A business name (obchodní firma) is the name under which an entrepreneur is registered in the Commercial Register. This is stated in Section 8(1) of the Commercial Code (obchodní zákoník). However, in common usage we have become accustomed to using the term firma in a completely different and incorrect sense, whereby we personify the firm and use it as a substitute for the concepts of subject, entrepreneur or commercial company. A striking example in this regard may be the best-known Czech portal Seznam, which in its “firmy” section lists not only entrepreneurs—natural and legal persons—but also non-entrepreneurial legal persons and organisational units of the state.
The term firma is thus used promiscuously in various contexts, with unclear meaning, and not only in common speech but also in professional publications and in legal practice. This state of affairs is certainly not desirable, it is confusing and moreover unnecessary, since the Czech legal order provides sufficient terms with precise and appropriate meanings.
Business Name (Obchodní firma)
As already stated above, a business name (obchodní firma) is the name under which an entrepreneur is registered in the Commercial Register. Therefore, the equivalent of the name of a natural person (Michal Kučera) is, in the case of an entrepreneur registered in the Commercial Register, his business name (Horologium, spol. s r.o.). An entrepreneur is obliged to perform legal acts under his business name.
If we say, therefore, that we do not carry out cleaning in our offices ourselves, but it is provided for us by the cleaning firma Telescopium, s.r.o., we commit linguistically the same nonsense as if we were to say that the cleaning is provided by a name. The sentence should correctly read: We do not carry out cleaning in our offices ourselves, it is provided for us by the company Telescopium, s.r.o. The sentence “I have founded a firma” is likewise incorrect, and moreover it is not even clear whether its author wanted to say that he is the founder of a commercial company or whether he started doing business as a natural person. The term firma is also often used in the sense of commercial company as opposed to natural person; for example, the question “Do you do business as a natural person or do you have a firma?” should correctly read “Do you do business as a natural person, or have you founded a commercial company for business purposes?” After examples of incorrect use of the term, here are some examples of correct usage. The question “What is the name of the company in which you are a managing director?” should read “What business name does the company in which you are a managing director have?” The phrase “Commercial company with the designation Tucana a.s.” should correctly be “Commercial company with the business name Tucana a.s.”
The traditional concept of business name (obchodní firma), used in First Republic law, appears in the Commercial Code (obchodní zákoník) only after an amendment effective from 1 January 2001 and replaces (and at the same time also changes in meaning) the previously used concept of trade name (obchodní jméno). The non-existence of this concept in positive law before 2001, however, does not change the fact that its use in the sense of commercial company, entrepreneur, etc. was incorrect. In this connection, it must be pointed out that this is not merely an academic problem of incorrect use of the term. In practice, cases occur where an obligation is imposed by an administrative act on a trade name or business name (obchodní jméno, resp. firma), which results in nullity of the administrative act in question due to absolute error in the person of the addressee (the act is addressed to something that is not a person in the legal sense of the word).
A business name (firma) is always linked to the registration of an entrepreneur (whether a natural or legal person) in the Commercial Register. An entrepreneur—a natural person—not registered in the Commercial Register is obliged to perform legal acts under his name and surname; an entrepreneur—a legal person—not registered in the Commercial Register is obliged to perform legal acts under his name (název). An entrepreneur not registered in the Commercial Register may use a distinguishing addition or further designation alongside his name and surname or name (provided that it does not have a misleading effect and its use is in accordance with legal regulations and good morals of competition). But back to the business name (obchodní firma). From the point of view of content, we can divide business names into personal, objective, fantasy and mixed. A business name is formed by the stem (base) of the business name and a business name addition, which supplements or specifies the base. Additions may be mandatory or voluntary. A personal business name for a natural person is formed by the name and surname (Michal Kučera); for legal persons it is derived from the names and surnames of partners or founders (Kučera, Vitásek, s.r.o.); an objective business name is derived from the subject of business (NOVÝ KAMENOLOM, akc. spol.). A fantasy business name has an abstract character (Equuleu, kom. spol.).
The business name of a natural person must always be his name and surname (František Hlinovský). The full name and surname must be used (thus, for example, only the surname, or the first letter of the name and surname cannot be used), and the real, non-diminutive, current name and surname. The name and surname form the basis of the business name; the business name may further contain an addition distinguishing the person of the entrepreneur or the type of business relating as a rule to this person or type of business. The law permits both personal additions (František Hlinovský - syn) and objective ones (František Hlinovský – Klempířství), as well as fantasy ones (František Hlinovský – Ophiuchus). However, the rule should be only personal and objective additions. Nor can it be excluded that several additions are given at once (František Hlinovský, syn – Klempířství). As already stated, a business name (obchodní firma) may be used only by that natural person who has been registered in the Commercial Register.
The business name of a commercial company or cooperative and other legal persons that are registered in the Commercial Register is their name (název) under which they are registered in the Commercial Register. A mandatory part of the business name of legal persons is also an addition designating their legal form; details of such an addition are laid down within the regulation of the relevant type of commercial company in the Commercial Code (v.o.s., veř. obch. spol., k.s., spol. s r.o., s.r.o., a.s., etc.), or in a special law (s.p.).
A business name must be exclusive, that is, it must not be interchangeable with the business name of another entrepreneur and must not have a misleading effect (it must not create a misleading idea about the entrepreneur or the subject of business—for example, Policie ČR, s.r.o.). A different addition designating the legal form is not sufficient to distinguish the business name. (Circinus s.r.o and Circinus a.s. are therefore interchangeable business names). For a natural person, as a rule, indication of a different place of business is sufficient for distinction (Michal Kučera, Příbram). If a natural person has the same name as another entrepreneur operating in the same place, he is obliged to supplement the business name with a sufficiently distinguishing addition (Michal Kučera - Čalouník). If the addition of one addition would not be sufficient for distinction, it is the entrepreneur’s obligation to add a further addition (Michal Kučera starší – Čalouník).
If several persons do business under a common name without establishing a legal person, for example on the basis of an association agreement pursuant to the Civil Code (občanský zákoník), this common name is not a business name. An entrepreneur may have only one business name—the so-called principle of unity of business name. A natural person may, of course, found several commercial companies, provided the statutory conditions are met. However, each of these companies (entrepreneurs) may have only one business name under which it performs legal acts.
Various designations of establishments or enterprises must be distinguished from the business name (whilst the names of the hotels Caeleum Praha and Caeleum Brno are merely designations of the establishment, the name of their operator Caeleum ČR, spol. s r.o. is a business name).
Protection of Business Name
If someone has been harmed in his rights by unauthorised use of a business name, he may claim against the unauthorised user that he refrain from such unlawful conduct and that he remove the defective state. Furthermore, he may demand the surrender of unjust enrichment (if it arose in connection with the unauthorised use of the business name), compensation for damage suffered and appropriate satisfaction, that is, compensation for non-pecuniary harm. This may be provided in money; other forms are also possible. The court may also grant to the person who was harmed by the unauthorised use of the business name the right to publish the judgment at the expense of the party who was unsuccessful in the dispute, i.e. the person who used the business name without authorisation. The court may also determine, according to the circumstances, the scope, form and manner of publication of the judgment. From the point of view of the importance of the good reputation of the entrepreneur, this method of protection may appear effective.
Unauthorised use of a business name must be understood in a broad sense. This will include cases where an interferer appropriates another’s business name and uses it in his business, but also cases where he himself chooses and has registered for himself a business name interchangeable with a business name already used by another entrepreneur. Protection of the business name will certainly also be applicable in cases where someone uses his business name in a distorted form, inaccurately, if this creates interchangeability with another business name.
Brief Explanation of Other Terms
In conclusion, we consider it important also to outline briefly the meaning of terms that we have used in connection with the explanation of the term business name (firma).
Subject
Subjects of law are persons in the legal sense. Persons in the legal sense have legal personality, i.e. the capacity to have rights and obligations. Subjects, under Czech law, are natural persons and legal persons. Legal persons are commercial companies, cooperatives, civic associations, political parties, churches, self-governing chambers, foundations, state funds, municipalities, regions, health insurance companies, etc.
Entrepreneur
An entrepreneur is one who carries out a continuous activity, independently, in his own name and on his own responsibility for the purpose of achieving profit, provided that at the same time it concerns a) a person registered in the Commercial Register, or b) a person who does business on the basis of a trade licence, or c) other authorisation, or d) a natural person who carries out agricultural production and is registered in a special register.
An entrepreneur is therefore every natural and legal person who legitimately does business or is registered in the Commercial Register (in this case, paradoxically, an entrepreneur is also a subject who does not do business).
Commercial Company
A commercial company is a legal person founded as a rule for the purpose of doing business; it is always registered in the Commercial Register and is therefore always an entrepreneur. A commercial company as a legal person is a subject of rights, not an object. In contradiction to commonly used language, one cannot therefore deal with a commercial company, own it, sell it or otherwise transfer it. The erroneous statements “I sold my limited liability company” or “I jointly own two companies now” should correctly read “I sold my business shares in the limited liability company” or “I am now a partner in two companies”.
Enterprise
By enterprise (podnik) the law understands a set of tangible as well as personal and intangible components of business. An enterprise includes things, rights and other property values that belong to the entrepreneur and serve for the operation of the enterprise or, by their nature, are intended to serve this purpose; an enterprise is a collective thing. An enterprise is a thing, it is the property of the entrepreneur. An enterprise is not a subject. The following statements are therefore incorrect: “I concluded a contract with the enterprise BOOTES” (correctly “I concluded a contract with the company / with the entrepreneur BOOTES, a.s.”), “Property owned by the enterprise will be sold” (correctly “Property owned by the company / the entrepreneur will be sold”).
This text was translated from Czech to English using an AI translator.