I have recently opened new companies for several clients who have consulted with me with regarding to their preferred names. I have found myself at a loss … I explained the legal guidelines, as I understand them under Israeli Law (which is substantially similar to considerations under other jurisdictions) and yet… after further review of Israeli case law … it seems that there are very few guarantees I, as a lawyer, can give a client that they won’t be sued for using a certain name.
It’s true, that in most cases under Israeli law, the party charged with infringement has not been convicted and has even been awarded expenses, etc. But for a number of years, until the Court ruled, the company charged with infringement was in a state of uncertainty with regard to the name of their brand.
To summarize the legal framework:
Under the Israeli Companies law, a company can be called anything as long as:
- It is not similar enough to the name of another company that it can mislead[1] (this is determined by the Companies Registrar that does not take field of activity into account), the sheer similarity of the name bars the second name even if the two companies are in vastly different lines of commerce; and
- It is not a registered trademark for goods or services that are used for similar purposes, or sufficiently similar to mislead, unless the trademark holder has given consent; and
- Furthermore the law gives the Companies Registrar broad discretion saying that “a company shall not be registered in a name that the Companies Registrar considers to be fraudulent or misleading”. There is a big difference between fraudulent and misleading… but, this is at the Companies Registrar’s discretion.
The second set of legal issues concerns trademark law.
The Companies Registrar’s approval of a business name does not grant trademark rights, nor does registration of a corresponding domain name result in any significant legal rights. A company that has successfully incorporated under a name could find still itself liable for trademark infringement or dilution – with potential risks of an injunction, disgorgement of profits, payment of damages, and more.
Trademark infringement occurs when a person or company uses a name or mark in a way that causes a likelihood of confusion with another person or company with respect to source, sponsorship, or affiliation of products, services, or commercial activities. As a general rule, if someone in a similar field to yours is already using a particular business or organization name, you should not use it, nor should you use a name that would be confusingly similar. Traditionally, there was nothing to prevent someone from using a trademarked name in a completely unrelated field or industry (for instance MacDonalds’ make up or MacDonald’s Airlines) because there was no possibility that consumers would confuse one for the other.
Trademark dilution according to the International Trademark Association [2]is defined as “the lessening of the capacity of a famous mark to identify and distinguish goods or services, regardless of the presence or absence of competition between the owner of the famous mark and other parties or of likelihood of confusion. This typically occurs as the result of blurring or tarnishment of the famous mark”. This is a highly subjective determination and a company may also be liable for trademark dilution by the famous mark of another company even if there is no competitive overlap or likelihood of confusion. However, since the emergence of anti-dilution law means, the owner of a “famous” trademark can prevent you from using it even in an unrelated industry. Therefore, it probably would not be a good idea to call a blog “”McDonald’sBlog” unless your name is actually McDonald.
The fact that a company may have a low public profile, or does not yet have products on the market and does not yet have a website, does not immunize it from challenges. In the USA companies have been sued for allegedly causing confusion through their financing activities or for use of a pre-lease code name for a new product.
It is therefore important to assess the potential trademark law risks of a name before adopting it as a company name.
It is very difficult to verify that a trademark is free and clear …but one can reach a certain level of certainty with regard to whether a mark is famous/well-know. The World Intellectual Property Organization’s report entitled Joint Recommendation Concerning Provisions on the Protection of Well-Known Marks recommends the following factors to determine whether a mark is well-known: the degree of knowledge or recognition of the mark in the relevant sector of the public; the duration, extent and geographical area of any use or promotion of the mark; the value of the mark; and the record of successful enforcement of the mark.
Once you have chosen a business name, you should make sure that it is not a famous or well-known mark belonging to someone else, and that someone else is not already using it in a similar field. An initial Internet search should be done for your proposed name. If it is a common word that brings up a lot of results, add keywords relevant to your business or organization to see if any similar enterprises have adopted the same name. If you see any other websites doing work similar to yours, you should consider choosing a different name. When you consider whether something is “work similar to yours,” take a broad view. There is little certainty in this area, and you will just have to do your best in making the call. Thereafter you can search the WIPO Global Brand Database , the US based Trademark Electronic Search System (TESS), the European Trademark Database, the Worldwide Trademark Database and the Israeli Trademark Database, as applicable. Check if the domain is available. It’s also worth checking the availability of a name on social platforms – this can be done at NameChk.com. You should certainly discuss your findings with an IP lawyer who will have additional tools at his/her disposal.
Even if you find nothing through all of these searches, it is still possible that someone somewhere is already using the name you intend to use. This is true because laws protect unregistered trademarks, and there is no comprehensive list of all unregistered trademarks in use. The searches described above are the best you can do, and if they turn up negative, the chances that you will run into trouble are greatly reduced.
[1] Section 27(1) to the Companies Law
[2] http://www.inta.org/TrademarkBasics/FactSheets/Pages/TrademarkDilution.aspx
