Brand Protection and Company Names - New right of complaint to the Company Names Adjudicators: Our summary guide to the new complaint procedure for brand owners.
What has changed?
From 1 October 2008, corporate names will be regulated by Part 5 of the Companies Act 2006. A new right is provided for third parties to complain of the choice of a company name before a new body, the Company Names Adjudicator, based at the UK IPO (Intellectual Property Office).
On what grounds can the complaint be made?
This new right enables an objection to be made to a company’s registered name on the basis that it is either “the same as a name associated with the applicant in which he has goodwill” or “sufficiently similar” that it would be likely to mislead when used in the UK by “suggesting a connection between the company and the applicant”. The complaint is based upon a “name” associated with the complainant, so can apply to a wide range of rights: company names, trading names, brand names and registered trade marks. Rights in a well-known domain name may also be protected under the law of passing off.
If the objection is upheld the respondent can be directed to change the name, failing which the Company Name Adjudicator can change the name himself (not necessarily an attractive option!).
Are there any defences?
If the grounds of complaint are satisfied, the objection will be upheld unless one of the following criteria applies:
(a) the name was registered before the applicant built up goodwill in the name;
(b) the company is operating under the name, 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;
(c) 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
(d) the name was adopted in good faith;
(e) the interests of the applicant are not adversely affected to any significant extent.
The respondent will not be able to benefit from defences (a) to (c) if it can be shown that the primary purpose in registering the name was to obtain money from the applicant or to prevent him registering the name.
The ‘defences’ listed above will require interpretation from the Adjudicators and the first decisions will be of considerable interest. For example, how should ‘good faith’ be interpreted? Would ignorance of conflicting rights, by turning a blind eye, amount to good faith? Furthermore, why should investment in start-up costs (see (b) above) necessarily prevent an otherwise infringing company name from being refused registration?
How does the procedure work?
The application is made on the appropriate form, including a concise statement of the grounds of complaint. The Adjudicator will then serve the form and grounds on the respondent, who must file a defence and counter-statement. Following any defence the Adjudicator will specify a timeframe for filing evidence.
Where no evidence is filed in support by either side, the Adjudicator may decide to treat the application as withdrawn or make a decision without an oral hearing, inviting the parties to make submissions before reaching a decision. The Adjudicator can also strike out, in whole or in part, an application or defence on the basis that it is vexatious, has no reasonable prospect of success, or is misconceived. If a hearing is ordered, parties will be given at least 14 days’ notice.
Is the Decision Final?
An appeal can be made to the court against an Adjudicator’s decision either to uphold or dismiss an application. The notice of appeal must be given prior to the name change deadline. Where the notice of appeal is against a decision to uphold the application, this serves to suspend the Adjudicator’s ‘name change’ order.
What are the costs involved?
The procedure is intended to be less formal and provide a more cost-effective option than litigation through the courts. The Schedule to the draft Rules for the Adjudicators contains a table of fees which accompany each form, for example, the complaint fee is £400, in addition to a fee of £150 to progress to the evidence round of proceedings. In addition, applicants will have to meet the costs of preparing evidence in support of the complaint. The Adjudicator also has the power to make costs awards against either party and the starting position will be on a “loser pays” basis, as in the courts and the UK IPO.
In what circumstances should I complain?
The intention of the legislation is to prevent “opportunistic” or speculative company registrations that are designed to extract money from the brand owner, or pose a barrier to expansion or other legitimate interests of rights holders. A complaint will not be suitable if the name is merely similar to a trade mark or brand and the incorporation was carried out in good faith by the respondent and without reference to the applicant’s rights. However, in those circumstances, there may be other forms of redress, such as passing off or trade mark infringement.
What does this mean for brand owners?
Brand owners can now bring an action based upon a company name, trading name or registered trade mark and the Adjudicator has much wider powers of discretion to prevent the registration and use of a company name.
Previously, the Registrar of Companies had only a very narrow discretion to prohibit a company name being placed on the register, where it was “the same as” or “too like” a company name already on the register. The objection could only be brought on the basis of another company name, not a trading name or brand name. This required brand owners to rely on trade marks and passing off to enforce their rights. Further, the ECJ confirmed in Celine that merely incorporating a company which uses a sign as a company name that is the same as or similar to a trade mark belonging to another does not amount to infringement. Accordingly, trade mark owners should investigate new companies to establish their field of business and whether the company name is being used in the course of trade, or is otherwise capable of interfering with the essential function of the mark.
When does this come into force?
The rules come into force on 1 October 2008, after which complaints can be filed with the Adjudicator. Given that it is a potential defence to a complaint if the respondent has built up goodwill in the name, in many cases it will be prudent to act promptly in contacting the respondent and filing a complaint if the matter cannot be resolved amicably.
