New Regulations Prohibit Registered Trade Marks as Company Names – Problem?

Companies Registry at Office of Attorney General Sheria House Nairobi by Business Daily

In an earlier post here, this blogger reported that Kenya finally enacted a new and comprehensive company law legislation. The Companies Act 2015 contains an express provision on prohibited names which states that the Registrar of Companies has the discretion not to register a company if the name applied for reservation is offensive or undesirable.

The Act states that the criteria to be used by the Registrar to determine whether a particular name is offensive or undesirable shall be prescribed by the regulations. This blogger is now pleased to report that the regulations in question have been published in the Kenya Gazette. From an intellectual property (IP) perspective, it is notable that the regulations contain a provision intended to provide greater certainty in situations where a company is registered using a name that is identical to a registered trade mark belonging to a third party.

Section 12 of the regulations reads as follows:

“The Registrar is required to apply the following criteria in determining whether a particular name is offensive or undesirable or contrary to the public interest: (…)
(f) the name includes the name of a registered trade mark unless a document signed by the owner of the trade mark and indicating consent to its use is provided;”

The intention of the above provision is clear: prohibiting third parties from using names of registered trade marks as company names. However, the problem is that the provision does not cater for the period leading upto the registration of the trade mark during which a third party may easily apply for reservation of the particular name at the Companies’ Registry. This problem arises because the process of trademark registration is significantly longer than that of company name registration. This means that the gap in time between the two registrations is enough for a third party to register the name of a proposed mark as a company name with the added benefit of access to any particular word mark advertised in the Industrial Property Journal.

It may be argued that the above problem applies only to IP maximalists who would contend that once a trade mark is applied for, it is destined for the Trade Marks Register therefore no other person should be allowed to register the name of that mark in the Companies Register since the latter registration would defeat the intention of the Act and regulations.

In a previous post here, this conflict between registrations of names under the Trademarks Act and the Companies Act was highlighted and discussed as it arose in court cases. Recently, the case of Litein Tea Factory Company Limited & another v Davis Kiplangat Mutai & 5 others [2015] eKLR highlighted once again the fact that there is no coordination between the registrar of companies and registrar of trademarks in Kenya, which is a growing concern to users of the two registration services. In the Litein case, the plaintiffs registered the name “Chelal Tea Factory” as a trade mark in 2012 then subsequently the defendants registered a company in the name “Chelal Tea Factory Company Limited” in 2014. As result the plaintiffs applied for a declaratory order that the company registration by the defendants is unlawful, illegal, null and void ab initio. A copy of the interim ruling in this case is available here.

With the regulations now in force, it will be interesting to observe how the Registrar of Companies and the courts will determine claims by registered trade mark owners against infringing company names.

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