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Sep 30, 2011

IP perspective on Consumer Protection Act and Companies Act

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Webber Wentzel partner Bernadette Versfeld discusses the introduction of a new business names registry.
Webber Wentzel|Local Law|Act|Bernadette Versfeld
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Local law firm Webber Wentzel says the new Consumer Protection Act (CPA) of 2008 may lead to new challenges from a trademarks perspective, when the Companies and Intellectual Property Commission’s business names register is up and running in terms of Section 79 of the CPA.

Webber Wentzel partner Bernadette Versfeld explains the business names register will operate alongside the trademarks and company names registers.

The aim of the provisions dealing with business names contained in Sections 79 to 81 of the CPA, is to prevent the use of business names, which could lead to confusion or to consumers being mislead into thinking that a business is associated with another, when in fact it is not.

This is often caused by the inclusion of an already existing trademark in the business name. “xxx Trading (Pty) Ltd trading as yyy will no longer be allowed to trade under the name yyy unless yyy is registered as a business name,” explains Versfeld.

This, when applied correctly, will enable trademark owners to identify infringing business names, which may have previously not been detected, she notes.

Versfeld’s concern, however, is whether the business names register will come into existence, as it was supposed to have been maintained in terms of the Business Names Act 27 of 1960, but does not exist, and whether the newly established National Consumer Protection Commission (NCPC) will be able to effectively regulate the new register.

“The Registrar of Trade Marks regulates the trademarks register and the Registrar of Companies and Close Corporations regulated the companies and close corporations register separately.

“We are hoping that the NCPC will, before allowing the registration of a business name, conduct a check of the trademarks and companies registers to ensure that the proposed business name is not an already existing trade mark or company name. It is unclear how this will work from a practical point of view,” she says.

She explains that problems will arise when business names conflict with existing, registered trademarks or company names.

However, Section 81 of the CPA and Section 160 of the Companies Act do make certain provisions to ensure that trade marks and company names remain protected.

Further, the Companies Act comes into play when an application to object to a company name is filed with the Companies Tribunal.

Versfeld notes that the judicial process involved in objecting to a company name has changed significantly.

Under the old Companies Act an objector only had one year from the date of incorporation of the company to file an objection with the Registrar of Companies, or two years from the date of incorporation with the High Court if the company name infringed a registered or well-known trade mark.

Now, the objector can file an application with the Companies Tribunal at any stage. One of the challenging aspects of the new process is that the period allocated for answering the application filed with the Companies Tribunal and replying to that answer has been reduced.

“The short time periods are likely to cause problems, especially in cases where affidavits have to be commissioned abroad and the Act does not make provision for extensions of time,” she adds.

In addition, filing an application with the Tribunal may be more expensive than filing an objection with the Registrar.

“Previously, an objector simply sent a letter to the Registrar arguing why the name was undesirable. The process was fairly efficient from a time and cost perspective. The new procedure is similar to a High Court application procedure and one wonders whether it will have the same time and cost benefits,” says Versfeld.

Meanwhile, some critical clarifications have been made in the Companies Act and the grounds of “undesirability” and “calculated to cause damage” have been replaced with grounds of confusing similarity and false association.

Further, the Companies Act makes provision for the Companies Tribunal to grant an order as to costs providing a benefit, which the objector did not have in the past.

“From an intellectual property perspective, both Acts have positive aspects, but they are not without their challenges,” concludes Versfeld.

 

AUDIO CLIP
To listen to an audio clip in which Webber Wentzel partner Bernadette Versfeld discusses the introduction of a new business names registry, go to www.polity.org.za and click on 'Multimedia', or listen it on the Polity.org.za App on your iPhone.

Edited by: Shannon de Ryhove
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