Objections to Company names

There has not, until recently, been much anyone could do about companies being incorporated under names that were similar to existing trading names, although in one recent case the High Court adopted a novel approach and allowed a claimant to pass a special resolution on behalf of the shareholders of the defendant company to change its name. The Registrar of Companies would refuse registration of a company whose name was the same as one already on the Register, but for the purposes of company law it was enough just to avoid almost identical names. Rights in trade marks – registered or unregistered – counted for nothing.

Since 1 October, there has been a right to object to company names that include trade marks or similar marks, thanks to section 69 of the Companies Act 2006 which came into force on that day. (The old provisions are also retained.) Section 70 allows the Secretary of State to appoint company names adjudicators, and these individuals form the Company Names Tribunal. The rules governing adjudications are set out in SI 2008/1738.

Company name as trade mark infringement or passing-off

It is fairly well-established in English law that registration of a company is likely to amount to infringement of a trade mark that is identical with or similar to the company name, or to passing-off. In Glaxo v GlaxoWellcome [1996] F.S.R. 388 a squatter who registered the portmanteau name in anticipation of a merger between the two pharmaceutical companies was ordered to surrender it. Direct Line v Direct Line Estate Agency [1997] F.S.R. 374 was similar. Likewise registering a domain name that is the same as or similar to a registered or unregistered trade mark, as in Global Project Management v Citigroup [2006] F.S.R. 721 where Park J granted summary judgment (on Citigroup’s counterclaim) even though the claimant had no history of cybersquatting. Often, cases involving company or domain names have been decided on the basis that the names are “instruments of fraud” where the intention is to sell them at inflated prices to the businesses who have the goodwill in the name. This was the case in British Telecommunications and others v One In A Million and others [1999] F.S.R. 1.

The Court of Justice of the European Communities took a rather different view in Case C-17/06, Céline SARL v Céline SA in which it held that merely adopting a company name might not amount to infringement, though this is not necessarily at odds with the English courts’ approach, which does require something (even if only the “instruments of fraud” element) over and above the mere act of registration. There was no evidence in the Céline case that this element was present.

It remains the fact, however, that it is often easier and cheaper to purchase the company name or domain name from the squatter than to try to use trademark rights to secure it. The “ransom” amount will commonly be set at a level that takes into account the cost of litigation or other dispute resolution.

The right to object

The new law allows objections to be made where a company name is registered that is:

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  the same as a name in which the objector has goodwill; or
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  sufficiently similar to such name that its use within the UK would be likely to mislead by suggesting a connection between the company and the objector.

Objections are made to the Tribunal. If the complaint is successful then the company will be forced to change its name.

The first limb seems to set down a similar test to that already applied by the Registrar of Companies, so small differences will probably suffice. The second limb protects names with goodwill, regardless of whether there is a registered trade mark. However, one shortcoming of the new legislation is that there is no remedy (as there is in trade mark law) where there is no likelihood of confusion but the mark has a reputation and the second user takes unfair advantage of that reputation or is otherwise detrimental to it. On the other hand, the adjudicator will be able to consider a connection suggested by a similarity in names such as an implied parent-subsidiary relationship.

Overcoming objections

A number of defences are available, amounting to presumptions that the name was adopted legitimately:

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  the name was registered before the objector began the activities on which it now relies to show goodwill;
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  the company is operating under the name, or is proposing to do so, and has incurred substantial start-up costs or was formerly operating under the name and is now dormant; or
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  the name was registered in the ordinary course of a company formation business and the company is available for sale to the objector on the standard terms of that business.

Unless the respondent is able to show one of these three defences applies, the objection will be upheld unless the name was adopted in good faith, or the interests of the objector are not adversely affected to any significant extent. But even if a defence is available, the objection will be upheld if it can be shown that the name was registered to try to obtain money from the objector or to prevent the objector registering it.

The adjudicator’s powers

If an objection is upheld, the adjudicator may set a deadline for the company to change its name to one that is not objectionable. If the deadline is not met, the adjudicator may determine a new name for the company – another significant change from the old system, where the registrar could only direct a change.

There is no way of obtaining damages under the new procedure. An action for trade mark infringement or passing-off would be necessary if the objector wanted to make a financial claim.

Procedure

The rules are intended to make sure that it is not unduly burdensome (in time or money) to make an objection. The Tribunal’s office is at the Intellectual Property Office, which produces the forms needed to file an objection. The applicant has to pay £400 on filing an objection: a respondent has to pay £150 on filing a counterstatement, which is highly unusual. The costs look small, but if there are numerous names to which objection is taken they could quickly mount up.

Applications and defences must be filed using the prescribed forms, and must include a concise statement of the grounds on which the application is made or opposed. Once an objection has been received, the adjudicator must send it to the primary respondent specifying the date by which a defence must be filed. The defence itself must also contain a concise statement of grounds. Either party may request an oral hearing, which will be public. The Adjudicator has wide powers to direct the form and content of the proceedings, and to dispense with a hearing. He may strike out applications and defences that he considers to be vexatious, to have no reasonable prospect of success or to be otherwise misconceived. He may also call a hearing on 14 days’ notice.

Evidence may be filed by witness statement, affidavit, statutory declaration or any other form that would be admissible as evidence in proceedings before the court, subject always to the Adjudicator’s directions.

The adjudicator may award such costs as he considers reasonable to any party at any stage in the proceedings.

Once a decision is made, the adjudicator sends written notice to the parties setting out the reasons. An appeal lies to the High Court, and the time limit for notice of appeal will be included in the Adjudicator’s decision.