Your business reputation can be your biggest asset. So what happens when your unique identity is under threat? Risk management is a must.
Business identity theft is a significant threat to small businesses. Many businesses have built their reputations over a number of years based on superior service and product quality. Unfortunately, fraudulent operators can set up businesses with names that are phonetically identical or similar to yours, and thereby use your success as a platform for their own operations.
This can occur because the business did not take steps that could have protected them from such a situation. The Australian Securities and Investment Commission (ASIC) no longer has the power to refuse registration of names that are similar to existing names, so you need to be vigilant when starting up a business or protecting your already established reputation.
Protect your identity – be proactive
Fighting identity theft can be costly and distressing and a threatened business’ options can be limited. Taking steps to ensure your identity is protected when you start up your business is crucial. In the case of business identity theft, prevention is certainly better than cure. Your good reputation is a significant asset and maintaining its integrity is critical.
Seek legal advice
You should seek legal advice as a first step. However if legal recourse is not a realistic course of action you may be faced with riding out the threat and hoping the competitor fails, without causing too much damage by way of transferred business or damage to your good name. This is especially difficult when the competitor is operating in the same marketplace. Unfortunately this option depends on the failure of the competitor.
Where there is an apparent attempt to use your business identity or pass off another product/service as yours you should contact your legal advisers who can take steps to stop the continued exploitation of your name and reputation.
How to safeguard your identity
The best time to protect your identity is when least damage can be done. This is when you are taking the first steps to set up your business and before you have invested money and effort in building an identity.
ASIC states on their website:
‘It is entirely your responsibility to be aware of any problems that might arise from names already registered which are similar to, or likely to be confused with, the name you register’.
This is a clear warning of the pitfalls you may come across if you don’t take steps to safeguard your identity. Conversely, it is also important to ensure you aren’t unknowingly using a name that is too similar to an existing company, thereby exposing you to legal action.
When registering your name with ASIC you should search the National Names Index on their website to ensure you aren’t attempting to register a name that is similar to an existing one. You can also use ASIC’s Identical Names Check. It is ideal to perform both checks.
It is important to note you should not commit to logo creation, printing of stationery or any other advertising until your name is approved by ASIC.
Trademarks
Many business owners believe the registration of a company name grants them the exclusive right to use the name. This is not the case. Registering your name or brand as a trade mark is not compulsory but it does you greater recourse to legal action if another company attempts to use your identity.
Registering a trade mark gives you certain rights that simply registering your name with ASIC does not. The advice that http://www.ipaustralia.gov.au/ recommends is that a trade mark gives you:
- The statutory right in Australia to use it as a ‘sign’ or brand on the goods or services specified in the registration
- The right to authorise or license other people to use the registered trade mark on the goods or services specified in the registration
- The right to sell or deal with the mark as personal property
- A registration that covers the whole of the Commonwealth of Australia
- The option to file a notice with the Australian Customs Service objecting to the importation of goods that infringe the registered trade mark
- The right to take court action to stop others using the trade mark inappropriately
- The option to file international applications based on their Australian application/registration, through the international trade marks system (the Madrid Protocol).
A final note of caution
You should always seek legal advice when starting your business to ensure you are not violating existing trademarks and that you have the best possible protection for your identity. You should also seek legal advice if you feel your identity has been stolen or is threatened.
This article originally appeared on the Ask Us How website. NSW Business Chamber Members can access this site, which features hundreds of practical articles and other resources to help you manage and grow your business.
Find out more about the beneftis of NSW Business Chamber membership.