It’s all in the name – business name registration; your rights and the risks.
Your Business Identity
You’ve decided on your next business venture, who will be involved and what products or services will be on offer. You’ve also taken the time to identify a business name for your enterprise which resonates with your objectives perfectly, and you have aspirations to develop this name into a brand.
What you do next with that name will be critical to every aspect of your business.
Many people think that once they create a name, it is theirs to own, use and enjoy exclusively. Unfortunately, the reality is that unless you protect that name, for example by having a proprietary interest registered in relation to that name, you may end up in a situation where a third party has a better ownership interest in your name than you do.
To prevent this from happening, our advice is always to undertake some research prior to settling on a name and seek a number of registrations, based on how you intend to use it.
Register a Business Name
The first step is to identify if you need to register a business name. Business name registration is not required if you intend to operate in the following way:
- as an individual trading in your own name, for example ‘John Smith’
- as a partnership which trades using the names of all the partners, for example each of ‘John Smith’ and ‘Julie Jones’ could trade as ‘The Partnership of Smith and Jones’
- as a company who trades using the company name, for example ‘ABC Pty Ltd.’
Where you do not fall within any of these categories and intend to conduct a business, a business name will need to be registered through ASIC and an ABN obtained. Whilst registration itself is a simple process, the first step will be to identify if the name is actually available to be registered. It is okay if your name is ‘similar’ to another’s, for example ‘John’s Bakehouse’ and ‘John’s Bakery’, however the name must not be identical to one which has been registered.
Similar Names
Although it is possible to register a business name that is similar to another’s, there is a risk that the owner of a similar business name could make a claim against you in an action called ‘passing off.’ This is particularly the case where you propose to use that name in the same industry.
A person makes a passing off claim if they are of the view that you are actively trying to confuse their customers or the public that you are somehow associated with their business. To be successful, amongst other things, they must be able demonstrate that you have caused them damage in the form of a tarnished reputation. A passing off action usually involves a litigious process and if a case is successfully made against you, can result in considerable damages and costs.
Conversely, if through the process of searching the business name register, you discover that a third party has registered a name which could give rise to a ‘real risk of substantial detriment’ to you, it is possible to request ASIC to review the registration of that business name with a view to having it removed.
Company Incorporation
If you intend to operate through a company, you can apply directly to ASIC to obtain the company name of your choice, so long as there are no identical company or business names registered. Unlike the registration of business names, the use of certain words in a company name is prohibited. You must also display the liability status of the company’s members in its title (for example ‘Pty Ltd’).
Once you register a company name, it will not be necessary to also obtain a registered business name, unless you wish to trade using a different name.
Whilst registering a company name does prevent others from using the same name, it does not prevent third parties from registering a trademark against the name. Accordingly, to have exclusive use of your business name, a trade mark registration is recommended.
Trade Marking Your Name
As with business names, it is important to also search the IP Australia register of trade marks to ascertain whether any similar names to your proposed business name has been registered. Bear in mind that unlike business name registration, IP Australia will reject trade mark applications for names that are ‘substantially similar’ to those already registered who are in the same industry as yours.
As a trade mark owner, you have exclusive rights to use the trade marked business name in all states and territories of Australia for up to 10 years. You may also register the ‘brand’ associated with the trade marked business name, to the extent that you wish to utilise certain logos/images in association with your business.
If you would like any assistance with obtaining the right level of protection for your business’s name, please contact one of our experienced commercial lawyers.
We’re here to help.
Ann-Maree Ventura Special Counsel
Level 3, 1 Palmerston Crescent
South Melbourne, VIC 3205, Australia