The provisions creating a new procedure for objection to company names via the Company Names Adjudicator in the Company Names Tribunal come into force on 1st October 2008.
Anyone with goodwill in a name can object to that name or a misleadingly similar one being registered as company name where the registration is an opportunistic one.
- Brand owners may use this procedure to stop registrations the same or misleadingly similar to their brand names.
- "Goodwill" is defined as "reputation of any kind" and so may be a lower hurdle to get over than the goodwill requirements of a passing off action.
- The previous objection procedure, which allowed objections to names that were "too like" a currently registered company name, continues to be administered by Companies House.
- Following the ECJ's decision in Céline SARL v Céline SA (Case C-17/06, September 2007), the use of brand names as company names looked more difficult to prevent using trade marks, so this development, although limited to opportunistic registrations, will be welcomed.
In September 2007 in Céline SARL v Céline SA (Case C-17/06) the ECJ held that the purpose of a company name is to identify a company, whereas the purpose of a trade name or a shop name is to designate a business which is being carried on. Accordingly, where the use of a company name, trade name or shop name is limited to identifying a company or designating a business which is being carried on, such use cannot be considered to be ‘in relation to goods or services’ within the meaning of Article 5(1) of the Trade Marks Directive (equivalent to section 10(1) of the Trade Marks Act 1994).
However, if that same company/shop/trade name is affixed goods which are marketed then the use may be “in relation to goods and services”. Even where the sign is not affixed, but a link is established, this is trade mark use. The ECJ concluded that it would be within the trade mark proprietor’s rights to prevent such use in relation to identical goods or services where it was liable to affect the functions of the trade mark in particular its essential function of guaranteeing to consumer the origin of the goods and services, but not where it does not have this effect (such as mere use in a company name alone).
Nevertheless, the Céline decision caused concern amongst practitioners in relation to brand owners' ability to prevent use of their brand names as company names.
The Companies Act 2006 – a new objection procedure under section 69
The Companies Act 2006 now may have come to the rescue. With the coming into force of section 69 of the Companies Act 2006 on 1 October 2008 and the accompanying Company Names Adjudicator Rules 2008 (SI 2008/1738), there is now a route by which brand owners may prevent the opportunistic registration of their brand names as company names.
In the past objections could only be raised to names that were "too like" other registered company names. This objection procedure continues to be administered by Companies House.
However, the new section 69 objection procedure will allow anyone with goodwill in a name the same as that registered, or where the company name is sufficiently similar to such a name that its use within the UK would be likely to mislead by suggesting a connection between the company and the objector, to object to its registration as a company name via the Company names adjudicator (CNA) and the Company Names Tribunal. Although evidence of goodwill is required, it is defined broadly, as "reputation of any kind" and may therefore be a lower qualification requirement than the usual passing off goodwill standard.
The new legislation is probably most easily understood if compared to the domain name dispute resolution policies. In effect it attempts to do the same thing, to provide a means of knocking out opportunistic registrations. If the registrant can show that the name was registered with a bona fide intention then an objection is unlikely to succeed. Where in the past the registration of the name of a planned merged company, followed by negotiations to sell the name to that company, were dealt with using passing off (see Glaxo plc v Glaxowellcome Ltd (1996)), such disputes might now be brought before a CNA at the Company Names Tribunal.
Company Names Adjudicator (CNA) procedure
The objection is lodged with the CNA who will decide on the merit of the objection and can direct that the name be changed. The CNAs are drawn from hearing officers experienced in trade mark matters from the UK IPO.
Once an applicant (objector) has objected to a company name, the respondent company then has to show that its actions fall into one of the following circumstances set out in section 69(4) of the Companies Act 2006, which each raise the presumption that a name was adopted legitimately:
- The name was registered before the commencement of the activities on which the applicant relies to show goodwill (sub-section (a)).
- The company is operating under the name; or is proposing to do so and has incurred substantial start up costs in preparation; or was formerly operating under the name and is now dormant (sub-section (b)).
- The name was registered in the ordinary course of a company formation business and the company is available for sale to the applicant on the standard terms and conditions of that business (sub-section (c)).
- The name was adopted in good faith (sub-section (d)).
- The interests of the applicant are not adversely affected to any significant extent (sub-section (e)).
However, even if sub-sections (a), (b) or (c) apply, if the applicant can show that the name was registered either to obtain money from him or to prevent him registering the name, then the objection will be upheld (section 69(5)).
Opportunism is the key
The Company Names Tribunal recently released a fact sheet, emphasising that this new procedure is a method of dealing with "opportunistic" registrations, rather than genuine ones that happened to cause offence to brand owners. Brand owners will have to continue to deal with the latter with using trade mark rights and passing off, but the CNA procedure may allow non bona fide registrations to be dealt with directly through the Company Names Tribunal.
However, since the new procedures make provision for statements of grounds of objection, defences and rounds of evidence from both sides, including oral hearings if the CNA considers it necessary and provision for costs orders and appeal to the High Court, it may be that the resultant reduction in "delay, worry and expense" in company name disputes does not turn out to be as great as might have been hoped.
The Company Names Tribunal's fact sheet (4 September 2008, www.ipo.gov.uk/cna/cna-factsheet.hm) gives the following as examples of opportunistic registrations:
- When someone registers one or more variations of the name of a well known company in order to get the latter company to buy the registration(s).
- Where someone knows that a merger is about to take place between two companies and so registers one or more variations of the name that the newly formed commercial entity is likely to require.