Rose… and other (company) names

“What’s in a name? that which we call a rose
By any other name would smell as sweet.”
–William Shakespeare, Romeo and Juliet

Although love birds might not attach much value to names, business owners spend hours contemplating possible names for their latest ventures. And with good reason! Marketing guru’s will tell you that your company name must be short enough to have impact, unique enough to be memorable, positive enough to touch people emotionally, informative enough to sell your products, and last but not least, visual enough to be trademarked.

Legal do’s…

All company names must be reserved and eventually registered with the Companies and Intellectual Property Commission (CIPC).

Common law principles of passing-off, Section 11 and Regulation 8 of the Companies Act 71 of 2008 provides specific criteria for company names.

Company names can consist of one or more words in any language, or combination of words and letters, numbers or punctuation marks such as “+”, “&”, “#”, “@”, “%”, “=”, “-“ and round brackets which may be used to isolate any part of the company’s name.

However, if the company name contains any word in a language that is not an official language of the Republic of South Africa, the application to reserve such a name must also include a certified translation of that word into an official language of South Africa. Additionally, if this word is also a registered trademark, or trademark in respect of which the application for registration has already been filed in South Africa, or a well-known mark as contemplated in Section 35 of the Trade Marks Act 194 of 1993, the person applying for its reservation must also file a declaration confirming that he/she is entitled to use the mark.

In addition to the above requirements a company name, irrespective of its form or language, must also end with one of the following expressions depending on the category of the particular company:

  1. Personal liability company “Incorporated” or “Inc.”
  2. Private company “Proprietary Limited” or “(Pty) Ltd.”
  3. Public company “Limited” or “Ltd.”
  4. State-owned company             “SOC Ltd.”
  5. Non-Profit company “NPC”

Section 11(1)(b) further provides that a profit company may use its registration number as its company name subject to Section 11(3)(a) which require such a company’s name to immediately be followed by the expression “South Africa”. Where a company’s name does not comply with the aforementioned criteria the CIPC commissioner may, in the interim, use the registration number of a company during the period in which the company is rectifying any compliance issues in this regard. However, Non-Profit companies are not allowed to use their registration numbers as company names.

If a company’s Memorandum of Incorporation (MoI) includes any provision, contemplated in Section 15(2)(b) or (c), restricting or prohibiting the amendment of any particular provision of the MoI, the company’s name must immediately be followed by the expression “(RF)”. The main aim of this indication is to alert third parties, wishing to contract with the company, to certain restrictions contained in its MoI to prevent the third party from being prejudiced by any hidden restrictions or prohibitions.

Contrary to any provisions contained in the 1973-Companies Act, the current Companies Act does not seem to require that the name of a company must indicate that it is under business rescue, which could obviously prejudice bona fide third parties wishing to contract with the company.

…and legal don’ts

A company may not contain any word, expression or symbol, either viewed in isolation or in context with the rest of the name, which may reasonably considered to be propaganda for war, incitement to imminent violence, advocacy of hatred based on race, ethnicity, gender, religion or incitement to cause harm. Should the CIPC commissioner deems a company’s proposed name to be potentially offensive, he may, in terms of Section 12(3)(b), refer the name reservation application to the South African Human Rights Commission which in turn may apply to the Companies Tribunal for a determination and order as contemplated in Section 160.

A company name must also not be the same as, or confusingly similar to the name of another company to the extent that a potential customer might think that the company is the same as, or affiliated with another company with the same or similar name, unless the company forms part of a group of companies. Similarly the company’s name may not be similar to defensive names registered in terms of Section 12(9), business names registered in terms of the Business Names Act 27 of 1960 or trademarks registered in terms of the Trade Marks Act 194 of 1993.

Issues resulting from these similarities is governed by the common law principle known as “passing-off”. In Williams v Janse van Rensurg (3) 1989 (4) SA 884 (C) it was held that for a name to be the same as another name as contemplated in Section 11(2)(a), it must be identical rather than “similar to”. In Bata Ltd v Face Fashions CC 2001 (1) SA 844 (SCA) a broader interpretation of the word “similar” as contemplated in Section 11(2) was favored to mean to have “a marked resemblance or likeness” and that the offending mark (or name) should immediately bring to mind the well-known trade mark (or name). Accordingly a mere similarity will not be sufficient. A name must be confusingly similar, as is the test in respect of passing-off, dealt with in the matter of Adidas AG and another v Pepkor Retail Limited (187/12) [2013] ZACSA 3 (28 February 2012) as follows:

“…a reasonable likelihood that ordinary members of the public, or a substantial section thereof, may be confused or deceived into believing that the goods or merchandise of the former are the goods or merchandise of the latter or are connected therewith. Whether there is such a reasonable likelihood of confusion or deception is a question of fact to be determined in the light of the particular circumstances of the case.”

A company name should further also not falsely suggest that the company is part of an association, is an organ of state, owned by a person with a specific educational designation, who is a regulated entity or is owned by a foreign state, government or international organization.

Thus, dear Mr Shakespeare, a rose by any other name might NOT always smell as sweet, but sometimes confusingly similar.

Marietjie Botes