No Credit for Credo in Company Name Case

In most cases before the new UK Company Names Tribunal, claimants have scored a win without the need for evidence, because respondents have typically defaulted. In one recent contested case, though, evidence proved essential, and the claimant's failure to provide it in the proper form ultimately lost it the claim (Credo Group (UK) Ltd. v Credo Financial Solutions Ltd., Application No. 11, Company Names Tribunal 22 May 2009).

Proof, if proof were needed

In this case, Credo Group (UK) Ltd applied for an order that Credo Financial Solutions Ltd., registered on 11 September 2008, should change its name.

In its complaint, Credo Group described itself as part of a group of companies trading in financial services. Its related company, Credo Corporate Finance Ltd, owned UK and CTM registrations for CREDO for financial services, details of which were filed with the complaint. Credo Group argued that Credo Financial's company name was confusingly similar and likely to misleadingly suggest a connection with Credo Group's business. It filed numerous Internet print-outs and copies of press articles referring to the CREDO brand, which it asserted had become well-known in the UK and internationally.

In reply, Credo Financial asserted that it did not compete with the claimant, but rather was planning to trade in the field of motor vehicle financing. It disclaimed any knowledge of the claimant. It said that it had spent around £8,000 so far in setting up its business, and intended to trade on a small scale only.

As a defence was filed, the adjudicator ordered both parties to file evidence in support of their case. Neither did so.

In the absence of evidence the adjudicator found that the claimant had not proved the goodwill in the UK necessary to succeed. The adjudicator declined to regard the information and materials filed with the complaint as evidence, because they were not in the form required by Rule 9 of the Company Names Adjudicator Rules 2008, namely in the form of a witness statement with a statement of truth, an affidavit or a statutory declaration, or in any other form admissible as evidence in Court. Mere assertions in a complaint and attached documents did not comply with this rule.

In light of this, the adjudicator exercised his discretion to deem the application withdrawn.

Comment

For the vast majority of claimants, the Company Names Tribunal has proved an efficient and cost-effective way to force an English company to change its name, where the name is misleadingly similar to a trademark or name in which the claimant has goodwill in the UK.

Most actions have been undefended and have resulted in orders for a change of name to be implemented within a month. Costs are typically very low in such default cases, often no more than £700 or so. Where the company to be challenged is not trading and there is no justification for seeking urgent Court relief for passing off, this procedure fills a real need.

The outcome in Credo, however, shows that there are times when the procedure merits a little extra expense. Although it is not essential to file evidence with a claim and costs can be saved by not doing so where a respondent defaults, in the rare contested cases evidence becomes critical. It is important to support a claim to goodwill with evidence that a mark or name has become known in the UK, preferably (although not necessarily exclusively) through trading or promotion here.

If there is evidence that the disputed company name was registered with an intent to extract money or other consideration from the brand owner, or to obstruct the brand owner from registering the company name itself, that can also be key where the respondent raises a possible defence.

That leads into a further point. There are times when the procedure may not be appropriate, for example where a potential respondent is known to be trading already, or to have incurred substantial start-up costs. This amounts to a complete defence except where a claimant can prove opportunistic or obstructive intent.

An action may also not be appropriate where a would-be claimant can see that the company name in question was registered before the claimant acquired goodwill in the UK. This is important as the procedure is available for all company names, even those registered before the Companies Act 2006 came into force.

In general, though, the procedure is attractive where a brand owner wants to clear confusingly similar company names from the register but could not do so in the past without going to court. Used pre-emptively in conjunction with a company names watch, the new procedure can nip potential passing off in the bud, before a company with a similar name has a chance to start trading.
The modest costs involved can therefore be a wise investment in heading off much greater costs in future.