My company name says what?

15 July 2010
It's worth making stringent checks about your company name to save money and adverse publicity later.

Company names can evoke strong feelings—particularly if a company chooses a name that is misleading or deceptive.

Just because a company has been incorporated by the New Zealand Companies Office doesn’t mean the company can use that name.  One company recently found that out the hard way.

New Zealand Natural Care Products Limited (NZ Natural) was fined $15,000 in the Auckland District Court for using its company name and variations of that name. This case highlights the risk of using descriptive terms in company names.  

The problem for NZ Natural was the message consumers took from its name.  Consumers believed the royal jelly it sold was from New Zealand, when it actually came from China. As a result, NZ Natural was found to be in breach of the Fair Trading Act.  NZ Natural breached the Act because its name and variations of that name misled consumers about the origin of its Royal Jelly.


What you need to know about company names

A quick check of the Companies Office database shows that many New Zealand companies contain descriptive terms.  Many more contain ‘New Zealand’.

The use of terms like the seemingly harmless ‘New Zealand’ can cause issues if consumers believe your company name implies that your products are from New Zealand, especially when it turns out that they are not!

Using a registered company name is not a defence in misrepresentation cases, or in trade mark infringement or trade mark reputation based actions.


What should you do?

If you intend to trade in New Zealand using your company name, or in fact any name, it pays to check that:

  • using your name will not mislead consumers
  • your name is not the same as or similar to a registered New Zealand trade mark
  • your name is not the same as or similar to a trade mark someone else already has a reputation in New Zealand.

These checks are fairly straightforward and do not take long or cost too much.

And remember your working environment is not static.  Checking periodically that you can use your name is also something you should do as your business expands. If you have an established business under a particular name but are going to move into new business areas or expand into new geographical areas, it pays to stop and check that you can do so without unacceptable risk.  Understanding the risks you face will help you avoid a NZ Natural situation.


What’s the risk?

Misleading people about the origin of your products breaches the Fair Trading Act. Fines of up to $200,000 and criminal convictions are possible.  Not to mention the adverse publicity!

Breaching someone’s registered or unregistered trade mark rights can result in an injunction preventing you from using your name and an award for damages or an account of profits.


Plan for the future

Most risks can be managed if a business is aware of them.   Stand in the shoes of your customers when selecting your company name – does it tell a truthful story?  Getting it wrong can significantly impact on a business—make sure you do proper checks.

An edited version of this article was published in FMCG magazine, July 2010.

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