When it comes to protecting your intellectual property, starting with your business name, Michael Sutton discovers SMEs aren’t as well protected as they think.
If you believe registering your business name will stop other businesses using the same name, you’re not alone. According to last years’ Registered Business Names Survey, conducted by IP Australia and the Advisory Council on Intellectual Property, 85 percent of small business owners are labouring under this popular misconception, which could prove costly.
The survey also found 82 percent of small businesses think registering a business name gives you the right to trade under that name. And the misconceptions don’t end there. Many also believe business names are exclusive and offer a form of protection, and that registration in one area means protection for all uses of the name. Unfortunately these are all untrue.
The results of the survey are a wake up call for business owners to obtain proper legal advice. In many cases the name and intellectual property of a small business comprise its key assets. Without appropriate protection, they may become worthless.
Business Names
In a nutshell, you cannot conduct a business under a particular name until that name has been registered. Registration involves submitting the relevant forms and paying the applicable fees to the appropriate state or territory body—in NSW, for example, business name registration is operated through the Department of Consumer Affairs.
What protection does business name registration give? Probably not as much as you’d like to think. It does entitle the owner to conduct business in the state or territory in which it was registered. It may stop someone registering an identical company name or registering a business under the same or a nearly identical name.
But it will not give the business owner exclusive rights in that name. Nor will it provide a defence in the event that your use of the business name infringes someone else’s registered trade mark. Bear in mind, too, the Registrar does not conduct trade mark or domain name searches when processing an application to register a business name.
Due to the nature of the registration process, other businesses may use or register, or may already be using or have registered, the same or similar name. Another business in the same state or territory may register a very similar business name. A business in another state may register the same business name. Someone else may register a similar company name.
Trade Marks
Trade marks are a different kettle of fish. The registration of a trade mark gives the owner the exclusive rights to use that mark, and to authorise others to use the mark, in relation to the goods and services for which it is registered. It also gives the owner the power to prevent others from using a substantially identical or deceptively similar mark in respect of such goods and services, or closely related goods and services (unless such use is not likely to cause confusion).
A trade mark is registered by applying to IP Australia. It is not a right that arises automatically, nor is it a right created through use of a name, or through the registration of a business name, company name or domain name. It is, however, the most powerful of the ‘name rights’, an essential part of brand protection that offers a statutory remedy to those whose rights are infringed. The ownership of a trade mark is a useful tool when trying to prevent a third party using an identical or similar name.
Remember, however, that trade mark ownership in itself does not exempt a business owner from complying with the business name registration requirements. Also, just because a business owns a trade mark does not necessarily give it the right to the related domain name.
Company Names
If a business wishes to trade as a company, it must apply to incorporate and register a company with the Australian Securities and Investment Commission (ASIC).
The registration of a company name will prevent a third party from registering that same name as a company name or business name. But it does not provide any exclusive rights in that name, nor does it offer the exclusive protection and proprietary rights or a trade mark.
Subject to any passing off or trade practices issues, others may be able to use the same name. A registered company name may not necessarily provide a defence where using that name infringes a third party’s registered trade mark, and ASIC does not conduct any trade mark or domain name searches when processing applications.
Domain Names
A domain name is an address for a location on the internet and is used by a business as an easy way to find its website. A domain name ending in ‘.au’ is registered through an accredited registrar, a list of whom can be found at www.auda.org.au/registrars
A business can acquire the exclusive right to use a domain name for a set period by paying a fee, during which time no other person is able to use that domain name. This right can be a powerful tool, particularly in a marketing context.
Originally, a business could only register a domain name that corresponded to its name. The rules have now been relaxed. Names with a close and substantial connection to the business can now be registered and so we see domain names corresponding to trade marks and brand names.
A domain name does have limitations. It does not grant the registrant proprietary rights in the name. The domain name registrar does not check whether the business has the right to use that name. A holder of prior rights in the name may challenge the right to use the domain name, either through the domain administrator’s dispute resolution policy or through the courts. As a result, the right to use the domain name may be revoked.
A further weakness is that, unlike trade marks and company and business names, it can be easy to register a domain name that is virtually identical to one that is already registered, or indeed one that is identical but registered as a ‘.com’ as opposed to a ‘.com.au’.
As a business owner it is important to recognise there are different and distinct regimes for registering and protecting your name. If in doubt, invest in the right advice on what name protection your business will need, and on how to avoid unwittingly infringing the rights of a third party. A modest outlay on advice and adequate protection early in a business’ life is likely to pay off, and help minimise the risk and cost of having to change the name in the future, or fund defence or opposition proceedings.
So what’s in a name? Properly set up within the right structure, it could mean everything.
* Michael Sutton is an associate with national law firm, Dibbs Abbott Stillman (http://www.daslaw.com.au). Phone (02) 8233 9500.
