Spanish retail giant Zara forces Canberra small business into name change

Canberra small business owner Neda Luketic has been forced to completely rebrand her children’s clothing company after receiving an infringement notice from retail giant Zara.

Luketic told SmartCompany she received an infringement notice from Zara’s solicitors earlier this month requesting a change to the name of her business, ZaraBumba, because it was too similar to the retail chain’s name.

“It was basically an infringement notice on the Zara trademark,” said Luketic. “They said my business name was too similar to Zara and that I was using the Zara name to better my business.”

Luketic launched ZaraBumba in 2011, naming the business after her three-year-old daughter Zara. She has now rebranded the company under the name Z and Co.

While she sought legal advice from her solicitor, who told her it would be possible to retain the ZaraBumba name, Luketic says the costs of seeing the case through the courts were prohibitive.

A spokesperson for Zara Australia told SmartCompany Zara contacted Luketic when it learned of the ZaraBumba online store, which Luketic launched this year.

“Zara contacted Neda Luketic, owner of the ZaraBumba online sales website, to highlight the possible misleading information to customers caused by the name,” said the spokesperson. “The notice was issued to avoid ambiguity with customers, as a matter of respect to them and to avoid any brand confusion.”

The spokesperson said Zara offered to assist Luketic by providing links to websites with information about registering alternative business and domain names and trademarks. “Zara wants to underline its high respect for the … [ZaraBumba] initiative and has tried to demonstrate this throughout the process with practical assistance,” said the spokesperson.

“We cannot forget that Zara originated from a small family business in apparel manufacturing and, as a result, the brand is empathetic to all entrepreneurs.”

“It is probably worth nothing that Ms Luketic initially agreed to take all measures to solve the confusion, including the change of the site name, business name and to discontinue the use of the trademark ZaraBumba,’ said the spokesperson.

“Our aim was always to resolve the issue amicably and to help her business to move forward in a positive fashion in the future.”

K&L Gates partner Jane Owen told SmartCompany that the case “reinforces the basic business principle that if you are going to launch a business, you need to make sure the trademark is available”.

“The difficulty in this case is that Zara has registered trademarks and ZaraBumba probably did not,” says Owen. However, if Luketic had have owned the ZaraBumba trademark, it would have provided an “immediate defence” and made it much harder for Zara to establish a case, says Owen.

Owen says business owners should not mistake registering their business name with registering a trademark.

“Many people falsely believe that registering a business name gives them an entitlement to run that business, when what it gives them is an entitlement not to be fined for not having a business name,” says Owen.

“It really is incumbent on new business owners to go one step further to protect their business and to also stop other businesses from infringing their trademarks,” she says.

Since appearing on A Current Affair this week, Luketic has been overwhelmed by the support she has received from fellow small business owners.

“I’m now hoping to recoup my losses,” says Luketic, who is in the process of re-launching her company’s website and hand-stitching new labels onto her products. There are also costs associated with registering her new name business name and this time around, applying for a trademark.

If Luketic has one piece of advice for other small business owners, it is to double check their business names with IP Australia to ensure they are not infringing any trademarks. “A lot of small business owners, especially mums who operate their businesses from home, don’t know about trademark issues,” she says.