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