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Intellectual Property and IT update: The new National Business Names regime — Pros and cons

May 31, 2012

On 28 May 2012, the National Business Names registration regime came into force, ushering in a new era of administrative convenience and cost effectiveness for those wishing to register business names Australia wide. While the new system has a number of advantages, businesses should also be aware of new threats and risks posed by the system.

Why do we have a business name registration scheme?

The purpose of business name registration remains unchanged. Registration is required to provide a means for members of the public to identify the individuals or entities behind a trading business.

What are the benefits of the new system?

Until now, a business was legally required to register its business name in each State or Territory where the business was carried on. The new system allows proprietors to register such names with a single registration with national effect.

The new Register, now maintained by ASIC, merges millions of business name records previously held by various State and Territory agencies across Australia. Current State and Territory-based registrations are automatically converted to national names and business names that come up for renewal may be renewed once with national effect.

The new system is designed to be cheaper and more administratively convenient for business owners. Application and renewal costs have been significantly reduced. Registration nationally can now be obtained for as little as $30 (for a one year registration) or $70 (for a three year registration). Equivalent coverage could previously have cost up to $1000.

A streamlined system means that upon applying for a new business name an applicant will receive an automated response as to whether their chosen business name can be registered or whether there are problems with the chosen name, for example due to a conflict with an earlier registered name. The system employs a ‘green light’, ‘red light’ and ‘amber light’ automatic response to a new registration query. ASIC has indicated that it is anticipating some questionable outcomes from the automated system and there will be scope for challenging refusals. There are bound to be ‘grey areas’ as to whether one name is too similar to another in the absence of any established rules.

New eligibility requirements

Under the new regime, having an Australian Business Number (ABN) is a pre-requisite to registration of a new business name. An existing business name will only be able to be renewed if the owner has a current ABN.

Beware! Business Names Registration confers no intellectual property rights!

Business owners are often lulled into a false sense of security upon registering their business names. Registering a business name is a legal requirement for a business trading under a name other than its corporate name or the name of its individual proprietors, but it is critical to note that business name registration does not confer any intellectual property rights on the owner to the registered business name.

Registration of a business name does not entitle the owner to bring an action against a third party using the same or a similar name. In order to bring such action, the owner of a business name will generally need an Australian registered trade mark in respect of the name to successfully assert their rights to that name.

Further, registration of a business name does not of itself guarantee that the trader can legally trade under the name in question. If the use of the business name conflicts with the rights that another trader has under a Registered Trade Mark, then the later user’s business name may need to be abandoned and there may be liability for infringement. Registration of the business name does not give a defence to a trade mark infringement claim. Therefore, it is important to ensure that appropriate trade mark and other searches are conducted by qualified professionals before settling on any new business name.

As business names applicants can now cheaply and effortlessly obtain national business name coverage, trade mark registration may now be more important than ever.

New business name applicants are also advised to check their proposed names against a modified version of the Trade Marks Register at the time of applying for a business name. Having a registered trade mark can act as a good deterrent against a would-be adopter of a similar business name.

Business owners may also wish to ensure that their actual or potential trading names are reflected on the National Business Names Registration by making a single application for national coverage. While not conferring any IP rights in the names, such registrations will have the effect of preventing third parties registering the same or near identical names as business names.

More information

If you have any queries as to how this may affect your business, please contact Jeremy Goldman, Principal Lawyer, on (03) 8600 8886 or jgoldman@kcllaw.com.au.

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