Especially in difficult economic times, it is important to know not only what one does or does not need but also how to get the most out of what one already has. This is also true of intellectual property (IP). Yet, one important IP asset that companies already have often goes overlooked in devising an IP strategy: the trade-name.
The trade-name, as defined in the Canadian Trademarks Act, is “the name under which any business is carried on, whether or not it is?the name of a corporation, a partnership or an individual.” A distinction is to be made between a trade-name that is the name a company uses to identify itself to the public and a corporate name that is named in its articles of incorporation. As indicated by the definition of trade-name, a company’s trade-name and corporate name may be the same or similar, or a company may carry on business under a different name, as demonstrated by the following examples:
- Acme Manufacturing Company (corporate name) identifying itself as Acme Manufacturing Company (trade-name)
- Acme Manufacturing Company (corporate name) doing business as?Acme (trade-name)
- 984472 Ontario Limited (corporate name) doing business as Dave’s Equipment Rentals (trade-name)
Trade-names and corporate names must likewise be distinguished from trademarks, which often overshadow them. Whereas corporate names and trade-names serve to identify a corporate entity or business, trademarks serve a different, albeit related function: to distinguish the wares and services of a business from those of another.
To capitalise on the value of the trade-name of a business, it is important to understand the difference between these concepts, which in turn allows a company to take full advantage of the different rights and recourses they provide.
Registration of a corporate or trade-name. When incorporating a company in Canada, it is mandatory to identify its corporate name in its articles of incorporation pursuant to the federal or provincial legislation under which incorporation is being sought. Moreover, if a company is carrying on business under a trade-name other than its full corporate name, that name must be registered under the applicable provincial legislation. Referring to the examples above, this applies if Acme Manufacturing Company is carrying on business simply as “Acme” or if 984472 Ontario Limited is carrying on business simply as “Dave’s Equipment Rentals.”
It is important to note that registering any trade-name under which it is doing business serves to protect the public, not to protect the name. As such, this mechanism alone affords a very limited scope of protection. For example, it does not operate:
- to prevent a third party from using the same or a confusingly similar trade-name, whether such use commenced before or after the registration;
- as a defence to the infringement of a third party’s rights. In other words, if a trade-name is similar to that of a third party, the simple fact that a trade-name has been registered will not constitute a defence to an action brought by that third party.
That is not to say, however, that legislation pertaining to corporate or trade-names cannot play a role in an effective strategy to protect a company’s rights in its trade-name. Indeed, although the specific requirements vary between jurisdictions, such legislation generally provides a framework that allows:
- to search the corporate names or trade-names already registered that can help in selecting a more distinctive corporate name or trade-name and avoiding the possibility of running afoul of third parties’ rights;
- a mechanism to challenge corporate names or trade-names that are considered misleading, confusing or not?distinctive by reason of the use of another trade-name or even a trademark that may be relatively fast and inexpensive.
Such legislation can therefore provide interesting alternatives to the classic remedies offered pursuant to the Trademarks Act and should not simply be overlooked when devising a strategy to maximise the value of a trade-name.
Use of a trade-name. Because of their identification function, trade-names also have?an important role to play within the framework of the Trademarks Act. Of course, the use and promotion of a trade-name can serve to accumulate goodwill, but trade-names can also be used to actively protect that goodwill.
Use of trade-names, if properly evidenced, can notably present the following strategic advantages:
- acting as a bar to the subsequent registration by a third party of a trademark that is confusingly similar with a trade-name. For example, the ACME Manufacturing Company, in operation since 1950 and famous for its sale of widgets, may be in a position to stop its most recent competitor, ABC Co., from registering the trademark ACME in relation to widgets;
- serving as the basis for passing-off actions, which are legal actions that seek to prohibit one trader from misidentifying his/her products as those of a competitor or trying to usurp that competitor’s goodwill by using a confusingly similar trade-name or unregistered trademark.
As well as the above strategies that use trade-names directly, trade-names can also be used in conjunction with other IP rights to maximise the value of a company’s overall portfolio.
One such strategy is combining the use of both a trade-name and a trademark corresponding to the trade-name. For example, coming back to the ACME Manufacturing Company, assuming that no third party has acquired any rights in the trade-name or trademark “ACME,” it could?not only use the trade-name ACME Manufacturing Company and prevent others from using the ACME trademark but could also itself use the ACME trademark to identify its widgets. Using a trade-name and trademark together in this way can:
- add to the distinctiveness of both a company’s trade-name and trademark and have them work together to grow the goodwill both in the business and its products; and
- allow a company to potentially obtain a trademark registration for the trademark corresponding to the trade-name, which in turn offers a wider scope of protection, including additional grounds of opposition and actions for trademark infringement and depreciation of goodwill, which a company can use to stop third parties from using confusing trademarks as well as trade-names.
If a company already has a trade-name and corresponding trademark, consider the following tips to maximize the benefits of this combination:
- if the trademark corresponding to the trade-name has been registered, ensure that the trademark is used as registered; and
- ensure that the trademark (i.e. ACME) and not the trade-name (i.e. ACME Manufacturing Company) is used on the company’s widgets to identify their source. This in turn ensures that both the trade-name and the trademark are used for their intended purpose: the former to identify the business and the latter to identify its products or services. Indeed, clear and consistent use of trade-names and trademarks can help ensure that a company can benefit from all the various grounds of opposition and recourse either offers and, importantly, can also help protect a company’s trademark (or registration as the case may be) against various attacks on the ground of improper use.
These tips will help diversify the recourses available and avoid the potential pitfall of losing rights (and therefore investment and goodwill) in the trademark from indiscriminate and interchangeable use of the trade-name as a trademark. This will help to ensure that your trade-name and trademark are working together to grow your rights and not against each other to detract from them.
Émilie Dubreuil, Montreal
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