2005 PLP 808 (CLD)

8. The criterion laid in section 37 of the Companies Ordinance, 1984 is that a company shall not be registered by a name identical with that by which a company in existence is already registered, or so nearly resembling that name as to be calculated to deceive. This is to protect persons who may be coming in contact with such a company from believing that the source and origin of the new company was that of an existing company and that no confusion in this regard is caused.

9. We have also the Trade Marks Law where the criterion laid under its old sections 8(a) and 10(1) of the Trade Marks Act is that an unwary purchaser should not be allowed to believe that the goods of a party and the opposing party came from the same source.

10. Keeping this criterion in view, we have now to see whether a name adopted by the respondent side and the petitioner side created a deception or confusion with respect to their origin or not.

11. Such like questions have emerged even in the past and there is a plethora of case-law which can be of guidance in coming to the just conclusion. An old case reported in (1899)

16. R.P.C. 12 is very lose to the point. "Dunlop Pneumatic Tyre Company Ltd." as manufacturing and selling tyres and other accessories such as pumps and inflators under the name Dunlop since

588. This word "Dunlop" had become so identified with the name of the company that anyone could not think of one without the other. One Peter Funt started business as Dunlop Lubricant Company." The original Dunlop company filed an action for a prohibitory injunction to restrain the defendant from trading under the name Dunlop. The defendants contested the action on many grounds but two most impressive grounds were (i) that the defendant and one other John Francis Dunlop had formed a partnership under the style "Dunlop Lubricant Company" in November 1896 with the object of selling, the lubricant etc. The business continued in partnership till August, 1887 when John Dunlop retired after releasing and the defendant has thus acquired the name Dunlop from his previous partner and desired to continue to exploit the name in future. Additionally, the defendant pleaded, the business of Lubricant was so distinct from the business of the plaintiff that there was no chance of either any loss being caused to the plaintiff or any possibility of any deception to the public. Romer Judge after hearing the parties disbelieved the story of Peter Funt having adopted the name Dunlop in the manner he had alleged and ranted injunction to the plaintiff as prayed. The learned Judge held:-- "I am satisfied that there was never any prior business carried on by Mr. Dunlop under that name. I am not satisfied that the arrangement purported to be come to by the deed which has been put in was a genuine arrangement, and the conclusion I come to is that the defendant himself chose to carry on business under the name of the Dunlop Lubricant Company because of the word 'Dunlop' and because the word `Dunlop' suggested the plaintiff company, and for no other reason. It appears to me it would be wrong to allow him to carry on business under that name, and to describe the goods as he does as "Dunlop" goods, for that is the chief word that he uses on the covers of his goods, with regard to his burning oil and his graphite, which he sells. The word "Dunlop" is put in a very prominent way, and I am satisfied that he does that with a view of inducing customers to believe that those goods, if they are not the goods of the plaintiffs, are goods used in some way with their sanction, or connected in some way with them, so as to get the benefit of the plaintiff's name. It appears to me that the plaintiffs are entitled to say that the word "Dunlop" ought not to be allowed to be used under those circumstances with those objects by the defendant; that it would injure them in their business very considerably if it is not stopped. They themselves are sellers of cycle accessories, though as a matter of fact up to the present time they have not sold burning oil or lubricants. But they may do so, and in the meantime it appears to me that they are entitled to come into Court and say that a name substantially identical with theirs ought not to be allowed to be used by the defendant in the way in which he is using it. I, therefore, think the plaintiffs are entitled to some relief."

12. Another interesting case was decided by the High Court of Justice Chancery Division as early as 1912 and is reported as Lloyd's v. Lloyd's (Southamption) Ltd. In. (1912) 29 RPC, 433 Lloyd's the world known name in the Marine Insurance and shipping circles have existed as an establishment since 1774. They have branches or agents at practically every port of any importance throughout the world. In 1911 some person floated a company using the name Lloyd's and called it "Lloyd's (Southamption) Ltd. Dawson Bros. who were Lloyd's agents at Southamption brought an action against this company praying for an injunction against the defendants restraining them from using this name. The trial Judge while conceding, that the defendants had no satisfactory explanation to offer why they had chosen this name Lloyd's for their adventure and also being convinced that by the use of this name defendant had no other motive but to take some benefit out of the goodwill and reputation of Lloyd's still refused to issue injunction on the ground that there was no evidence worth the name to prove that "there is a reasonable probability of such deception being practised." In this an appeal was preferred and the appeal was allowed and the defendants were restrained by an injunction to use the name Lloyd's. The leading judgment was written by Buckley L.J. who stated:-- Lloyd's has existed for 200 years in connection with shipping; for 100 years they have had an agency at Southamption. The defendant company is formed with objects which according to its Memorandum of Association cover all sorts of purposes not all shipping but nearly everything relating to shipping and a multitude of other purposes, and they have chosen for their name "Lloyd's (Southamption) Ltd." They said they thought it was a suitable name. I have not the least doubt that it was a suitable name for their purpose, and that purpose was what the learned Judge described as an impudent attempt to tend they are that which they are not. Reference may also be made to a very old case which came before the House of Lords and by majority judgment their Lordships held that "Dunn's Fruit Salt' should not be registered because 'Eno's Fruit Salt' had by that time gained so much popularity and the name of the producer Eno with the name of the product 'fruit salt' had become so identified that to allow the registration of the word 'fruit salt' to a different person was bound 'to cause confusion in the market. It may be stated that in this case the words 'fruit salt' were common words and the product being baking powder was also different from the product of 'Eno's which was a 'fruit salt' to be used for medical purposes, yet the registration was not allowed to Dunn's for registering his baking powder under the name 'fruit salt'.

13. While discussing the possibility of confusion and deception in the case of Bandenawaz Ltd. v. The Registrar of Trade Marks PLD 1967 Kar. 492 following observations were made:-- "The real point is not whether the goods belonged to the same class or to different classes, but whether there is any trade relation between them of such a nature as to create an impression that the manufacturer of one might be the manufacturer of the other; or the products of one manufacturer might have been used in the production of the goods of the other manufacturer. From this point of view, there is a likelihood of deception and confusion if the chemical liquid, which is used for giving a harsh to textiles and for protecting them against shrinkage has the same name as the textiles themselves, because the impression can easily be created that the textile piece goods which bear the name of "Resloom" may be been treated with the chemical preparation of the other manufacturer."

14. In case of Messrs Irshad Sewing Machine Company v. Registrar of Trade Marks and Messrs Tokyo Shibaura Denki Kabusiki Kaisha the relevant excerpts help us to appreciate the proposition further although the observations were made in a trade Mark case:-- "Building up his case substantially on what is contained in respondent 2's opposition and which is summarized in the first two paragraphs of this judgment, the learned counsel for respondent 2 made strenuous effort to show that the appellant's use of the mark Toshiba would cause deception and confusion in the minds of the purchasers who would take its products as those of respondent

2. He contended that respondent 2's products were known and were being sold the word over for a number of years and that with extensive publicity and advertising done by respondent 2 its trade mark Toshiba has become known to almost to very citizen of Pakistan and was practically a household word and, therefore, any customer's first impression would be that the sewing machine manufactured and sold by the appellant with the mark Toshiba thereon had actually been manufactured by respondent." "The contention of the learned counsel is not without force. With the proliferation of means of communication media the names and products of world renowned big companies are catching the eyes and ears of the public at large in all civilized countries of the world and Pakistan is no exception. Extensive travelling abroad in the recent past has made it possible for the people of Pakistan to have knowledge of the internationally renowned companies and their products dent 2 is no doubt a company of world renown and its products are marketed in Pakistan as also in other countries."

15. Corresponding to our section 37 is section 20 of the Indian Companies Act, 1956. According to which the adoption of a name which is identical with, or so nearly resembles, the name by which a company is in existence and has been previously registered, is undesirable under the Act.

16. The reason for this rule was explained in the case of Society of Motor Manufacturers and Traders Limited v. Motor Manufacturers and Traders Mutual Insurance Co. Ltd. (1925) 1 Ch. 675 in the following words:-- "Under the Companies Act, a company by registering its name gains a monopoly of the use of that name since no other company can be registered under a name identical with it or so nearly resembling it as to be calculated to deceive." "The name of a company is a part of its business reputation and that would definitely be injured if a new company could adopt an allied name."

17. In case of many Companies some portion of similarity in name has been allowed to co-exist and the determining factor in each case is one of facts depending on the amount of confusion involved, and for this each case has its own history and merits.

18. Another factor will be where a particular name is to be used, viz. amongst educated people, who were alert and the society was sophisticated or otherwise where people could be easily misled.

19. The criterion on the basis of which the revision was rejected was that the line of business of the petitioner and the respondent being dissimilar, the element of the confusion was eliminated because people will choose to go to either on the basis of their needs and will know that they were different.

20. This criterion overlooks the indigenous requirements. If we keep the two names in juxtaposition, it is very obvious that a common man will at least think that the respondent company has some connection with the petitioner company, although they trade differently. It will be only after investigation that he may come to different views. Why put him to such a test?

21. We are concerned with what appears to be ostensible and prima facie and if that is misleading and gives an impression of a common origin, we have to term such a company as undesirable and have to stop it from further misleading. There, may be certain names so common in our society where we may have to allow existence of common names along with other added names in the matter of registration of a company. But where the names are unusual, unpopular and uncommon a strict view has to be adopted. Here, we find that the name Darson is falling in the second category and, therefore, even if used with another trade, it may deceive a person with respect to source and origin of respondent-Company with the source and origin of the previously registered company. If we look at the name Darson, the word Dar reflects a Kashmiri caste but added together with son, it makes an uncommon name, unlike names as Ali, Umer etc. To my mind, it has a potential of causing deception. Therefore, the Tribunal by merely stating that uncommon names in respect of two different trades will not cause any deception, is not well explained nor is based on our circumstances and logic:

22. In the case of trade mark a monopoly cannot be bestowed and the same trade mark could be used in respect of different goods by different persons, who then go for the goods connecting to a trade mark. In the Jeep Case PLD 1969 Karachi 376 two tests were laid in respect of determining the question of deception pertaining to the trade mark and these were as follows:-- (i) Whether this is identity of, or close resemblance between the two competing marks; and (ii) Whether there is some kind of trade connection between the goods marked under the two marks, so as to lead the members of the public to attribute the origin of both the goods to the same source?

23. Whereas, a company is perceived as an artificial entity in the sense that like a vehicle it is driven along with a corporate route by the management and membership. The concept of registration of a company took birth in the middle of 19th Century. Whereas, from the 17th Century onwards and with the growth in the world shipping trade, Chartered Joint Stock Companies were developed which comprised association of members contributing capital towards specific trade venture. It was rather sophisticated form of partnership and which ultimately led to an enactment of the Joint Stock Companies Act, 1844 in U.K., which created a limited liability. This Act was later substituted by the Companies Act of 1985 in U.K. One of the rationales for the new Act was to counter potential danger which floated from the production of the registered company and the benefits of the limited liability. With the creation of the limited company, it became increasingly important for a third party advancing credit to be aware that it has a monetory risk which should limit the company fall. The company name has, therefore, assumed importance and even a small variation in the name entailed penalty under the law (section 349(4). Therefore, there's a rationale behind section 38 of new Company Ordinance, 1984.

24. This proposition has been well resolved in the case of trade mark where identification of the goods is the question. But can we use a similar standard in respect of two companies having commonality of the name although having different trades. The answer would be in the negative because the name used is of so much importance that a deception can always subsist. For avoiding this deception, we have to have different principles under section 38 of the Companies Ordinance, 1984 and under the Trade Mark Act.

25. There are many Corporations which, household words manufacturing different types of goods and indulging in various kinds of trades. These Corporations may have common names and these may have uncommon names. Those with common names can be shown some laxity provided their name is prefixed and suffixed with certain other identity which may reduce the chance of the deception. But in case of uncommon name, the chances of the deception are larger and a customer could always be deceived from the name rather than from what the company may be trading in.

26. Consequently, this Court disagrees with the learned Tribunal and sets aside the orders dated 11-2-2002 and 30-7-2002 and allow this petition with no order as to costs. M.H./D-29/L Appeal allowed.