BUSINESS NAMES AND TRADE-MARKS
How are rights to a name or mark acquired?
Rights to prevent others from using your trade-mark or business name are acquired in two ways:
(1) by establishing a reputation in that name, and thus building up goodwill value in the name, or
(2) by obtaining a trade-mark registration under the federal Trade-marks Act.
What is the extent of rights acquired by use?
In the absence of a trade-mark registration, you can prevent someone from using a confusingly similar name for a similar product or business, but only within the specific geographical area in which you can show that you have established a substantial reputation associated with the trade-mark. You must also establish that the infringer is unfairly trading on the reputation you have developed, is passing off his product or service as yours or otherwise acting in such a way as to confuse consumers.
What advantages are obtained by registration?
A Canadian federal trade-mark registration gives the owner the exclusive rights to the use of the mark across Canada. Trade-mark registrations are granted for 15 years and may be renewed every 15 years thereafter as long as the mark is in use. To enforce rights against an infringer, you need only show that there would be a likelihood of confusion if you and the infringer were selling in the same geographical area, regardless of whether or not you actually are in the same area.
Does a business name registration provide adequate protection?
The registration of a business name with the provincial authorities or incorporation does not mean that you acquire the automatic right to use that name. You could be prevented from using that name by someone who had previously registered it as a trade-mark, or by someone who had previously established a reputation in your area using that name or a very similar one. Neither does a business name registration or incorporation provide you with an automatic right to prevent others from using the name as a trade-mark (though others will generally be prevented from registering the name in the province as a company name). In section 6 of the Ontario Business Names Act, additional rights are provided for both damages and injunctive relief if a person suffers damages by reason of the registration of a name that is the same as or deceptively similar to another person's registered name. Damages however are limited to the greater of $500 and the actual amount of damage incurred.
What can be registered as a trade-mark?
To be registered as a trade-mark, the following requirements must be met:
(a) a trade-mark is a word, phrase or logo (or colour, sound, scent or character, or shaping of goods or their containers, or mode of wrapping or packaging goods) used to distinguish goods or services sold or provided by the trade-mark owner from goods or services sold or provided by others;
(b) a trade-mark cannot be primarily a name or surname of a living individual or person who has died in the preceding 30 years;
(c) a trade-mark cannot be clearly descriptive or deceptively misdescriptive of a character or quality of the goods or services, although it can be suggestive;
(d) a trade-mark cannot be the name of the goods or services, or the place of manufacture;
(e) a trade-mark cannot be confusing with another mark previously used, made known or registered in Canada; and
(f) a trade-mark cannot be a prohibited mark under the Trade-marks Act.
What is the first step?
It is advisable to conduct thorough searches before adopting a new trade-mark or business name. Many new businesses have been embarrassed by having to changes their names shortly after starting business. Searches vary in scope as follows:
A preliminary registrability search restricted to previously registered trade-marks and pending applications in the Canadian Trade-marks Office, depending on complexity, can usually be prepared on a next day basis if necessary. However the search does not include a search of corporate or business names or trade-marks that have been used but not registered. It therefore does not uncover common law rights that may be infringed by the adoption and use of a similar name.
The search can be extended to include a NUANS search of Canadian business names. The search results are generally available in 3 or 4 days.
If common law references such as telephone listings, trade indexes, domain names etc. are searched in addition to the Trade-marks Office records and corporate and business names, this more comprehensive level of searching will have results available in a week.
US trade-mark searches are considerably more detailed as not only is there a Federal trade-mark system but each State has its own state registration system. A search can take a week or more.
Are there any special requirements to protect my trade-mark?
Proper use of trade-marks is important. They should never be used in such a fashion as to become generic (i.e. so that they come to be the name of the product). Once this happens, any competitor becomes entitled to use the word, and its trade-mark status is lost. To avoid a mark becoming generic, tie the trade-mark to a descriptive term – such as in “BRAND X widgets”.
It is important to give notice that you are using the mark as a trade-mark by making it stand out from surrounding text by using upper case letters, bold etc. Use the designation ™ in the case of an unregistered trade-mark, or ® in the case of a registered trade-mark (in the US), to show that the word or logo is a trade-mark.
If the trade-mark is licensed to another company who makes and sells the goods or services, make sure the mark (on the goods or services) is identified (at the time of sale or purchase) as a trade-mark of the owner and it is used under license. Legal advice should be obtained in any licensing situation as improper usage can destroy the trade-mark rights. A proper trade-mark licensing agreement should be in effect.
Most trade-mark registrations are subject to the rule of “use-it-or-possibly-lose-it”, meaning that if you abandon or cease using a trade-mark in the normal course of your business for any significant length of time (more than 3 years is a common standard) the registration could be challenged or cancelled, either in whole or in part, by any interested member of the public for lack of use.