A recent report by the Advisory Council on Intellectual Property (ACIP) has identified that many business owners are uncertain of the differences between business names, trade marks, company names and domain names and the potential consequences.
As the Parliamentary Secretary to the Minister for Industry, Tourism and Resources, Bob Baldwin, recently observed: “Under the current arrangements, people can set up a business and commence trading under a registered business name and be unaware that they are infringing an existing trade mark. This can lead to expensive legal disputes, loss of reputation, and in some circumstances, may even result in a business closing down”.
The recent report identified common and widespread confusion as to the purposes served by registration under the differing systems and the legal effect of those registrations.
Recent difficulties experienced by holders of registered business names highlight the issues involved in identifying those rights that lead to exclusive rights to use a name and those that, initailly, simply meet mandatory registration requirements. For example, individuals are required to register as a business so that consumers and other businesses may identify exactly who they are dealing with and in particular to identify the individual owners of that business.
The registration of a business name does not of itself convey any proprietary right upon the owner, contrary to the expectations of a significant number of business name registrants.
As ACIP observed, the common misconceptions are that a business name registration provides immunity from infringement of others rights and gives exclusivity to that name. Consequently there are inadequate checks at the point of formation of the entity both in so far as concerns registered trade marks and common law trade marks.
In a case study quoted in the ACIP report, a Brisbane woman was about to start a new business. The entrant was advised that by spending $100 to register a business name she could achieve protection for her name, rather than registering a trade mark. After several months of conducting business she received a letter threatening her with legal action for infringement of a trade mark made up of the same words. Left with a decision whether to fight the claim or adopt a new name, this entrant adopted a new name at considerable cost.
If a business name, company or domain name is substantially identical with or deceptively similar to a registered trade mark there may exist an infringement of the trade mark under Section 120 of the Trade Marks Act. Alternatively, use of the name may give rise to an action for passing off under common law or a breach of the Trade Practices Act/relevant Fair Trading Act.
With the increasing proliferation of names and businesses, any new entrant into business should conduct a comprehensive search of trade mark databases to ensure they minimize the prospect of infringing registered trade marks. If the entrant intends to deal overseas, similar searches should be conducted where the goods and services are to be marketed.
Entrants should not only seek to deconflict their names with others but should consider their market and the need for a registered trade mark, at an early time.
In another example submitted to ACIP, a business named Housemart was registered in Western Australia in 2001. By 2003, the business had prospered and was advised to register their name and logo to prevent others from ‘stealing’ the name and thus potentially undoing all their effort in establishing their name. The owners found there was already another business with a similar name registered as a trade mark and Housemart’s application for a trade mark was opposed and considerable costs were incurred. For Housemart to be forced to start again from scratch with a new name would have been disastrous.
The latter case illustrates the need for forward consideration of markets and branding issues. Later success may be held back or defeated by the inability to protect the intellectual property built up by the hard work of the firm over many years. Protection by way of trade marks is not the exclusive preserve of multi-nationals and soft drink firms.
What can be registered as a trade mark? Section 17 of the Trade Marks Act identifies that as a ‘sign used, or intended to be used, to distinguish goods or services dealt with or provided in the course of trade by a person from goods or services so dealt with or provided by any other person’.
A non exhaustive variety of features may qualify for registration as a ‘sign’, including a letter, word, name, signature, label, ticket, shape, colour, sound, scent, numeral, device, brand or heading.
Existing and new entrants should closely consider and review on an ongoing basis the intellectual property they seek to preserve in their name and branding. Each situation should be reviewed on its individual merits and appropriate registrations and searches undertaken. The trade mark can become a very valuable asset capable of valuation in the balance sheet. Trade mark registration should be given careful consideration from the outset of an enterprise and be the subject of ongoing review.