Contents
Discovering that another business is already using the name you had your heart set on can be a major headache – especially if you’ve invested time, money, and lots of passion into your new venture. In Australia, choosing a unique business name is a crucial first step to building a strong brand identity. In this article we’ll walk you through the legal considerations you need to be aware of when you want to buy business name rights or negotiate with an existing owner to secure the name that best represents your vision.
Understanding the Legal Landscape: Business Name Registration vs. Trade Mark Protection
Before you decide to buy or negotiate for a business name, it’s important to understand the difference between simply registering a business name and obtaining trade mark protection. In Australia, business name registration is managed by the Australian Securities and Investments Commission (ASIC) and indicates who is using a name for business purposes. However, registering a business name does not give you the exclusive rights you might expect when compared to a registered trade mark.
Business Name Registration
When you register a business name with ASIC, you’re essentially putting your name on the public record. This registration notifies consumers of the business that is operating under this name, but it does not prevent others from registering similar names or even using the same name in different parts of the country.
Trade Mark Registration
On the other hand, registering a trade mark with IP Australia gives you the exclusive legal rights to use that mark in relation to your goods and services. A trade mark registration helps protect your brand identity in the market and can prevent competitors from using a similar name or logo that might confuse customers.
For more insights on protecting your intellectual property, check out our article on trade marks what and why.
Why Someone Else Using Your Business Name Is a Serious Concern
Finding out that another business is already using your preferred business name can be very disruptive. This situation could potentially lead to confusion in the marketplace and, more importantly, legal disputes over intellectual property rights. Often, entrepreneurs discover the issue only after investing in branding and marketing materials. Understanding your rights and the legal implications of someone else occupying your desired name is an essential part of your business planning.
While business name registration may show that the name is active, it is the trade mark registration that often makes the real difference. Even if a business name is available for registration, the existence of a registered trade mark on a similar name can limit your freedom to use or buy business name rights. This is why it’s crucial to do thorough research even before you commit financially to a name.
Checking for Registered Trade Marks
The first step in assessing your situation is to determine whether the other business has actually registered a trade mark for the name. Trade mark registration can be checked online through the IP Australia trade mark search tool. This will give you an idea of who may have exclusive rights to use the mark and whether pursuing the name is likely to involve litigation or disputes.
If you find that the other party does have a registered trade mark, using a similar name without permission could be considered trade mark infringement. In such cases, your only viable options might be to negotiate a settlement or even consider a rebranding strategy entirely.
Options When Your Desired Business Name Is Already in Use
If you discover that another business is using your ideal name, don’t lose hope. There are several legal and strategic options available to you:
- Negotiate with the Existing Business: If the other business is small or in its early stages, you might be able to negotiate a sale or transfer of the name. This process may involve drafting a formal agreement – something that is best handled by a lawyer familiar with business contracts. (Learn more about the importance of clear agreements in our article on what is a contract.)
- Register the Trade Mark Yourself: If you determine that the other business has not registered the name as a trade mark, you may have a chance to apply for the registration yourself. However, be aware that the other party might oppose your application if they can prove prior use of the name.
- Secure the Domain Name: Even outside of trade mark issues, buying the domain name that corresponds with your business name is a critical step in building a credible online presence. This can be done on a first-come, first-served basis, and it is wise to act quickly if you have your heart set on a particular name.
For entrepreneurs weighing these options, it’s important to consider the feasibility of each approach carefully. Our article on how to start a business from home provides additional details on the broader process of setting up a business legally.
The Prior Use Rule in Australia
Australia follows a “prior use” rule when it comes to trade marks. This means that if another business has been using a trade mark (or a very similar mark) for a considerable period before you file your application, they may have strong grounds to oppose your registration. Proving prior use requires clear documentation that shows continuous and consistent use of the mark in connection with the relevant goods or services.
This rule underscores the importance of early and comprehensive research when planning to buy business name rights or secure a name for your new venture. Failure to consider the prior use rule can result in a lengthy and expensive legal battle over trade mark infringement.
How to Strategically Buy a Business Name
If you decide that buying the business name is the right way forward, there are several key steps you should follow:
Prepare a Clear Proposal
Before approaching the current owner, outline what you are willing to offer for the name. A clear proposal that includes financial terms, any conditions, and a timeline for the transfer can help facilitate smooth negotiations.
Engage in Negotiations
Negotiation is often the most effective way to resolve disputes about business names. When negotiating, it is beneficial to have a detailed understanding of your legal rights. Internal resources such as our discussion on setting out good business terms and conditions can provide insight into the clauses you might consider including in your negotiation agreement.
Draft a Formal Agreement
Once you’ve agreed on the terms with the other party, a formal agreement should be prepared. This document should clearly outline the transfer of rights, any payment terms, and any warranties or conditions associated with the purchase. Having a lawyer review the agreement is highly recommended to ensure that all legal bases are covered.
If you’re unsure about the specific clauses needed, our article on what is a contract is a good starting point to understand the elements of a robust legal agreement.
Additional Considerations and Tips for Aspiring Entrepreneurs
When planning to secure your business name, keep in mind a host of other considerations that could impact your overall business strategy:
- Your Business Structure: Whether you operate as a sole trader or register a company can affect your legal rights and obligations regarding intellectual property. For more insight into choosing the right business structure, you can refer to our guidance on operating as a sole trader and whether business structure matters.
- Brand Identity and Future Growth: Your business name is often the cornerstone of your brand identity. Investing in the right legal protections early on can save you significant time and expense as your business grows.
- Domain Name and Online Presence: Securing your domain name is essential for establishing a strong online presence. Even if you resolve issues with the business name, you don’t want to miss out on the digital opportunities offered by having a matching domain.
- Seek Professional Advice: Navigating the legal landscape of business names and trade marks can be complex. Consulting a professional, like Sprintlaw’s experienced legal team, can help you understand your options and take the right steps.
Starting a business is an exciting journey, but the challenges of protecting your brand – including issues like trying to buy business name rights from another party – can be difficult to navigate alone. Being proactive in researching, negotiating, and drafting clear legal agreements is key to minimizing risks and ensuring long-term success.
Tips and Common Pitfalls
Here are some practical tips and common pitfalls to keep in mind as you work through the process of securing your desired business name:
- Always Do Your Homework: Before making any moves, conduct thorough research on both business name registrations through ASIC and trade marks via IP Australia. Overlooking this step can leave you vulnerable to infringement claims.
- Understand the Limits of Business Name Registration: Remember that just because a business name is registered with ASIC, it does not give you a monopoly over that name or similar names. True exclusive rights come from trade mark registration.
- Prepare for Negotiations: If you decide to negotiate with the current owner, having a well-prepared proposal can make all the difference. Research comparable deals and be ready to discuss financial and contractual details.
- Consider Future Expansion: Your ideal business name today might limit your options tomorrow if your business evolves. Consider whether the name will suit future products or services and whether additional legal protections might be needed later on.
- Seek Expert Advice: Legal issues around intellectual property can be complex. Don’t hesitate to get professional advice early in the process to avoid pitfalls that could cost you time and money.
Key Takeaways
- Conduct thorough research with ASIC and IP Australia before proceeding.
- Understand the key differences between business name registration and trade mark protection.
- Consider all legal options – negotiate, register a trade mark, or secure your domain – if another business is using your desired name.
- Be aware of Australia’s prior use rule, which can impact your ability to secure the name.
- Draft clear and comprehensive agreements when negotiating a business name purchase.
- Review your overall business structure and branding strategy to ensure that your choice of name supports future growth.
If you would like a consultation on buying a business name and securing your brand, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.
Meet some of our Intellectual Property Lawyers
Get in touch now!
We'll get back to you within 1 business day.
Book in a free consultation with us to discuss your legal needs.