Have you protected your business name?

Is your business name valuable to you? Do you consider that you “own” it? What steps have you taken to prevent third parties copying your name?

This article seeks to highlight some key considerations on the legal protection of business names and logos, a topic on which I have recently received a number of queries.

Company and domain name registrations: are they enough?

It is a common misconception that registration of a company name and/or a domain name secures ownership of a name, and therefore the right to prevent use of such name by third parties (or to charge a fee for such use). However, this is not quite right. Registration of a company name and a domain name, whilst potentially useful for a business, do not, in themselves, give protection against other parties using the relevant name (except insofar as they prevent others from registering exactly the same company name or domain name). Importantly, these registrations give no legal ownership of the name itself.

Trade mark registrations

On the other hand, a registered trade mark is a property right, which gives the owner the right to prevent other parties using identical or similar marks. A trade mark is intended to be a “badge of origin” and can be any sign which distinguishes your goods and services from those of third parties. It may be the business name as a word in itself, or with a stylised font, and/or a logo.

Trade marks are registered in relation to specified goods and services which define the scope of the protection. So, for example, if you have registered your name in relating to furniture, this does not necessarily give you the right to prevent someone using the mark in relation to cosmetics. They are also territorial, meaning that protection is given only in the country or countries in which the trade mark is registered. The Intellectual Property Office (www.ipo.gov.uk) is the UK trade mark registry.

There are several limitations to registration, for example if a mark is:

• non-distinctive, which includes a mark which is exclusively descriptive of its purpose or quality (eg “APPLE JUICE” for apple juice); or
• confusingly similar to another registered trade mark (eg it is likely that KOKA-KOLA for soft drinks would be refused registration). In these circumstances, you may also be infringing the registered owner’s rights by using your business name (see below).

Unregistered business names: do you have any rights?

Under English common law, a business has the right to prevent a third party from “passing off” its goods and services as those of that business. Taking legal action for passing off enables you to recover losses you have suffered should another party deceive the public into thinking its goods/services derive from or are connected to your business.

Passing off does not give property rights to a business name itself, but misuse of names and logos is often a key element in establishing passing off.

The party claiming passing off must also demonstrate that it has goodwill in relation to its business. This means that having a well-known business name is not in itself sufficient, although business goodwill is often associated with trading names and logos used by that business.

Protecting your business name: so what should you be looking to do?

If you attach a value to your business name, how can you protect that value? Some considerations are as follows:

• A trade mark registration puts you in a strong position to prevent third parties from misusing your name. However, this relies on you having chosen a distinctive name and/or logo which his capable of registration.
• Passing off is often more difficult to prove (and a more expensive action to take) than trade mark infringement. Registering a trade mark is therefore usually preferable to relying on passing off alone.
• Ensuring you have also registered the company and domain names (and any other similar registrations) means they are secured for your use and avoids the need to fight someone else for them down the line.
• Another key step in protecting your name is to keep an eye out for what third parties are doing so that you can enforce your rights if needed.

On a related note, it would be prudent to choose a business name that is not too similar to those of other businesses. This will assist you to ensure your name is distinctive and does not conflict with existing rights of other parties. Steps to take in assessing this may include searches against trade mark registers, and other website and business searches. If you don’t do this, legal action may be taken against you and you may be required to stop using your chosen name (and re-brand stock and marketing materials).

Trade mark licences: what should you be thinking about?

There are a multitude of legal issues to consider when obtaining or granting a licence of trade marks which is a subject for a separate article! However, I wanted to make brief comment on key ownership issues to consider if your chosen business name will be licensed to you from a third party. This may arise, for example, if you are setting up a franchise or want to associate a name with goods/services which are different to the core business of the trade mark owner (such as merchandising).

If you are seeking a licence to use a business name, background checks and licence terms will assist you in ascertaining what you are getting from that licence and securing its value to you. Some questions to consider:

• Are you sure the licensor has the right to grant you a licence? Is it making any promises to this effect in the licence agreement?
• Does the licensor have a registered trade mark? If not, what are you getting for your licence fee? Is the licensor’s business and its name sufficiently well-known that they could sue you for passing off if you didn’t have the licence?
• Is your licence exclusive or non-exclusive? Could similar licences be granted to others resulting in many competitors and dilution of the value of the name to you?
• Is the licensor obliged to maintain its registrations and uphold the reputation associated with the name? If not, there is a greater risk that the value of your licence will deteriorate over time.

Olivia Whitcroft, principal of OBEP, 3 October 2011

This article provides general information on the subject matter and is not intended to be relied upon as legal advice. If you would like to discuss this topic, please contact Olivia Whitcroft using the contact details set out here: Contact Details