What can you do if you find out a third party has registered a UK company with a name that is identical or similar to your brand name?
Until 1 October 2008, you had three possible options:
- ask the Secretary of State to issue a direction (now under section 67 of the Companies Act 2006) that the name be changed. However, this is available only if you own a company with an all but identical name on the register already. Companies House gives the example of "H & S Consultants Limited" which would be deemed too alike "H & S Consulting Limited", while "H & S Consultants Limited" would not be too alike "H & S Consultants (Cardiff) Limited";
- commence trade mark infringement proceedings if you have registered your brand as a UK or Community trade mark provided that (following the European Court of Justice decision in Céline SARL v Céline SA ) the offending company has used the offending name as a trade mark in relation to its goods or services. This means that there will be no trade mark infringement if the use of the offending name is confined to use as a company name, rather than as a brand name for its goods and services; or
- commence an action for passing off, but only if you can demonstrate that: (i) there is goodwill in your brand name; (ii) the offending company's use has misled consumers into believing that there is a connection with you; and (iii) this has resulted in damage to, or a likelihood of damage to, your goodwill. If the offending company has not started trading or does not use your brand name in relation to its goods or services, a passing off action is likely to prove more useful than proceedings for trade mark infringement, since a passing off action does not require any actual use of the company name but still may be successful if the court concludes that the only realistic future use of it would be as "an instrument of deception".
A fourth option can now be considered following new rules which came into force on 1 October 2008. Section 69 of the Companies Act 2006 provides brand owners with a right to apply to a Company Names Tribunal if an objectionable name appears to have been registered for opportunistic or obstructive purposes. The Coca-Cola Company is the first complainant through the door on 1 October 2008, with an application before the tribunal against "Coke Cola Limited" for trying to cash in on the registered marks COKE and COCA-COLA.
The good news
First, an application to the tribunal is likely to be more cost and time-effective than court action (see "The practicalities of your application" below). Second, there is no need to hold a registered trade mark or to show that the registrant is using your brand in relation to its goods or services (as Céline requires for registered trade mark infringement).
Third, you do not need to show that you have suffered, or are likely to suffer, any damage as you do for passing off. Fourth, although you will need to evidence a "reputation of any description" in your brand and this is defined as "goodwill" in section 69, this definition is wider than the interpretation of "goodwill" in a passing off action. Consequently, section 69 would seem to cover, for example, the well-known names of famous individuals who have not built up any "goodwill" (in the passing off sense) in connection with their name by trading in any ordinary sense, or a well-known foreign company that does not supply products to customers in the UK directly.
Fifth, your name need not be identical to the offending company name, provided it is "sufficiently similar" such that its use would be likely to mislead others by suggesting a connection between the company and you. The future tense used in this section means that the company need not have commenced trading under, or otherwise used, the offending name. The use of the words "a connection" would appear to cover, at the very least, any sort of suggested trading or economic relationship; for example, that the company was an associated company, your licensee or joint collaborator.
Last of all, there is no need for the name for which protection is sought to be your registered company name. Further, you are not prevented from objecting to a company name registered over 12 months ago, which is the case when requesting the Secretary of State to issue a direction pursuant to section 67.
The bad news
Oliver Morris, one of the five currently appointed adjudicators on the tribunal, emphasised that the tribunal chose the strap line, "Adjudicating on opportunistic company name registrations", in order to make clear that the tribunal's powers are very limited. The initial defences to an application before the tribunal are very wide-ranging and designed to ensure that section 69 will apply successfully only to truly opportunistic registrations. By "opportunistic", the tribunal means registrations which were made with the intention of: (i) asking for money or some other consideration in order to change the name; or (ii) selling the company with the name where the only real value of the company is the registered name's similarity to your existing or potential brand name. Consequently, your application cannot oppose the registrant's name solely on the basis that it is too similar to yours, since this would not be accepted by the tribunal.
It may well be difficult to prove that a registrant's intention was to extract money from you without evidence of similar past activity or correspondence to that effect. An example given by the tribunal is where your company is likely to adopt a new name following a publicised or rumoured merger or similar transaction. This attempts to address the circumstances in Glaxo plc v Glaxowellcome Ltd , where the defendant registered "Glaxowellcome" as a company name when it realised that a merger was planned between Glaxo plc and Wellcome plc and then demanded £10,000 for the newly registered name. Here the claimant was successful in its passing off claim.
However it is unclear the extent to which an applicant will be successful under section 69 where a registrant of an offending name has not demanded money or registered other offending names and where the applicant's complaint is based on the registration being obstructive. In these cases, it is often difficult to obtain any evidence as to the registrant's motive, so the adjudicator is likely to rely on whatever inferences can reasonably be made from all the circumstances.
Once your application is accepted by the adjudicator, you have established that you have goodwill (as defined in "the good news" section above) in your brand name and the offending name is sufficiently similar to it, the onus shifts to the registrant to establish in its defence that:
- the objectionable name was registered before the activities you are relying on to prove your goodwill; or
- the registrant is operating, or (after incurring substantial start-up costs in preparation) is proposing to operate, or has previously operated, under the company name; or
- the name was registered as an off-the-shelf company and is available for sale on standard terms of business;
- the offending name was adopted in "good faith"; or
- your interests are "not adversely affected to any significant extent" by the offending name.
If the registrant cannot establish any of these "defences", it will be required to change its name, though this process may take over a year if there are lengthy evidence rounds or extensions of time.
If the registrant can only establish one of the first, second or third defences, the onus then shifts back to you to prove that the main purpose of the registrant "was to obtain money (or other consideration)" from you or to "prevent… [you] from registering the name". In other words, that the registrant's main purpose was opportunistic or obstructive.
The good faith and adverse effect defences
It is far from clear just how widely the last two "absolute" defences are intended to be applied. For example, under the fourth "good faith" defence, could a registrant claim to have registered a name in "good faith" if they did not carry out reasonable searches (which would have identified your pre-existing brand) before registering the offending name? The pool of adjudicators has been drawn from trade mark examiners at the UK Intellectual Property Office (IPO), who are used to assessing questions of honesty of use under the "honest concurrent use" provisions of section 7 of the Trade Marks Act 1994. Additionally, they can be expected to have some awareness of how the courts in infringement cases have approached defences, such as the use of one's own name, for example, which require the use to be in accordance with honest practices in industrial and commercial matters and which entails an objective assessment. Therefore, adjudicators may be inclined to interpret "good faith" from an objective perspective, carrying out an assessment of all the circumstances. This could mean that a registrant's own reasoning for failing to carry out searches may be less important than evidence as to what a reasonable and honest person would have done in the same circumstances.
Additionally, since the purpose of section 69 is to restrict behaviour relating to the registration of company names that is akin to "cybersquatting" domain name registrations, assistance with what cannot amount to "good faith" may be found in the interpretation of "bad faith" under the Uniform Domain Name Dispute Resolution Policy. World Intellectual Property Organization (WIPO) panels have established that mere inactive or passive holding of a domain name may constitute evidence of bad faith where the registrant cannot demonstrate a legitimate right or interest in the domain name and the domain name is confusingly similar to the trade mark of another. Examples of bad faith include the brand owner having a well-known or invented trade mark, there being no response to the brand owner's complaint, a concealment of identity, and the impossibility of conceiving a good faith use of the domain name. However, WIPO panels have decided that one should not reasonably expect a registrant to have made a search of identical or similar marks on the UK trade marks register before registering a domain name and that failing to do this alone cannot be considered bad faith.
Considering the fifth defence (your interests "are not adversely affected to any significant extent" by the offending name) it is difficult to predict the circumstances in which this defence may be successful. When the Company Law Reform Bill was considered before the Lords, an example circumstance of where the "no adverse effect" defence may be applicable was noted as being where the applicant has hardly used the similar brand name it is basing its complaint upon. Yet, as the applicant must be able to establish at least a "reputation of any description" in its brand name in any event, the example circumstance noted by the Lords is unlikely to come before the tribunal for consideration often.
So, what do you do if you think you may have a complaint which falls within section 69?
The practicalities of your application
An application is made to the Company Names Tribunal at the Intellectual Property Office in Newport, South Wales, using the prescribed application form available on the IPO's website.
The initial fee for making such an application is currently £400. It should be noted that applications to the Company Names Tribunal which do not fall within the bounds of section 69 will not be dealt with and you will not receive a refund of the fee.
After the application form has been accepted by the adjudicator, it will be sent to the registrant of the offending name. If the registrant defends the registration, the adjudicator will make provision for rounds of evidence to be served by both parties (usually within a two-month period) before reaching a decision. The adjudicator has the power to order the registrant to change its company name to one which does not offend but, if the registrant does not comply with this order, the adjudicator can select a new company name itself without the registrant's consent and order the Registrar of Companies to make the change. The tribunal is considering currently whether such new names selected by the adjudicator should be numerical to some extent for ease of reference.
In defended complaints, the fee for each time a party files evidence is £150 and any extensions of time will cost £100. Note that all documents submitted to the tribunal are open to public inspection, unless the tribunal directs otherwise. The adjudicator can make a decision based on the evidence alone or via a hearing in either Newport or London for a fee of £150.
The adjudicator can make any costs award deemed reasonable in favour of any party at any stage of the proceedings. The tribunal has published a scale of costs that it will award: £200-300 for preparing a statement of grounds and considering the opponent's statement; £500-£2000 for preparing and commenting on evidence; up to £1,500 per day of the hearing, capped at a total figure of £3,000; and £100-500 for preparing written submissions in lieu of a hearing. Note that any cost award will not take account of any "success fee" paid subject to any conditional fee arrangement. Official fees and reasonable travel and accommodation expenses for witnesses may also be recoverable. These scaled costs will be halved if the party is not legally represented, save for any expenses which can be recovered in full.
Note that, if you make an application without reasonable notice to the registrant who does not defend the application, usually you will not receive an award of costs. However, the adjudicator does have discretion to award compensatory costs or to lower the scaled costs depending on the conduct of the parties.
The adjudicator's decision can be appealed to the High Court by either the registrant or the brand owner. The offending name is likely to remain on the register pending the hearing of any appeal.
What can you do if you find out a third party has registered a UK company with a name that is identical or similar to your brand name?
In order to ensure that you are in the best possible position to take action should someone register a company name that it is too similar to your brand name:
- consider registering your brand name as a trade mark at the Intellectual Property Office and (subject to cost and time considerations in relation to filing and administration) as a company name at Companies House;
- keep good records of sales and marketing activities, awards and other means of establishing goodwill in your brand; and
- consider employing a watching service to monitor registrations at Companies House, so that you can move swiftly and before the registrant will be able to avail itself of the operating company defences under section 69 of the Companies Act 2006 should you wish to bring a complaint before the Company Names Tribunal (see Wragge & Co's analysis).
If you become aware of an objectionable registration:
- ensure that your staff do not enter into any discussions with the registrant without taking legal advice, since any reference to your trade mark rights may be construed as a groundless threat which would provide the registrant with a right of claim against you under section 21 of the Trade Marks Act 1994;
- instruct your staff to keep any written communications you receive from the registrant and make careful notes of any telephone communications which might indicate that the registration was opportunistic or obstructive;
- investigate whether the registrant has made opportunistic or obstructive registrations before; and
- quickly seek legal advice as to which options may be available to you, (an action for trade mark infringement or passing off or a complaint under section 69 of the Companies Act 2006) as outlined here, and which would be the most appropriate to pursue in your circumstances.