As a budding entrepreneur, you’re excited about your business idea. You may be spending a lot of time thinking about how to grow and develop your brand and reputation, and who you will work with to help you get there. One key consideration for many business owners is name recognition. Extra attention should be devoted to determining an appropriate business name and/or trade name to market your business. Your business or trade name is not just what your business will be known as – it is a critical and valuable component of your goodwill and becomes your intellectual property. Therefore, it is important to consider how to protect it. The corollary to this is that it is equally important to not infringe on existing naming rights, as other business owners will seek to protect their own business and trade names.
First, Do Your Research
Your name may sound clever to you, but it is important not to begin using a business or trade name that is already in use by someone else. Use of another’s name may be an infringement of their intellectual property rights. By choosing a business or trade name that is already in use, you risk being forced to subsequently change your business or trade name and therefore risk losing any goodwill your business may develop while using such name. You also risk a damage claim against you for such infringement.
The easiest way to determine if anyone else is using your proposed name is by searching for similar names and for similar businesses on the internet and on social media. This may be enough to at least tell you what names are currently being used and where those businesses are located.
If your initial searches suggests that no one is currently using your proposed name in Ontario or perhaps even in Canada, it is then appropriate to ask a business lawyer to help you conduct a more in-depth search of the Canadian corporate/business names and trademarks database (a NUANS report) or Canada’s business registries to make sure that your proposed business name is available to you. If your proposed name is available, a business lawyer can also help you to protect it (read more below). Remember, a clever name with no legal protection means that it can be used by others!
Business Name vs. Numbered Name vs. Trademark
If you are a sole proprietor or partnership, you may carry on business or identify yourself under your own personal name.
If you incorporate your business, you may do so under a corporate name of your choice when you incorporate (i.e., Swan Legal Inc.), or under a numbered company name (i.e., 1234567 Ontario Inc.). If you choose a numbered name, a numbered name will be assigned to your corporation during the incorporation process. People will choose to use a numbered company if they have not selected a specific business name at the time of incorporation or if they don’t require one for their purposes.
Can a sole proprietor or partners use a trade name other than their personal names? Can a corporation use a trade name other than its corporate name? The answer is yes, but only if such trade name is registered first. A corporation cannot carry on business or identify itself to the public under a name other than its own corporate name and/or a trade name that it has registered. Your trade name (or operating name) is often how you brand your products or services. If, for marketing purposes, you plan on using a name (i.e., “Swan’s Litigators”) other than your personal name (i.e., Lily Swan), or other than your corporate legal name (i.e., Swan Legal Inc.), as is applicable, you can apply to register your trade name as a business name owned by you or by your corporation. You can also apply to register such trade name as a trademark; however, a trade name can only be registered under the Trademarks Act if it is also used as a trademark (that is, if it is used to identify goods or services – i.e., certain well-known cola company or shoe company trademarks).
Registering a Business Name
If you have selected a specific name to be associated with your business or corporation, you will want to register that name. This is done either when you first start your business, or it can be done afterwards through an amendment.
Before registering the business name, you or your lawyer will search to see if that name is already in use. Generally, your lawyer will submit a NUANS name search to advise on whether your name has been registered already or if it is confusingly similar to another name in the same or a related industry. Next, your lawyer will advise on whether your name complies with all requirements under the Business Names Act. The Business Names Act sets out many restrictions that must be complied with to effect successful registration. For example, your name cannot be scandalous, obscene, or immoral.
It is very important to register your business name as soon as possible. A person who fails to register their business name when required, will be incapable of maintaining a proceeding in a court in Ontario in connection with that business except with leave of the court. However, it is important to note as well that registering a business name is not the same as registering a trade name, described further below.
Registering a Trademark or Trade Name
Registering your trade name or a trademark is also crucial to protecting the goodwill associated with your business. Registration of a trademark is proof of ownership and others will be unable to register a trade name or mark that is identical to yours. This is not the case with business registration, where it is up to the individual to search their name, ensure it is not infringing, and to monitor and protect their name. Registering a trademark or trade name will also enable you to license the trademark or trade name out to third parties, and you can keep track of anyone trying to infringe upon your trademark, since registration gives you an exclusive license across Canada for 10 years and can be renewed indefinitely.
Although it is strongly advisable (and probably a good investment in your business), you do not need to register your trademark. By using and operating under a trade name or using a trademark for a certain length of time, you accrue rights under the common-law. However, if your trade name or trademark is confusingly similar to another it may result in expensive and protracted litigation. By registering your trade name or trademark, you can skip this step and go straight to enforcement.
Seek the Right Support
As you start your business, having the right lawyers on your team will help you grow by ensuring that you have a solid foundation in place. Aside from assisting with trade mark/business name searches, business registration, and incorporation documents, we regularly assist small businesses with all sorts of issues that arise in the early days. Whether you need a contract drafted, a commercial lease agreement reviewed, or help when you’re ready to hire your first employee – we’ve got you covered.
We are business lawyers proudly assisting businesses of all sizes throughout the Cambridge, Kitchener, and Waterloo region. Contact us today to set up a consultation.