Intellectual Property Law / IP Articles

Trade Marks v Trade Names – why it is important to understand the difference.

Posted 04 December 2017

Tracy Rengecas

A trade mark is a distinctive mark that is used to identify and distinguish the products and services of one company from the same kind of products and services offered by another. The registration of trade marks and the nature and scope of the statutory protection that is acquired upon registration is regulated by the Trade Marks Act.  A trade name on the other hand is the name by which a business enterprise is known. At present company names are regulated by the Companies Act, while business names will be regulated by the Consumer Protection Act once the relevant sections come into effect.  

In terms of s11(1)(a) of the Companies Act a company name may “comprise one or more words in any language irrespective of whether the word or words are commonly used”. In terms of the Trade Marks Act a trade mark must be capable of distinguishing the goods and services in respect of which it is used.  Unlike the Companies Act, the Trade Marks Act specifically provides that descriptive words or words that are commonly used may not be registered as trade marks.  A trade mark must be distinctive in order to be registrable.  Neither trade marks nor trade names  may be similar to an earlier mark or name.

A company is incorporated once it is registered by the Company and Intellectual Property Commission (CIPC).  The Certificate of Registration issued by CIPC is evidence that all the requirements for incorporation have been met and that the company has been incorporated in terms of the Companies Act on the date specified in the certificate.  This does not grant the company exclusive rights in its name.  The only interest that the company may have in respect of its name is the “right” to lodge an objection with the Companies Tribunal should CIPC register another company with a name that:  

  • is the same or confusingly similar to its own name; or
  • creates the impression that the later company is associated with it.

In contrast, upon registration of a trade mark the proprietor acquires exclusive rights in the trade mark. The trade mark owner may rely on the infringement provisions of the Trade Marks Act to prevent the unauthorised use of the trade mark.

Many entrepreneurs make the mistake of thinking that, because their trade or company name has been approved and registered by CIPC, they have acquired statutory protection over it.  However it is only once a trade name has been registered as a trade mark that exclusive rights in the name are acquired. 

The fact that CIPC administers the registration of both companies and trade marks exacerbates the confusion. In fact, the registration of company names and trade marks is administered by different departments within CIPC.  The Companies Register and the Trade Marks Register are wholly separate and neither is cross-referenced when trade marks are examined or company names approved.  Consequently the registration of a company does not guarantee that the name is available as a trade mark or that the use thereof will not infringe existing third party trade mark rights.    Similarly existing identical and similar trade marks will not be cited when a new company name is approved. 

We therefore strongly recommend that

  • entities conduct clearance searches before adopting a trade mark or a trade name;
  • important brand names are registered as defensive company names in order to acquire a presence on the Companies Register;
  • trade names are registered as trade marks in order to rely on the benefits of statutory trade mark protection.

While some rights may be acquired in a trade name or company name through use, common law rights are very difficult and expensive to enforce, as will be discussed in the next article.