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Trading styles

Article by Reggie Dlamini: Senior Associate, Spoor & Fisher

The term ‘trading style’ refers to the name under which a natural or juristic person carries on a business. Since it refers either to a ‘business name’, ‘company name’ or ‘trade mark’, thinking about how best to protect it or the applicable rules regarding use of the name can be puzzling. The statutes that must generally be considered include the Companies Act 71 of 2008, Trade Marks Act 194 of 1993 and Consumer Protection Act 68 of 2008.

Business names

Apart from the most common business structure, namely a company, a business can be conducted under a number of other types of business entities including a sole trader, partnership or a business trust. It is in part for this reason that the Consumer Protection Act seeks to regulate the use of ‘business names’, which could otherwise in certain cases not even be registered with any regulatory authority.

In terms of the Consumer Protection Act, 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, 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 that person in terms of any public regulation.

A person conducting trade must include the following particulars on any trade catalogue, circular, business letter, order for goods, sales record or statement of account:

(a) the name, title or description under which the business is carried on

(b) a statement of the primary place at which, or from which, the business is carried on, and

(c)] if the activity is carried on under a business name, the name of the person to whom that business name is registered.

The conditions for a business name registration under the Consumer Protection Act are very similar to the criteria contained in the Companies Act (see below). It is however important to note that if a trading style is registered under the Companies Act or Trade Marks Act it is not necessary to obtain a further registration in terms of the Consumer Protection Act.

Company names

An application for a company name registration is made to the Companies and Intellectual Property Commission. An applicant is entitled to list up to four alternative names which are considered for availability in their listed order.

The main conditions for registration are that the proposed company name must not be the same as or confusingly similar to

(a) the name of another company or close corporation

(b) a name registered by another person as a business name in terms of the Consumer Protection Act

(c) a registered trade mark belonging to another person unless the registered owner has consented in writing, or

(d) a mark, word or expression protected in terms of the Merchandise Marks Act 17 of 1941.

In addition the proposed company name must not falsely imply or suggest an association with any other person or entity, or that the applicant

(a) is an organ of State or a court, or is operated, sponsored, supported or endorsed by the State or by any organ of State or a court

(b) is owned, managed or conducted by persons having any particular educational designation

(c) is owned, operated, sponsored, supported or endorsed by, or enjoys the patronage of, any

(i) foreign State, head of State, head of government, government or administration or any department of such a government or administration,  or
(ii) international organisation.

Although a company name registration serves as a bar against registration by third parties of a confusingly similar company name, it results in relatively restricted rights. That is where trade mark registration comes in.

Trade marks

Even though they have their own limitations, trade marks are generally considered to result in the widest protection of a name. Registration of a trade mark allows the rights holder to prevent unauthorised use by others of a name which is identical or confusingly similar to the registered trade mark, in relation to the same or similar products.

The main requirement for qualification for registration of a trade mark is that the proposed name must be ‘distinctive’. In other words, it must not describe any feature of the products or services of the business, or be reasonably required for use by others in the same trade.

Some of the limits to registered trade mark protection include that a registered trade mark is not infringed by

(a) any bona fide use by a person of his own name or the name of his place of business

(b) the use by any person of a bona fide description of his goods or services

(c) bona fide use of the trade mark to identify spare parts

(d) importation into or distribution or sale in the RSA of genuine goods, or

(e) use of any identical or confusingly similar trade mark which is already registered.

It is in most cases advisable to obtain registered trade mark protection in addition to a company name registration.

Spoor & Fisher is a proud partner of the National Small Business Chamber (NSBC).