Protecting your company's trade name: five practical questions and answers

The trade name you give to your company is an important and often strategic choice. A catchy name creates your own identity. It makes your company recognized, and it distinguishes you from your competitors. A trade name is the name under which a business is conducted. This can be a family name (such as Heineken or Philips), a name that describes the company's activities, or a name that you have thought up yourself (or a combination of these). Protection of your company's trade name is very important. But how do you actually obtain a trade name right? And in what ways does the law protect against the use of your trade name by a third party? In this article I answer five practical questions regarding trade names.

What legal rules apply to trade names?

The rights you can derive from your trade name are laid down in the Trade Name Act. Among other things, the Trade Name Act regulates what a trade name is and what you can do if a third party uses your trade name or a name very similar to it. In addition, the Trade Name Act stipulates that a trade name may not be misleading. This means that a company may not use a trade name that falsely suggests that the company (or part of it) belongs to someone other than the actual owner. An example of this is using the name of a well-known person. Deception may also occur if a company's trade name includes an incorrect legal form, for example the addition "BV" when it is not a private limited company.

How do you obtain a trade name right?

A trade name right is obtained by actually using the trade name to designate your business. You carry the trade name by using it externally. Think of mention on your letterhead, in the footer of your e-mail, on the office facade or on your website. Registering the trade name in the Trade Register of the Chamber of Commerce is neither required nor sufficient to obtain a trade name right. You must actually use the trade name to obtain a trade name right.

What legal options do you have when someone wrongfully uses your trade name?

Pursuant to the Trade Name Act, it is prohibited to use a trade name that was already lawfully used by someone else before the company was run under that name. This prohibition also applies if a trade name deviates only slightly from a previously (lawfully) used trade name. However, it must be shown that there is a likelihood of confusion among the public in connection with the nature of the enterprises and the place where they are established. Likelihood of confusion exists if the public is likely to be confused: for example, someone orders from company A, but would actually have wanted to order from company B (direct confusion). The impression may also be created that the two companies have something to do with each other (indirect confusion).

Case law interprets confusion broadly. It is not required that there be actual confusion between the two companies. The determination that confusion among the public could arise is sufficient. Whether there is actually a likelihood of confusion depends on, among other things, the nature of the companies, the place of establishment, the target group and the other circumstances of the case. Bakkerij De Bruin from Amsterdam, which has been baking bread under this name since 1900, cannot simply take action against the use of this name by a newly established baker from Nijmegen. This is because there is very little chance of public confusion between the two bakers. The bakers do not operate within the same geographical market, so confusion between the two bakers is not likely to occur. If there are companies (for example, chains) with the same trade names that operate nationwide or via the Internet, the situation is significantly different, since a risk of confusion on the part of the public is then more likely.   

The party who believes that there has been an infringement of his or her trade name may request the district judge to order the person using the prohibited trade name to change the trade name. The judge will then determine exactly what change must be made. In addition, acting in violation of the Trade Name Act in many cases constitutes an unlawful act. Based on this legal basis, a ban or damages can also be claimed.

What should you pay attention to when choosing a trade name?

First and foremost, it is important to verify that your chosen trade name is not already being legitimately used by another company. Do this before you start, for example, designing logos, placing signage and registering a domain name. If you don't, you run the risk of incurring unnecessary costs when you have to discontinue the use of the trade name because it infringes on someone else's trade name. It is also advisable to check that the trade name is not identical or very similar to an already registered trademark. Finally, it is important to note that the fact that you want to use your family name as a trade name does not constitute an exceptional ground. The use of your family name as a trade name may also violate the law if it was already lawfully used by another person before and there is a likelihood of confusion.  

Is a trade name the same as a trademark?

A trade name is not the same as a trademark. A trade name is a name you use for your business, while a trademark is a name used to distinguish products and services. Another important difference between a trade name and a trademark is that a trade name is obtained through mere use, while a trademark requires an application process leading to registration in a trademark register of a particular country.

Do you have questions about protecting your trade name or trademark? If so, please contact Joost van Dongen.

This page was last updated on August 8, 2023.