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“What’s in a name?” Juliet infamously asked of Romeo; and we all know what happened next! Choosing a company name on incorporation can be the difference between success and failure or for Romeo and Juliet, life and death. It is the identity of your business and you need to get it right.
There are two key considerations: 1) whether the company name appropriately reflects the brand you have created or are seeking to launch; and 2) whether the company name you want to use is the same or confusingly similar to a name already in use by another business.
As my colleague, Caroline Bamford, in our Corporate Services team set out in her update, section 69 of Companies Act 2006 (CA 2006) has been amended as a result of the Economic Crime and Corporate Transparency Act (ECCTA) to expand the Registrar’s control over names.
As before, an applicant may object to a company’s registered name on the basis that it is the same as a name associated with the applicant or that it is sufficiently similar to a name in use in the UK and is likely to mislead members of the public in the UK. This has now been widened to include names in which other businesses have goodwill elsewhere, i.e. outside of the UK where its use may mislead the public outside of the UK.
Whilst that does not mean that businesses across the world will now be objecting to all new UK company names, the potential for challenges is higher especially if a company is looking to trade outside the UK. Overseas companies now have a useful tool to attempt to stop the use of the same or similar company names, which would only previously have been available to them if they had a UK trade mark (section 10 Trade Marks Act 1994 (TMA 1994)) or their trade mark was well known in the United Kingdom (section 56 TMA 1994).
Anyone looking to incorporate a company must conduct some basic company register and UK Intellectual Property Office trade mark searches. If they are also looking to operate outside of the UK, they should certainly conduct more extensive searches before deciding on a company name (and any brand names they are intending to use). This will not only assist in preventing an objection being raised, but from a practical perspective it can also prevent significant time and cost being invested to develop a UK brand which cannot then be used overseas if the name already has brand affiliation with another business.
To defend an objection, the new company may be able to show that the name was adopted in good faith (section 69(4)(d)), but this will turn on the motivation and knowledge when the company was registered under the name that is being challenged. The burden is on the respondent to show good faith which is fact specific. It is important to be aware that the members and/or directors could now be personally liable if the chosen name falls foul of the new provisions. Carrying out appropriate searches will assist in demonstrating a good faith intention, regardless of whether the company is operating solely in the UK or overseas, and so should be done in every case.
Unlike the pre‑ECCTA position, the defence at section 69(4)(b) has now been removed entirely which means that a new company could be forced to change its name, despite having already made use of it or incurred significant start-up costs in readiness to do so. This is a significant change and brings the position more in line with trade mark law.
It is important to be aware that, whilst there are several grounds in section 69 CA 2006 (including good faith) which will protect a new company from an objection under the CA 2006, these are not defences to a claim for infringement under English trade mark law. The most efficient approach is to carry out appropriate due diligence to ensure as far as possible that a company name is cleared for use before spending time and money – to avoid the additional time and cost of re-branding.
Our specialist teams in Intellectual Property and Corporate Services can help you navigate company incorporation and the rules around company names to ensure that your chosen name can be used as a brand for your business with confidence going forward.
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