Thursday, 3rd October, 2013

Is your shop name registrable as a trade mark?

Once you have selected and cleared your shop name for use, the next step is to register your shop name as a trade mark. In this article, we outline some points you should consider before registering your trade mark.

Trade mark protection

Whether you can stop another party using a company or domain name similar or identical to yours depends on whether the name is registered as a trade mark. The reputation connected with the name will also be considered.

Registered trade mark rights provide the owner with the strongest protection possible.

Registration

A trade mark is a business asset which can be sold or licensed by its owner. Registration of your name as a trade mark grants you the exclusive right to use that name for the goods or services covered by the registration throughout New Zealand.

If you choose to register, it is important to think carefully about the services and products that you offer to ensure the rights you seek are broad enough to cover your current and future interests.

You should also think about your shop's appearance and livery. They may meet the criteria for registration as a trade mark. Subject matter for a registered trade mark is broad and includes:

  • words
  • devices
  • logos
  • names
  • headings
  • tickets
  • slogans
  • jingles
  • signatures
  • numbers
  • colours
  • sounds
  • smells
  • shapes
  • tastes
  • labels.

These may be registered alone or in combination.

With the increasing popularity of franchising, it is vital to protect a successful business name, as it is often the name that is central to the relationship between a franchisor and his or her franchisees.

You can identify your rights by simply inserting ® next to your name. This symbol acts as a way of telling your competitors and others that your name is a registered trade mark.

It costs to register your name, and the other aspects of your livery as a trade mark. That cost is nominal when compared to the cost of renaming your business and the potential legal costs if you adopt someone else's name.

The time factor

Some business owners question the need to register a trade mark because they think the use of a name and its associated marketplace reputation will give them enough protection. This is partially true but there are limits to the rights gained through mere use and reputation. Many do not realise these limits until it is too late.

A reputation in a name is built up by using the name on the goods or services provided.

It can take a large amount of time to prove a reputation in a name. Usually, many years of consistent and extensive use are needed before customers will immediately associate a particular name with the goods or services they seek. But it takes very little time to destroy or damage a good reputation. It may be difficult, if not impossible, to oversee and stop the damage inflicted on your name.

Examples of damage to the reputation of a business occur often but, unless you have a strong reputation, there may be little you can do about it. Of course, if you have a registered trade mark the situation would be different.

Passing off

A further complication is how far your reputation extends. Except for national retailers, most retailers are based in a single geographic location and may have one or two satellite shops. If you only trade in a particular geographic location, any reputation you have gained will likely be restricted to that area.

If you can prove that you have a reputation in your name, then you may be able to take legal action called 'passing off" - where the goods or services of one person are represented as being those of another person. A valid cause of action for 'passing off' is established by proving that:

  • you enjoy a reputation in your name
  • someone has made demonstrable misrepresentation to the public about you or your name
  • you have suffered damage as a result.

But it's not always easy to establish these three elements successfully.

Beware

If you operate your business locally with a strong local reputation, you may be shocked to learn that someone else could legitimately set up business using your name in a different centre, simply because you do not have a presence and are not known in that centre. This is because unregistered rights to a name rely heavily on having a nationwide reputation.

The bottom line is that registering your name as a trade mark provides the best form of protection, especially if you operate in a limited geographical area. Names are no longer a local phenomenon.


An edited version of this article was published in the October 2013 edition of NZ Retail.