Registration of Trade Marks as business names
6/09/2010

Currently, businesses are allowed to trade under unregistered names or trading styles. This position will soon change because business names will be regulated by sections 79 to 81 of the Consumer Protection Act 68 of 2008 (“the Act”) which makes it obligatory for all businesses to register their names.

The requirement to register business names in terms of the Act raises certain questions regarding the circumstances in which it is compulsory to do so.

Section 79(1) of the Act provides that “a person must not carry on business, advertise, promote, offer to supply or supply any goods or services, or enter into a transaction or agreement with a consumer under any name except-

(a) the person's full name as-

(i) recorded in an identity document or any other recognised identification document, in the case of an individual; or

(ii) registered in terms of a public regulation, in the case of a juristic person;

or


(b) a business name registered to, and for the use of, that person in terms of section 80, or any other public regulation.”

The position is clear with regards to a business which is not registered and merely trades as, for example, ABC Green Grocer. Such an entity is obliged to register ABC Green Grocer as a business name in terms of the Act.

Section 79(3) of the Act empowers the Commission to issue a compliance notice to a business that contravenes Section 79(1) of the Act, requiring the business either to apply to register a business name or discontinue its conduct under the name.

Section 79(1)(a)(ii) of the Act, referred to above, provides that a juristic person whose full name is registered in terms of a public regulation does not need to apply to register a business name.

The Act defines public regulation to mean “any national, provincial or local government legislation or subordinate legislation, or any licence, tariff, directive or similar authorisation issued by a regulatory authority or pursuant to any statutory authority.”

The abovementioned definition is very wide and would certainly include any company or close corporation name registered in terms of the Companies Act 61 of 1973 or the Close Corporations Act 69 of 1984. A company or close corporation therefore does not have to register a business name in terms of the Act, provided that it does business under its registered name.
The question that needs to be answered is whether a trade mark registration and/or application in terms of the Trade Marks Act 194 of 1993 falls within the definition of a full name registered in terms of a public regulation.

The wide definition of a public regulation arguably includes a trade mark registration and/or application in terms of the Trade Marks Act 194 of 1993, which is national legislation and therefore falls within the definition of a public regulation. However, is this interpretation consistent with the purpose of the Act?

One of the purposes of the Act is to improve consumer awareness and information. Consumers should be in a position to identify the “persons” behind a business. The directors/members of a company/close corporation can be obtained easily from public records. Therefore, companies and close corporations need not register their names as business names because this is consistent with the purpose of the Act.

The position is different with a trade mark. The proprietor or applicant of a trade mark, whose details are also publicly available, is not necessarily the entity conducting business with the consumer. This often occurs in holding companies which have operating divisions and the names/trading styles of these operating divisions are trade marks. In most cases, the trade marks would be registered to, or applied for, in the name of the holding company which authorises its divisions to use the trade marks. The consumer would be conducting business with an operating division and the details of the “persons” behind the operating division cannot readily be determined by the consumer. Accordingly, in this case, the purpose of the Act would not be fulfilled if the registration of, or application for, a trade mark which corresponds with a business name is interpreted to meet the requirements of the Act.

Section 81 of the Act lists certain criteria for business names. In particular, section 81(2)(a)(ii)(aa) of the Act provides that a business name must not be the same as, or confusingly similar to a registered trade mark belonging to another person, or a mark in respect of which an application has been filed in the Republic for registration as a trade mark or a well-known trade mark as contemplated in section 35 of the Trade Marks Act 194 of 1993, unless the applicant for registration of the mark as a business name is, inter alia, the registered owner or applicant for registration of the trade mark.
The abovementioned sub-section therefore permits the proprietor of, or applicant for, a trade mark to apply for the registration of a corresponding business name. It is therefore arguable that section 81(2)(a)(ii)(aa) of the Act implies that a trade mark proprietor/applicant should apply to register its trade mark as a business name, if the trade mark corresponds with an unregistered name, ie not a company or close corporation name.

The position gets more complicated when dealing with the licensees of a trade mark. Section 81(2)(a)(ii)(bb) of the Act allows a licensee to register a business name. The full name of a licensee is not necessarily identical to the trade mark that it uses under licence. For example, the proprietor of the trade mark BARBER BOYS may have licensees throughout South Africa and the full name of a licensee in Pretoria may be BARBER BOYS PRETORIA, and not merely the trade mark BARBER BOYS. Section 79(1) of the Act requires the full name BARBER BOYS PRETORIA to be registered.

Trade mark proprietors are warned to take care when authorising a licensee to register a trade mark as part of its business name. A trade mark proprietor must control the manner in which its trade mark is used in the marketplace in order to avoid its trade mark from being attacked in terms of Section 10(13) of the Trade Marks Act 194 of 1993 which provides that a trade mark shall be liable to be removed from the register if the mark, as a result of the manner in which it has been used, would likely to cause deception or confusion.

Trade mark proprietors must maintain exclusive rights to use their trade mark. It is therefore commonplace in licence agreements to have provisions which allow the proprietor of a trade mark to control the manner in which a licensee uses its trade mark and intellectual property rights in general. It is advisable that a licence agreement should contain a specific provision which controls the registration of a business name by a licensee. On termination of the licence, the licensee should be obliged to cancel the business name registration.

The provisions of the Act are not yet in operation and there is currently no system that allows for the registration of business names. However, once these provisions are in operation, a business may be ordered to discontinue trading if it does not meet the requirements of the Act. In order to avoid this situation, all affected businesses should register business names.

In conclusion, although it is arguable that a trade mark corresponding with a business name falls within the definition of a full name registered in terms of a public regulation, the Act by implication allows for a proprietor/applicant to register its trade mark as a business name. The registration of a trade mark corresponding with a business name also fulfils the purpose of the Act. Accordingly, until there is certainty on this issue, trade mark proprietors/applicants may want to follow a cautious interpretation of the Act and therefore register its trade marks as business names.


Nishan Singh
Senior Associate
Adams & Adams