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What's in a name?

Many people who set up a business consider trading using their own name. In several ways this is a sensible idea, particularly where they are going to be heavily involved in the business and they already have a strong reputation. For instance, where a sole trader, who has worked for a number of years in a particular field, decides to form a limited company it is only logical in most cases that he incorporates his own name in the company name. There is then continued recognition of the services or goods that he has previously provided.

Personal touch
Generally, personal names are not considered to be distinctive so cannot be registered as trade marks. If, however, enough goodwill and reputation has been established in a personal name, a well-known trader may be able to register his own name as a trade mark if it appears to the Trade Mark Registry that the name has become capable of distinguishing that trader’s goods or services from those of another. Indeed the essential function of the trade mark is to identify the commercial origin of the relevant goods and services.

A registered trade mark creates a monopoly right which enables the proprietor to take action to stop a third party from using the same or a similar mark in respect of the same or similar goods or services. If the trade mark becomes particularly well known a registration may even prevent the mark from being used by a third party on dissimilar goods or services where such use is likely to cause public confusion as to the source of the goods. Given that a trade mark is a valuable asset a proprietor may sell it or license others to use it in order to raise revenue. Accordingly, a personal name may generate significant commercial value and become an important business asset in itself.

Two recent cases have, however, highlighted a major pitfall for traders who operate a business under their own name:
In the case of I N Newman Limited -v - Richard T Adlem, Mr Adlem had run a successful business as a funeral director since 1965. Mr Adlem sold the business in 1993 to a new owner who continued to use the “Richard T Adlem” name and Mr Adlem undertook some work for this new business. In 2000 the business was sold on to I N Newman Limited together with the right to use the business name “Richard T Adlem Funeral Director”. Mr Adlem made no complaint of this further assignment of rights in the name and in fact he assisted I N Newman with approximately 40 funerals.
The agreement between Mr Adlem and the company to which he sold his business included a restrictive covenant preventing Mr Adlem from setting up business as a funeral director within a 10-mile radius for 5 years. Approximately 7 years later in 2001 Mr Adlem decided to again set up a business as a funeral director under his own name and applied to register a trade mark in respect of “Richard T. Adlem Funeral Director”.
I N Newman Limited brought a passing off claim against Mr Adlem and sought a declaration that Mr Adlem’s trade mark registration was invalid on the grounds that it had an earlier right (namely, the right to use the “Richard T. Adlem” name as a business name. Mr Adlem counterclaimed for infringement of his registered trade mark. A passing off claim involves a claimant having to prove that they have goodwill in a name, that the use of the name by a third party would lead to confusion on the part of the public and that the claimant would in turn suffer damage to their goodwill.

I N Newman Limited succeeded in its claim of passing off and the Judge declared Mr Adlem’s trade mark registration invalid. I N Newman Limited argued successfully that it was the rightful owner of the established goodwill in the name “Richard T Adlem” in relation to the funeral business which it had purchased and that any use by Mr Adlem of his own name in relation to such services would cause confusion to the public.

The judge made it clear that Mr Adlem was not able to simply start a new funeral business under exactly the same name as he had transferred to I N Newman Limited without making it absolutely clear the two businesses were distinct - unless he did so the public was likely to believe Mr Adlem was conducting the original business, when that was not the case. Any disclaimer would need to be clear and unambiguous so that Mr Adlem was not gaining business by misrepresentation.

Change of a dress
A second case involved the famous dress designer, Elizabeth Emanuel. Ms Emanuel was renowned for designing Princess Diana’s wedding dress in 1981. In 1990, Ms Emanuel set up business under her own name. She later applied to register a trade mark which incorporated the name “Elizabeth Emanuel” into a logo. This trade mark application was included in the sale of various assets to another company, Frostprint Limited, which changed its name to Elizabeth Emanuel International Limited (“EEIL”). Ms Emanuel worked for EEIL for a month following this transaction. Subsequently, EEIL sold the trade mark to another company, Oakridge Trading Limited.
Oakridge applied to register a word only version of the mark to gain protection in the words “Elizabeth Emanuel” rather than the words as incorporated in a logo.

Ms Emanuel opposed the application to register the amended version of the mark and sought to have the original registration (which she had sold) revoked on the basis that it was “deceptive” to the public as they would be confused into thinking that clothing bearing the mark “Elizabeth Emanuel” had been made by Ms Emanuel herself. However, the UK court, with a little help from the European Court of Justice, rejected her argument and Ms Emanuel lost her case. The judge stated that this kind of confusion, which Ms Emanuel claimed, was a natural and inevitable consequence of the sale of a business and did not constitute the type of deception necessary to justify a revocation of the logo incorporating “Elizabeth Emanuel”.

Although it is easy to sympathise with Mr Adlem and Ms Emanuel, the courts’ decisions were entirely logical in the circumstances. The consideration paid in respect of those names and the goodwill entwined with them would effectively have been lost if the courts had found in favour of Mr Adlem or Ms Emanuel.

Traders need to bear in mind the implications and consequences of using their own name as a business name and subsequently parting with the rights in their name on a sale of the business.

Further Information
Shelley Beaumont is a lawyer specialising in intellectual property with law firm Haliwells. She can be contacted at the firm’s Manchester office on 0161 835 3003.

September/October 2010
issue 61
available now