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Protecting your business name

If, like many business owners, you’ve put a lot of thought and effort into your business name it makes sense to try and protect it from being copied, whether inadvertently (by someone who had never heard of you) or deliberately, by another, especially if you’ve linked this to a great domain name.

Unfortunately, it’s not easy to protect your business name in New Zealand as unlike elsewhere in the world, there is no register of Business Names. Yes they have introduced Business Numbers in New Zealand, but that won’t help. Here are the options:

Form a limited company with your business name. This is OK up to a point (even if you still trade as a Sole Trader or Partnership because you can just keep the company dormant) but the law is weak in this area and there’s absolutely nothing to stop other companies being formed with very similar names. For example, if you are called “Make Lots of Money Limited” it’s OK for another to form a company called “Make Lots of Money 2013 Limited” – how annoying is that?

Effectiveness factor: 6 out of 10. Cost: $100-$200

Multiple limited companies. A client in the UK tried to stop this by forming every conceivable combination of name similar to his such that he ended up with 25 companies! Worth a go maybe if you don’t mind paying a lot of $45 Annual Return filing fees to Companies Office but still not foolproof!

Effectiveness factor: 8 out of 10. Cost: thousands of dollars!

Rely on “Passing Off” law. Google this for more information but essentially subject to certain factors applying you can use the law to try and stop competitors from using your business name or unregistered trade mark. It was quite common in the UK for lawyers letters to be issued threatening this and that and mostly the threat of your own lawyer’s fees to defend your name was sufficient. This can be effective but also expensive with no guarantee of success.

Effectiveness factor: 5 out of 10. Cost: could be very expensive in legal fees!

Unregistered Trade Marks. Use “TM” with your business name, especially if you’re going to register your name one day, as this will help protect you in a Passing Off situation. Include this on your letterhead and publicity material “ABC is a trade mark of XYZ Limited”. Will they even notice the absence of the word “registered”?

Effectiveness factor: 6 out of 10. Cost: nil but needs to be done in conjunction with Passing Off

Registered Trade Marks.  Now you might think this is going to save the day but not necessarily, because annoyingly, the New Zealand Intellectual Property Office won’t register a business name alone as it’s “not distinctive enough” – how silly is that? To register your business name then you have to add some other element to make it distinctive, like a logo, an image, a sound or a smell or make the writing heavily “stylised”. That’s all very well but isn’t there a risk that a competitor uses your business name with a different logo or sound etc? Maybe but just having a registered trade mark will act as a significant deterrent. Include this on your letterhead and publicity material “ABC is a registered trade mark of XYZ Limited”.

Effectiveness factor: 8 out of 10. Cost: $150 per industry class

The best protection? Make sure you have a limited company name and a registered trade mark, the cost of both is very low.

It’s very important to protect your business name and it’s not just because you could be losing business. Like a local client of mine, you could end up with your reputation badly tarnished (as customers confuse your business with theirs) AND a poor credit record, as bills for your competitor remain unpaid but are wrongly linked to your business.