The main restriction on the use of a name (for any business whether sole trader, partnership, LLP or company) is that the name used for the business, or a very similar name, may already be in use by an existing business. The other business (which could be any type of entity, including a foreign company conducting business here) may be able to sue for the tort of passing off. This is a common law action with no statutory basis.
For a successful passing off action the complainant company must show:
- That it is established in business under that name or has some other right to its use;
- That the company being sued is conducting business in such a way as to infringe the complainant's right to the use of the name;
- That this is likely to cause damage to the complainant's business. Unless the plaintiff is a very well-known person or company, the action is only usually available where the two companies are in a broadly similar line of business and the same or overlapping geographical areas. If the complainants action is successful it will obtain an injunction to stop the new company using the name. Damages may be available if infringement persists and there is, of course, the risk of legal costs.
As an alternative to bringing an action for passing off, if the established business is a UK registered company, it may be able to persuade Companies House to exercise its powers to order the new company to change its name. Such an order can be made under CA 2006, sec67 if the new company has been registered in a name which is 'too like' one which was already on the register. If available, this is a much cheaper and less risky alternative to suing for passing off. Disputes about company names can also be taken to the Company Names Tribunal.
Incorporation Services Limited provides an expert service for all your company formation and company law requirements, including the use of the proposed company name.