First impressions are important. Try as we may to avoid judging a book by its cover, the reality is that it is second nature to do so.
When it comes to a business, be it big or small, there are a few things that factor into creating a good first impression with potential customers. Your brand name is one of them. Because of this, it is important that the name you choose aligns closely with the image or brand that you wish to present.
Once you have chosen a name, you must register that name as a business name and/or company name. We would also recommend you register it as a trade mark. In this article, we explore the differences between the three.
Company Names & Business Names
In Australia, you can only operate a business under a registered business name, a company name or your personal name. The main purpose of registering a business or company name is to enable the public to identify who they are dealing with. A company name is only required if you actually intend to operate through a company.
The Australian Securities and Investments Commission (ASIC) monitors and oversees the operations of companies and the registration of business names. While the ASIC rules prevent the registration of a name that is identical or nearly identical to an already registered business name or company name, they do not prevent similar names from being registered. For example, if “Joe’s Bakery” is already registered as a business name, you can still register “Joe’s Baked Goods”, but not “Joe’s Bakehouse”.
The registration of a business name or company name indicates to ASIC your intention to trade under that name. However, it is not an indication that you have any formal rights to use the name. In other words, registering a business or company name merely informs ASIC that, in the event that they need to identify a business, this is the name which you intend to be doing business under and by reference to.
If you register a company name and that is the name you intend to trade under, then you do not have to register a business name. However, you do have to use the full company name, for example “Joe’s Bakery Pty Ltd”. If you wish to trade under the name “Joe’s Bakery” then you will need to register a business name also.
A trade mark typically consists of either a word or a logo that is said to operate as a ‘badge of origin’. That is, a trade mark is something which indicates to a consumer who is offering the goods or services.
One of the main rationales behind allowing people to ‘own’ trade marks in words and logos is that it is for the consumer’s benefit. Broadly speaking, it ensures that every time you go to a store and buy a drink with the words ‘Coca-Cola’ on it, for example, you know exactly what you are buying and who is responsible for its production. It also prevents other people from ‘hijacking’ the goodwill of one entity for its own benefit.
In Australia, there are two ways you can ’acquire’ a trade mark:
(a) By registration of the mark with IP Australia
You can register a name or logo as a trade mark with IP Australia. We generally recommend that you seek to obtain a trade mark registration because by owning a registered trade mark, you do not need to show that you have any reputation in the mark. Indeed, you can own a registered trade mark before you have even begun trading by reference to the trade mark.
(b) By a reputation established in the marketplace
You can also acquire what is known as a ‘common law’ (unregistered) trade mark. That is, you can register a trade mark by virtue of the fact that you have acquired a reputation associated with that name. You will be said to have acquired a common law trade mark when the public identifies a particular trade mark with you. This type of trade mark acquisition is less common and requires you to present substantial evidence of the use of your trade mark over a number of years.
Company Names and Business Names versus Trade Marks
The important aspect to keep in mind is that registering a business, company or even a domain name does not give you ownership over that name. This means that you cannot stop other people from using the name.
The only way to stop others from using the same or similar name is by obtaining a registered trade mark in the name or acquiring a common law reputation, which allows you to register a trade mark in that name.
As a consequence, it is entirely possible for you to have a registered business, company or domain name and another person to have the ownership or proprietary rights of the same name by virtue of a trade mark or reputation. In this instance, the person with the proprietary rights will have the right to use that name and prevent you from doing the same.
What should I do before I decide on a name?
The important difference between proprietary rights (like a trade mark) and non-proprietary rights (like a company and business name) is that you can only take action against other persons to prevent them from using a name when you have proprietary rights in that name.
For this reason, it is imperative that you consider the availability of a name before you begin using it. Even if you innocently use a name that someone else owns, that person will be able to take action against you and, not only prevent you from using the name further but potentially receive damages from you.
Accordingly, some serious thought should be given to the availability and enforceability of a name from a legal perspective before you adopt a new brand name.
Need help on choosing or protecting your name? Get in touch with us.