One of the most important steps in creating a new business is to define your business name. This step is about building a badge that will differentiate you from the competition in the market.
Costa Rica, in recent years, has become more than just a tourist hotspot for holidaymakers – it’s become an increasingly viable destination for business and investment. Its GDP peaked in 2017 at US$57.06 billion and continues to be one of the fastest-growing economies in Central America.
The government is fuelling this growing commercial attractiveness by enforcing a moratorium on bureaucratic regulations until May 2022. This makes it easier for foreign businesses to navigate the initial phases of expansion in the country. Additionally, a large chunk of the formation process can be done online.
But how do businesses protect their image and branding once settled and operational? We look at the protections the country offers to ensure companies can maintain profitable commercial activities.
Registering a company name
At the time of establishing a new company in Costa Rica, entrepreneurs will register their business name. This name is unique, and is the first step in developing a brand for their business. The name comes in addition to the identification number that Costa Rican authorities grant each new business for administrative and tax purposes.
Don’t treat this step lightly; the name selected at this step in the formation process will be the one the company carries into its long-term venture and will be registered in the National Registry of Legal Entities. This registration step also prevents others from using the same name for their company and brand.
Commercial use of a company name
However, this protection does not cover the commercial use of the name. For this, we are faced with a different need, which is to register our commercial name as a different sign of Industrial Property before a different Registry. This step grants the name protection under the country’s Intellectual Property laws.
The Commercial Name, according to the Law on Trademarks and Other Distinctive Signs is (translated from Spanish) “a denominative or mixed sign that identifies and distinguishes a particular company or commercial establishment.” This commercial name must not be related to the name of another company that registered and uses it.
The exclusive right to a commercial name can be acquired by its first use in commerce and ends with the closing of the company or the establishment that uses it. However, it is advisable to register it properly, with the appropriate authorities. This way you can better protect the use of the name and secure your brand. You’ll be more able to prevent its improper use by third parties that seek to promote their commercial activities with it. This avoids brand dilution and public confusion.
Commercial name registration process
In Costa Rica, the registration of a commercial name can be made within a period of no more than 6 months and the protection begins from the moment the application is approved. It is important to mention that this protection not subject to manual renewal, since it is associated with the business and its ongoing operational existence.
The process begins by verifying the availability of the commercial name in databases of the Registry. Once cleared, the corresponding application or form must be submitted with the following written information:
- Name and address of the applicant
- Place of incorporation and domicile of the applicant when it is a legal person
- Name of the legal representative or power of attorney (POA) appointed during the company formation process
- Name and address of the POA in the country, if the applicant has no real and effective domicile or establishment in the country
- The name or sign to be registered
- The translation of the sign, if it written or communicated in a language other than Spanish
- In the case of commercial names: the address of the establishment that will be identified with the requested sign must be explicitly and accurately indicated, as well as the business activity
- In the case of propaganda signs, the products or services that will be promoted with the requested sign must be indicated and the brand or commercial name must be indicated, whether registered or in process, to which it will be linked
- Proof of payment of the established fee
- Address to send notifications.
Once the application has been submitted to the Registry, a form test will be carried out to check that the requirements are met and corrected if necessary. In this case, it is important to include the necessary information from the beginning – any gaps in information will cause delays, and any major hold up in provided the information requested could result in application rejection. Additionally, the first-in, first-served nature of this process means that delays put you at risk of someone else registering your desired name/sign before you. If you’re unsure about what to include, seek local legal advice upfront.
Once the form analysis has been carried out, the Registry will analyze the request to determine if the requested sign contains any established legal prohibitions. The Registry shall ensure that the proposed commercial names do not pose a risk of disruption to morality or public order. After this analysis, any inconsistency must be corrected so that it complies with local standards and the process can continue.
Publication of your name and/or sign
After the examination of the form and substance of your name or sign, the Registry will issue an edict requesting it be published 3 times in the official newspaper to raise awareness among third parties about your proposed application.
After 2 months, if no objection has been received, the commercial name or sign is registered and your IP protection request is granted.
Other particulars regarding the commercial name
Note the following additional characteristics of the commercial name:
- It has no expiration period. Since its validity is indefinite, reliant only on the existence of the company that uses it, it does not have to be renewed
- It cannot be transferred to third parties unless it has been sold in conjunction with the business
- The owner of a commercial name may prevent the use of this or any other that is identical or similar that may affect you.
Contact the local experts
If you’re thinking of creating a new company in Costa Rica, it’s wise to get legal advice and assistance right from the beginning. The process involves appointing a legal representative, and you’ll want to partner with a team you can trust to work in the best interests of your business.
Biz Latin Hub can help you protect and establish your company and its name by carrying out the required procedures with due diligence. Our suite of market entry and back-office services goes beyond filling out paperwork – we ensure your needs are met, and our bilingual team bridges bureaucratic and cultural gaps to reduce confusion and delay.
Reach out to our Costa Rica team at [email protected], so we can help you make the most of this developing market.