Infringement of descriptive trade name possible after all
After the judgment of the Supreme Court of February 2021 in the DOC Dairy Partners vs. Dairy Partners dispute, the possibility of protecting a descriptive trade name seemed to have become (even) more limited. Nothing appears to be further from the truth. The judge in preliminary relief proceedings of the District Court of The Hague ruled at the end of September 2021 that the use of the name 'Low Budget Verhuisservice' constitutes trade name infringement of the trade name 'Budget Verhuisservice'.
What happened?
The moving company Klustoppers has used the trade name 'Budget Verhuisservice' since April 2015. Klustoppers also uses this name for its website 'www.budgetverhuisservice.nl'.
In 2020, a competitor entered the market, profiling itself under the trade name 'Low Budget Moving Service'. This company used the website www.lowbudgetverhuisservice.nl.
Klustoppers was not happy about this, which led to the suing of this competitor. Klustoppers claimed a ban on the use of the name 'Low Budget Moving Service' before the court.
When is a trade name possible?
When assessing the question of whether a trade name has been infringed, it must be determined whether a trade name right exists.
A trade name does not come into being the moment you have thought of it, registered it with the Chamber of Commerce or registered it as a domain name. You will have to actually use the trade name (first) to get an exclusive right to the name. This use means using the name for your company. Names for your products are not protected under trade name law. Protection of products is possible within the trademark law, a registration is required.
Use of trade name
The use of a trade name can be; the use of the name on letterhead, use of the name on the website (so not only in the domain name), use in the info e-mail address, a name board above a physical shop, use of the name on social media channels and so on.
Recently, the Court of Appeal of The Hague (in Dutch) ruled, for example, that the use of a trade name in the intro of a film (it concerned the trade name of a producer) can be seen as valid use of a trade name and therefore provides protection.
When is there infringement of a trade name?
Article 5 of the Trade Names Act states that it is forbidden to use a trade name (or a similar trade name) that has already been used by another party if that use creates a likelihood of confusion among the normally attentive public. Likelihood of confusion means that there is a chance of the confusion that parties are seen in some way related to each other, while this is not the case. Is there such a likelihood of confusion? Then there has been trade name infringement. If not, there is no trade name infringement. Whether there is a likelihood of confusion depends on the circumstances of the case.
Descriptive Trade Names
It follows from the judgment in the DOC Dairy Partners vs. Dairy Partners dispute of the Dutch Supreme Court that a likelihood of confusion is and can be less likely for the same descriptive trade names than for the same non-descriptive trade names. According to the Supreme Court, the following circumstances may lead to a likelihood of confusion in the use of identical or similar descriptive trade names:
- A need for preservation of descriptive trade names must be taken into account. The more descriptive a trade name, the greater the need for reservation, the smaller the likelihood of confusion;
- The likelihood of confusion requires that the trade name be distinctive (through absorption (i.e. name recognition) or the addition of a non-descriptive element);
- The Internet has made people more accustomed to descriptive names - partly because findability improves with the use of descriptive terms - and because the public knows this, confusion is less likely to occur.
Conclusion, the protection of a descriptive trade name is very limited as the likelihood of confusion in the case of descriptive trade names is low.
So why is the trade name Budget Rental Service infringing on the trade name anyway?
As stated above, the question of whether a trade name infringement has occurred is based on the question of confusion. The answer to this question depends on the circumstances of the case.
In this dispute, Klustoppers claimed that it had made considerable investments in the name 'Budget Verhuisservice' and that customers could demonstrably find it under that name. The competitor 'Low Budget Removal Service' did not contradict this. Therefore, the court assumes that 'Budget Verhuisservice' has some name recognition and therefore some distinguishing capacity. Because the only difference between the two trade names is a descriptive word, namely 'Low', the chance of a likelihood of confusion is not removed, according to the Court.
The fact that the competitor copied the general terms and conditions of Klustoppers one by one is also a circumstance that is taken into account in the question of confusion. The court ruled that this also increases the likelihood of confusion.
A final indication that there is a likelihood of confusion is that the confusion has actually arisen.
Despite the fact that the name 'Budget Verhuisservice' is a descriptive trade name, this name is - under these circumstances - protected and the use of the name 'Low Budget Verhuisservice' is prohibited. Klustoppers is therefore right.
Remarkable
It is noteworthy that the District Court of The Hague ruled in 2016 that Klustoppers itself had crossed the line by using the trade name 'Studenten Verhuisservice'. This just goes to show that the line between infringement and being 'copied' can be very thin.
Questions?
Do you want to set up a company and/or market a product, but do not know yet whether you can use the name you have thought up? We will be happy to advise you! Even if someone else copies your company name or product name, we will be happy to help.
