New company name regime set to come into force
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Numerous sections of the Companies Act 2006, including Sections 69 to 74 on company names, come into force tomorrow. Those sections introduce a new mechanism allowing brand owners to object to company names.
Previously, Companies House, the official register of UK companies, dealt only with objections to company names which are the same as, or similar to, another registered company name. As brand owners could not rely on trademark and passing off rights, there was often little option but to commence court proceedings. Furthermore, a quirk of English company law meant that neither the courts nor Companies House had the power to change company names themselves. Instead, the courts had to compel the shareholders to make the required resolutions.
Section 69 of the act creates a new right to object to a registered company name that is:
- the same as a name in which a person has goodwill or reputation of any description; or
- sufficiently similar to such a name that its use in the United Kingdom would be likely to mislead by suggesting a connection between the company and the applicant.
Objections may now be filed with a company names adjudicator at a new Company Names Tribunal. The tribunal has the authority to require the company to change its name by a certain date and, if the company does not comply, choose a new name for the company.
Objections will be upheld unless the respondents (the company, or any of its shareholders or directors) can show that:
- the name at issue was registered before the commencement of the activities on which the applicant relies to show goodwill;
- the company:
- is operating under the name in question;
- is proposing to operate under the name and has incurred substantial start-up costs; or
- was formerly operating under the name and is now dormant;
- the name was registered in the ordinary course of a company formation business and is available for sale to the applicant on the standard terms of that business;
- the name was adopted in good faith; or
- the interests of the applicant are not adversely affected to any significant extent.
The first and third grounds will be unavailable if the main purpose of the registration was to:
- obtain money (or other consideration) from the applicant; or
- prevent the applicant from registering the company name.
The new tribunal will be operated and administered by staff at the UK Intellectual Property Office (IPO). It is intended that existing trademark adjudicators at the IPO be appointed as company names adjudicators. The adjudicator will determine in each case whether a hearing is necessary or whether the complaint can be dealt with in writing.
The new system aims to provide a comparatively cheap and simple - and hopefully faster - dispute resolution mechanism for brand owners affected by the opportunistic registration of a company name in which they have goodwill or reputation, and should provide a welcome alternative to court proceedings.
Hiroshi Sheraton, McDermott Will & Emery UK LLP, London
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