The Legal Side of Branding
Not tending to the legal side of branding has produced unnecessary setbacks for too many businesses. Trademark infringements are filed on a daily basis, and the high-profile ones which make it into the news represent just the tip of a very large iceberg. Here are a few ways you can protect yourself.
Understand the Differences
Business owners often confuse the three, but the terms 'business name', 'company name', and 'trademark' refer to three different things.
The business name is the name under which you trade. If you do business using a name which isn't your own name, then you're required to register it with Australia's Securities and Investment Commission, or ASIC.
The company name need not necessarily be the same as the business name. You can register a company name, and operate using a registered business name. While there are many different kinds of company structures, the most common one for company name registration is the Proprietary Limited, commonly abbreviated Pty Ltd.
Finally, trademarks are ways to identify unique products or services. You can and probably should trademark your company name and business name but you should also trademark the name of your products and services and any other brand names. Similarly, your tagline, logo, and number should also be protected as part of registering a trademark.
Which kind of registration should I use?
The fact is that many people confuse the one kind of registration with the other. This is a mistake, since it can lead you to believe you have protection when you don't.
Registering a trademark will legally protect your business or product name against other businesses that might want to use it. Company and business name registration gives you the exclusive right to use a name, but doesn't give you an exclusive license on doing a certain kind of business.
Trademarking your business name gives you formal protection against others copying your name and logo. When you file for trademark registration, you are granted the exclusive right to use it across Australia and you get this protection for an initial 10 year period. Registering a trademark is a powerful tool; it can even protect you against cybersquatting, since domain owners must have valid entitlements to their domain.
Registering a Proprietary Limited company, on the other hand, is what forms your company. This process creates the legal entity, limits company shareholders' liability to the company's assets, and gives you the privilege of paying taxes at the company rate. If you only filed for a trademark or business name registration but not a company name registration, your personal assets would still be at risk.
Registration of a business name does not give you any formal legal protection, it only gives you the right to use that name. Business name registration alone doesn't convey any exclusive rights to trade under the name, nor will it give you any asset protection. Especially if someone is conducting a different kind of business activity, you can't stop them from using the same business name for their business. In order to gain exclusivity, you must register a trademark.
When is it worth applying for each kind of registration?
Especially in the early stages of a business, when cash flow is crucial, the last thing you want is to file unnecessary registrations that cost unnecessary money.
The cheapest option is therefore just to file for a business name registration. This will cost you $34 for a single year or $78 for a period of 3 years. However, if someone else files for a trademark before you end up trademarking the name, you could have an expensive fight, and you might lose the right to use the name entirely.
Trademark registration is therefore also worth considering early on in your business. Only trademark registration really protects your brand and business activities. The application fee for a trademark is $120 per class, followed by a $300 registration fee once your trademark is approved and that registration is good for 10 years.
Finally, registering a company name will not give you exclusive rights, but it will protect your personal assets. This is the most costly option of the three (you have ongoing obligations, and must lodge tax statements and have audited accounts) but it provides the best protection for your personal assets. The general cost to incorporate a company is about $660.
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Alex Pejak is an economist currently working on a few projects in Australia. She is interested in topics related to market research and project management.