Business Names and Trade Marks – a problem for brand owners caused by poor law-making

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A key part of my role as an intellectual property specialist is to advise small business on the availability of their name. For many service providing businesses, their trade mark (or ‘brand’) is synonymous with their ‘business name’.

When giving advice on the availability of a name, we check whether another person has ‘trade mark’ rights in that particular name (or something confusingly similar). These checks are done to ensure that our clients cannot be sued for intellectual property infringement.

However, we must also advise on whether use of a particular name would be contrary to any other legislation. This includes the Business Names Registration Act 2011.

Recently, the Commonwealth Government released the Business Names Registration (Availability of Names) Determination 2015.

This determination effectively makes it easier for ASIC to determine that a proposed business name is similar to another business name, and therefore unregistrable. This determination has exacerbated a flaw with the Business Names Registration Act 2011 that has been present since its introduction.

The trade mark system, for over 100 years, has tolerated identical names being used as trade marks, provided that the goods or services offered by the respective businesses are sufficiently different.

The issue with the Business Names Registration Act 2011, which is now exacerbated by the determination, is that it makes no distinction between traders providing completely different goods or services.

For example, under the Trade Marks Act 1995, two entirely different businesses could both register and use the trade mark “AlphaOne”, in the case where the first business was a mortgage broker and the later business was a courier company. The reason that such co-existence is permitted is that there is very little possibility of confusion.

However, under the Business Names Registration Act 2011, only one of these businesses would be permitted to register the business name “AlphaOne”, or something that is ‘nearly identical’. This means that the second business which cannot register the business name is at risk of breaching the Business Names Registration Act 2011, given that it is an offence to be ‘carrying on a business’ under an unregistered name.

Explaining to a client the distinction between what is permitted under the Trade Marks Act 1995, and the Business Names Registration Act 2011, is not easy. Further, there is no guidance by the courts on what exactly constitutes ‘carrying on a business’ under a particular name, and whether this includes using a trade mark in the provision of services.

It appears that Government policy with respect to the Business Names Registration Act 2011 is designed to prevent confusion. However, this objective is already achieved by trade mark law, and consumer protection law.

The purpose of a business name is simply to identify a business. A business name bestows no intellectual property rights, and it should therefore not prevent the legitimate adoption of similar names by traders in completely different fields. Provided that businesses abide by the legal requirements to properly display their business name at their premises and on relevant business correspondence, there is no strong public policy reason to increase the difficulty of registering a business name.

Significant time and money is devoted toward developing a brand name and building goodwill. A business should not be precluded from using a name due to a legal technicality, i.e. that their brand name does not also qualify for registration as a business name. The current regime will most certainly increase compliance costs for business, for little gain. This is seemingly contrary to the Government’s commitment to decreasing red tape.

The Business Names Registration Act and recent determination must be reviewed, to ensure that the legitimate rights of trade mark holders are not adversely affected. This may require the legislation to be amended, either by relaxing the laws on registration of similar business names, or clarifying the interplay between rights given under the Trade Marks Act 1995, and obligations under the Business Names Registration Act 2011.

This is an issue that requires immediate review, and which cannot wait for judicial attention.

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