This post was written prior to our January 2017 merger, under our previous firm name, MacPherson Leslie & Tyerman LLP.
Virtually every modern business understands that they need to protect their brand, but many businesses mistakenly trust a registered corporate name or trade name for protection. That has led to countless cease and desist letters, trademark infringement lawsuits, and rebranding exercises.
WHY ARE NAMES DIFFERENT FROM TRADEMARKS?
- Corporate Name: A corporate name is the legal name of a corporation, acquired through provincial and federal corporate registries. The primary purpose of a corporate name is to identify a corporation on legal documents (e.g. contracts, invoices, etc.). While there are rules in place to prevent confusion around corporate names, you should be wary of using a corporate name as you brand. Doing so may result in a claim of trademark infringement if your corporate name is confusingly similar to an existing trademark. Owning a registered corporate name is not a defence to trademark infringement.
- Trade Name: A trade name is a secondary registered name for a business entity. Trade names are available to virtually any entity, including partnerships, corporations and sole proprietors. As with registered business names, you should be wary of using a trade name as your brand. The fact that your trade name is registered is not a defence if you are sued by someone who already has a registered trademark.
- Trademark: A trademark identifies the source of goods or services. Trademarks benefit both businesses and consumers, enabling businesses to monopolize their brand while allowing consumers to select goods and services from their preferred provider. Once a trademark is registered, the owner may sue anyone who uses the trademark or a confusingly similar trademark in the same field anywhere in Canada. Registered trademarks also carry a range of other brand-protection benefits, which you can read more about in Trademarks 101: Five Reasons to Register Your Trademark.
WHY THE CONFUSION?
The trade name/corporate name registration process often confuses business owners into believing that they “own” their brand and can prevent unauthorized use:
- Trade names/corporate names often overlap with trademarks, partly because businesses use the same name on their branding as they do on more formal legal documents (e.g. the corporation Coca-Cola Ltd. owns the trademark COCA-COLA).
- As anyone who has registered a trade name/corporate name will know, registries may vet names for confusion with existing names and registered trademarks. During this process, the applicant may receive the results of a NUANS search, or similar search, and a notice that their trade name/corporate name has been approved. After seeing this vetting process, it is completely understandable that business owners might believe having a registered trade or business name means they own their brand.
WHAT ARE THE RISKS TO MY BRAND?
If you are using a corporate name/trade name as your “brand” but you have not registered a trademark, you are taking a number of risks, including:
- Someone else owns the trademark. They may demand that you rebrand or, even worse, sue you for trademark infringement to obtain the profits you have made with their trademark and for their legal costs.
- Someone else starts using the same trademark. If you do not have a registered trademark, you will be in a weaker position to stop them, particularly if you only have a regional reputation and they are not in the same region.
- Someone else registers your trademark after you start using it. Whether they are a legitimate business or a squatter, if someone registers your trademark they have put you in a very weak position. At best, you can pursue costly Federal Court proceedings to try to have their trademark cancelled. At worst, you will lose your brand entirely.
HOW DO I MITIGATE THE RISKS?
- Before you brand, make sure a trademarks professional has conducted the appropriate searches. For more on searches, see Trademarks 101: Pre-screening and Searches.
- Register your trademarks. The process takes a minimum of 12 months, so it is best to file as early as possible.