This guide is based on UK law. It was last updated in October 2008.
The Companies Act 2006 has introduced the role of the ‘Company Names Adjudicator’ which is a new weapon for trade mark owners. The provisions concerning the Company Names Adjudicator came into force on 1st October 2008.
A misconception
It was a common misconception that the incorporation of a company under the previous Companies Act, the Companies Act 1985, gave the company concerned some form of trade mark right to its company name. It did not. The incorporation of a company under the old act simply prevented the incorporation of a company whose name was identical to or ‘too like‘ the name of a company already incorporated under the Act.
A company name registration, in the absence of a trade mark registration or common law rights established via use under the tort of 'passing off', could not in itself prevent another company trading under the identical or similar name. It simply prevented the incorporation of a company under that name on the Companies Register.
Furthermore, although the old Companies Act did give companies already incorporated under the Act the right to object to the continued incorporation of a company which was ‘too like’ an existing name, a decision to force the change of a company name was subject to the discretion of the Secretary of State in the form of Companies House. In practice this meant that this happened only if a company name was almost identical to an existing registration. The ability to challenge a company name registration under the old Act was also only available to the owner of an existing company registration.
Weak provisions of the old Act
The relatively weak provisions of the old Act concerning the registration of similar company names was particularly problematic for companies which had not yet been incorporated under the Act, but where news of their impending launch had been leaked to the press or for companies which had yet to begin trading or were in the early days of trading and thus had not established common law rights to a name via use and had not yet registered the name as a trade mark.
In 1996 news of the merger of the multinational pharmaceutical companies Glaxo plc and Wellcome plc was leaked and at the time the news of the merger became known, there was no company on the Companies Register incorporated under the name GlaxoWellcome. An individual proceeded to incorporate such a company before the owners of the merged GlaxoWellcome entity had done the same.
Although ultimately the ‘true’ Glaxo Plc was successful in forcing the change of the offending company name, it had to resort to taking action through the courts and succeeded on the basis that the earlier incorporation would act as an ‘instrument of fraud’. The GlaxoWellcome case aptly illustrates some of the problems with the old Act in that a complainant was forced into costly court proceedings, rather than being able to utilise the provisions of the Companies Act itself.
Furthermore, an allegation that a company name registration is an ‘instrument of fraud’ would succeed only in the most blatant of cases. If the offending company never actually used the name concerned in commerce, then conventional trade mark infringement and passing off actions would not be available to the complainant, enabling a dormant company to remain on the Register with an offending name.
The new protections
The Companies Act 2006 provided for a Company Names Adjudicator who resides at the UK Intellectual Property Office (UKIPO). Company Names are dealt with under Sections 66 to 74 of the new Act and the new provisions came into force on 1st October 2008.
Under the new Act anybody can file an objection with the Company Names Adjudicator if the new company is incorporated under a name that is the same as that associated with the complainant and in which the complainant has goodwill in a business associated with the name or that the new company name is sufficiently similar to such a name and that its use in the United Kingdom would be likely to mislead by suggesting a connection between the company and the complainant.
The crucial difference to the provisions of the old act are that the complainant need not be owner of a registered company. Furthermore, the issue of goodwill has been brought into consideration with the phraseology of ‘sufficiently similar’ bringing the new regime much more in line with the tort of passing off and the law of trade mark infringement. It would therefore appear that it will be much easier for a complaint to be upheld under the new regime compared to the old regime.
The new regime provides for the protection of the rights to company names which have not been registered under the Companies Act, a major difference to the old regime.
Furthermore, the introduction of the phraseology of ‘sufficiently similar’ appears to be a much broader concept than ‘too like’ under the old Act. It would appear that if there is likely to be any association with the complainant then the complaint will be upheld.
If the Company Names Adjudicator upholds a complaint then he can make an order to force the respondent company to change its name.
Defences
Section 69(4) of the Act sets out a number of defences to a complaint which are:
- that the name was registered before the commencement of the activities on which the complainant relies to show goodwill;
- that the company is operating under the name, or is proposing to do so and has incurred substantial start-up costs in preparation, or was formally operating under the name and is now dormant;
- the name was registered in the ordinary course of a company formation business and the company is available for sale to the complainant on the standard terms of that business;
- the name was adopted in good faith; or
- the interests of the complainant are not affected to any significant extent.
There are undoubtedly a number of ‘get out clauses’ above, and a number of issues which will have fleshed out in proceedings before the Adjudicator. What is the definition of ‘good faith’? With regards trade mark cases good faith has been held to be the opposite of bad faith and acting in bad faith has been held to acting in contravention of accepted practices of commercial behaviour.
Possibly the two most intriguing defences are 2 and 5 as detailed above. It would appear that if the defendant has made a substantial investment in the creation of their company then this could provide a defence to an action.
This provision would suggest that any complainant must quickly file a complaint, so it is less likely a defendant can make such an investment and suggesting that companies should invest in company name watch services to provide an early warning on recently incorporated companies.
Further, will a dormant company which does not trade affect the complainant under the defence detailed in point 5? These are all questions which will have to be decided over time.
Making a complaint
Draft Regulations concerning complaints to the Company Names Adjudicator have been published. The Regulations make provision for the filing of evidence in any proceedings and on first reading bear a similarity to the provisions governing oppositions under the Trade Marks Act 1994.
Given that the Adjudicator will form part of the UKIPO it seems likely that the Adjudicator will progress and review proceedings in a similar way to the way in which the UKIPO deals with oppositions at present under the Trade Marks Act. Hopefully such actions will be dealt with faster than a typical trade mark opposition which can take up to two years to prosecute to a Hearing.
Consequences
The introduction of the ‘Company Names Adjudicator’ does mean that it is more likely that complainants under the Companies Act will succeed in challenging the incorporation of companies under similar names. It also appears that it will be much easier and cheaper for a complaint to succeed in such cases meaning that the complainant no longer has to resort to costly court proceedings. A complaint under the new provisions could also nip a trade mark infringement and passing off situation in the bud with a successful challenge to the Adjudicator.
Given that complaints under the Companies Act with regards similar company names now appear to be a much stronger weapon in the protection of trade mark rights, you or your clients should review the issue of company name watching, as such a service could provide the first warning signal for possible infringement of your trade mark rights in the future and enable you to launch and succeed in a complaint under the Companies Act 2006.
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