How Protected Is Your Business Name?

‍How Protected is Your Business Name?

When starting a business, choosing a name is a critical decision, as it becomes the cornerstone of your brand identity. However, the level of protection from other businesses using your business name depends on several factors, including the nature of registration and the type of trademark protection in place. This article outlines the ways in which business names can be protected or left vulnerable under business registration, common law trademark principles, and trademark registration.

Name Protection (or Lack Thereof) by Business Name Registration

Registering a business name is an essential step for most businesses, but it is crucial to understand the limitations of this registration. Business name registration varies in its protective power against usage of the same or similar name by other businesses, depending on the structure and location of the business.

a. Sole Proprietorship, Partnership, or Doing Business As (DBA) Names

• Provincial  Protection: Registering a business as a sole proprietorship, partnership, or under a DBA name prevents other entities within the same province from registering an identical sole proprietorship, partnership, or DBA name.
• Limitations on Protection: This form of registration, however, does not restrict corporations from registering a similar or identical name, meaning that businesses with different legal structures might still adopt your business name.

b. British Columbia Company (Provincial Corporation) Names

• Provincial Corporation Name Protection: In British Columbia, registering a corporate name provides protection against other corporations within the province registering a similar or identical name.
• Scope of Name Protection: While corporate name registration adds a layer of name protection within British Columbia, this protection only applies to corporate entities within British Columbia, and similar or identical names might still be used by corporations in other provinces or by non-corporate entities.

c. Federal Corporation (Canada Business Corporations Act) Names

• Federal Corporation Name Protection: Registering a federal corporate name prevents other federal corporations across all provinces from registering the same or a similar federal corporate name. However, a federal corporate name registration generally won’t prevent the registration of the same or similar business name as a provincial corporation or non-corporate entity.
• Word of Caution: Incorporating a federal corporation generally requires you to extra-provincially register your federal corporation into British Columbia, in order to legally operate that business in British Columbia. Accordingly, federal corporations can generate more paperwork, hassle, legal fees, and accounting fees than their equivalent provincial corporation. Talk to your corporate lawyer about what type of corporation is best for your business.    

Common Law Trademark Protection

Trademark rights in Canada are not limited to registered trademarks. Under common law principles, business names and other types of trademarks can still be protected based on use. This form of protection is automatic, arising from the business’s use of its name or brand in commerce.

a. Trademark Use and Consumer Identification

Trademarks, including business names, serve as identifiers for consumers, helping them distinguish the source of goods and services. The use of a business name in the market, even without registration, can establish common law trademark rights if the name is recognizable to the public.

b. Scope and Limitations of Unregistered Trademarks

• Geographical  and Business Type Restrictions: Common law trademark protection is limited to the specific geographic area and industry type where the     trademark is actively in use. This means that another business in a different region or industry could legally use a similar name without infringing on the unregistered trademark.
• Consumer Confusion: For common law protection to apply, there must be a reasonable likelihood of confusion among consumers between the unregistered trademark and a similar name or brand.

c. Enforcing Unregistered Trademarks: Claims of Passing Off

Enforcing rights over an unregistered trademark typically involves a “passing off” claim. In a passing off claim, the claimant must demonstrate three critical elements:

1. Established Goodwill: The claimant must show that the business has a reputation associated with the trademark, which consumers identify with the business’s goods or services.
2. Misrepresentation: The claimant must prove that the similar mark misled or is likely to mislead the public into believing the goods or services offered by the     allegedly infringing party are actually the goods or services of the claimant.
3. Damages: The claimant must demonstrate that this misrepresentation has, or is likely to, harm the goodwill or reputation of the business.

Trademark Registration

Registering a trademark provides the strongest and most comprehensive protection for a business name. In Canada, trademarks are registered under the Trademarks Act, and once registration is complete, owning a registered trademark generally grants to the business owner exclusive rights over usage of the name or mark in Canada.

a. Federal Registration and Enhanced Protection

• Trademark Exclusivity: Registered trademarks give their owners the exclusive right to use the mark nationwide. Trademark registration can prevent others from registering or using a similar mark in Canada, regardless of their location or industry.
• Legal Enforcement: Registered trademarks afford businesses the legal grounds to pursue claims of trademark infringement, providing a stronger basis for     protecting brand identity than common law rights alone.

b. The Trademark Registration Process

While registering a trademark offers substantial benefits, the process can be complex, time-consuming, and expensive. Legal representation by an intellectual property lawyer is often recommended to navigate this process, as it involves several stages, including conducting searches, submitting applications, and adhering to filing requirements under the Trademarks Act.

c. Proactive Measures Before Choosing a Business Name

Before adopting a business name, it’s prudent for companies to search the federal trademark registry. This can help avoid potential conflicts with existing registered trademarks, thereby reducing the risk of infringement claims after establishing the business.

d. Trademark Dilution of Goodwill Claims

Registered trademarks also protect against "dilution of goodwill", a claim under the Trademarks Act that applies when a similar mark diminishes the value of a well-known brand. For a successful claim of dilution of goodwill, the brand owner must prove that:

1. Mental Association: The similar mark creates a mental association with the registered trademark.
2. Goodwill: The registered trademark has significant goodwill, even if not famous.
3. Effect on Goodwill: The similar mark affects the goodwill of the registered trademark.
4. Depreciation of Value: The use of the similar mark likely diminishes the value of the trademark’s goodwill.

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Conclusion

Understanding the levels of protection for a business name is essential for building a secure brand.

Business name registration provides very little to no protection depending on the business structure and location.

Common law trademark rights are limited to specific business types and local jurisdictions, and are hard to enforce.

Federal trademark registration offers the best name protection but is expensive and challenging to achieve.

As with any complex business decision where the law is involved, consider getting personalized advice from your business lawyer. If you have concerns or questions about protecting your business name, or on anything else in the realm of business law, contact Andrew Reed, lawyer at Johnston Franklin Bishop in British Columbia today: email ar@jfblaw.ca or call 250-756-3823.

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