One of the most seemingly straightforward but actually complex and frequently confusing areas the lawyers at Ahlstrom Wright deal with is in relation to business names. The confusion arises because there are many different ways in which you use (or what you think of as) the “name” of your business. The different business “names” are all quite distinct legally.
In this article, we will be discussing the common confusion about the differences between corporate names, trade names, and trademarks.
What is a Corporate Name?
Corporate names are the full legal names of corporations, like Apple Inc. This is no different than a full legal name of a human being like John Smith. Corporate names can sometimes include a legal element that tells the public that it is an incorporated business, such as the words “Limited”, “Incorporated” or “Corporation”. The abbreviated form of this element (“Ltd.”, “Inc.” or “Corp.”) is just as valid. Unlike real people, there cannot be two corporations with the same or confusingly similar names. There can be many John Smiths, but only one John Smith Donuts Ltd.
It is important to understand that corporations do not come into existence simply because you have started using a corporate-sounding name with a legal element, such as “Inc.”. Please consult with one of the lawyers at Ahlstrom Wright if you are in any doubt about this.
There are other types of specialized corporations that have their own naming rules. Not for profit corporations usually do not include elements like “Inc.” or “Ltd.” but have their own unique set of corporate naming rules. For example, a Society is a special type of non-profit corporation that will always have the word “Society” in its name. A Municipality like the County of Strathcona or the City of Yellowknife is also a type of corporation and is named as a “County” or “City” based on very specific naming rules (usually based on population and geographic area) that exist for municipalities.
When it comes to corporate names, numbered corporations are not much different. When the business was incorporated, instead of actively choosing a corporate name, the corporate registry assigned it a sequential number by default. That number (with the corporate legal element) is considered a corporate name also.
Can You Change Your Corporate Name?
Whether your company is already a named or numbered corporation, you can always rename the corporation. It is important to note that renaming a corporation does not change anything about who that corporation is, what it owns or what its legal obligations are. It is much the same as changing the name of a person. For example, if Ryan Gosling suddenly decides to legally change his name to Mark Saxton, he can do that, but he is not going to suddenly have the same sparkling charm and good looks as Mr. Saxton. Sorry Ryan. But on the other hand, you have not transferred ownership of that nice home in Southern California to Mr. Saxton either, so we are sure you’ll be fine.
Are you thinking about incorporating your business?
Ahlstrom Wright can provide answers to any questions you may have.
Ahlstrom Wright has offices in Sherwood Park, AB and Yellowknife, NWT.
What is a Trademark?
Trademarks are not the name of a person or the name of a product. Trademarks serve to connect or associate a particular brand, product, service, or quality with a particular person/company. “Apple Computers”, “iPhone” or “iMac”, along with their distinctive logos, are trademarks. Apple Inc. is the corporate name of the legal entity that owns these trademarks. When you buy one of these products you assume that it came from that company.
Trademarks are complicated, and above is a very oversimplified explanation. It is important to understand the concept enough to know what we mean below when we tell you that it is not the same as a trade name.
What is a Trade Name?
For practical purposes, consider trade names to be like nick-names. Just like corporate names, they do describe people, but those people are not using their legal names. Jonathan Smith is our example’s legal name. But he might go by John, or Jack, and it is not hard for you to understand who “John” or “Jack” refers to. This can become more confusing in the business context.
The Importance of Trade Names Example: John’s Donuts
For legal purposes “John’s Donuts” could actually be referring to any number or people or corporate entities. It might be referring to John Smith personally, it might be referring to a corporation named John Smith Donuts Ltd., or it might be referring to 8675309 Alberta Ltd., all of which are different legal persons (remember that corporations are persons too!) who could actually own the shop and use the trade name, which may or may not be obvious to the customer. If John (as a sole proprietor) owns a donut shop and calls it “John’s Donuts”, you might know that it is owned by John Smith, or you might not, but there is no way to tell just from the trade name.
This could become a real problem for John if he doesn’t own the donut shop. Especially when a very large competitor decides to sue John for trademark infringement over his very successful “Reel up the rim to win” promotion. Honestly John, what were you thinking?
In this hypothetical situation, John incorporated 8675309 Alberta Ltd. to run John’s donuts, so his house and other personal assets are not at risk because he is protected by the fundamental legal principles around corporations. Unfortunately, the unnamed donut competitor sued John personally! And they won! What could John have done to ensure there was no confusion over this? He should have registered “John’s Donuts” in the corporate registries as a trade name used by 8675309 Alberta Ltd.
Whether you own your business personally (a sole proprietorship) or through a corporation, it is very important that you register the trade name. In fact, it is required by law. Registering your trade name can help protect any trademark rights you might have in the name, but more importantly it ensures that the public knows who the real owner of the business is. If you incorporated to protect yourself from some of the liability associated with your business, you are risking losing that protection if you do not register the trade name.
The Difference Between Trade Names and Trademarks
It is important to note that trade names can also be a bit of a hybrid with a trademark – they are an identifying name used by a legal person (or more than one person) that is not its (or their) full legal name. The same trade name, for some purposes, may also be used as trademarks.
Trade Names vs. Trademarks Example: Coke
“Coke” can describe a product produced by a particular person or corporation and is therefore a trademark, but sometimes may describe Coca-Cola Ltd., which is a legal person.
Consider the following:
“I went to Coke’s offices in Atlanta for a job interview, and as you would guess, everybody was drinking Coke like it was water.”
The first reference to “Coke” is to the person (a trade name) and the second to the product produced by that person (a trademark).
Please note that the above does not include any discussion about some underlying concepts, such as how you can obtain or protect your trademark (or not infringe someone else’s).