When starting up a company, one of the most important considerations is the company name. Every company must have a name and this must be stated in the Memorandum. After the formation of a company, it is possible to change it’s name by special resolution of the shareholders of the company.
When deciding upon a company name, there are a number of important factors which should be considered. The first point to note is that under the Companies Act 2006, Section 66, a company must not be registered under a name that is the same as another company name appearing in the Registrar’s Index of Company Names. That is to say that if Companies House already has a company by the name which you intend to register you will not be able to register that name. It is not only companies with exactly the same name that can raise difficulties, but a company with a name which is very similar (and “too like”) to an existing company name can also be challenged.
Under Section 69 of the Companies Act 2006, objection to a company’s registered name can be brought on the grounds that it is the same, or that it is sufficiently similar to a name that it would be likely to be misleading by suggesting a connection between the company and the objecting company. When an application is made the Company Names Adjudicator must decide whether the chosen name is too similar to an existing one. Whilst each case must be considered individually, there is guidance available. If the name is only different by a few characters or are very minor differences, such as changing “consultant” to “consulting” this is likely to suggest there will be a level of confusion. If, however, the changes are longer or more descriptive, this is likely to reduce the element of confusion. One example of adding a descriptive term may be the place name of the new company. However, adding words such as “services” or “trading”, which do not generally add any meaning to the name, will not usually provide the elements of distinctiveness that would be required to differentiate the name.
If an objection to a company name is made and the Company Names Adjudicator finds that there is too great a similarity, the Adjudicator has the power to direct that the name of the company be changed. It is therefore advisable to carry out a search of the Index of Company Names to ensure that the chosen name is not the same as an existing company or too similar.
Unfortunately, this is not the only challenge that can be made to a company name. Even if the company name is not the same as one on the Index of Company Names and the Adjudicator does not find that it is too similar, there is a possibility that existing businesses may seek to bring a passing off action. If an existing business has been using the name for trading and has developed goodwill in that name it is possible that the existing business will bring a claim for passing off on the basis that the use by the new company of that name would cause confusion and detriment to the existing business. There is also the possibility that the choice of a company will cause an infringement of an existing trade mark. It is therefore essential that you seek specific advice on whether your company name is likely to infringe a trade mark.
Another element to consider is the internet domain name; the new company is likely to want to set up a website. In the event that there are websites already in existence that have similar names, this could be another cause of confusion and source of dispute. When a domain name is registered, the Uniform Dispute for Domain Names Resolution Policy (UDRP) is incorporated into the registration agreement. If a dispute arises regarding domain names there are a number of different types of dispute covered by the UDRP:
- Where the name is identical to or confusingly similar to one already registered.
- Where there are no legitimate rights or interests in the use of the disputed domain name.
- Where the disputed domain name has been registered and used in bad faith.
For UK domain names, Nominet is the registry that will deal with the dispute. Proceedings through Nominet do not rule out the possibility of court action.
As you will appreciate from the above, there are a number issues that should be considered when setting up a new company or changing the company name. Some advice at the outset and careful research can save many thousands of pounds in legal fees and much management time wasted in dealing with disputes.
Should the issues arising from this article be of interest to you, please do not hesitate to contact Linder Myers LLP who will be happy to give you advice on either company names registration or dealing with disputes arising from company names.