Three important checks every business owner should make before choosing their trading name

Judith nearly choked on her coffee when she saw the ad in the paper. Judith had never had a problem with competition, but the name and logo of this new business looked remarkably like hers. There were differences of course, but she feared her customers would get confused. Her fears were confirmed when one customer complimented her on "her advertising campaign".Judith nearly choked on her coffee when she saw the ad in the paper. Judith had never had a problem with competition, but the name and logo of this new business looked remarkably like hers. There were differences of course, but she feared her customers would get confused. Her fears were confirmed when one customer complimented her on "her advertising campaign".

 

Why it was no compliment to Judith

After 3 years of trading the business was financially starting to get some traction in the marketplace. Her customer base had grown exponentially in the last year compared to the previous 2 years and Judith could now see the light at the end of the tunnel.

The risk now was that existing customers may mistakenly telephone this new company, looking for her. The unique identity of her brand had been tarnished. That immediately devalued her business.

Her business lost value overnight

When you sell a business a significant part of its assets is its goodwill. Goodwill represents the relationship your business has with its customers. You can't see goodwill like you can see office furniture, but it does have a value. Your brand and identity is the physical representation of that goodwill. That's why businesses go to the expense of trademarking their brand name and logo.

A trademark application gives you exclusive use to that name and design and makes it much easier for you to stop another business using a name or logo which is similar.

 

Judith didn't have trademark protection

Unfortunately, Judith didn't have trademark protection for her name or logo. That meant she couldn't rely on the trademark infringement procedures to stop the other company in their tracks. Instead, her only remedy was to bring court proceedings for "passing off", which is a claim you can make in the regular courts. However, she was advised that this would be a long and costly process. She didn't have the funds to commit to protracted and expensive litigation.

 

She couldn't file a trademark application either

Faced with the prospect of expensive litigation, Judith investigated filing her trademark application. That was when the news got worse. Her rival company had already filed their application and had it accepted. Challenging that registration now would involve further expense with no guarantee of success. She had very few options left.

 

Judith only had one real option

The only option left to Judith was to re-brand her business. That would entail:

 

1. Design of a new logo and mark.

2. Registration of a new domain name.

3. Throwing away all existing pre-printed marketing material.

4. Getting new business cards, stationery and promotional literature.

The cost wasn't cheap, but was less expensive than litigation. It was almost like starting out all over again, except this time Judith was going to do it properly.

 

The three steps to take when choosing your trading name

The first thing most businesses do when they choose their trading name is to search the Companies Register to see whether the name they want is available. However that is probably the least important thing to do, since your company name is irrelevant. It is your trading name that matters as far as goodwill is concerned and that can be completely different to your company name.

 

The second thing most businesses do is check the availability of the domain name they want. This is important since an increasing amount of business is either being transacted online or being driven by an online presence. If you don't have a memorable domain name, you could be missing out on valuable business.

The third step (and one which a lot of businesses forget) is to check the IPONZ Trademark Register. This can be done by going to www.iponz.govt.nz. If there is a similar name already registered in the same class that you want, then think again about your name. If you are considering trading abroad you may also want to check the trademark registries of the other countries in which you envisage you will have a trading presence in the future.

 

Judith wasn't going to make the same mistake twice

Judith neglected to search the IPONZ Register the first time around. This time she wasn't going to make the same mistake. From her list of 4 possible names she found 1 that checked out under each of the 3 criteria.

 


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