The corporate name of an entity is typically an important asset of the company. It is a valuable brand and frequently subject to trademark protection.
There have been a number of incidents where other entities have attempted to obtain the benefit of an existing brand or mark by incorporating an entity with a similar name. If the existing corporate entity’s name has been properly registered and protected by trade-mark or otherwise, the usual practice is to advise the new entity of the potential for confusion or infringement and, if no satisfactory resolution is reached, to bring proceedings in the appropriate court for injunctive or other relief.
One alternative to this approach is to rely on the provisions of either the Canada Business Corporations Act or a provincial Business Corporations Act to address deceptively misdescriptive, confusing or misleading corporate names. In some situations, simply providing notice to the Corporate Registrar of a new corporation’s confusing or infringing name may compel that new entity to effect a corporate name change.3
For example, the Alberta Business Corporations Act 4 (ABCA) prohibits names that are similar to, or confusing or misleading of, existing bodies corporate. Pursuant to s.13(2) of the ABCA, the Registrar on its own initiative or at the request of any person who feels “aggrieved” that the name is confusing or misleading can direct a corporation to change its name.
The process is initiated by sending a letter to the Registrar, who will then notify the other entity of the complaint, set out the relevant provisions of the ABCA and Regulations, and inquire whether any resolution can be reached between the two entities. If no such resolution is reached, the Registrar will provide a period of time for the other entity to respond (usually 45 days) and then allow a further period after that response is received for sur-rebuttal. The Registrar will investigate the issue and make a direction under the ABCA as to whether a name change is required or not. The decision of the Registrar can be appealed to the Court of Queen’s Bench of Alberta.
Section 15 of the Alberta Regulations sets out the Registrar’s powers in determining whether a name contravenes the ABCA as follows:
- the distinctiveness of the name or any element of it and the extent to which the name has become known;
- the length of time the name has been in use;
- the nature of the business carried on under or associated with the name, including the likelihood of any competition among businesses using such a name;
- the nature of the trade with which a name is associated, including the nature of the goods or services and the means by which they are offered or distributed;
- the degree of similarity between the name and another name in appearance or sound;
- the geographic area in Alberta in which the name is likely to be used.
Notice to the Registrar should be made by a detailed submission addressing each of the foregoing points. If appropriate, statutory declarations or other sworn documents can be used to support the submission, especially as it relates to actual evidence of confusion amongst the public. If the corporate name has been protected by trade-mark, providing a copy of that registration is also helpful.
Similar laws exist in other provinces.5
There are a number of advantages to proceeding by way of complaint to the Registrar such as:
- The process is relatively cost-efficient.
- If the new entity has not had time to establish a corporate presence by way of a website or other marketing, such entity may be more inclined to respond to a notice from the Registrar and agree to a name change.
- Even if the matter is appealed to the Court, the foundation has been laid for one’s case.
Some of the disadvantages to proceeding in this fashion include the following:
- There is no ability to cross-examine or test or challenge any of the evidence that might be submitted by the new entity (although one has the right to file sur-rebuttal).
- If the new entity has already established a strong corporate presence, it is likely the issue will end up in litigation in any event.
- Actual incidents of confusion by the public appear to have some weight with the Registrar. Absent any actual incidents of confusion, one might be better advised to proceed in some other fashion (e.g., a passing-off or infringement action).
- The process can be time-consuming, often extending four to six months. There will be instances when one will want to obtain more immediate relief (e.g., injunctive relief in an action where preventing brand erosion is critical).
Utilizing the provisions of a Business Corporations Act to effect a name change of a new entity is likely only appropriate when that new entity has not yet established a presence in the market or has just started to carry on business. If a new entity has already carried on business for some time and has established a presence, the benefits of this process are lessened, particularly if there have been few incidents of actual confusion between the two corporate names.
From a practical perspective, it is prudent for officers and directors of companies seeking to protect their brands and mark to routinely conduct corporate searches to identify any potential new corporations that have registered names that may be misleading or confusing to the existing brand. If the identification of new entities with confusing or misleading names is discovered before the new entity has obtained much of a corporate presence, the provisions of a Business Corporations Act allowing the Registrar to effect a name change may be a valuable and relatively cost-effective tool to stop infringement.