Brand owners can now apply to the new UK Company Names Tribunal to prevent registrations of company names similar to their company or business name by opportunists seeking to take advantage of goodwill in that name or make a fast buck by selling it to the brand owner. With effect as of 1 October 2008, the Company Names Adjudicator Rules 2008/1738 laid down the rules for proceedings before the Company Names Adjudicator to consider an objection to a registered name because it is either the same as one in which the applicant has goodwill or is so similar that it is likely to mislead by suggesting a connection between the company and the applicant.
An example of an opportunistic company name registration is when someone registers one or more variations of the name of a well-known company in order to get the latter to buy the registration. Another example is when someone knows that a merger is about to take place between two companies and registers one or more variations of the name that the newly formed commercial entity is likely to require, with a view to selling it to that entity to cash in on its fame. Similarly, a registration will be considered opportunistic where it is made in the belief that a well-known overseas company is about to set up in the United Kingdom.
The Rules set out how an application should be made and provide, inter alia, for the service of documents and the form of evidence to be given, as well as security for and the awarding of costs. Once accepted, an application form will be sent to the holder of the company registration. If that holder does not defend its registration within the time allowed, the Adjudicator will order it to change its registration to something that does not offend. If the registration holder does defend its registration, the Tribunal will set timescales for each side to file evidence. If the registration holder fails to change the name by the date specified, the Adjudicator can determine a new name for the company and order that change to be made without the holder’s consent.
The Tribunal will only deal with “opportunistic” company name registrations. Adjudicators cannot deal with cases where someone feels that another company name registration is too similar to their own company name, but where there is no suspected opportunism behind the registration. An application to the Tribunal would therefore fail if the registration holder shows that it registered the name with another purpose in mind. In this respect, the Companies Act 2006 lists the following acceptable defences:
- The name was registered before the start of the activities on which the applicant relies to show it has goodwill/reputation.
- The company is operating under the name or is planning to do so and has incurred substantial start-up costs, or was operating under the name but is now dormant.
- The name was registered in the ordinary course of a company formation business and the company name is available for sale to the applicant on the standard terms of that business (an “off the shelf company”).
- The name was adopted in good faith.
- The interests of the applicant are not adversely affected to any significant extent.
Thus an application to the Tribunal will succeed if the registration holder cannot show any of the above. Or, even if the registration holder can show that it satisfies (a), (b) and/or (c), the applicant can prove that the registration holder’s main purpose in registering the company name was to obtain money (or some other consideration) from the applicant or to prevent the applicant from registering the name.
The new Rules are not designed to deal with mere clashes of company name. That is a matter for Companies House. Nonetheless, the new Rules are not restricted to protecting registered company names, but extend to any name in which an applicant can demonstrate goodwill at the time it was adopted by the registration holder as a company name.
There is a good chance that the new Rules will provide a swift and effective means of dealing with abusive company name registrations. With a right of appeal to the High Court, however, there is always a chance that any dispute could become protracted.