A business name (obchodní firma) is the name under which an entrepreneur is registered in the Commercial Register. This is what Section 8(1) of the Commercial Code tells us about a business name. In common speech, however, we have become accustomed to using the term firma in a completely different, incorrect sense, whereby we personify the firma and use it as a substitute for the terms entity, entrepreneur or trading company. A deterrent example in this regard may be the most well-known Czech portal Seznam, which in the “firmy” section lists not only entrepreneurs, both 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 an unclear meaning, 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

As already stated above, a business name 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.

Thus, if we say 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 are committing 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 established a firma” is also incorrect and, moreover, it is not even clear whether its author wanted to say that he is the founder of a trading company or whether he started business as a natural person. The term firma is also often used in the sense of trading company as opposed to a 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 established a trading company for the purposes of doing business?” Following examples of incorrect use of the term, some examples of correct use. The question “What is the name of the company in which you are a director?” should read “What business name does the company in which you are a director have?”; the phrase “Trading company with the designation Tucana a.s.” should correctly be “Trading company with the business name Tucana a.s.”

The traditional term obchodní firma, used in First Republic law, appears in the Commercial Code only after the amendment effective from 1 January 2001 and replaces (and at the same time also changes the meaning of) the previously used term obchodní jméno. The non-existence of this term in positive law before 2001, however, does not alter the fact that its use in the sense of trading 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, there are cases where an obligation is imposed by an administrative act on an obchodní jméno or firma, which results in the nullity of the administrative act in question due to an 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 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 first name and surname; an entrepreneur – a legal person – not registered in the Commercial Register is obliged to perform legal acts under his name. With his first name and surname or name, an entrepreneur not registered in the Commercial Register may use a distinguishing addition or further designation in business (provided that this 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. From the point of view of content, we can divide business names into personal, substantive, fanciful 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 compulsory or voluntary. A personal business name for a natural person is formed by the first name and surname (Michal Kučera); for legal persons, it is derived from the first names and surnames of partners or founders (Kučera, Vitásek, s.r.o.); a substantive business name is derived from the object of business (NOVÝ KAMENOLOM, akc. spol.). A fanciful business name has an abstract character (Equuleu, kom. spol.).

The business name of a natural person must always be his first name and surname (František Hlinovský). The entire first name and surname must be used (thus, for example, only the surname or the first letter of the first name and surname cannot be used), and the first name and surname must be real, not diminutive, and current. The first name and surname form the base 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 that person or type of business. The law permits both personal additions (František Hlinovský - son) and substantive additions (František Hlinovský – Plumbing), as well as fanciful additions (František Hlinovský – Ophiuchus). However, the rule should be only personal and substantive additions. Nor can the inclusion of several additions at once be excluded (František Hlinovský, son – Plumbing). As already stated, a business name may only be used by that natural person who has been registered in the Commercial Register.

The business name of a trading company or cooperative and other legal persons that are registered in the Commercial Register is its name under which they are registered in the Commercial Register. A compulsory 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 trading 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 act (s.p.).

A business name must be exclusive, i.e. it must not be confusable with the business name of another entrepreneur and must not have a misleading effect (it must not give rise to a misleading impression of the entrepreneur or the object of business – for example, Policie ČR, s.r.o.). A different addition designating the legal form is not sufficient to distinguish a business name. (Circinus s.r.o and Circinus a.s. are therefore confusable business names). For a natural person, as a rule, the 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 information about the name with a sufficiently distinguishing addition (Michal Kučera - Upholsterer). If the addition of one addition were not sufficient for distinction, it is the entrepreneur’s obligation to add a further addition (Michal Kučera senior – Upholsterer).

If several persons do business under a common name without establishing a legal person, for example on the basis of a consortium agreement under the Civil Code, 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, establish several trading companies, subject to compliance with statutory conditions. 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 establishments, the name of their operator Caeleum ČR, spol. s r.o. is a business name).

Protection of Business Name

If someone has been affected in his rights by unauthorised use of a business name, he may demand that the unauthorised user refrain from such unlawful conduct and that he remedy the defective state. He may further demand the surrender of unjust enrichment (if it arose during the unauthorised use of the business name), compensation for damage incurred and appropriate satisfaction, i.e. 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 has been affected by unauthorised use of the business name the right to publish the judgment in the judgment at the expense of the party who did not succeed 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 an entrepreneur, this method of protection may appear effective.

Unauthorised use of a business name must be understood in the broad sense. This will include cases where the infringer 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 confusable with a business name already used by another entrepreneur. Protection of a business name will certainly also be applicable in a case where someone uses his business name in a distorted form, inaccurately, if he thereby gives rise to confusability with another business name.

Brief Explanation of Other Terms

In conclusion, we consider it important to briefly outline the meaning of the terms we have used in connection with the explanation of the term firma.

Entity

Entities 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. Entities, under Czech law, are natural persons and legal persons. Legal persons are trading 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 continuous activity, independently, in his own name and on his own responsibility for the purpose of achieving profit, if at the same time he is 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.

Thus, an entrepreneur is every natural and legal person who lawfully does business or is registered in the Commercial Register (in this case, paradoxically, an entity that does not do business is also an entrepreneur).

Trading Company

A trading company is a legal person established, as a rule, for the purpose of doing business; it is always registered in the Commercial Register and is therefore always an entrepreneur. A trading company as a legal person is a subject of rights, not an object. Contrary to commonly used language, a trading company cannot therefore be dealt with, owned, sold or otherwise transferred. The erroneous statements “I sold my private limited company” or “I now co-own two companies” should correctly read “I sold my business shares in the private limited 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 to operate the enterprise or, by their nature, are 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 an entity. 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 / entrepreneur will be sold”).

This text was translated from Czech to English using an AI translator.