trifunovski in January 2013 when the judge Buchanan J found, among other things, “no adequate foundation for a conclusion that the relationship [between ACE Insurance and its agents] was anything other than one of employment.”

Distinguishing factors

The distinction between an employee and an independent contractor is like that now proverbial “elephant test” – hard to describe in precise terms but instantly recognizable when spotted. It doesn’t help that the Fair Work Act 2009, fails to define what an “employee” is.

Over the years, the courts have developed the so called “multi-factorial” test to determine the employment status of a worker. Regardless of what side of an employment relationship you’re on, you’ll do well to familiarise yourself with some of the main factors used by the courts in disputes related to employment agreements:

  • Control – the ultimate control by the business over the performance of work by the worker will indicate an employer-employee relationship. If this test determines such a relationship exists, it’s unlikely other tests will be considered.
  • Representation – a worker is presented to the community as a representative of a business by means of, for example, special uniform, giving out business cards with a trade logo on it or signing off emails with a business signature. The court will likely see such a worker as an employee of a business they represent.
  • Tax – deducting income tax from the worker’s payment will generally indicate a worker is an employee.
  • Equipment – employees are usually supplied with equipment and its maintenance is the business’ responsibility.
  • Remuneration – employees are paid wages based, for example, on time spent on performing work, per item of work performed or commission. By contrast, contractors are usually paid for the completion of tasks which are invoiced by the worker with GST added to it.
  • Employment relationship – an employee can be lawfully dismissed or suspended.
  • Insurance – workers compensation insurance is generally associated with employees while contractors are free to arrange their own insurance cover.
  • Delegation – unlike contractors, employees are not able to delegate or sub-contract their work.
  • Choice of work – generally, contractors are free to work for whoever and whenever they choose while employees are not.
  • Tools and Repairs – generally contractors provide their own tools and are responsible for fixing defective work at their own cost.

Vicarious Liability

An employer is also generally vicariously liable for the negligent acts of an employee and will require insurances to cover such events. A principal engaging a contractor on the other hand is generally not liable for negligence of the contractor and will not require such insurances. However, the status of a contractor can be challenged after an incident has occurred, potentially leaving a principal liable for the negligence of the worker who they thought was a contractor. This can provide serious detriment to a principal with inadequate insurance coverage, particularly where the negligence results in personal injury, disability or death.  We can provide advice on the risk of your arrangements with contractors, and advice on how best to proceed in protecting your interests.


It’s important to realise that what might look like a straightforward, easy to understand employment agreement expressed in clear terms may turn against you if challenged in court. To that end, whether you employ people in your business or are employed, make sure you’re aware of these important points:

  • Australian legislation does not provide a clear distinction between employees and independent contractors.
  • It’s up to the courts to decide what the relationship between a business and a worker is.
  • The courts will look beyond contractual agreements and examine a number of factors to determine the employment relationship.
  • Employers should make sure the employment agreements are not only carefully drafted, but the day-to-day employment relationship is consistent with the employment status agreed upon between an employer and a worker.

Due to the impact of specific facts on any given case please treat this information as a general guide and not as legal advice. If you require advice on how to adequately protect your security rights please contact Adam Robinson on 07 3123 5700.