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