Trademarks vs. Trade Names
One of the most common misconceptions about trademarks is that incorporating your business is sufficient to protect your brand. Watch this cartoon and find out why it is not so.
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NARRATOR: Brad runs a restaurant chain in Vancouver that is about to go the franchise route. Brad incorporated his company in British Columbia and thinks that it's sufficient to protect his brand. Let's find out if he's right...
FRANCHISEE: Hello Brad, I am interested in becoming your franchisee in Ontario.
BRAD: I'm listening.
FRANCHISEE: But I've checked the website of the Trademarks Office, and it looks like you haven't registered STEAQUINOA as your trademark. How come?
BRAD: Don't need to, it's too much hassle with lawyers and their bills. I already incorporated as STEAQUINOA Restaurants Ltd. in BC. That's all I need.
FRANCHISEE: I wouldn't be so sure. Let's ask someone from Trademark Factory.
BRAD [unwillingly and condescendingly]: OK
BRAD: We're arguing if incorporating my company as Steaquinoa Restaurants Ltd. is enough to protect the brand.
TRADEMARK FACTORY: No. This is one of common mistakes. All incorporation does is it prevents your competitors from registering an identical or similar name as their CORPORATE name in the province where the company is incorporated. However, such registration does nothing outside the province where your business is registered. It also does very little to protect you against competitors who might use your brand without using it as part of their corporate name.
BRAD: What does this mean?
TRADEMARK FACTORY: It means that anybody can legally start their Steaquinoa Restaurants Ltd. company in Ontario.
BRAD: You gotta be kidding!
TRADEMARK FACTORY: It also means that somebody in Manitoba could legally start a company with ANY name (including a numbered company) and simply use the brand STEAQUINOA.
BRAD: That's not good.
TRADEMARK FACTORY: Your prior use might allow you to ultimately succeed if someone wants to register STEAQUINOA as a trademark, but it will cost you at least several tens of thousands of dollars in legal fees.
FRANCHISEE: I told ya!
TRADEMARK FACTORY: And when I say "prior use", I don't mean simply incorporating the business. You need to actually USE the name AS A TRADEMARK for it to give you protection.
BRAD: Not sure I understand.
TRADEMARK FACTORY: To protect the word STEAQUINOA as a trademark for a restaurant, you need to prominently display the word STEAQUINOA while rendering or advertising your services, not STEAQUINOA Restaurants Ltd.
TRADEMARK FACTORY: Also, while you will be able to stop others from REGISTERING the name as a trademark, your ability to stop them from USING it would be limited to the geographical area where a significant number of people know your brand. In your case, it would be Vancouver. You see, just because someone can't register a trademark does not always mean that they can't lawfully use it!
BRAD: So someone can legally rip off my name?
FRANCHISEE: I don't want to pay for a brand that can be taken away from me so easily! The great name is the most valuable part of your business!
TRADEMARK FACTORY: It's not too late. As soon as you file your trademark application, you will stake a claim to your brand that will be enforceable all around Canada.
BRAD: Now you're going to tell me that it's going to cost me $10,000, right?
TRADEMARK FACTORY: No, in fact it's not nearly as expensive as you think.
BRAD: Well... Looks like it's a no-brainer then...
FRANCHISEE: I will be ready to proceed as soon as you file your trademark application.
BRAD: Thank you so much for putting me on the right track!
Disclaimer: Please note that this cartoon is not and is not intended as legal advice. Your situation may be different from the facts assumed in this cartoon. Your watching this cartoon does not create a lawyer-client relationship between you and Trademark Factory International Inc., and you should not rely on this cartoon as the only source of information to make important decisions about your intellectual property.
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