One of the first things you’ll likely do as a new business owner is decide on your branding, including your business name, logo, and overall brand look and feel. Understanding the rights you have in your branding and knowing when and how you can enforce those rights is crucial.
What is a brand?
A brand is a name, symbol, or other marker that businesses use to distinguish their products from competitors’ and foster a public identity. In the age of the internet and social media, it’s incredibly easy for people to get inspiration from other brands or for their creative decisions to be influenced by existing brands. This ease of access also makes it easier for businesses to check whether other entities are trying to trade off their goodwill and reputation.
Developing your legal literacy about branding will not only help you enforce your rights but also assist you in managing the legal risks of infringing others’ rights. Put simply, understanding the legalities of branding will help you stop others from doing the wrong thing by you and assist you in not doing the wrong thing by others.
The process of branding your business goes beyond just picking a name; it involves understanding various factors that influence your choice of a trading name, including your choice of business structure.
One of the first decisions you will likely make is under what structure to operate your business. You might decide to conduct your business as a sole trader or to register a company. What you choose will depend on the structure that is best for you, based on accounting advice and hopefully some legal advice too. Tax exposure, asset protection, and financial planning should be key considerations when choosing your business structure.
For the purpose of this article, we are proceeding on the basis that you have already given consideration to these factors and identified the best business structure for you.
Registering Your Trading Name
So now, onto your name. Both business names and company names are registered with the Australian Securities and Investments Commission (ASIC). We refer to both business names and company names as “trading names.” You can search the ASIC website to check the availability of your business name. However, what this service does not guarantee is the availability of a trading name for exclusive use. If you are successful in securing the registration of your chosen trading name, the only rights you get in that name is the right to trade using that name. You do not get any property rights in the trading name itself.
For example, if I register the trading name “Annie’s Excellent Adventures” with ASIC, I do not have any rights to stop another adventurer named Erica from registering the name “Annie’s Excellent Adventure Tours.” Both names are very similar and could lead a consumer to believe that they are the same business, or operated by the same business owner. However, just because Annie has registered the trading name with ASIC, Annie does not have any property in that name … Annie does not own that name. Annie only have the right to trade using that name. And the other Annie has the right to trade using her registered name.
The Importance of Trade Marks
Just like the registration of your trading name with ASIC, the registration of a domain name does not establish any ownership rights in the domain name. The registration of a domain name gives you the right to operate a website using that name. So, what would you have to do to acquire property in the name, which might then allow you to stop the other Annie from using her registered trading name? The property I am talking about is intellectual property, and more specifically, trade marks.
The law of trade marks protects a business owner’s brand. A trade mark is a sign used to distinguish your goods or services supplied in the course of trade from the goods or services of another person.
Trade marks can protect a logo, phrase, word, letter, colour, sound, smell, picture, movement, aspect of packaging, or any combination of these. A trade mark allows you to use a name and/or a logo for your goods or services to the exclusion of all others. That means, in theory, no one else can use that name and/or logo, unless they have some kind of commercial agreement with you such as a licensing agreement.
Trade marks may be registered with IP Australia. Registration of your trade mark with IP Australia gives you the exclusive right to use, license, or sell the trade mark, and the right to take legal action against anyone who infringes your trade mark.
Registering a Trade Mark
Successful registration of a trade mark is dependent on a review of the trade mark application and an examination by IP Australia. The purpose of the examination is to determine if there are any issues with your trade mark application. Some common issues include:
- Your trade mark not being distinctive enough. For example, if you lodged an application for the trade mark “cooking class,” it would likely be rejected because it is not distinctive.
- It being too similar to other trade marks registered for the same or similar goods or services.
- You’ve picked the wrong class of goods or services in which to register your trade mark.
If IP Australia identifies issues with your trade mark application, you can work with them to seek to overcome the issues. If you do have to go down this path, it’s best to consult a trade mark lawyer because of the legal nuances involved in seeking to overcome such issues. If you are successful in the registration of your trade mark, you will have trade mark protection for 10 years.
Unregistered Trade Marks and Trade Mark Infringement
Unregistered trade marks may still be recognised and protected, but the process to argue that they should be protected in the same fashion as a registered trade mark is more complicated. You have to be able to establish a history of use, as well as provide other evidence as to the awareness of the trade mark’s reputation and proceeds of the business received from the use of the trade mark. Whether or not a trade mark is registered or unregistered, it is illegal for a person to use another owner’s trade mark as their own. The use of the same, or a similar trade mark, which is owned by someone else, to sell the same goods and services covered by the trade mark, is known as trade mark infringement.
Enforcing your rights in a registered trade mark, or defending an allegation of trade mark infringement, are both very costly processes. This is why doing your due diligence when developing, improving, or changing your branding is of critical importance.
Consumer Law and Branding
When it comes to your business branding, there are also other legal risks that you must consider. Usually, with an allegation of trade mark infringement, there will also be an allegation of misleading or deceptive conduct under the Australian Consumer Law (formerly known as the Trade Practices Act). Whereas the law of trade marks protects the rights of the owner of a trade mark, consumer law protects consumers from illegal business practices, including misleading or deceptive conduct.
The bringing of a misleading and deceptive conduct claim in parallel with a trade mark infringement claim is done to protect the goodwill and reputation being built up in the brand by the business owner. The definition of misleading and deceptive conduct is not black or white. To determine whether conduct is misleading or deceptive, the overall impression a business gives to a consumer when engaging in the conduct is assessed.
Generally speaking, misleading or deceptive conduct will occur when a business entices or leads a person into buying something by creating an overall impression that is false or inaccurate. Let’s use a simple example of a business that manufactures cola flavoured soft drinks. This business sells a canned soft drink called Cola Plus. The can is red in colour, has white stripes, and the words Cola Plus are written in a cursive font. The way in which the business has branded its cola flavoured soft drink may entice a consumer to buy Cola Plus because the impression given through the use of colours, the style of font, the design of the soft drink can, and the word “Cola” creates a false or inaccurate impression that the manufacturer of Cola Plus is Coca-Cola, or associated with Coca-Cola.
The overlap between consumer law and trade marks in this example is the false impression created by using branding substantially similar to the branding and trade mark owned by Coca-Cola. It does not matter if the business does not mean to give a false impression to consumers. The fact that there is an overall false impression is enough. The overall false impression will be determined with reference to the consumers to whom the product or service is being targeted.
Other Avenues of Brand Protection
There are other ways that you can protect your brand from being misused by others, some of which can also be quite complex. In addition to consumer law, the equitable doctrine of passing off provides protection to unregistered trade marks. Passing off involves using false representations to make a consumer believe that goods or services are those of another business, usually a more established business with a reputation in the market.
Some other potential avenues of brand protection include design rights, copyright protection, and seeking to register your brand in overseas markets.
Branding and the Importance of Due Diligence
Due diligence involves doing all the necessary checks to ensure that you are not copying another brand’s intellectual property when developing your business name, logo, and other aspects of your branding. As mentioned earlier, checking the availability of your business name on the ASIC website is only one aspect of due diligence. It would help if you also searched for unregistered trade marks, registered trade marks, domain names, and common law uses of your chosen business name and/or logo.
You should also regularly search online and on social media to see if anyone is using a business name and/or logo similar to yours. This process is not a one-off event but rather an ongoing one. Consumer behavior and market trends are ever-evolving. New brands and businesses are always entering the market. Maintaining vigilance over the market and being proactive about protecting your brand will ensure that you are not caught unaware.
Legal Literacy and Your Business Branding
Legal literacy in branding does not happen overnight. It requires ongoing learning and education, including reading articles, attending webinars, engaging with legal professionals, and staying updated with legislative changes.
In conclusion, mastering the legalities of your business branding is not just about protecting your name and logo. It’s about understanding the broader landscape in which your business operates and the legal rights and responsibilities that come with it. By developing a solid understanding of trade marks, consumer law, and the importance of due diligence, you can ensure that your brand is protected, and you are operating within the confines of the law.
Disclaimer: The information provided by the Legal Literacy Foundation, in all formats, is for educational and information purposes only. It is not intended to be a substitute for professional legal advice, and is solely an educational tool for your own use.
