A corporation’s name is one of the most important assets it owns, excepting perhaps for private investment or holding companies where a numbered name (e.g. 1234567 Ontario Inc.) or an indistinct name will suffice. But generally a company offering goods or services to the public will want an effective name, one that helps attract business and create goodwill. At the same time, the name must not conflict with an existing corporate name, trade style or trade mark used for the same or a related business.

When incorporating a company, selection of a name is not always given the attention it deserves. Not providing enough care and time in this process, in consultation with your legal advisor, can risk complaints from third parties that the name is too close to their own, with the further risk of having to change the name or pay damages. Sometimes a request to change the name can come from the Corporate Branch of particular jurisdiction, especially the one under whose laws the company was incorporated.

Under regulations enacted pursuant to the Ontario Business Corporations Act, a corporate name must not be too general (e.g. ABC Industry Inc.), only descriptive of the business of the corporation (e.g. Fine Drapes Inc. except perhaps if "Fine" was a surname), primarily or only the name or surname of an individual who is living or has died within 30 years prior to the date of filing the articles or is primarily or only a geographic name used alone (e.g.Northern Ontario Inc.). There are, however, certain exceptions for these situations including where through long use, a general name has become distinctive in the mind of the public. Particular statutes sometimes impact on the corporate name selected. This is so with most of the laws that regulate establishing personal corporations for various professions including engineering and architecture. These laws set out how, from their perspective, a profession can be referred to in the corporate name.

These rules may sound technical or even arbitrary, but they generally work to protect the interest of the name-holder when properly applied. For example, if a name is too general, such as Taret Inc. (I have made up this name for the purpose of this article), someone else can choose a similar-sounding name and following the above rules, incorporate words to indicate what the business does. For example, it might choose Tarret Meat Products Inc. The first business, Taret Inc., would, in our view, have real difficulty to stop the second business from using its name if it was also in the meat business and serving similar customers. Thus, while clients will sometimes ask why a proposed corporate name should have a descriptive element, it is usually in the client’s interest to have a name with that characteristic. Exceptions are provided where general names acquire distinctiveness through long use, e.g. McDonald’s.

The same logic applies to a corporate name which is only descriptive of the business, but in reverse.

The Ontario Business Corporations Act also provides that a name must not contain certain enumerated words or expressions (in particular to suggest a government connection, for example “Veteran”), and also must not be the same as or similar to the name of a known body corporate, trust, association, partnership, sole proprietorship or individual, whether in existence or not, if the use of the name would be likely to mislead the public. The same rule applies where a corporation identifies itself to the public under a name different from its corporate name. (These are so-called assumed, unit or divisional names). Thus, subject to limited exceptions, it is not lawful to use a name similar to one already in use where the customer base might be confused as to the source of the goods or services. For example, if a company exists called John’s Tech Ball Bearings Inc., it would not be prudent for a new company making similar or related products to call itself Joan’s Hi-Tech Ball Bearings Ltd., if again they potentially will serve the same market. At a minimum, similarity of names in appearance or sound entails a consideration of the relevant product and geographical markets.

A further rule is that an Ontario corporation may only have a name that is English only, French only, that combines English and French, or is comprised of equivalent, separately used English and French names. There are also limitations on the length of corporate names and the kinds of letters, numerals and grammatical symbols that can be used to form them.

Under the Ontario Business Corporations Act and regulations, a NUANS report must be submitted with the Articles of Incorporation or Articles of Amendment to ensure that the Articles will be issued. A NUANS report is a report prepared by an authorized issuer from a computerized database maintained by the Federal government. It will show Canadian Provincial and Federal corporate names, trade styles and Canadian-registered trade marks that are identified as the same or similar to the proposed name. A study of the report with legal counsel will assist to ensure, as far as possible, that the desired name will not conflict with existing names or trade marks in the marketplace where, again, the possibility of market confusion may arise. In this regard, using a name similar to another in the marketplace for a completely different product will likely not raise an issue, but businesses still should be cautious: using a very famous corporate name or trade mark may still get a company in trouble.

It will not always be possible from the NUANS report to know what business another company engages in and also, the NUANS report and the databases it is derived from are subject to inherent limitations which sometimes make them incomplete. Still, with the market knowledge of the client, perhaps supplemented by online business searches using Google and similar functions, a reasoned decision can be made whether a proposed name is likely to be safe. In practice, this should go a long way to reducing the risk of choosing a name that trenches on third party rights.

The NUANS database does not include names of (non-Canadian) corporations doing business outside of Canada except for corporations which have obtained an extra-provincial license to carry on business in a particular province or territory. Similarly, American or other foreign-registered trade marks will not appear in the NUANS report. Therefore, for example, if a Canadian company wishes to change its name and has a subsidiary operating in the United States, it will be prudent to have U.S. legal counsel check in advance that a name similar to that which the parent wishes to adopt can be adopted with safety in the United States.

An important point in Ontario is that once the NUANS report is obtained and assuming that its period of validity (90 days) has not expired, it can be submitted to Director of Corporations at Queen’s Park in Toronto together with Articles of Incorporation or Articles of Amendment and the name will issue in due course. In other words, the Corporate Branch will not review the NUANS to determine whether confusion may exist with a name or mark used by another. This burden and risk are assumed solely by the applicant for the name. This is so despite the fact that the Ontario government requires a NUANS to be filed with the authorizing Articles.

The situation is otherwise with respect to Corporations Canada, which administers matters concerning corporations incorporated or continued under the Canada Business Corporations Act (the federal general incorporating statute).

In that situation, an examiner in Ottawa will review the NUANS report and may object that the proposed name appears to conflict with the name or trade mark of another party. Sometimes one can convince the examiner that the objection is not reasonably founded, but not always. In this respect, proceeding under Ontario law to obtain or change a corporate name offers a general advantage in our judgement. Sometimes the applicant can conclude for various reasons that the risk of a conflict, while apparent in theory, may in practice be unlikely to occur, so it saves time and cost to proceed under Ontario law where no risk is incurred of an examiner’s objection. Sometimes indeed, it may be of interest to a federally-incorporated company to transfer to the Ontario corporate jurisdiction to avoid the risk of dealing with such objections and the related time and cost expenditure. For example, if a federal company wishes to change its name and is confident that an objection from a third party will not be received despite the appearance of a conflict raised by the NUANS, rather than try to fight it out with Corporations Canada it should consider applying for transfer to the jurisdiction of the Ontario Business Corporations Act. This can be achieved by what is known as the continuance procedure, whereby it can become governed by the Ontario Business Corporations Act, file the NUANS with its articles and obtain the desired name without further ado.

However, whether proceeding under the Canada Business Corporations Act or the Ontario Business Corporations Act, the applicant for a corporate name is always strongly advised to check the NUANS carefully with his lawyer to consider whether the risk of violating the rights of a third party is too high. For example, if one wishes to use the name John’s Tech Ball Bearings Inc. and a NUANS search discloses that “New Tech Ball Bearings” is an existing trademark, this will raise an issue that the proposed name is too close to that mark, especially since the Trade Marks Act (Canada) grants an exclusive right to a registered trade mark owner to use the mark anywhere in Canada in connection with the goods or services covered by the registration.

There are many other twists and turns in the area of corporate names, one of which is that in some cases, it may be advisable to adopt the desired name by way of a local business style rather than as a corporate name. Thus, it may make sense, for example, that a numbered company be formed and register “John’s Tek Ball Bearings” as a business style. Provincially-registered trade styles can violate trade mark rights just as corporate names can, so caution is still advised. Business or trade styles are registered in Ontario under the Business Names Act and similar legislation exists under the laws of each province to permit similar local filings of so-called assumed, divisional or trade names.

Out-of-pocket costs to obtain a NUANS are relatively minimal. It will sometimes be useful to obtain two or even three such reports before a company can be satisfied that it has chosen a name that is both effective from a market standpoint and will not be exposed to significant risk in the future of being confusingly similar with another’s name or trade mark or otherwise unlawful.

A last point is that the corporation name must by law be set out (in full) in all contracts, orders for goods or services, invoices and negotiable instruments (therefore on cheques). It is not required, therefore, that the name be set out in business cards or on the door of the company premises. A business style can however appear in such formats.