New regulations prohibit registration of LLPs whose names include registered mark

The Limited Liability Partnerships Regulations (LLP Regulations), which were issued by the attorney general pursuant to powers conferred by Section 35 of the Limited Liability Partnerships Act 2011, were published in the Kenya Gazette Notice of September 12 2014.

The LLP Regulations contain a provision that would operate to provide greater certainty in situations where a company is registered using a name that is identical to a registered trademark belonging to a third party. This situation is not aided by the fact that the Companies Act, Cap 486 of the Laws of Kenya and the Trademarks Act, Cap 506 of the Laws of Kenya, which govern companies and trademarks respectively, are not clear on the rights under which legislation would prevail in such situations.

One critical issue that has arisen in cases of the above nature is whether the registration of companies and use of such company names in the course of trade would constitute trademark infringement. Perhaps in recognition of this challenge, the LLP Regulations contain a provision on the restrictions applicable to registration of limited liability partnership names. Even though there have been court decisions discussing and providing a way forward on this issue, the provisions of the LLP Regulations would go a long way in helping to chart a definitive solution with respect to this apparent impasse.

In this regard, Section 15(i) of the LLP Regulations provides as follows:

"For the purposes of Section 21(1)(a) of the act, a name is undesirable if:

The name includes the name of a registered trademark, unless a document signed by the owner of the trademark and indicating consent to its use is provided."

The significance of the above provision is that it will not be possible for persons to register limited liability partnerships in Kenya with names which are similar to existing registered trademarks. It is hoped that the Companies Bill will contain provisions which are similar to those set out above. Even though the Companies Bill 2014, as currently drafted, does not contain a provision prohibiting the use of registered trademarks as companies names, it is possible that such a restriction could be included in the regulations to be enacted under the bill.

It is worth noting that Section 49 of the Companies Bill provides as follows:

"(1) The registrar may not register a company by a particular name if:

(a) the use of the name would constitute an offence;

(b) the name consists of abbreviations or initials not authorised by or under this act;

(c) the registrar is, after taking into account the relevant criteria, of the opinion that the name is offensive or undesirable.

(2) For purposes of Subsection (1)(c), the relevant criteria are the criteria (if any) prescribed by the regulations."

This apparent disharmony between the provisions of the Companies Act and those of the Trademarks Act was discussed by the Kenyan High Court in Agility Logistics Limited v Agility Logistics Kenya Limited (HCC No 840 of 2010).

The facts of the above case were that, in November 2006, the third plaintiff had acquired a company known as Agility Logistics Limited which was incorporated in the United Kingdom. Upon the acquisition, the third plaintiff decided to rebrand all its global subsidiaries with the brand name Agility, which exercise was globally advertised.

As part of its strategy for entering the Kenyan market, in 2007 the Agility group decided to acquire a clearing company by the name Starfreight Logistics Limited. The acquisition necessitated change by the first plaintiff from its then name Starfreight Logistics Limited to Agility Logistics Limited, in line with the global rebranding of the Agility Logistics Group. The third plaintiff thereafter applied for, and obtained registration of, the trademark AGILITY in Kenya on February 24 2009.

The defendant, on the other hand, registered the business name Agility in October 2007. This was followed by the registration of the company Agility Logistics Kenya Limited in September 2008. Aggrieved by the actions of the defendant, the plaintiffs filed an application for injunctive orders restraining the defendant from trading, advertising, marketing and/or in any other way dealing with the name Agility Kenya Limited or any other name resembling the first plaintiff’s name.

The court, in reaching a decision, observed:

"On the outset, my take on the present application is that the dispute before the court is an indictment of two acts of Parliament that give protection to proprietorship of names in a manner that suits one legislation a villain and a victim of the other and vice versa. These are the Companies Act, Cap 486 Laws of Kenya, on the one hand, and the Trademarks Act, cap 506, Laws of Kenya, on the other hand. The present dispute brings into sharp focus the competing interests served by the two acts vis-à-vis each other and the gaping lacuna in harmonising the said interests in such a manner as would smoothen the inherent conflict in the operation allocation of the two legislations. This position is not helped by the appalling lack of coordination in the institutions charged with the implementation of the respective legislations."

The court found that, whereas the Companies Act governed the registration of company names, the fact of registration per se did not extend protection to the name of the company itself as does the protection provided by a trademark. The court also noted that the Companies Act protects such names only to the extent that no other company can be registered by a similar name, but does not protect the intellectual property in the name itself as to confer exclusive use, as does a trademark.

The court went on to find that the protection provided to the name Agility by the trademark registered in favour of the plaintiffs by far overrides the protection of the name Agility Logistics secured through the mere registration of the name as a company. The court stated that the exclusivity in the use of the name that was conferred upon the plaintiffs through the Kenyan registration of the mark and worldwide by virtue of the status of ‘well-known mark’ conferred locus standi upon the plaintiffs to sustain a claim for infringement of the mark, which the defendant cannot equally enjoy by virtue of registration of the company under the Companies Act.

Even though the above court decision has helped to chart a way forward in situations such as those discussed above, the inclusion in the Companies Bill 2014 of a provision declaring registered trademarks to be undesirably companies names would go a long way in providing a definitive solution. Such a provision would also serve to ensure that the rights conferred to proprietors of registered trademarks under Section 7 of the Trademarks Act are observed and respected.

Section 7(1) of the Trademarks Act stipulates in part that:

"the registration (whether before or after January 1 1957) of a person in Part A of the register as the proprietor of a trademark, if valid, gives to that person the exclusive right to the use of the trademark in relation to those goods or in connection with the provision of any services and, without prejudice to the generality of the foregoing, that right is infringed by any person who, not being the proprietor of the trademark or a registered user thereof using by way of permitted use, uses a mark identical with or so nearly resembling it as to be likely to deceive or cause confusion in the course of trade or in connection with the provision of any services in respect of which it is registered."

It is hoped that the provisions of the LLP Regulations are an indication of better things to come.

John Syekei and Daniel Mwathe, Coulson Harney Advocates, Nairobi