You cannot own a business name!
Before you even commence business you must understand the difference between each of these very different business tools – Business Names, Trade Marks and Company Names.
Anyone considering the sale of their business should also consider these things carefully. If trade marks, domain names, business names and business structures are not all in order, then seek legal advice as early as possible. We have seen business sales fall over because intellectual property including the business name is not registered.
The registration of the name is a process, nothing more, and that process does not guarantee exclusivity. The business owner having registered the business name has no legal right to prevent others from using that name, nor does completing the registration process provide any entitlement to compensation if the name is used by someone else without authority.
So what do you own after registration of your business name? It may surprise you that, you own nothing. The registration process only entitles you to trade, using that name. While the name is registered no one else should be permitted to register that same name in the state of registration. In other states there is no protection against registration by others.
You are not permitted to carry on business unless you have a registered business name in the state in which you trade. Sure, you can carry on business using your own name (without registration) but, if you add anything to your name (in any sign or any business material) then you must register that business name.
There is a proposal to create a National Business Name Register. So look out for this new system, which is planned to commence later this year (2012). If this happens it will simplify the process of Business Name registration in multiple states.
So what might you do if you wanted to have ownership of certain words? The answer is that you would register a trademark!
Although from a practical point of view a business name or company name may have the effect of making it more difficult for others to use the name that you use, only a trademark guarantees exclusivity.
A trade mark is used in conjunction with your goods or services. A trade mark protects your mark Australia wide. Unlike a business name it is not restricted to one state. If you register a trade mark the same words may be used by other business owners as their business name (so registration of a business name remains necessary) however other businesses cannot use the words in connection with goods or services covered by your trade mark. You have legal rights to take action if your registered trademark is used.
In addition to protecting words a trade mark can be used to claim ownership of a symbol or image. A trademark can be a very useful marketing tool and provides the owner with the power to prevent imitators.
A company name is obtained when a company is registered. Again there is no ownership or exclusivity attaching to a company name. The name will be noted at the ASIC and the registration of that name is effective Australia wide. From a practical point of view it may make it harder for others to use the name in connection with a business. A company name will not however prevent registration as a trademark, by someone else, of the business name that you use.
The most significant thing about a company is not its name but instead it is the need to recognize that you are dealing with a separate legal entity. A company has limited liability. Although there are several significant exceptions this means, in a general sense, that a company rather than any individual has liability if something goes wrong. Some people incorrectly refer to businesses as companies. Many business however are not operated by companies. A business may be operated by a sole trader, a partnership, a company or a trust. Each of these different structures have very different implications both for the operators and for anyone who chooses to deal with the structure.
If a company were to operate a business then in most instances it should still register a business name.
The matters referred to above should be considered before business is commenced and then again before any sale of the business.