What’s in a name? – Erroneous registration of company names

17 May 2018

The Companies Tribunal (“the Tribunal”) is an agency of the Department of Trade and Industry established in terms of the Companies Act No. 71 of 2008 (“the Companies Act”) to resolve disputes between companies, including disputes relating to the erroneous use and/or registration of company names.

On 16 February 2018, the Tribunal held a seminar to address the controversial issues pertaining to the registration of company names, one of which being the approval by the Companies and Intellectual Property Commission (“CIPC”) of company names which incorporate a third party’s registered trade mark, the use of which has not been authorized by the proprietor of such trade mark.

In terms of section 11(2) of the Companies Act, a company name must be distinctive in nature in order for the CIPC to approve, and subsequently register, the company name. In other words, it is envisaged in section 11(2)(a) of the Companies Act that a company name will be rejected, and is therefore unregistrable, if it is the same as, inter alia:

• the name of another company;
• a trade mark registered in accordance with the Trade Marks Act 194 of 1993 (“the Trade Marks Act”), the proprietor of which is a person other than the company;
• a trade mark in respect of which an application has been filed in South Africa for registration as a trade mark; or
• a well-known trade mark as contemplated in section 35 of the Trade Marks Act.
  Furthermore, and in terms of section 11(2)(b), a company name cannot be confusingly similar to any name, trade mark, mark, word or expression contemplated in section 11(2)(a), as specified above.

In terms of section 34(1) of the Trade Marks Act, any unauthorized use of a proprietor’s registered trade mark constitutes a trade mark infringement. Alternatively, and in situations where a trade mark is not registered, the proprietor of the trade mark accrues reputational rights and goodwill in a trade mark through its use and is afforded common law protection thereof. The unauthorized use of a trade mark in which extensive goodwill and reputation has been established, will amount to passing-off, which is tantamount to trade mark infringement.

Although the legal provisions are explicit to the requirements for the approval and registration of a company name, applying these provisions in practice proves to be difficult given that the Companies Register and the Trade Marks Register are independent of each other and may very well include names which are substantially similar and / or identical. The independence of these registers has caused many conflicts insofar as the requirements for the approval of a company name are concerned.

The difficulty comes in where, in accepting or rejecting a company name, both the Companies Register and the Trade Marks register have not been concurrently assessed for any potential infringement and/or passing-off prior to the acceptance of a proposed company name. This has led to many cases of passing-off and trade mark infringement.

It goes without saying that a company operating under a company name which incorporates a third party proprietor’s trade mark (without the proprietor’s prior consent) could quite possibly be infringing that third party’s trade mark (assuming it is registered) and, therefore, is exposed to the risk of having infringement and / or passing-off proceedings instituted against it. There are of course, various considerations that need to be factored into this assessment such as the nature, extent and duration of the use by the company of its name compared to the nature, extent and duration of use of the third party’s trade mark.

In an attempt to address these difficulties during the seminar, the CIPC highlighted the seriousness with which it regards this particular difficulty and confirmed that the members of the CIPC have been in discussions to determine a feasible solution to overcoming this difficulty. In the meantime, however, any company wishing to be incorporated or looking to change its company name is strongly encouraged to conduct its own research, including an availability search of the Trade Marks Register, to establish for itself whether or not its desired company name is distinctive in nature and to confirm that it does not infringe on any third party’s proprietary trade mark rights, for purposes of mitigating any infringement and/or passing-off risk which may ensue.

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Credit: Kayla Ferreira, Candidate Attorney

(This article is provided for informational purposes only and not for the purpose of providing legal advice. For more information on the topic, please contact the author/s or the relevant provider.)