Currently, if there were no ‘Osborne Clarke Ltd’, Osborne Clarke would have to prove a case in trade mark infringement or passing off to stop somebody else registering a company under the same name. From 1 October 2008 all that will change. Carla Basso reports.
Who: UK Government
A new Companies Act 2006 (the "2006 Act") is to replace the Companies Act 1985 (the "1985 Act"). Certain provisions came into force on 8th November 2006 when the 2006 Act received Royal Assent; most will be brought into force by order of the Treasury or Secretary of State. In particular, Part 5, which will deal with company names, will be introduced from 1 October 2008.
The key change is in section 69 which brings in a new right for any person (not just another company) to object to a company's registered name on the grounds:
- that it is the same as a name associated with the applicant in which he has goodwill (which includes reputation of any description); or
- that it is sufficiently similar to such a name that its use in the UK would be likely to mislead by suggesting a connection between the company and the applicant.
If either of the above grounds is established, the company must show one of the following grounds applies, otherwise the objection will be upheld:
- that the name was registered before the start of the activities on which the applicant relies to show goodwill; or
- that the company is either operating under the name; or proposing to do so and has incurred substantial start up costs in preparation; or was formerly operating under the name and is now dormant; or
- that 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 of that business; or
- that the name was adopted in good faith; or
- that the interests of the applicant are not adversely affected to any significant extent.
Even if one of the first three grounds above is established, the objection will still be upheld if the applicant shows that the main purpose of the company in registering the name was to obtain money or other consideration from the applicant, or to prevent him from registering the name.
If an objection is upheld, the company names adjudicator (appointed by the Secretary of State for these purposes) will make an order directing the company to change its name to one that does offend these rules, by a specified date. If the company fails to do so, then the adjudicator can apply the ultimate sanction of determining a new name for the company, notifying the applicant, the company and the company names registrar. That decision can be appealed, and the court can determine a new name for the company.
The government has published a consultation document on the 2006 Act. Comments are invited by 31 May 2007. Views are sought on various company name registration issues, including:
(i) the rules which the Registrar of Companies must apply in assessing whether a proposed company name is the same as a name already registered at Company's House, and should therefore be refused. The 2006 Act would be broadly similar to the old rules on this, but consultation is sought on whether to add items to the list of things to be ignored (e.g. "@") and to the list of items regarded as being the same (such as "+" and "&"); and
(ii) whether a company name should be refused registration without the consent of a company whose name is already registered if the only differences between the two names are the inclusion of "www" at the start, "UK", "GB" or "exports" anywhere in the name, or ".com", "co.uk", or "org.uk" at the end of the name.
Why this matters:
As the Consultation itself notes, registration of a company name at Company's House only gives a company prior rights to that name as a company's registered name, and doesn't give it any right to trade under that name or prevent another company doing so. The actual use of that registered company name may still be prevented by those with earlier rights under existing trade mark law, in the usual way. Since the Registrar of Companies does not consider the Trade Marks Register when assessing company name applications, registered trade mark owners wishing to prevent a company registering or using a company name which is the same as or similar to its registered trade marks, only have the time consuming and costly option of suing for trade mark infringement and passing off.
Therefore, although section 69 is of fairly narrow application, it is still a useful new route for those with goodwill in a name to prevent what the Consultation calls "opportunistic registrations" of company names.