In the evolving landscape of corporate and intellectual property law, the intersection between trademarks and company names has garnered significant attention. Trademark infringement through company names not only dilutes brand identity but also disrupts market dynamics, creating consumer confusion. This article analyzes the multifaceted legal framework, bolstered by landmark judicial precedents and statutory provisions, including Section 16 of the Companies Act, 2013, Section 29(5) of the Trademarks Act, 1999, and the Ministry of Corporate Affairs Notification of 2021.
Legal Framework Governing Trademark Infringement through Company Names
1. Section 29(5) of the Trademarks Act, 1999
Section 29(5) is a cornerstone provision addressing the use of registered trademarks as trade names or parts thereof. It explicitly states:
“A registered trade mark is infringed by a person if he uses such registered trade mark as his trade name or part of his trade name, or name of his business concern, dealing in goods or services in respect of which the trade mark is registered.”
This provision aims to safeguard the distinctiveness and goodwill of registered trademarks from unauthorized usage in company names. For instance, in Skipper Limited v. Akash Bansal & Ors (2017), the Calcutta High Court reinforced the application of this section by prohibiting the use of “BANSAL” in a manner that infringed the petitioner’s registered trademark.
2. Section 16 of the Companies Act, 2013
Section 16 complements the Trademarks Act by providing a mechanism for rectification of company names. Sub-section (1)(b) allows the registered proprietor of a trademark to apply to the Central Government for a direction to change a company name that is identical to or too closely resembles a registered trademark. The Central Government, upon satisfaction, may direct the company to adopt a new name within six months.
This provision empowers trademark owners to challenge conflicting company names. For example, a trademark proprietor whose registered mark is used by a recently incorporated company can invoke this section for rectification. Failure to comply with such directions results in penalties under sub-section (3), reinforcing the statutory mandate.
3. Ministry of Corporate Affairs Notification (2021)
The Companies (Incorporation) Fifth Amendment Rules, 2021, introduced Rule 33A to address non-compliance with Section 16 directives. Under Rule 33A:
If a company fails to change its name as directed under Section 16(1), its name will automatically be changed to include “ORDNC” (Order of Regional Director Not Complied), along with the year and Corporate Identity Number (CIN).
This rule ensures accountability and deters companies from continuing unauthorized use of conflicting names. For example, if a company named “XYZ Apple Pvt. Ltd.” fails to change its name after being directed to do so due to a conflict with the registered trademark “Apple,” its name would be altered to reflect non-compliance, effectively signaling its illegitimacy.
Judicial Precedents
- M/s Raymond Pharmaceuticals Pvt. Ltd. vs. Union of India: In this case, the Hon’ble Madras High Court upheld the order passed by the lower court under Section 22 of the Companies Act, 1956 (Now section 16 of the Companies Act, 2013). The court directed the petitioner to change its company name, as it was deemed too similar to the trademark “Raymond” owner by M/s Raymond Limited. The court emphasized that Section 22 of the Companies Act, 1956 and Section 29 of the Trade Marks Act operate in distinct fields—while the former addresses rectification of undesirable company names, the latter pertains to trademark infringement concerning goods or services. Despite the petitioner’s claims of long-standing use and distinct business nature, the court found the name’s resemblance to the registered trademark sufficient to warrant rectification, aligning with statutory provisions.
- Kirloskar Diesel Recon Pvt. Ltd. v. Kirloskar Proprietary Ltd. (1996):
The Bombay High Court in this case clarified the restrictions on invoking the defense of bona fide use by companies. Section 35 permits the bona fide use of a person’s name or the name of their place of business, provided it is used honestly and without intent to deceive. However, its application is limited, particularly for incorporated companies.
The court held:
“In any event, the defence that a person is entitled to use his own name or surname is not available to a limited company as the provisions of Section 34 (now Section 35 of the Trade Marks Act, 1999) of the Act give no such defence to an artificial person.
“saving for use of name as provided in Section 34 of the Act does not apply to artificial person like incorporated company. In the case of incorporated company, the adoption of the name is by choice whereas in the case of matured person, the adoption of surname is not by choice.”
This distinction clearly highlights that companies, being artificial entities, cannot claim the inherent right to use a name as their own if it conflicts with an existing trademark.
Practical Applications
- For Trademark Owners: Sections 29(5) and 16 empower trademark owners to proactively safeguard their rights by challenging infringing company names. These provisions also provide remedies, including injunctions and directives for name change.
- For Companies: Newly incorporated entities must conduct thorough name clearance searches, including trademark databases, to avoid conflicts and potential liabilities.
Challenges in Enforcement
- Delay in Enforcement: Rectification under Section 16 is time-sensitive, requiring action within three years of incorporation or name registration.
- Cross-Industry Conflicts: Companies in unrelated industries often claim immunity, complicating enforcement under Section 29(5).
- Proliferation of Common Names: Use of common surnames or generic terms often results in legal disputes, as seen in cases like Precious Jewels v. Varun Gems (2015).
Recommendations
- Proactive Monitoring: Regular monitoring of company registries and trademark filings can help detect potential conflicts early.
- Comprehensive Due Diligence: Entrepreneurs should leverage name search tools, including those maintained by the Ministry of Corporate Affairs, to avoid infringing trademarks.
- Swift Legal Action: Timely recourse to Section 16 and Section 29(5) can prevent prolonged litigation and mitigate damages.
Conclusion
The interplay between Section 16 of the Companies Act, 2013, Section 29(5) of the Trademarks Act, 1999, and the Ministry of Corporate Affairs Notification (2021) offers a robust legal framework to address trademark infringement through company names. These provisions not only protect the interests of trademark proprietors but also ensure fair competition and transparency in business practices. As aptly remarked in the Skipper Limited case:
“No company is entitled to carry on business in a manner so as to generate a belief that it is connected with the business of another company, firm or individual. The same principle of law which applies to an action for passing off of a trade mark will apply more strongly to the passing off of a trade or corporate name of one for the other.”
In an era where brand value often defines market success, the vigilant enforcement of these provisions is not merely a legal necessity but also a business imperative.
Author: Swati Agrawal
Link to Similar articles: https://jpassociates.co.in/domain-names-as-trademarks-beyond-urls/
Link to Trade Marks Act, 1999: https://www.indiacode.nic.in/bitstream/123456789/15427/1/the_trade_marks_act%2C_1999.pdf
