Company Name Disputes

Social enterprises, despite their often altruistic motives, are still firmly immersed in the commercial world and all the business related themes that entails. Consequently, social enterprises (and for that matter any commercial enterprise) should view the protection of their intellectual property as an integral part of the business process.

The ownership of ideas, products and services will often form part of the goodwill enjoyed by a company. That goodwill generates business which in turn helps enterprises to create profit and/or meet their social objectives.

One of the most important and obvious examples of the way in which intellectual property can generate goodwill is through the company name. The name affords the company a highly visible means of identification through which the enterprise can build a reputation and brand; vital components for any successful commercial entity.

Thus it is understandable given the importance of the name that disputes can, and often do arise between companies over ownership. The Company Act 2006 offers some legislative remedy to those disputes under the guise of section 69.

Under S69 (1) A person ("the applicant") may object to a company name on the ground that:

(a) the name is the same as a name associated with the applicant in which he has goodwill.

(b) that the name is sufficiently similar to such a name that its use within the UK would be likely to mislead by suggesting a connection between the company and the applicant.

If the applicant can satisfy one of the above then it is up to the other party ("the respondent") to put forward one of the accepted grounds of defence as laid out in S69(4) of the Act.

1. The first defence that may be relied on is if the name was registered by the respondent before the commencement of the activities on which the applicant relies to show goodwill. Therefore it would be prudent for any enterprise contemplating an objection of a company name to check when the other party first registered the name with Company House. (Sub-section 4(a))

This defence does not apply where the company name was registered in anticipation of goodwill or reputation being established by another company. An example would be where someone knows that a merger is about to take place between two companies and so registers one or more variations of the name that the newly formed commercial entity is likely to require. The registration(s) would be opportunistic in that the registration holder’s purpose in obtaining the registration was to cash in on the other entity’s fame. This is known as an opportunistic registration.

2. The second defence arises if the (respondent) company is operating under the name, or is proposing to do so and has incurred substantial start-up costs in preparation; or was formerly operating under that name and is now dormant (subsection 4(b))

This defence would not be available if the name was registered but the company never conducted business under that company title.

Like in the first defence if the applicant can prove that it was a opportunistic registration this will trump a successful defence under 4(b)

3. The respondent could also argue that the name was registered in the ordinary course of a company formation business and the company name is available for sale to the applicant on the standard terms of that business. (sub-section 4(c))

Again an opportunistic registration will defeat this defence whatever its merits.

4. The respondent can state that the name was adopted in good faith; that it was not carried out with some conspiracy in mind but that the similarities are mere coincidence and that the respondent's motivation and knowledge are beyond reproach. (sub-section 4 (d))

5. The last potential defence under S69 is where the interests of the applicant are not adversely affected to any significant extent by the fact that that the name is the same or is similar. (sub-section 4 (e))

Consequently a goodwill or reputation of little or no commercial significance would not be sufficient and would allow the respondent to mount a successful defence under this subsection.

In effect section 69 only afford protection to the applicant if (s)he can prove that the registration of another company name was opportunistic in nature and/or that it adversely affected the applicant's business.

The first port of call if you do feel aggrieved over another company name should be Company House. If you believe that an opportunistic registration has taken place then you should contact the Company Name Adjudicator.

Both organisations should be able to offer initial guidance and support.