What’s in a Name? How about Reputation, Goodwill, & Profit?

A couple of weeks ago I posted a New Legislation Notice about existing forthcoming changes to the Companies Act due to take place in October this year. I laid special emphasis in that particular post on the fact that – come October – new companies intending to register a similar name to existing companies are going to need the consent of those companies before being allowed to register the name.

I want to revert to that subject now, because when I was browsing the Companies House site yesterday, I came across a perfect example of exactly why the new legislation is important and necessary.

Berkmann Wine Cellars Limited was incorporated as Company Number 02190816 on the 10th of November 1987. It is a private limited Company, has a registered office at 10-12 Brewery Road, London N7 9NH, and the nature of its business is given as “(SIC(03)) 5134 – wholesale alcoholic and other drinks".

On the 27th of May 2009, Berkmann Wine Cellars UK Limited was incorporated as Company Number 06915798. It, too, is a private limited company. It has a registered office at 56 Sherston Court, Newington Butts, London SE1 6SG, and the nature of its business is also given as “SIC(03))".

I was curious enough about those entries to make some enquiries.

Berkmann Wine Cellars Limited – as you will discover for yourself if you visit http://www.berkmann.co.uk - is a family owned company that was originally founded to supply Mr. Joseph Berkmann’s group of restaurants with bordeaux, burgundy and Beaujolais wines.

Berkmann Wine Cellars UK Limited, on the other hand, has a single Director whose name is Rivero and not Berkmann and who is apparently in no way related to the Berkmann Family – just as the new Company is no way related to Berkmann Wine Cellars Limited.

Which brings me to the knotty legal problem of ‘passing off’.

The legal definition of ‘passing off’ is: “to misrepresent that one's business is that of, or connected with another, in a way likely to cause damage”, or: "a misrepresentation made by a trader in the course of trade to prospective customers of his or ultimate consumers of goods or services supplied by him, which is calculated to injure the business or goodwill of another trader (in the sense that this is a reasonably foreseeable consequence) and which causes actual damage to a business or goodwill of the trader by whom the action is brought or will probably do so."

The definition of ‘misrepresentation’, incidentally, is simply “a representation that is untrue." ‘Goodwill’ is an intangible business asset which includes a cultivated reputation and consequential attraction and confidence of repeat customers and connections. In many cases, the word ‘goodwill’ is used interchangeably with the word ‘reputation’.

Obviously, I’m not in a position to speculate as to why the sole Director of ‘Berkmann Wine Cellars UK Limited’ chose a company name that might be so easily confused with that of a pre-existing, well-established, and reputable company – and I’m certainly not accusing that person of having any intention of ‘passing off’. Ms. Rivero may, after all, never have heard of Berkmann Wine Cellars Limited.

On the other hand, the name was an unfortunate choice on her part, and she (or her professional advisors) should have done their homework before settling on a name for the new company. Moreover, were I a Director of a pre-existing, old-established, and reputable company faced with this situation, I would be concerned enough to try to ensure that there could be no confusion – because, in all the circumstances, confusion would certainly seem to be ‘a reasonably foreseeable consequence’.