The name the public sees is always top of mind for a new business (and a popular topic for articles like this.) The rules which govern name approval are relatively plain. The penalties for not following the guidelines are less straightforward than they seem, however.
Every entity operating under a business name in Saskatchewan must register the name provincially. Individuals who run a business under only their personal name are not subject to this registration requirement. Likewise, a corporation which operates a business under the corporate name does not need to both incorporate and register a business name.
Name registration goes through Corporate Registry at Information Services Corporation. It is inexpensive and straightforward. The registrant conducts a search to confirm the desired name is available. The registrant must then apply to Corporate Registry, submitting details about the type and location of the new business. After registration a business name needs to be renewed every three years.
The consequences for failing to register a business name start with Corporate Registry. A business operating under an unregistered name might receive a letter from the Director of the Corporate Registry demanding compliance with legislation. If the demand is not obeyed, the matter may be referred to the Public Prosecutions Division of the Ministry of Justice. A business owner may face personal prosecution for the offence of operating an unregistered business name under The Business Names Registration Act. If found guilty, the business owner may be required to pay a substantial fine which increases with every day that the owner fails to remedy their non-compliance.
The previous paragraph has a lot of “may’s”. This is because there is no guarantee that Corporate Registry or the Justice Ministry will enforce offences. For various reasons, including resource availability or likelihood of impact, no action might be taken. But this lack of punitive consequences does not mean the problem should be ignored.
From a business perspective, any goodwill earned under an unregistered name or duplicative name is always at risk and can be easily lost. The public may be unable to distinguish between the two businesses. A consumer in the marketplace could end up patronizing an organization which is completely unrelated to the business they may have heard about from their friends, family or colleagues. While the unregistered business may consider starting a legal action against the new business for infringing upon its intellectual property, a trade-mark infringement suit can be an expensive and complex effort for a small business. Hefty legal bills and years of pursuing a remedy could easily be saved by registering a business name from the outset and at least leaving open the option of Registry protection and action.
When an existing business attempts to register a name similar to another registered name, the Director of Corporations decides whether the name is likely to confuse or mislead the public as to what business they are dealing with. Similarly, if two business names come to be registered which are strikingly similar, the Director has the authority to direct one to change its name. The Director will consider whether the use of the name in question would cause the public to believe that the businesses were somehow connected or carried on by one and the same entity.
There are a number of factors which contribute to this decision. The Corporate Registry will first consider the names themselves. Copied elements which are unique or even invented are more likely to be treated as likely to confuse or mislead in comparison to existing dictionary words. Next, the Director will be consider the nature and history of each business. If the businesses are operating in identical industries they may be too confusing to both sustain registration. If the original business is a long-standing and well-established operation, their name will probably receive more protection. Finally, the Registry will consider the geographic region of the province in which the businesses are operating. A Swift Current business seeking registration might be permitted to do so even if a similar name is registered in Prince Albert, as the distance between the businesses decreases the likelihood that consumers will associate the two operations.
Still, there is a large amount of discretion involved both in registering and enforcing business name protection in Saskatchewan. This doesn’t mean the issue should be ignored but it does affect the choices of names and the environment they inhabit. Prompt registration of a correctly formed name before or at the time of starting a new business will not only save an individual money and legal complications but will ultimately contribute to the success of that business in the market.
This article originally appeared in Saskatchewan Business magazine and is reprinted with their kind permission