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Choosing a Business Name: Why Getting it Right is Important

Your trading name is an asset. Choosing the right name is essential, from a business perspective, many entrepreneurs put a lot of stock in the name. Some believe, that from a branding perspective, your name can make or break your business. Good names are easy to understand yet unique and memorable.

The problem, of course, is that there are not many names left to choose from that are short, catchy, descriptive and which stand out at the same time. This makes finding the right name an often long and tedious project.

If you are stuck on a name check out the NameInspector.com’s 10 Company Name Types: Pros and Cons where they broke down the TechCrunch Company Index into ten name categories and the pros and cons of each. 

The Number One Rule: Don’t be a Copycat

From a legal perspective, the number one rule is simple, don’t be a copycat.

Choosing the wrong name can be devastating.  A name that is too similar to an existing businesses name or trade-mark opens your new business up to the threat of a lawsuit before you even leave the gate. While the law differs based on jurisdiction, the general rule of thumb is do not pick a name that creates confusion in the marketplace between you and an existing business or trade-mark.

Consequences of Creating Confusion with Other Names or Trade-marks

If your name is too close to an existing corporate name or trade-mark the owner of that name may commence legal action to force you to stop using your name and even to pay damages for its unlawful use.

One of the types of damages a plaintiff may claim is an accounting of profits. That is, they may seek to recover any profits you made as a result of using the name, along with handing over all marketing materials. This can be devastating for a new company.

Your own due diligence on selecting a name is important as the government name approval process is only intended to help you to avoid selecting a bad name by identifying potentially confusing names or trade-marks. The fact that the government permits you to register the name is not an indication that you will not be sued, or that the name is not confusingly similar to an existing name.

Google Test

To avoid selecting a similar name, the first step is the “Google Test”. Do a quick Google search to see if existing businesses are listed in Google search results. Google is a good initial indicator for whether a name is available. It also helps ensure that when you start competing for that keyword on search results, acceptable results show up.

If you plan on building a business which will one day go international, it’s a good idea to search those jurisdictions as well. Perhaps more importantly, ensure your name does not have a different meaning in other jurisdictions. For example, don’t be the company that makes “Pee Cola” (true story).

GoDaddy Test

If your name passes the Google Test, its time to put it through the GoDaddy Test. GoDaddy allows you to quickly search to see if a suitable domain name is available. Most businesses today are first found online by their customers. From a business perspective, having a domain name that suites your business and ranks high in search results can be essential.

CIPO Test

The next step is the CIPO Test. CIPO is short for the Canadian Intellectual Property Office, a government entity. CIPO has a public database on their website with a list of registered trade-marks. You can search the database for free to see if your name is available to be registered as a trade-mark. Keep in mind that just because there is not an exact match does not give you a free pass to use the name. Speak with a lawyer or trademark agent once you have a final name to ensure it is registerable.

The NUANS Name Search

The final step is a NUANS name search, which costs about $25-$50 depending on where you do it.

The federal and most provincial governments require all new businesses to complete a NUANS name search report. While the search report is intended to show all similar business names and trade-marks registered federally and in the Provinces of Ontario, Alberta, New Brunswick, Nova Scotia and Prince Edward Island (the other provinces maintain separate databases), the search process is subject to a number of imperfections. There may still be similar names in existence that are not disclosed in the NUANS report because the name was, for whatever reason, not in the government database. This makes the Google and GoDaddy searches that much more important.

A NUANS name search report lists similar existing corporate names and trade-marks. While it is your job to ensure that new name does not create confusion with existing names the Federal government registration agents will often review your NUANS report to determine whether you can or cannot register the name. In some cases, the agent will ask for more information and research about existing businesses with similar names.

Most lawyers also have access to a service that lets them search the NUANS database for free, in what is called a pre-lim search. This gives lawyers a pretty good idea of whether the name is registerable before spending a client’s money on an actual NUANS search.

Distinctiveness

In Ontario, the law requires your name to be distinctive from other businesses that carry on the same activities. Your name will not be distinctive if it merely describes your business activities. For example, the name “Juice Manufacturer Inc.” lacks distinctiveness since it just describes the activities of all juice manufacturers.

You can achieve distinctiveness in a number ways. One of the most common is to add an element to an otherwise indistinct name. “Jonny W’s Juices Manufacturing Inc.” for example, is distinctive. New words also give a name distinctiveness. They can be a combination of two dictionary words such as “Infotech” or something completely new. Unusual highly distinctive names have greater protection because they are unique and more obvious when a competitor chooses to compete with a similar name. Unique names will also likely be easier to trade-mark.

Legal Element

All corporations in Canada are required to add Limited, Incorporated or Corporation, or contractions such as Ltd., Inc. or Corp. to allow people you do business with to identify your business as a corporation.

Section 2 of Ontario’s Business Names Act prohibits an individual or corporation from carrying on business under any name other than their legal name unless the name is registered under the Act.  For example, neither John Wires nor John Wires Inc. would be permitted to carry on business as “Wires Plumbing” unless they had registered “Wires Plumbing” as a business name under the Act.    Failing to register a business name can result in fines of up to $25,000 and a prohibition from commencing a lawsuit.

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John Wires is a Toronto business lawyer who comes from a corporate litigation background. John is the founder of Wires Law, a law firm serving corporate, technology and e-commerce clients across Canada. He was called to the Bar of the Law Society of Upper Canada in 2011 and has appeared in the Ontario Superior Court, the Ontario Court of Appeal and private arbitrations. John graduated from law school with first class honours specializing in both International Trade and Corporate Commercial Law. Having litigated shareholder and employee disputes he understands the value of companies protecting their businesses with the proper upfront legal work many Canadian businesses lack.