Not Smelling As Sweet – The Dangers of Confusingly Similar Company Names23rd February 2015
The recent case of Sebry v Companies House & Another (“Sebry”) acts as a useful reminder to businesses that a company’s name is a valuable asset.
A Tale of Two Taylors
Sebry was an action brought against Companies House for placing the wrong company into liquidation (Taylor & Sons Limited rather than Taylor & Son Limited). By the time Companies House was alerted to and corrected the error, the information stating Taylor & Sons Limited was insolvent had already been sold to third parties, including (crucially) credit agencies. This destroyed the company’s credit rating, leading key suppliers and customers to cancel orders and causing the bank to remove the company’s credit facilities. The 124 year old company was forced into ‘real’ liquidation by the omission of an ‘s’.
The Devil’s in the Detail
Ironically, the Selby decision came just before the Government introduced legislation which makes it easier to register confusingly similar names. The Company, Limited Liability Partnership and Business (Names & Trading Disclosures) Regulations 2014 and the Company, Limited Liability Partnership and Business (Sensitive Words & Expressions) Regulations 2014 substantially reduce the list of words which are disregarded for determining whether a company name is the same as an existing one. As a result, the inclusion of ‘generic’ terms such as ‘holding’, ‘international’ and ‘services’ in a company name will be sufficient to differentiate it from otherwise identical names.
What’s in a name?
A company should always regard its official name as part of its ‘brand’. Before choosing a company name, a business should consider:
- is it compliant – there are still a number of words which cannot be included in a company name. Businesses should also consider carrying out a trade mark search to check if the proposed name is confusingly similar to an existing trade mark.
- is it distinctive – to avoid the risk of administrative errors and confusion as seen in Sebry , it is safer to choose a name which is not highly similar to one or more existing company names.
- is it confusing – businesses should avoid registering names which are likely to cause confusion, taking into account the similarity of the name, its location and how well known it is among the ‘new’ company’s target market.
Following registration, if the directors discover another party has registered a confusingly similar company name, they should also remember they can apply to the Company Names Adjudicator to have the ‘new’ company’s name struck out. This is a cost effective and arguably underutilised tool for protecting business identities.
For more information on how to protect your company’s identity, contact our Intellectual Property Team.