Toronto Lawyer - PROTECTING YOUR BUSINESS NAME - TRADE NAMES, BUSINESS NAMES AND TRADEMARKS

Your business name is a valuable asset. A good business name conveys purpose, professionalism and value to the world.  As such, it should be protected so that your competitors cannot benefit from the goodwill and name recognition you have worked hard to create.

The law protecting your business name is a complex topic.  As a general overview, you should be aware of the following three concepts: Trade Names, Business Name Registrations, and Trademarks.

1. Trade Names

A trade name is the name under which a company conducts its business. A trade name’s protection comes from the identification of the company’s name with a particular product or service in a specific geographic area. For example, when we think of Nike we think of high-end shoes and athletic wear globally.

Trade name protection is enforced by what lawyers refer to as the “tort of passing off.” A “tort” is a legal name for a lawsuit. Simply put, a competitor cannot promote its goods or services in such a way that will cause confusion with an existing product or service in a specific geographic area. For example, a catering company named “Too Many Cooks” could have a claim against a subsequent competitor named “Two Many Cooks.” Specifically, “Two Many Cooks” is using the reputation developed by “Too Many Cooks” in offering catering services in the same geographic area. 

A major advantage of a trade name is that it is free to establish and maintain just by being in business. The major disadvantage of a trade name is that you need to hire a lawyer if you plan on suing someone who is infringing on your trade name.  

For practical purposes, a business cannot operate with a trade name only in this day in age. Registration of a trade name is essential.  For example, if you are running a business and you are using a trade name that is not registered, the Province of Ontario has the power to fine you.

2. Business Name Registration

A business name registration is a type of trade name that is registered with the appropriate governmental bodies.  The only substantive difference between a trade name and a business name is that a business name is the registered form of a trade name. 

If you want to register a business name you must first search the New Upgraded Automated Name Search (NUANS) database to determine if anyone else has registered or trademarked the name you want to use across Canada.  If the proposed name is acceptable, you may register the name, which is valid for 5 years (but can be renewed).  Generally, anyone who is operating a business with a name other than his or her own personal name must register a business name.

One of the purposes of a business name registration is to put the world on notice that a particular business name is being used.  The registry also allows people with similar or same names to contact the business name’s owner in the event of a dispute.  A registration does NOT grant you an exclusive right to use the name.   A registration’s primary purpose is to provide notice rather than protection.  Notice, in turn, allows you to start a lawsuit against someone who registers a name too similar to yours. 

Please be aware that if you choose to incorporate federally, you may have more difficulty registering a business name.  Generally, the federal government scrutinizes business name registrations more strictly than the Ontario government, which means you may have to wait longer to incorporate federally.  However, the greater level of federal scrutiny does NOT result in any greater protection for a federal corporation registering a business name than its provincial counterpart.  Please remember that a business name registration is not a way to protect your name.

A business name may be protected the same way as a trade name- by suing someone in the tort of passing off.  It is important to note, again, that the act of registration by itself does not grant you protection.   

The primary advantage to a business name registration is the ability to tell the world you use a certain business name.  By providing notice in the NUANS system, you will prevent anyone else from registering the exact same name.  As discussed, the primary disadvantage of a business name registration is the relative lack of protection it grants you.    

3. Trademarks

The best way to protect your business name is to register a trademark.  However, registering a trademark can be costly and businesses generally only register a trademark if their mark is either very distinctive or has great value to it (e.g. lots of sales related to the name).  Some of the more important issues in determining whether to trademark your name include cost-benefit (is my name worth enough to spend the money to protect it?) and distinctiveness of the mark. 

A trademark is a distinctive mark which distinguishes a product or service from others in the market. A trademark may be a word (Coke), combination of words (PriceWaterhouseCoopers), logo or symbol (Nike’s swoosh), slogan (“Just do it!”), package design (Kodiak’s yellow film box) or a series of numbers (Pizza Pizza’s 967-1111).  The primary purpose of a trademark is to protect your identity from imitation or confusion with your competitors.

Generally, like any asset, a business name should be protected by trade marking when there is significant value attached to it.   To determine “value” you must ask whether your mark has enough marketing appeal that a member of the general public would recognize your name with the products or services you sell.   

A person can apply for registration if the trademark is in use or proposed to be used.  However, an application is stronger if the trademark is in use (e.g. sales being made).  It is also important to note that the trademark holder has to use the mark in connection with a good or service.  If the trademark is not used, CIPO may remove the trademark from the registry which will allow your competitors to register the mark. 

Trademarks are registered and protected on a national basis by the Canadian Intellectual Property Office (CIPO). If a trademark is successfully granted, the owner has a general claim over that mark which is effective and enforceable throughout Canada. This differs from a trade name which is confined to an area where you can establish the name’s reputation.  Additionally, a trademark owner has protection not only over the mark but may start a trademark infringement lawsuit over marks that are “confusingly similar” to the trademark. To simplify, the legal term “confusingly similar” generally means more than the exact same name or a very similar name.  As you recall, a business name registration generally prevents the registration of the exact same name.  Thus, a trademark’s protection extends beyond the scope of a business name registration as well.  

Your trademark can be protected in a wide variety of ways.  CIPO may reject marks that are too similar to yours in the application process and you also have a right to sue for trademark infringement. 

Determining whether your mark is eligible to be trademarked can be a complex process to undertake.  I suggest you visit CIPO’s website for a general guide on the matter: http://strategis.gc.ca/sc_mrksv/cipo/tm/tm_gd_regis-e.html.

As discussed, the primary advantage of a trademark is that it grants you exclusive use over the mark in relation to a particular good or service. A trademark may also strengthen your protection over an Internet domain name and speed up the process of registering trademarks in other countries.  The disadvantages are that obtaining a trademark can be a costly and lengthy process to undertake.  It costs anywhere from $1,200 to $5,000 or more to have a trademark agent or lawyer obtain a trademark for you.  This cost increases dramatically if a competitor decides to oppose your application actively during the application process.  The process can also take more than a year to complete- even without any opposition to the registration.

In the typical business life cycle, a name usually starts as a trade name- for example, Universal Medical Products - which can be protected by starting a lawsuit for the tort of passing off in the geographic area where the business has a reputation.  When Universal Medical Products is registered as a business name, other businesses are prevented from registering the exactly the same name and the business can continue to sue in the tort of passing off.  When the name has significant value to it, the business usually trademarks it and the trademark gives the business national protection against anyone else using the name Universal Medical Products or any other name that may be “confusingly similar” in relation to medical products.