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.