Legislature(1999 - 2000)
04/30/1999 03:28 PM House L&C
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
CSSB 93(FIN) - NAMES OF ORGANIZATIONS & BUSINESSES
Number 1115
CHAIRMAN ROKEBERG announced the committee's next order of business
is CSSB 93(FIN), "An Act relating to the purposes of certain
businesses and corporations; relating to the names of businesses
and organizations; relating 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."
Number 1130
DAVID GRAY, Legislative Assistant to Senator Jerry Mackie, Alaska
State Legislature, came forward to present SB 93 as aide to the
Senate Labor and Commerce Standing Committee, the bill sponsor.
Senate Bill 93 was introduced in response to a request from the
Department of Commerce and Economic Development (DCED) to attempt
to clear up a real confusion in the state's responsibility for
registry or acknowledging names of the various corporations and
private businesses throughout the state. The state recognizes
names of different corporations and private entities in three ways.
In Alaska Statutes 10.06, 10.20, 10.35, 32.11, the standard is that
the name may not be the same or deceptively similar to the name of
another corporation or public entity. In Alaska Statute 10.25, the
guideline is that the name shall be distinct from the name of
another corporation. In Alaska Statutes 10.50 and 32.05, the
guideline is that the name is distinguishable on the records of the
department. These three different standards distributed through
the state's statutes are cause for a tremendous amount of confusion
and draws the DCED into an enormous amount of controversy.
MR. GRAY stated SB 93 is an attempt to establish one standard,
"distinguishable on the record," which is used by most states and
is recommended by the "Uniform Code Commission." He indicated a
representative of the department is also present to answer
technical questions. Mr. Gray explained to the newer members of
the legislature that, from his experience, without something like
this they would indeed receive some complaint from an irate
constituent on this subject. He described the complaint could be
that someone else was, in the constituent's view, taking the
constituent's [business] name, or it could be that the constituent
filed a name and found out someone else has that name. Mr. Gray
indicated there is not much which can be done in these situations;
in his experience it has been a very difficult issue to resolve to
anyone satisfactorily.
Number 1292
CHAIRMAN ROKEBERG asked if the committee had any questions for Mr.
Gray. The chairman noted the bill's length seems to result from
repeating the same thing in different sections of the statute,
questioning if they were being relatively repetitive.
MR. GRAY answered that is correct. There are three different
standards distributed through a great deal of statute which are
being reduced to one standard, "distinguishable on the record." He
indicated he wished the department to describe why it wishes to
have this standard, why it should be in this place, and how this
might resolve the current confusion.
CHAIRMAN ROKEBERG questioned if there has been any testimony from
businesses providing an example this could correct.
MR. GRAY replied he does not have any direct testimony from
businesses on record. However, there has certainly been no
objection.
CHAIRMAN ROKEBERG indicated he is thinking of the Alaska State
Chamber of Commerce, the National Federation of Independent
Business (NFIB), et cetera.
Number 1373
REPRESENTATIVE HALCRO pointed to the Senate Finance Standing
Committee minutes of April 9, 1999, in the bill packet which
mention the case of "Wild Iris" and the "Wild Iris Cafe" provided
by Dawn Williams of the DCED. Representative Halcro quoted, "'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.'"
MR. GRAY indicated the Senate Finance changes were mainly technical
amendments. The language in SB 93 regarding the adoption of
regulations to "interpret or implement" a subsection, et cetera,
was changed to "implement". Mr. Gray indicated this change was
made in about 15 places and had been the wish of one of the Senate
Finance co-chairs. Mr. Gray noted there had also been one small
technical amendment requested by the department which had made
eminent sense.
CHAIRMAN ROKEBERG indicated the detail-oriented nature of the House
Labor and Commerce Standing Committee.
Number 1485
DAWN WILLIAMS, Records and Licensing Supervisor, Division of
Banking, Securities and Corporations, Department of Commerce and
Economic Development, came forward. Ms. Williams stated she is the
corporations supervisor for the DCED and asked for the committee's
questions.
CHAIRMAN ROKEBERG requested she explain the legislation.
MS. WILLIAMS replied the department has corporations, limited
liability companies (LLCs), limited partnerships, limited liability
partnerships (LLPs), nonprofit corporations, religious
corporations, plus a few more. Basically, there are three
standards for deciding who can have what name. Ms. Williams
indicated the current standards for the limited liability companies
are unfair. The department is attempting to require all entities
to use one standard to determine whether or not their name is
available. Additionally, this legislation would allow more
entities to file with the state, either as a corporation, limited
liability company, or simply as a business name.
Number 1539
REPRESENTATIVE HALCRO noted it was mentioned in the Senate
testimony that 25 other states have adopted this same language. He
questioned if these states had solicited comments from chambers of
commerce, et cetera. Representative Halcro questioned if this is
a problem that exists and if that is the impetus for the
legislation in other states.
MS. WILLIAMS said she really does not know the answer. She would
think that most states have adopted the wording through the Revised
Model Business Corporation Act (RMBCA) done by the American Bar
Association ["national bar association"]. Ms. Williams noted that
language is "the (indisc.) must be distinguishable on the record."
CHAIRMAN ROKEBERG requested Ms. Williams repeat the example of the
Iris case and possibly a few others.
MS. WILLIAMS answered that "The Wild Iris" was on file with the
Division of Banking, Securities and Corporations as a registered
business name. The division received a new registration for "Wild
Iris Cafe." The division felt the names were different; it was not
confused by the two names at that time. The Wild Iris decided the
department was wrong and basically brought suit against the Wild
Iris Cafe and against the state. Through the department, with the
assistant AG [attorney general], it was decided that possibly The
Wild Iris was correct, maybe there is confusion, because the two
entities are in the same type of business. Ms. Williams noted she
thought this is the restaurant business; she thinks one entity is
in Anchorage and the other in Fairbanks. She commented she had
been confused about that at the Senate Finance hearing.
CHAIRMAN ROKEBERG questioned if she was no longer confused.
Number 1657
MS. WILLIAMS replied she believes so. The department decided that
the names were possibly confusing to the public. Unfortunately for
the state, business entity conflicts should not be decided by the
state - they should be decided by each individual entity. A new
corporation first of all needs to make sure there is no other
entity with the same name the corporation wishes to use.
CHAIRMAN ROKEBERG asked how one does this.
MS. WILLIAMS answered one looks in trade magazines, newspapers,
business licensing, and the Division of Banking, Securities and
Corporations of the DCED. She described the example of a business
obtaining a business license and then attempting to register the
business name with the division. In the example, Ms. Williams
noted she was simply speaking of a business obtaining a business
license, not a corporation, partnership, et cetera. In her
example, the division already has a corporation on file with this
same name and therefore will not file that business registration.
However, the first business is still out there doing business under
that name because it has a business license to do that. It is up
to the corporation to stop that business entity from using the
name.
CHAIRMAN ROKEBERG questioned that the corporation would have to
bring cause of action for this.
MS. WILLIAMS answered in the affirmative. She described that there
could be a business with a business license out there doing
business on its own. A corporation starts up, picking this great
name. The corporation files with the division as a corporation and
the division has no other name like that on file. Two years later
the corporation finds out this small entity has the same name and
had it first. Ms. Williams questioned which entity has rights to
the name. She said it is not up to the state to decide who has
right to the name; it is up to those entities to go to court and
determine that.
Number 1748
REPRESENTATIVE HALCRO mentioned he knew of a restaurant called
Chilly's in Anchorage on the Old Seward Highway towards Huffman
which suddenly went from "Chilly's" to "Eric's (ph)."
Representative Halcro noted the only thing he could think of was
that "Chilly's (ph)," the national chain, came in and said "'Hey,
excuse us, but you're using our name.'" He asked if the division
gets involved in that type of situation where a name is trademarked
or copyrighted.
MS. WILLIAMS replied the division cannot get involved in that. She
indicated, however, SB 93 contains a statute change regarding
trademarks within the state. Ms. Williams explained no
duplications are allowed with federally-registered trademarks but
she indicated state trademarks extend only to the state they are
registered in. She noted someone can register a trademark in
Alaska that may already be registered in Washington; the division
does not do any searching or anything. Ms. Williams stated, "The
trademark statutes and the business name or corporate name
standards don't look at each other. What we're doing with the
statute change is making it so that if when somebody files
trademark, we actually at our corporate database or our registered
business name database and make sure that somebody's not stepping
on somebody's toes within our own section, so that we can stop
those problems." She noted these problems have occurred.
REPRESENTATIVE CISSNA assumed because of the onus of responsibility
on the business owner, that there must be numerous cases of
businesses with the same name in various towns, and even in the
same town. She commented her own business name is very close to
another business name; it has been true for 20 years and neither
business cares. Representative Cissna said she is assuming this
wouldn't change that ability.
Number 1861
MS. WILLIAMS answered that every business has to have a business
license; business licensing does not have name statutes. Numerous
businesses can have the same business license name. However, the
Division of Banking, Securities and Corporations, which deals with
corporations, liability companies, partnerships and registered
business names, cannot have one name on file that is the same as
another. It doesn't matter who has a name outside who has not
registered with the division - this doesn't change anything for
those people. If there is a conflict between these businesses that
are outside the division, they have to settle that themselves. It
is not the state's problem; it is not something that the state can
determine. Ms. Williams said no other state she knows of is in the
name conflict business. She commented, "They don't determine
whether this person way out here and this person way out here
shouldn't have the same name or not. It's when they come to
register with the state that they have the problem."
CHAIRMAN ROKEBERG confirmed from Ms. Williams that the business
licensing is under the Division of Occupational Licensing. He
indicated there has been some discussion about changing that. The
chairman asked if she knew the procedure regarding using a name on
a business license; he questioned if there wasn't some warning or
something on the application itself.
MS. WILLIAMS replied she is not sure about warnings. If a business
has "Inc." [incorporated] in its business name when it files its
business license, Business Licensing will send the business a small
blue card informing the business it should contact the Division of
Banking, Securities and Corporations. If a business has "Inc." in
its name, it should be a corporation. Business Licensing also
sends a blue card to inform a business that it can register its
name and that it might want to check with the Division of Banking,
Securities and Corporations to see if another business has a name
like that.
Number 1960
CHAIRMAN ROKEBERG asked how a non-corporate entity registers a name
with the division.
MS. WILLIAMS answered, under Section 10.35. She explained that a
business can file an application with the division if it has a
business license. Currently, the business can register that
business name if the business's name is not the same as or
deceptively similar to another name on file.
CHAIRMAN ROKEBERG indicated he wondered if this applied to any type
of business, mentioning sole proprietorship, partnership, LLC, LLP,
et cetera.
MS. WILLIAMS answered that only business names or d/b/a [doing
business as] names could be registered as sole proprietorship
entities. LLCs, LLPs, and all of those entities, have to file
articles of incorporation or certificates of partnership.
CHAIRMAN ROKEBERG noted, then, they would already be under the
division's jurisdiction. However, if a sole proprietorship wanted
to register a name with the Division of Banking, Securities and
Corporations, they could do so.
MS. WILLIAMS confirmed that is correct.
CHAIRMAN ROKEBERG questioned whether a common multiple partner-type
business would be required to be registered with the division.
Number 2010
MS. WILLIAMS indicated this type of business would not necessarily
be registered. She explained the only entities that must register
with the Division of Banking, Securities and Corporations are
corporations - whether nonprofit or for-profit and including
religious corporations, limited liability companies, limited
liability partnerships, limited partnerships, and cooperative
corporations.
CHAIRMAN ROKEBERG commented, then, sole proprietorships or
combinations of family businesses wouldn't necessarily be
registered [with the division].
MS. WILLIAMS indicated that is correct.
CHAIRMAN ROKEBERG confirmed, though, these businesses could
register under the business name registrations. The chairman noted
the committee had received some correspondence a year or two
previously from a gentleman in Juneau with a landscaping business.
As the chairman recalls, a disgruntled employee of this business
left and then filed the business name with the business registry,
in effect almost stealing the business. The chairman indicated
there was a large conflict because the owner of the business did
not have the business name currently registered, lacked a business
license or something. Chairman Rokeberg asked Ms. Williams if that
rang a bell with her.
MS. WILLIAMS replied it did, but not clearly. She commented, "Our
statutes -- and this is why I say we're not in the name finding
business ...." The entities have to go to court themselves to
determine who has legal right to that name. The first person who
registers a name with the division, whether corporate name or
business registration, is the one who has it. That doesn't
necessarily give the entity legal title to that name; it is up to
the courts to decide who has legal right to that name.
CHAIRMAN ROKEBERG indicated this is because the name could be
copyrighted or trademarked in another jurisdiction, or the business
might be a sole proprietorship which has had a business license for
a number years but finally decided to incorporate, and wouldn't be
on the registry, et cetera.
MS. WILLIAMS indicated the chairman is correct.
CHAIRMAN ROKEBERG noted, though, the issue here is what the courts
should use in interpreting the criteria or standard for the name.
He questioned which standard is being used for the registry
(indisc.).
Number 2123
MS. WILLIAMS answered the standard most used currently is "the same
as or deceptively similar." This has been in use for years, but
the "distinguishable" standard is the newest standard. It is the
one most states are currently using; at least 25 states have
adopted it in recent years.
CHAIRMAN ROKEBERG asked, "Was it using 'deceptively similar'?"
MS. WILLIAMS agreed.
CHAIRMAN ROKEBERG questioned that the division believes by changing
the standard, more businesses with deceptively similar names that
are distinguishable on the record will be able to register,
resulting in the $30,000 and progressively increasing fiscal note.
He confirmed Ms. Williams agreed. The chairman asked if the
division believes it will actually increase its revenue.
MS. WILLIAMS answered that she personally sends out several letters
a month informing businesses their names are deceptively similar to
another name on file and therefore cannot be registered. The
business can choose another name or does not even have to register
it. With the "distinguishable" standard, the business will be able
to register that name, resulting in more revenue [for the state].
Ms. Williams noted it is not a great deal of revenue, but it is a
bit more. In response to the chairman's question, Ms. Williams
informed the committee the fee to register a business name for five
years is $25.
CHAIRMAN ROKEBERG indicated in the landscaping case the name may
have been registered but not renewed after five years, and thus
someone else could have filed it.
MS. WILLIAMS agreed.
Number 2200
CHAIRMAN ROKEBERG questioned if there is anything in statute that
the division should warn (indisc.) business that there is another
business with a similar name, if an entity had what would formerly
be considered a deceptively similar name but would now be allowed
under "distinguishable on the record."
MS. WILLIAMS answered there is nothing currently in statute.
However, the division does inform businesses of other similar names
when businesses inquire about registering their name.
CHAIRMAN ROKEBERG asked if there is any regulatory or statutory
requirement for the division to do this.
MS. WILLIAMS replied not at this time. If the legislation passes,
the division is planning adopt a policy which would include that.
It would be similar to Utah's current policy.
CHAIRMAN ROKEBERG questioned the length in pages in Utah's policy.
MS. WILLIAMS answered that Utah's is approximately two to three
pages. It encompasses a great deal, explaining what names would be
available compared to names on file, et cetera.
CHAIRMAN ROKEBERG asked Mr. Gray if he thought the bill sponsor
would mind if the committee amended the legislation slightly to
tell the division to do this.
MR. GRAY replied whatever works for the division and is good
government.
MS. WILLIAMS indicated the division would have no objections.
CHAIRMAN ROKEBERG noted the division's testimony is that it is
doing this now but it does not have an obligation to do so. It
seems to him the division might have an obligation - that is why it
is doing it. He mentioned providing good service.
Number 2279
MS. WILLIAMS thinks the division probably feels it should and
therefore does so in most cases. The division would not mind
having that in statute. In response to the chairman's comment
about not wanting to add two or three pages, Ms. Williams indicated
she thinks a statement could accomplish this purpose.
CHAIRMAN ROKEBERG interjected they could put something in to the
effect of implementing regulations to provide for informing the
public of similar names so the public is aware there are other
names out there which could be used, to avoid any conflict. The
chairman asked if that would be helpful for the division.
MS. WILLIAMS replied she doesn't know if it would be helpful. She
thinks it would be helpful to the public and the division is there
to help the public. The division is attempting to get as many
corporations, entities, et cetera, to file with the state so that
these entities can continue doing business.
2328
CHAIRMAN ROKEBERG called an at-ease at 4:10 p.m. The committee
came back to order at 4:13 p.m. [TAPE CHANGED MANUALLY DURING THE
AT-EASE]
TAPE 99-50, SIDE B
Number 0001
CHAIRMAN ROKEBERG commented he would like to get some more
information regarding the trademarking (indisc.) in order to carry
the legislation on the floor, unless it is assigned to
Representative Halcro. The chairman confirmed there were no
further witnesses on SB 93 and closed the public hearing.
Number 0035
REPRESENTATIVE HALCRO made a motion to move CSSB 93(FIN) out of
committee with the accompanying positive fiscal note and individual
recommendations. There being no objection, CSSB 93(FIN) moved out
of the House Labor and Commerce Standing Committee.
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