Reform Crackdown on Company Name Registration
Businesses that have been affected by another company registering under their name, so it can sell the name back to them, will be able to register complaints about such cases from 1st October 2008.
The UK Intellectual Property Office has introduced a new statutory body, the Company Names Adjudicator, following reforms to the Companies Act.
The reforms make it illegal for somebody to register a company name at Companies House with the intention of selling it back to its rightful owner at an inflated price, or sitting on it to stop them from using it — so–called ‘brand squatting’.
The legislation will allow businesses to challenge a company name and bring a complaint to the Company Names Adjudicator for a £400 fee, on the grounds that it is already in use as a brand name and has been used opportunistically.
It costs £20 to register a company name with Companies House, but brand squatters typically sell it on for around £20,000. Solicitor Helen Krushave of law firm McGrigors LLP said:
“This loophole for company name registrations was used by people who recognised that ‘squatting’ on a company name was an easy way to turn a quick profit,”.
“It was also being exploited by businesses that prevent their competitors from registering a particular company name. A business could thwart a competitor by pre–emptively registering a whole range of names.”
Until now, it has been illegal for somebody to trade under your company’s name, but there was nothing to stop them from registering under it.
“Larger companies would probably fork out the amount asked for by the brand squatter, but smaller businesses would often be unable to afford to buy it back,” said Krushave. “This system presents an immense benefit for small firms as there is a cheap, informal process you can go through without paying to go through court. It is an avenue they just didn’t have before.”
The Department of Business, Enterprise and Regulatory Reform (BERR) said that the new system reduces the cost and difficulty of registering a complaint.
“Previously, dealing with this problem could be an expensive legal process, but these changes make it much easier for small businesses to deal with opportunistic registrations that exploit them,” said a BERR spokesperson. “The process is designed to be as cheap and easy as possible, saving small businesses time and money.”
For more information and to download a complaint form, go to the UK Intellectual Property Office website and read the Company Names Tribunal section.