It is a common misconception that registration of a company name also provides trade mark protection.

In fact the registration of a company name only precludes a third party from registering the identical company name, it does not stop a third party from registering all or part of your company name as their trade mark, and it certainly does not prevent them using all or part of your company name in their branding.

Likewise, just because you are able to register a limited company name does not mean that you automatically have the right to trade using that name.

Companies House cannot warn you that you may be using a limited company name which is a breach of a third party trade mark, only that your chosen name is not distinctive from one already on their system.

Similarly, when buying website URLs it may be perfectly possible to buy a URL which contains the registered trade mark belonging to a third party, but if you attempted to trade using that URL you could be deemed to be breaching registered trade mark rights and forced to cease and even offer up a proportion of any revenues.

Only the owner of a valid trade mark registration has exclusive rights in the relevant country/territory to use that mark in relation to the products and/or services for which it is registered.

Registered trade marks last for an initial ten-year period and can be renewed indefinitely for additional ten-year periods subject to paying renewal fees.

There is no such thing as a global trade mark, but it is possible to apply for registration of a European Community trade mark which covers all EU member states.

Outside Europe, trade marks can be registered in all major trading countries although registration costs vary.

Naming your brand as a small business: The legal ramifications

Matt Sammon, partner at intellectual property firm Marks & Clerk, discusses the perils of not protecting your business name at the earliest opportunity.

There are many considerations when starting a new business including choice of corporate vehicle, regulatory requirements, insurance – the list goes on. One important consideration that often gets overlooked is the intellectual property (IP) of the company.

To be sure you can trade and maximise business opportunities, it is important to take care of the IP as soon as possible. This includes ensuring you are free to use your chosen company and product names, protecting those names and securing ownership of copyright in logos and marketing materials created on your behalf by outside agencies.

There have been some recent examples from the food industry that have highlighted some of the risks of not dealing with IP issues before problems arise.

Name wars

A few years ago, Bea’s of Bloomsbury, a small chain of London cafés, hit on the idea of crossing a doughnut with a muffin, the subsequent creation proved quite popular and Bea’s named it the Duffin.

More recently Starbucks decided to sell a similar hybrid product and also came up with the name Duffin. Being a large corporate entity, Starbucks no doubt has a comprehensive IP policy in place and further investigation reveals that its supplier, Rich Products Ltd, has applied to register the trade mark Duffin throughout the European Union.

Where does this leave Bea’s of Bloomsbury? Its earlier use of the Duffin name gives it a possible defence if Rich Products claims it is infringing its trademarks, and, if it has acquired ‘goodwill’ in the Duffin name, then it could possibly challenge Rich Products’ registration of the trade mark. However, had Bea’s registered the trade mark when it first came up with the idea, it is likely that there would be no question of its ability to continue using the name, it would not have found a competing product on the market under the same name and it would have had the exclusive rights to exploit the name.

Registering a trade mark gives a number of advantages to new businesses. One such advantage is the ability to licence the trade mark to drive expansion. This can serve to reduce capital outlay for new businesses by bringing in manufacturing and distribution partners bearing the set-up cost and using the trade mark under licence with royalties payable to the trade mark owner.

Challenging the use of a name

Another recent example from the same sector is a dispute of the trade mark PHO. The trade mark was registered by a company Pho Holdings Limited, owner of a chain of Vietnamese cafes.

Pho Holdings attempted to challenge the use of the name MO PHO by a small Vietnamese restaurant based on its registration. In this case, Pho Holdings decided to back down following nationwide media coverage and given that the name PHO is a descriptive term for one of the national dishes of Vietnam. However, it serves to highlight the dangers of choosing a name for a business without conducting the necessary checks to ensure that the name can be used without infringing a third party’s rights.

Owning a registered trade mark entitles the user to prevent use of a confusingly similar name via a court-issued injunction; the owner may also be able to claim damages and legal costs. The risk of infringing a registered trade mark needs to be taken seriously to ensure that new businesses do not later have to undergo expensive name changes that can also erode the goodwill acquired by the business.

New businesses need to:

1. Have a search conducted to ensure that their chosen name is free to use without risk.

2. Register the trade mark.

The need to protect the name relates not only to the name of the business, but also to product names such as the Duffin.

These can be simple inexpensive steps that will ensure business continuity, avoid potential disputes further down the line and maximise the ability to exploit the goodwill and reputation a business builds up over time.