What happens when someone copies your business?
As a rule, the more distinctive your business name is, the better chance you'll have in registering it as a trademark.
They say that imitation is the sincerest form of flattery but what happens when another business starts copying your name, products or processes?
This happened to Nicole Kersh, founder of 4Cabling.com.au, a wholesaler, manufacturer and distributor of cables. She founded the business seven years ago and says it is now turning over about $8 million a year. At only 28, she's built the business is a male-dominated industry and says she has developed her reputation in the industry.
Cashing in on your name
"It's something we've worked hard to grow and we're very proud of it," she says. "Like most entrepreneurs, my company's brand is intimately tied to my own personal brand. People know Virgin for Richard Branson, they know Aussie Home Loans for John Symond, Janine Allis for Boost Juice. And in my industry, my customers know me as the young female founder of 4Cabling.
"That's why we stood up and took notice when, a few years ago, a guy started up a competing business, using a company name that made it sound like he was a woman. It seemed a little strange at the time but it wasn't until he started using our trademarked name 4Cabling as a Google AdWord, in what seemed like an obvious attempt to direct traffic to his website, that we began to guess at his motivations. The company appeared to be using our good name and my own hard-fought reputation in order to steal our customers."
Kersh complained to Google who said they would "process" her complaint. After investigation, Google told her the advertisements would "now display in accordance with Google's trademark policies". The offensive ads were taken down.
"The problem is, we have no idea how long they had been doing it," says Kersh. "Who knows how many customers have found their way to their website when they were actually searching for us? We sell very similar products."
Kersh says she had a trademark in place for the name of her business. In cases like this, the existence of a trademark will help you mount a stronger argument than if you don't have one in place.
Better to be safe than sorry
The existence of a trademark will help you mount a stronger argument that if you don't have one in place.
When it comes to trademarking your business names or products, Melbourne-based trademark and copyright lawyer Sharon Givoni says that it's better to be safe than sorry.
Nicole Kersh, founder of 4Cabling.com.au, fought and won a trademark battle.
"I often see businesses think about trademarking when it's too late," she says. "Then, when another business starts using a similar name, there is a fight over who owns what.
"In the past, similar sounding businesses could co-exist if they operated in other states. But the internet has given rise to far more opportunity for confusion, making trademark protection all the more important."
It's important to note trademarking is a process that is done through a government body (www.ipaustralia.gov.au) You can register your business name as a trademark. This is completely different to "registering a business name" which is done with ASIC. "Registering a business name" does not offer you any real protection against someone else using the same name. The best form of protection is through trademark registration so you own the name.
It's no surprise that there are disputes among business owners on the use of similar terms. Givoni advises that the more unique and distinctive your business name is, as a general rule, the better chance you'll have in registering it as a trademark. "From the outset, the biggest tip I can give someone as a lawyer is to use a distinctive business name that doesn't rely solely on 'descriptive' words," says Givoni.
Distinctive versus descriptive
In this case, 'descriptive' means words that others may genuinely need to use to describe their own businesses. For example: "Valerie Khoo Consulting" or "Google" are distinctive names. "North Shore Consulting" or "Yarra Valley Winery" use descriptive terms. According to Givoni: "If you're using purely descriptive terms, you're unlikely to get ownership of them – the law tries to be fair. So, the test is whether other similar type businesses will have a genuine need to use those terms to describe their own businesses."
Many businesses start off cash-strapped so the expense of trademarking may not be considered a priority. However, Givoni warns of copycat businesses who may get in first. "Trademarks are granted on a first come, first serve basis. You should also consider the categories in which you want to register your trademark."
For example, Givoni says that even if your real name is Elle and your surname is Murray, the name Elle (on its own) and Elle McPherson are already registered trade marks, and you could infringe those trademarks if you were to use Elle or Elle M for a brand new clothing label. "Someone else simply got there first," she says, adding that many legal disputes have arisen over names. Givoni gives examples of Collette, Tiffany and Kylie in the area of fashion.
Smell, sounds, colours and shapes
Leaving aside names, Givoni says it's not just your business name that can be trademarked. If a sound, smell, colour or shape works as a brand you may be able to register that as well. She gives the example of Pacific Coast Eco Bananas, which is known for bananas that are covered on one end with distinctive red wax.
"Frank and Dianne Sciacca, who are owners of the business, decided they wanted to come up with a way to show people that their bananas were grown in a special way that made them tastier," she says.
"In what was somewhat of an a-ha moment, they dipped some of their farm grown bananas in food grade red wax. Today, they sell Australia-wide and they have trade marked the red wax tip – and all other colours too!
"As a result, they were able to stop a competitor from dipping his bananas in purple wax, potentially confusing customers. This may not have been possible without their trademark in place."
Protecting yourself from the big guns
It's not just protecting yourself against copycats, it's also about protecting yourself from others who may dispute your right to use the name. Oscar de Vries founded OSCAR Natural Skincare, a range of shaving products for men, in 2008.
In mid-2008, he received a phone call that resulted in a legal battle that is still going on today. "I remember clearly where I was when I received the call," says de Vries, 51. "It was a senior trademark lawyer for Oscar de la Renta who called me, so I knew they were serious."
Oscar de la Renta is a design house, established in 1965, that produces fashion, accessories, homewares and other items. De Vries was asked to destroy his packaging, with the lawyer saying that consumers would be confused with Oscar de la Renta.
"I had launched my OSCAR Natural Shaving Oil in Coles earlier that year and I was not going to be told what to do. I decided to send the message out in 'black and white' terms, so that Oscar de la Renta had no doubt about my stance. I told them the only way to succeed is to shoot me. Nothing grey about that. Their argument was that I was effectively riding on their name and that consumers would be confused.
"My argument was that Oscar de la Renta may have been a big influential brand in the 60s when Jackie Kennedy was wearing his clothes, but I doubt that most women under 40 would know the brand, let alone buy his perfumes on a regular basis. I used the word 'has-been' [to describe them] because I felt they were very arrogant to think they were still so relevant and asking me to jump accordingly. On the basis of attack is the best form of defence, I took out a special application with IP Australia to have Oscar de la Renta's trademark set aside in relation to shaving products. I guess that must have riled them."
De Vries says that he initiated the process directly with IP Australia to save money, but has since engaged a professional intellectual property lawyer. He has applied to trademark "OSCAR DE VRIES".
The legal battle is still going.
Be proactive in protecting your name
Julie Sweet founded CertificateOnline.com.au eight years ago. The business is a service for people who need their full original birth, marriage, family death certificates, or who wish to legally change their name in 24 hours. Sweet, 37, also had to defend her business name after receiving notification from a government body.
Sweet says: "A government body – which I can't name for legal reasons – contacted us because they believed we may have had the potential to confuse the general public with having a name similar to a government body."
She says she was advised to obtain a trademark from the inception of the business and that this was her "saving grace".
"I fought the issue head on," she says. "I engaged an exceptional corporate lawyer, who remains our business lawyer to this day and went through the process, step by step, honestly and openly. I chose to see the process through, to not step aside or away from the battle and actually tackle it through the resources available."