Trading Names (Trading as…)
The name a company registers at Companies House is referred to as its ‘company name’ and the one it trades under as its ‘trading name’. In an effort to prevent companies from disappearing behind different names, statute imposes requirements on the use of both types. In this article, I will focus on what trading names actually are and the regulations that govern them. I will then inform you on how to protect your company name and will raise your awareness of sensitive names.
What is a trading name.
It is often the case that companies are incorporated under one name, but trade under another. There are various commercial reasons for doing this, for example, a company which carries out diverse trading activities can benefit from trading under different names without having to set up a complicated group of separate companies. Alternatively, a sole trader or partnership may also choose to incorporate itself in order to have the image of a limited company name, but to keep on trading under its old name so as to retain its good reputation, brand loyalty and goodwill.
Choosing a company name.
There are various requirements of company names, which must be met when forming a company. For instance, a company’s name must be unique meaning that it must not be the same as a name already registered at Companies House.
What are the regulations for choosing a trading name.
In contrast to the regulations on company names, the rules that govern the use of trading names are less strict. There are no statutory restrictions on using trading names which are already in use (for example, on the register of companies at Companies House). However, companies should avoid this where possible, because they can potentially harm their own business by causing customer confusion or even worse – being accused for passing off someone else’s already established business or intellectual property infringement.
How to protect my company name.
Companies should be aware of other methods of company names protection in order to preserve their reputation. Such methods include:
• the registration of domain names
• a company policy for taking action if another business makes use of its name
• a trade/service marks if the company’s name distinguishes its products from others
One way of protecting a company name is to sue for passing off. A potential passing off action often comes to light as a result of a customer feedback or when customers are lost to the other business. In order to prevent any potential harm to their business, companies should monitor new entrants and competitors in the market and should search the internet regularly for any uses of their names.
If a company uses the same or a confusingly similar name to your company’s name, you can bring an action against it. This applies to products, services, packaging and internet domain names as well. However, it is very expensive to pass such an action, because extensive surveys of customers and expert witnesses are required.
If the company’s name is registered as a trade mark, it will be much easier to pursue an action for infringement against another party. To sue for trade mark infringement the company will just need to show:
• the use of the same trade mark on same goods
• the use of the same trade mark on similar goods
• the use of a similar trade mark on similar goods
• the use of a similar trade mark on any goods, even dissimilar ones
A successful trade mark infringement or an action for passing off can lead to severe consequences such as the prevention from using the name in question, liability in damages for the claimant’s loss of sales and reputation damage, liability to account for profits and the search and seize of orders made to take possession of infringing items.
The restrictions imposed on choosing trading names are the same as those on company names.
• Particular sensitive words will require a written approval of the appropriate government body. An example of a sensitive name is one indicating a connection with the government or any local authority.
• A company cannot use a trading name, which includes a misleading indicator of its type. For instance, it cannot use a name ending in limited/ltd, unless it is registered at Companies House under that company name.
• A company cannot include any other indicator or company type, unless it is actually that type of company.
It is important to know that a breach of these restrictions may lead to the person in default being liable to a fine and even a criminal offence.