Legislature(1999 - 2000)

04/09/1999 08:15 AM Senate FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
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 SENATE BILL NO. 93                                                                                                             
                                                                                                                                
"An Act relating to the names of businesses and                                                                                 
organizations; and providing for an effective date."                                                                            
                                                                                                                                
 CS FOR SENATE BILL NO. 93(L&C)                                                                                                 
                                                                                                                                
"An Act relating to the names of businesses and                                                                                 
organizations and to the registration under the Alaska                                                                          
Trademark Act of marks that resemble the name of                                                                                
another business or organization; and providing for an                                                                          
effective date."                                                                                                                
                                                                                                                                
                                                                                                                                
DAVID GRAY, staff to Senator Mackie was invited to join the                                                                     
committee.  He explained that the bill sought to                                                                                
consolidate statutes regarding names of businesses and                                                                          
corporate enterprises.  The present legislation was drafted                                                                     
to change the current name availability status under which                                                                      
business entities are allowed to file in the State from                                                                         
three conflicting guidelines to one.  Current guidelines                                                                        
under Title 10 and Title 32 were as followed:                                                                                   
                                                                                                                                
1. Alaska Statutes 10.06, 10.20, 10.35 and 32.11 each                                                                           
use the guideline ".name may not be the same as,                                                                                
or deceptively similar to, the name of a                                                                                        
corporation or registered/reserved name filed                                                                                   
under this title."                                                                                                              
2. Alaska Statute 10.25 uses the guideline ".name                                                                               
shall be distinct from the name of other                                                                                        
cooperatives or corporations organized under the                                                                                
laws of or authorized to do business in this                                                                                    
state."                                                                                                                         
3. Alaska Statutes 10.50 and 32.05 use the guideline                                                                            
".name is distinguishable on the records of the                                                                                 
department (from all other entities filed)."                                                                                    
                                                                                                                                
Due to the result of the difference in the current                                                                              
guidelines and the margin of error encountered in                                                                               
determining name availability, many conflicts arise each                                                                        
year between different business entities within Alaska.                                                                         
Some of the private name conflicts ultimately result in a                                                                       
conflict with the State of Alaska if an entity believes a                                                                       
name was filed inappropriately.  The State expends scarce                                                                       
resources when it must be party to a lawsuit resulting from                                                                     
"conflicting" registered names.                                                                                                 
                                                                                                                                
He further stated that the old standards of "deceptively                                                                        
similar" and "distinct" should be replaced by the newest                                                                        
guideline "distinguishable on the record."  The new                                                                             
guideline would allow for more entities to file with the                                                                        
State of Alaska, because it was not as stringent as the                                                                         
"deceptively similar" standard.                                                                                                 
                                                                                                                                
the adoption of the newer standard would remove the State                                                                       
from these conflicts and allow those entities that see a                                                                        
problem in name similarity to resolve their disputes                                                                            
privately.  He asked that the department representative be                                                                      
allowed to explain further or answer any technical                                                                              
questions.                                                                                                                      
                                                                                                                                
Senator Phillips said something must have triggered Senator                                                                     
Mackie to introduce this piece of legislation and asked for                                                                     
an example of some of the problems.                                                                                             
                                                                                                                                
Co-chair Torgerson indicated that Ms. Williams was present                                                                      
from the Department of Commerce and that she would be the                                                                       
best to answer any questions.                                                                                                   
                                                                                                                                
DAWN WILLIAMS, Corporations Supervisor, Department of                                                                           
Commerce was invited to join the committee.  She said there                                                                     
were several conflicts every year.  For example, she                                                                            
explained the case of "Wild Iris" and "Wild Iris Caf ".                                                                         
She said the department felt they were different but "Wild                                                                      
Iris" did not.  Therefore, a lawsuit was filed and the                                                                          
State was brought into the suit.                                                                                                
                                                                                                                                
Senator Phillips asked where the "Wild Iris" was located                                                                        
and Ms. Williams responded that she believed both were                                                                          
located in Anchorage.  Senator P. Kelly said the "Wild Iris                                                                     
Caf " was in Fairbanks.                                                                                                         
                                                                                                                                
Senator Phillips commented on two businesses claiming the                                                                       
same name.  Ms. Williams explained that the statute reads                                                                       
that no two names must be deceptive.  It is not known                                                                           
whether they are being deceptive or not.  However, it is                                                                        
not up to the State to determine who should use what name.                                                                      
The entities themselves must decide this issue.                                                                                 
                                                                                                                                
Senator Parnell said he understood the State not wanting to                                                                     
be the one to determine "names".  What standard will the                                                                        
Court use regarding names?  Will this bill change the                                                                           
standards?  Ms. Williams explained the procedure they used                                                                      
in determining the name usage.  The Court uses a variety of                                                                     
factors.  Who has used the name longer, where is the entity                                                                     
located, who has the longer business license, etc.  Senator                                                                     
Parnell said his concern was that they were not changing                                                                        
the statutory standard between parties, but rather as it                                                                        
would affect the State's relationship to those parties in                                                                       
registering the names.  Ms. Williams said this was correct.                                                                     
                                                                                                                                
Senator Adams asked the department's comments on amendment                                                                      
that they were attempting to correct this for the insurance                                                                     
companies.                                                                                                                      
                                                                                                                                
Senator Parnell asked what changed between the original                                                                         
bill and the Labor and Commerce version of the bill.  Ms.                                                                       
Williams explained the difference; said it dealt mostly                                                                         
with statutes and a few legal changes.   Senator Parnell                                                                        
asked about substantive changes.  Ms. Williams explained                                                                        
specifically section 1 and also said that the Labor and                                                                         
Commerce version of the bill went up to thirty-eight                                                                            
sections as compared to thirty-four in the original.                                                                            
                                                                                                                                
Mr. Gray said that the legal drafter noted in the original                                                                      
draft there was no mention of any religious corporations                                                                        
and that they should be included.  The Labor and Commerce                                                                       
Committee included those organizations.  She further                                                                            
thought there should be reference to banking laws. He said                                                                      
he would provide the appropriate memorandum.                                                                                    
                                                                                                                                
Senator Leman referred to page twelve, lines twenty-one and                                                                     
twenty-three and asked for a description of "deceptively                                                                        
misdescriptive".  Ms. Williams explained that this was                                                                          
different under registered trademarks and this was the                                                                          
original section.   Section 7 was added which would require                                                                     
the department to check registered business names to                                                                            
corporations so that they would not give a trademark would                                                                      
not be given to anyone if there was already the same name                                                                       
in use.  They were not looking to change Federal Trademark                                                                      
laws, but rather looking to make sure that when they file a                                                                     
trademark they would look at the names on file with the                                                                         
department.                                                                                                                     
                                                                                                                                
Co-chair Torgerson asked if this particular piece of                                                                            
legislation was going to affect any existing corporations                                                                       
or problems that the department presently has?  Ms.                                                                             
Williams said she did not think any corporation was going                                                                       
to be affected that was currently registered.  It will                                                                          
allow more corporations and more businesses to file.  At                                                                        
least twenty-five states have already adopted this same                                                                         
bill.                                                                                                                           
                                                                                                                                
Senator Parnell referred to page three, lines one through                                                                       
thirteen and the use of a corporate name.  He quoted                                                                            
particularly at line seven.  He voiced concern that it                                                                          
looked like it was setting up a standard and wanted to make                                                                     
sure the intent was not to preclude the use of the factors                                                                      
or criteria that Courts already use.  This was not going to                                                                     
be the exclusive standard or was it?  Ms. Williams                                                                              
explained the original statute and how it would be                                                                              
distinguishable.  It would have no concern to the State                                                                         
regarding any name conflict.  Senator Parnell felt the                                                                          
standard was being changed between private parties and                                                                          
giving the right to stop someone from using a particular                                                                        
name under different standards.  He said they were                                                                              
impacting the rights between private parties.   Ms.                                                                             
Williams explained that any corporation on file now,                                                                            
another corporation filing a name that would be                                                                                 
indistinguishable, the first corporation would have                                                                             
priority.  Senator Parnell said this was not meant to                                                                           
change the present criteria the Courts currently use                                                                            
regarding distinguishable names between two private                                                                             
parties.                                                                                                                        
                                                                                                                                
Co-chair Torgerson asked if the section could be taken out                                                                      
along with the section on page eight.  Action could always                                                                      
be brought; the authority does not have to be given.  Ms.                                                                       
Williams advised that the section was not included in the                                                                       
original bill.  Terri Bannister, the drafter, added the                                                                         
section.  As stated by Co-chair Torgerson, anyone has the                                                                       
right to go to Court and stop someone else from using their                                                                     
name or to prove that it is an infringement on their name.                                                                      
They wanted to keep this portion in the bill because it was                                                                     
in 10.06 originally.                                                                                                            
                                                                                                                                
Senator Parnell said this was really a matter of a policy                                                                       
call and did not want there to be a misunderstanding as to                                                                      
what was happening.                                                                                                             
                                                                                                                                
Senator Adams MOVED amendment #1.  Co-chair Torgerson                                                                           
explained the amendment and said perhaps there would be a                                                                       
title change, but that would have to be left up to the                                                                          
drafter.  WITHOUT OBJECTION amendment #1 was ADOPTED                                                                            
conceptually, giving leave to the drafter to make                                                                               
appropriate changes.                                                                                                            
                                                                                                                                
He then said he would like someone to think about another                                                                       
amendment.  He said the department was given authority to                                                                       
adopt their own regulations.  He referred to page two, line                                                                     
twelve, pages five, six, seven, eight, nine and ten.  He                                                                        
suggested taking out the words "interpret", "interpret                                                                          
and", "interpret or".  Senator Phillips MOVED amendment #2.                                                                     
As Co-chair Torgerson explained, the amendment would delete                                                                     
"interpret" wherever it showed up in the bill.  Senator                                                                         
Adams OJBECTED.  He asked the department if they had any                                                                        
objection to the removal of this language.  Ms. Williams                                                                        
said there was no objection.  Senator Adams WITHDREW his                                                                        
objection.  WITHOUT OBJECTION amendment #2 was ADOPTED.                                                                         
                                                                                                                                
Senator Parnell voiced concern regarding a letter from the                                                                      
Law Offices of Burr, Pease & Kurtz, dated 8 February 1999                                                                       
and signed by RALPH E. DUERRE.  In this letter he said                                                                          
that the State should not be making determinations in the                                                                       
guise of corporate regulations with regards to "deceptively                                                                     
similar"; however such determinations would be more                                                                             
properly made by private parties with the assistance of the                                                                     
Courts if necessary, under the concepts of unfair trade                                                                         
practices.  He also referred briefly to a memo dated 26                                                                         
February 1999 from Terri Bannister to Senator Mackie.                                                                           
However, he felt that this memo was no longer valid because                                                                     
the draft had been changed.                                                                                                     
                                                                                                                                
Co-chair Torgerson recessed the committee briefly at                                                                            
approximately 8:55 a.m.                                                                                                         
                                                                                                                                
Co-chair Torgerson reconvened the committee and said that                                                                       
he would HOLD the bill and give members time to work                                                                            
through some unanswered matters.                                                                                                
                                                                                                                                
He further advised that the Senate Finance meeting                                                                              
scheduled for this evening at 6:00 p.m. was cancelled.                                                                          
The schedule for tomorrow morning was briefly reviewed and                                                                      
he said he anticipated the committee being in session                                                                           
between 10:00 a.m. and  2:00 p.m.                                                                                               
                                                                                                                                
                                                                                                                                
ADJOURNMENT                                                                                                                     
                                                                                                                                
Co-chair Torgerson adjourned the meeting at approximately                                                                       
9:00 a.m.                                                                                                                       
                                                                                                                                
                                                                                                                                
SFC-99 (1) 04/09/99                                                                                                             

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