Sole traders who prefer to use their own identity for business purposes can usually forego the formalities of having to register an Australian business name but any other title has to be recorded. Differentiating between a business name that identifies the supplier of products and services within a smaller marketplace, and one that reaches out to a wider audience, can have varying influences on the registration process.
The Legalities of Business Registration
Under the Business Name Act, compiled in 2002, it is a compulsory requirement to register any other business name that doesn’t relate directly to the proprietor. Usually, sole traders will use personal identification in business (D.W. Jones, for example, can run his office furniture business under his own name) to make themselves more identifiable with the local community. The act states that a business name registration is not required under these circumstances.
When a business name moves away from personal identification and becomes a commercial or branded entity, registration is mandatory. If D.W. Jones chooses to operate under the identity of ‘New South Wales Deluxe Office Furniture’, a full business name registration must take place. Once completed, information is kept on the Register of Business Names and will include details about the proprietor, the date of registration and when that period of registration will end.
The Implications of Ownership
Registering an Australian business name does not give the proprietor exclusive ownership of a generic title and this is a grey area where many businesses encounter difficulties. If Mr Jones goes on to open his local branch of ‘New South Wales Deluxe Office Furniture’ and a competitor comes in with a similar title, it is entirely possible that ‘New South Wales Office Furniture and Fixings’ could be trading to the same marketplace.
The complexities of this type of situation raise many questions and there is always a risk that others can infringe on your intellectual property. Although a business name registration will deter this potential scenario, there are no absolute guarantees that it will not happen.
Securing a Business Name Exclusively
The only way to ensure exclusive use of a business name is complete a business registration and to acquire the relevant trademark for it as well. By purchasing a trademark, the business proprietor is able to protect their intellectual property but unfortunately, the costs associated with trademarks are notoriously expensive.
Business owners, however, should not be deterred. It is still possible to ensure exclusivity if your business name is truly unique. If Mr Jones uses a catchy title such as ‘The D.W. Jones Office Furniture Supermarket’, it’s very unlikely that a competitor will get away with opening a store called ‘The D.W. Jones Office Furniture Superstore’. This would be a clear infringement on the original business name registration and if any subsequent legal action ensued, our fictional business owner would probably be on very strong ground.
Sometime in 2012 – expected around July – the business name registration world will turn upside down when business name registration moves from a State-based system to a Federal system.