The snappily titled Company Names Adjudicator Rules 2008 established a new tribunal. It will deal with all complaints about company name registrations but especially those irritatingly opportunistic ones designed purely to cash in on the frustrations of legitimate name owners. Smartlaw looks at what the tribunal does and why it matters.
The new name registration regime, established under the Company Names Adjudicator Rules (CNAR), should be good news for anyone struggling to control a company name that is closely associated with their own business but which has been mischievously acquired by a third party. Since the regime is retrospective it applies to all company names, even those registered before its commencement date (1 October 2008).
Previously a brand owner's only option was to pursue expensive legal proceedings for passing off and/or trademark infringement. The tribunal, operated and administered by trademark hearing officers at the UK Intellectual Property Office (UKIPO), now provides a potentially lower-cost mechanism by which a brand owner can object to mischievous registrations. It is hoped that this new system will operate in a similar way to the dispute resolution procedure that exists for domain names. That said, the new procedure remains 'quasi-litigious' – in that it allows for witness statements and oral evidence and requires evidence of goodwill – so it remains to be seen whether it will indeed provide a simplified dispute resolution procedure, or whether it will just add another dimension to an area of law that is already quite complicated enough.
Why the new tribunal?
A company name cannot be registered if it is identical in all respects to another name on the UK Companies Register. So far "identical" has been interpreted very strictly so that even a small variation, such as a minor difference in spelling or the addition of non-distinctive words, would be enough to allow a very similar name to be passed. This has led to "company name squatting", so-called, and the opportunistic registration of company names. The architects of the new system were doubtless mindful of certain notorious cases in the past, such as when the merger negotiations between Glaxo and Wellcome prompted an unconnected third party to register the company name 'Glaxo Wellcome Limited'. The previous regime provided no assistance in resolving this 'squat' and so the case had to be determined under passing off principles (successfully for Glaxo Wellcome, as it turned out).
Who can object?
Any business or person (ie, not just a company) can now object to the registration of a company name on the grounds that it is:
- the same as a trading name associated with the applicant and in which he has goodwill (which includes reputation of any description); or
- sufficiently similar to an existing trading name such that its use in the United Kingdom would be likely to mislead by suggesting a connection between the two.
Thus the owner of a trademark can now object to a company name either because it encompasses that trademark or encompasses a confusingly similar mark. These new grounds involve a mixture of passing off and trademark principles; determining "goodwill" and "similarity" will inevitably involve a review of the relevant trademark case law. But unlike passing off (in which reputation must lead to goodwill), under this scheme mere reputation is enough to sustain a claim – which furthermore means that an organisation not based in the UK will be entitled to complain to the Company Names Tribunal because there is no requirement for it to be based in the UK, or to carry on a UK business, only to have a reputation here
In order to succeed in a defence the respondent must prove one of the following:
- the disputed name was registered before the beginning of the activities upon which the applicant now relies to show goodwill/reputation;
- the company is already operating under the name, or is planning to do so and has incurred substantial start-up costs, or was operating under the name but is now dormant;
- the name was registered in the ordinary course of operating a company-formation business (ie, it is a so-called 'off the shelf' company), and so the name is now available for purchase by any applicant on the standard terms of that business;
- the name was adopted in good faith; or
- the applicant's interests are not adversely affected to any significant extent.
None of these defences will succeed if the applicant can show that the main purpose of the registration was to obtain money (or any other consideration) from him or simply to prevent him from registering the name.
As a form of mini-litigation the procedure has many similarities with trademark opposition proceedings in the UK. The applicant must file a complaint form and a statement of grounds, together with the application fee of £400. Once the UKIPO has sent a copy of the complaint to the respondent, the respondent has two months to file a notice of defence. This defence must particularise which of the complainant's allegations are admitted or denied, or on which the complaint is put to proof. The adjudicator appointed to the case will set the schedule; either party may request an extension to any part of the schedule (subject to payment of a fee), but it is at the adjudicator's discretion, having regard to quasi-rules of civil procedure, whether or not such requests are granted.
Once the respondent has filed a defence notice each party has two months in which to file its evidence. The complainant's must include evidence of acquired reputation and goodwill as well as details of why the respondent's registration is considered to be opportunistic. Once all the evidence is filed, the adjudicator determines whether a hearing is required or whether the case can be decided on paper. If the adjudicator decides against a hearing, the parties can file written submissions. If a hearing is required, the adjudicator will give the parties at least 14 days notice of the commencement date. (And we expect that most early complaints will involve hearings so that the tribunal process can accumulate a body of jurisprudence.)
After taking into account the submissions (written or oral) the adjudicator sends the parties a written decision with reasons. The adjudicator has the power to order the respondent to change its name to one that does not offend the complainant's rights, and may also award costs to any party in the proceedings. Costs will follow a standard scale but an off-the-scale award can be made if a party has behaved unreasonably and/or issues of proportionality dictate that a higher award should be made. The adjudicator can also determine, and grant, applications for security for costs as well as make awards for expenses in certain circumstances. Any party may lodge an appeal against the decision to the High Court.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.