New rights for brand owners under the Companies Act 2006

On 1 October 2008 section 69 of the Companies Act 2006 is due to come into force giving a brand owner the right to object to a company name that is similar to a name in which the brand owner has goodwill.

Some companies use names that are confusingly similar, or identical, to an existing trademark so as to gain advantage from that mark’s reputation. As it stands, the law on registration of company names gives only limited protection to brand owners who must rely on trademark infringement or passing off to take action against companies who infringe their rights in this way. Currently, only the Secretary of State can order a company to change its name, within 12 months of the company’s incorporation, if it is identical to or “too like” a name already on the register.

The ECJ has given a restrictive definition of trademark use in this area. In Céline SARL v Céline SA they held that the use of the trade name “Céline” merely to designate a business, but not to market goods and services, was not an infringement of the registered trade mark “CELINE”. Such use was not considered to be ‘in relation to goods or services’ within Article 5(1) of the Trade Mark Directive. This was distinguished from when a company, trade or shop name was appended to the goods in question, or if the name was used in such a way that a link was established between the name and the goods.

The 2006 Act simplifies the provisions in this area. Section 69 allows individuals and companies to object to an Adjudicator (a newly created position under the 2006 Act) about a company name if the name is the same as a name in which the applicant has goodwill, or is sufficiently similar to such a name that its use would be likely to mislead by suggesting a connection between the two. There is no requirement for the applicant to hold a registered company name or trademark (goodwill is defined as including “reputation of any description”), nor is there a need to show that the offending company is using the name in relation to its goods or services. It is for the respondent company to defend the objection using one of the five defences set out in in section 69(4). The applicant can only defeat the first three of these defences by showing that the main purpose 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 under section 69 is upheld, section 73 allows the Adjudicator to direct the company to take all steps to change the name to one that does not offend within a specified deadline. Failure to do so is an offence, and the Adjudicator may determine a new name for the company in such a situation. The Adjudicator’s decision has to be made public and is open to appeal, to the High Court which can then determine a new name for the company.

As of 1 October 2008 it will be easier for brand owners, or anyone with goodwill in a mark, to enforce their rights against companies who set up with the same, or a similar name as the brand owner's mark. They will no longer need to show that the respondent is using the mark in relation to goods and services, and it will also be possible for an individual or a company to make a complaint, rather than having to rely on the Secretary of State to take action (which under the old law he rarely did).

Consistent with our policy when giving comment and advice on a non-specific basis, we cannot assume legal responsibility for the
accuracy of any particular statement. In the case of specific problems we recommend that professional advice be sought.

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