What’s in a name? A lot when it’s a trade mark

Business Day - Business Law and Tax Review - - BUSINESS LAW & TAX REVIEW - CHARLES WEB­STER

THE new Com­pa­nies Act, 2008, which came into ef­fect May 12, es­tab­lished the Com­pa­nies and In­tel­lec­tual Prop­erty Com­mis­sion (CIPC). The act is long and com­plex and I only in­tend to fo­cus on the ar­eas of the leg­is­la­tion that are closely as­so­ci­ated with trade mark law, par­tic­u­larly the reg­is­tra­tion of com­pany names and po­ten­tial ob­jec­tions thereto.

At first blush the new Com­pa­nies Act is dif­fer­ent to the well-ac­cepted and es­tab­lished con­cepts un­der the 1973 Com­pa­nies Act of un­de­sir­able com­pany names and names that are cal­cu­lated to cause dam­age, as it refers to names that are the same as or con­fus­ingly sim­i­lar to prior trade marks or com­pany names.

This has caused prac­ti­tion­ers some ner­vous­ness, as lawyers don’t like rein­vent­ing the wheel, pre­fer­ring to rely on es­tab­lished au­thor­i­ties.

I was there­fore sur­prised when, on scru­ti­n­is­ing the pro­vi­sions of the 2008 act, I found that while the word­ing is dif­fer­ent, at least one im­por­tant prin­ci­ple is ba­si­cally the same.

Un­der the 1973 act a com­pany name was ob­jec­tion­able if it was un­de­sir­able. The Reg­is­trar pub­lished a non­bind­ing di­rec­tive set­ting out what he con­sid­ered to be un­de­sir­able names, in­clud­ing a name that is likely to cause con­fu­sion with an ex­ist­ing trade mark. The courts, af­ter point­ing out that the word un­de­sir­able was not de­fined in the act, also found that a com­pany name that is con­fus­ingly sim­i­lar to a trade mark (or ear­lier com­pany name or com­mon law rights) was un­de­sir­able. In the cir­cum­stances the re­quire­ment in the 2008 act that a com­pany name must not be con­fus­ingly sim­i­lar to an ear­lier trade mark suc­cinctly deals with the most com­mon ground of un­de­sir­abil­ity that trade mark prac­ti­tion­ers usu­ally dealt with.

While the con­fus­ing sim­i­lar­ity test is to be wel­comed, this test in iso­la­tion can be dan­ger­ous. The dan­ger lies in the fact that while the con­cept of con­fus­ing sim­i­lar­ity is a well-es­tab­lished term in the con­text of trade mark law, com­pa­nies are dif­fer­ent. In par­tic­u­lar, trade marks are linked to goods or ser­vices, while a com­pany is free to oper­ate in as wide a field of ac­tiv­ity as it chooses, con­strained only by its mem­o­ran­dum of in­cor­po­ra­tion and main ob­ject, which is of­ten widely de­fined. There­fore, apart from com­pany names that in­cor­po­rate terms that de­scribe the busi­ness, such as ABC Fi­nan­cial Ser­vices (Pty) Ltd, it is dif­fi­cult to iden­tify the pre­cise field of ac­tiv­ity.

Let us ac­cept, for present pur­poses, that Ap­ple is con­fus­ingly sim­i­lar to Ap­ple­tiser when com­pared in iso­la­tion. How­ever no-one could pos­si­bly sug­gest that Ap­ple (Pty) Ltd, for the i-fam­ily of consumer elec­tronic goods, is con­fus­ingly sim­i­lar to Ap­ple­tiser (Pty) Ltd for soft drinks. What if the names are iden­ti­cal? Co­bra taps and Co­bra pol­ish co-ex­ist in the mar­ket even though there is no con­nec­tion be­tween the two com­pa­nies. While the com­pany names Co­bra Taps and Co­bra Pol­ishes could co-ex­ist be­cause they are not iden­ti­cal, what if ei­ther of the com­pa­nies chooses not to limit the com­pany name by in­sert­ing a de­scrip­tive term but just wishes to call it­self Co­bra (Pty) Ltd?

Things get worse. Co­bra is a well­known trade mark for beer. Well­known trade marks are also a bar to com­pany names. But un­less the Com­mis­sioner is a beer drinker and cricket lover (where the In­dian Co­bra beer is likely to get its most ex­po­sure in SA) he will not even be aware of this fact.

The act states that the Com­mis­sion must re­serve a com­pany name ap­plied for un­less the name con­flicts with sec­tion 11(2) (a). The trou­ble is that 11(2) (a) in­cludes prior reg­is­tered marks and well-known marks. So if you wish to reg­is­ter Co­bra (Pty) Ltd, the com­mis­sion should refuse the com­pany name be­cause of an ex­ist­ing Co­bra trade mark reg­is­tra­tion. But which one? This cre­ates the ab­surd sit­u­a­tion that two or more Co­bra trade marks owned by dif­fer­ent en­ti­ties can co-ex­ist on the Reg­is­ter of Trade Marks (be­cause they re­late to dif­fer­ent goods or ser­vices) but Co­bra (Pty) Ltd can­not be reg­is­tered as a com­pany by a third party, even if its field of in­ter­est is dif­fer­ent to the ex­ist­ing Co­bra trade mark reg­is­tra­tions.

While the act no longer uses the un­de­sir­able test for com­pany names, re­gret­tably the man­ner in which sec­tions 11 and 12 deal with com­pany names leaves much to be de­sired.

We can only hope the Com­mis­sion will be able to strike a bal­ance be­tween not re­fus­ing names where com­mon sense sug­gests that the name is clearly not a prob­lem and reg­is­ter­ing names that are ob­vi­ously prob­lem­atic.

Re­gret­tably the Com­mis­sion must oper­ate within the leg­is­la­tion and it will be dif­fi­cult, if not im­pos­si­ble, to achieve this.

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