Why you should think twice before you name your business

What's in a name? Quite a bit, if it's somebody else's, says trade mark attorney Edward Carstairs.

by Edward Carstairs
Last Updated: 12 Jul 2016

You’ve come up with a brilliant new business idea that’s going to change the world, or at least earn you a comfortable retirement on a yacht in the Med. Even better, you’ve come up with the perfect name – snazzy, memorable and relevant.  

What’s your first thought? If you’re anything like most founders, you’ll want to stop anyone else pinching your idea. An obvious next step is to get the name legally protected.

It can certainly be beneficial to have a trade mark registration in place. But as banking startup Mondo found recently, having a registered mark doesn’t itself give you the right to use that mark; all it actually secures is the right to stop anyone else using it, or something similar.

Mondo faced legal action from an existing firm with a similar name. It chose to settle, meaning it will have to change its name.

The company has been savvy about capitalising on its cool and disruptive image to turn the case against it into positive publicity. CEO Tom Blomfield announced that customers and investors would be invited to contribute to the name-change process, even riffing on the popular Boaty McBoatface meme.

Mondo’s popular concept and high media profile ensure it is all but guaranteed to continue to be successful following its name change. Entrepreneurs or startups in more prosaic circumstances are unlikely to be so lucky.

Counting the cost of trade mark action

Getting caught out can be costly. The last thing you want is to have gone through the effort of creating marketing materials, packaging, a digital presence, launched yourself to the media etc., only for an infringement action to force you to rip it all up and start again.

Any brand recognition you have built up can be wiped away almost overnight, and if you aren’t sufficiently established in your market, the damage could be terminal.

Then there are the legal costs: defending an action could reach well into six figures. And if you were to lose, not only would you face legal fees, damages and the cost of creating a new brand, but also the prospect of paying a proportion of the other side’s costs.

It is crucial, therefore, to ensure that you have done thorough due diligence for any existing trade marks that might be at risk of infringing before you file any application for your own.

Starting the search

It’s not just your own mark you should consider, but also relevant similar ones: companies with similar marks offering similar products or services may have a valid claim against you.

It’s worth noting as well that relevance in legal terms can stretch beyond your chosen sector: banking and insurance might not seem similar from a commercial point of view but overly-similar marks would pose a risk in technical legal terms.

Looking overseas

Freedom to use a brand name or trade mark in one country or territory doesn’t automatically mean freedom to use it elsewhere. Just ask Apple, which paid a $60 million settlement in 2012 when a Chinese company, Proview, challenged its use of ‘iPad’ in the country.

Mapping IP strategy to your wider business plan is crucial – extend your search for existing marks to all territories in which you manufacture, distribute, trade, or sell (or plan to).

Bear in mind that in many countries – including the UK – earlier rights to a mark can be acquired through use as well as registered protection. Domain names or company names don’t confer enforceable rights, but can indicate earlier use to be investigated in more detail. 

Registration: your first – and potentially only – line of defence

The next step once you’ve found your mark is to apply for registered protection. Registration puts you in a much stronger position should you need to take action against another party – some countries don’t recognise earlier use at all, and having a registered mark is your only defence.

Registered trade marks are also assets that add value to your business and can make it easier to attract investment or make a successful exit. 

While Mondo conducted relevant searches, no search will ever be absolutely comprehensive. If you want to manage risk further once having filed an application, it’s safest to wait to use your mark until after the opposition period. 

Even this isn’t cast-iron, as an earlier rights holder may simply not have noticed your application, but it is at least a good indication that nobody is concerned at the outset.  

Edward Carstairs is a UK & European trade mark attorney at Gill Jennings & Every LLP.



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