By: Atty. Gregorio B. Austral, CPA
The value of a business name
A business name of a proposed enterprise is nothing but a combination of words used to identify a non-existing business. As the proprietor commences his operations and is able to establish good name and reputation in terms of the quality of its products and services, the business name becomes a valuable asset to the company since the company’s name is now being associated to quality. There is a reason therefore for businesses to protect their names from being copied or infringed.
Although we have an old law (Act 3883) regulating the use of business names in business transactions, it is surprising to realize that the law is not primarily intended to establish a property rights system for business names. On the contrary, the main purpose of the law is to protect the dealing public. In People v. Chan Chin, [CA] 45 O.G. 39 64, it was ruled that the purpose of the law is “not to protect the goodwill of the business or its owner or owners but to protect the public dealing with such business or owner or owners through the disclosure of the names and real identity of the person or persons operating the business as well as other facts in the records of the Bureau of Trade Regulation and Consumer Protection (BTRC).
As a consequence, however, of the provision in the law which prohibits any person or entity from using and/or registering any business name or trade name which has been previously registered or one similar thereto, the law has the legal effect of preserving priority interest over BTRCP-registered business names and trade names. In so far as the law and its implementing rules prohibit the registration of those names which so nearly resemble a business name, firm name or style previously registered with DTI, SEC, or any other government office authorized by law to register names or styles, as likely to cause confusion or mistake in the minds of the public and prejudice the interest of the owner of the registered business name, firm name or style, the law to a certain extent establishes a rule of priority of registration.
In cases of usurpation of business name, firm name or style by a third person, the Business Name Law (BNL) does not address nor provide remedies against third parties who usurp such names other than subjecting such third parties for using a business name for their enterprise without complying with the BNL registration requirements to penalties under Section 1 of the law. So, if the purpose is to enjoin the continued use of such names or to recover damages, the law does not give such reliefs to the aggrieved business name owner.
Since the BNL does not entirely provide for a property rights system over business names, businessmen are advised to register whatever intellectual property rights they may have acquired in doing business under the Intellectual Property Law. Clearly, this law confers and protects the rights of the creator and provides for adequate remedies against the infringer.