By David Lucenti, Associate
I was recently contacted by a corporate client who runs a successful roofing business in Ontario. He advised me that a company from British Columbia had recently entered the Ontario market with an intention to compete with his business. My client was not calling me to seek advice on how he could best protect his business from competition but rather, he was concerned about the corporate name under which this new company was to operate. He believed that their corporate name was too similar to his company’s name.
My client has been in the roofing business for over 25 years in Ontario. During that time, he has continuously advertised, promoted and used his company’s name in the normal course of business in Ontario, so much so that the corporate name has generated significant goodwill and reputation in Ontario. As such, my client felt that by introducing a company name similar to his in the same Ontario market where he operates his business will likely deceive and/or confuse both suppliers and customers alike. I agreed.
Luckily, there are remedies available to my client under the Ontario Business Corporations Act (the “Act”). The corporate name provisions are set out in section 9 of the Act and subsections 1-22.1 of the Regulations to that Act.
Section 9 prohibits a corporation from having a name that is the same as, or similar to, the name of a known body corporate, or the known name under which any body corporate carries on business or identifies itself (it’s “trade name”), if the use of that name would be likely to deceive.
In the event a party believes that a name is likely to deceive, the company can bring an application to the Director under section 12 of the Act. The Director may, after giving the offending corporation an opportunity to be heard, issue a certificate of amendment to the articles changing the name of the corporation to a name specified in the certificate and, upon the issuance of the certificate of amendment, the articles are amended accordingly.
There are however, various factors to consider when determining whether a name is contrary to section 9 of the Act. Section 3 of the Regulations lists the following factors the Director may consider:
- The distinctiveness of the whole or any element of any name or trade-mark and the extent to which the name or trade-mark has become known;
- The length of time the trade-mark or name has been in use;
- The nature of the goods or services associated with the trade-mark or the nature of the business carried on under or associated with a name, including the likelihood of any competition among businesses using such trade-mark or name;
- The nature of the trade with which a trade-mark or 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 corporate name and any trade-mark or name in appearance or sound or in the ideas suggested by them; and
- The geographical area in Ontario in which the corporate name is likely to be used.
In my client’s situation, I am pleased to report that before bringing an application, the offending party agreed to amend its Articles and change their corporate name. It was a positive outcome for my client but there are many instances when a party is not so cooperative.