Increased Protection for Companies at Company Names Tribunal

The Companies Act 2006 gives rights which allow a person to object to a company’s registered name in certain circumstances. This provides a cost effective and efficient means by which brands can enforce their rights, without recourse to expensive trade mark infringement proceedings or similar. However, one significant limitation is that those rights are often fettered by available defences.

One such defence which has been the thorn of many applicants is set out in section 69(4)(b) which permits a respondent company to keep its name if it has been operating under the name or ‘is proposing to do so and has incurred substantial start-up costs in preparation’. Well, no more. This defence has been repealed pursuant to the Economic Crime and Corporate Transparency Act 2023 (ECCTA 2023) and there are a number of other changes which will be welcomed by brand owners. We summarise three of the more significant changes below:

Removal of Start-Up and Trading Defences

Change: Defendants are no longer able to defend an application challenging their name on the basis that (i) it is operating under the name, (ii) it is proposing to do so and has incurred substantial start-up costs in preparation, or (iii) it was formerly operating under the name and is now dormant.

Impact: The change is hugely beneficial for brands who have, to date, had to face the prospect of starting costly infringement proceedings because of the availability of this (now repealed) defence.

Extended Scope for Applications

Change: When considering whether a company name is ‘sufficiently similar’ such that it may mislead consumers, consideration must now also be given to use of the name outside of the UK.

Impact: We will have to wait and see how the tribunal approaches this change as it is now required to assess whether a challenged company name is ‘sufficiently similar’ and may therefore mislead consumers outside of the UK. Prior to this change, it had only been required to make this assessment by reference to UK consumers. It will also be interesting to see how applicants approach this in terms of evidence.

Liability of Directors

Change: The ECCTA 2023 enables applicants to join directors of the company to the objection if the director was in post at the time the company name was registered.

Impact: Prior to this change, directors were able to resign from the respondent company and therefore avoid being joined to the proceedings. The hope is that this change will act as a deterrent (including in relation to costs) and cause directors to think carefully before choosing confusingly similar names for their companies.