Opinionista Gaelyn Scott 1 October 2013

There’s only one Bloomberg

Court decisions regarding company names are rare. So the recent decision of the Western Cape High Court in the case of Bloomberg’s Posterity Investments (Pty) Ltd v The Registrar of Companies and Bloomberg LLP is worth discussing.

What makes company name cases interesting from an intellectual property (IP) law point of view is that they deal with issues that are very similar to issues that are dealt with in trade mark infringement and passing-off cases. That’s because the law says that a company name will be refused if it is “undesirable” or “calculated to cause damage” and this has been interpreted to mean that the name must not cause confusion.

The issue in this case was whether the name Bloomberg’s Posterity Investments (Pty) Ltd was undesirable or calculated to cause damage, given the renown of the US company Bloomberg, which is of course involved in various aspects of financial services, including software, data services, news, analytics and trading platforms. The US company has 41 trade mark registrations in South Africa for marks incorporating the name “Bloomberg” going back as far as 1994, and some 1,000 domain names. It also has a significant commercial presence in South Africa, with an office in Sandton, a news bureau in Cape Town, and some 1,500 South African subscribers, and it get some 50,000 hits on its website every month from South Africa.

The South African company admitted that the US company was well known in South Africa, but it argued that it had not sought to pass itself off as being connected with the US company. It raised a number of points. It said that it was part of a group of companies created by one Israel Lester Joseph (ILJ) Bloomberg, and that by the time Bloomberg’s Posterity Investments (Pty) Ltd was registered in 2009 there were already 15 “Bloomberg” companies and close corporations in existence. This, it argued, meant that the group had considerable rights to the Bloomberg name in South Africa, rights that pre-empted the registration in South Africa in 1999 of Bloomberg LLP as an external company. The South African company further argued that as it was a small company registered in Plattekloof in the Western Cape, there would never be any confusion with the US company. It further argued that although the company’s main object was investment services, it in fact only provided such services to companies within the group. And it argued that the word “Posterity” in the name distinguished it from the US company because it suggested succeeding generations of ILJ Bloomberg.

The court looked at a number of earlier cases. It referred to the well-known case of Peregrine Group (Pty) Ltd & Others v Peregrine Holdings Ltd & Others 2001 (3) SA 1268 (SCA), where the judge said this about company name objections: “In my view it is inappropriate to attempt to circumscribe the circumstances under which the registration of a company name might be found to be undesirable. To do so would negate the very flexibility intended by the legislature by the introduction of the undesirability test in the section and the wide discretion conferred upon the Court to make such order as it deems fit. For the purposes of the present matter, it suffices to say that, where the names of companies are the same or substantially similar and where the likelihood is that members of the public will be confused in their dealings with the competing parties, these are important factors which the Court will take into account when considering whether or not a name is undesirable.”

The court also referred to the recent company name case of  Polaris Capital (Pty) Ltd v The Registrar of Companies & Others 2010 (2) SA 274 (SCA), where the court upheld an objection by a US company called Polaris Capital Management to an application by a South African company to change its name to Polaris Capital. In this case there was proof that the US company had a reputation in the financial services market in South Africa, and the court held that the South African company’s name change would lead to confusion and that it was therefore undesirable.

The court lastly referred to the well-known passing-off decision of Brian Boswell Circus (Ltd) and Another v Boswell- Wilkie Circus (Pty) Ltd 1985(4) SA 466(A), where this was said: “A party accused of passing off cannot use a surname that has already acquired a distinctiveness and is universally known in the market without making it clear to the public that he is not the original user of that name in the market.”

The court in the Bloomberg case said that, although the South African company claimed that it only offered services to companies within the group, there was in fact evidence that it had made loans to outsiders and there was nothing in the company’s object that limited it to offering services within the group. The court was also not persuaded by the argument that the word “Posterity” distinguished the South African company from the US company, because there was no proof that South Africans knew who ILJ Bloomberg was, and that he was not in fact the person behind the US company.

The court went on to say this about the Bloomberg name: “There can be no question that it has come to bear a secondary meaning in relation to finance and investments.” It concluded that the name Bloomberg Posterity Investments (Pty) Ltd was likely to cause confusion: “There can be no quibble with the fact that the words: ‘Bloomberg’s Posterity Investments’ describe a financial investment activity … Applicant’s concession that second respondent is a more reputed company than it, means that members of the public are more likely to seek out the services of second respondent than that of applicant, given the former’s well-known reputation and success in the field of financial matters.” The fact that the US company had not proved any actual confusion did not matter, as this is not a requirement in trade mark infringement cases, and nor should it be in company names cases. It was sufficient that “it is more probable than not that applicant’s name is likely to be confused as an associated company of second respondent.”

The court said that the degree of confusion is a factor to be taken into account in deciding whether or not a company name is undesirable, and that here the degree was likely to be considerable. “Clearly South Africans use the Internet and have access to second respondent’s television channel sufficiently to be familiar with second respondent’s products and services. They can accordingly become as confused as any person outside of South Africa could and incorrectly form the belief that applicant is a company associated with second respondent. Given the globalised nature of financial transactions generally, there is clearly opportunity for a strong likelihood of confusion between the two companies.”

The court concluded that the name Bloomberg’s Posterity Services (Pty) Ltd was undesirable and calculated to cause confusion. It therefore ordered that it be changed.

In order to avoid this situation, it is prudent to conduct a search of the Trade Marks Office register when registering a company name to confirm that the new company name will not infringe the rights of an earlier trade mark proprietor. DM

Gaelyn Scott is Head of and Director In Intellectual Property at ENSafrica (Edward Nathan Sonnenbergs).


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