Decision

Decision on The Toddler Cloud Ltd

Published 21 December 2022

Order under the Companies Act 2006

In the matter of application No. 4052

For a change of company name of registration No. 13515565

Decision

The company name THE TODDLER CLOUD LTD has been registered since 16 July 2021 under number 13515565.

By an application filed on 14 October 2022, BABY SENSORY INTERNATIONAL LTD (“the applicants”) and BABY SENSORY LTD applied for a change of name of this registration under the provisions of section 69(1) of the Companies Act 2006 (the Act).

The applicants state that they are involved in the licensing and provision of educational and developmental classes for babies, infants and young children and that the name associated with the applicant is TODDLER SENSE. The applicants state:

The registration of the Company Name was an opportunistic registration. The use of the Company Name is also free-riding and unfair. It is done with the intention of appropriating the goodwill generated at the Premises under the license of the Mark from 2016 to 31 June 2021. This case is aggravated by the fact that Ms. Laura Butler previously provided the same Services under the Mark, TODDLER SENSE, under the Franchise Agreement. Now, she offers the same services at the same location (the Premises) under the Company name, THE TODDLER CLOUD. This is confusing and that confusion is a deliberate attempt to capture and appropriate the goodwill generated under the licence.

On 4 November 2022, the Tribunal wrote to the applicants in the following terms:

I refer to your application to the Company Names Tribunal, received on 14 October 2022, a copy of which has been sent to the Respondent for information purposes only.

It is noted that in your Statement of Grounds, you have indicated the Respondent company is already trading.

Section 2 states,

The Applicants also have filmed footage of her running classes for the Company in June 2022

Section 4 states,

The Company runs classes for small children promoted and marketed under the Company Name, THE TODDLER CLOUD.

Section 8 states,

From 16 July 2021, when the Company was incorporated, it has had its registered office at the Premises and offered services at the Premises.

Section 12 states,

Now, she offers the same services at the same location (the Premises) under the Company name, THE TODDLER CLOUD.

Section 18 states,

The Company has assumed the goodwill of the licensed franchise that was at the Premises under the Mark by the selection of the Company Name and its use in trade at the Premises.

Under section 69(4)(b)(i) of the Companies Act 2006 (the Act), a company has a defence to an application under section 69 if it is operating (trading) under the name. Section 69(5) of the Act states:

If the facts mentioned in subsection (4)(a), (b) or (c) are established, the objection shall nevertheless be upheld if the applicant shows that the main purpose of the respondents (or any of them) in registering the name was to obtain money (or other consideration) from the applicant or prevent him from registering the name.

There is nothing to suggest in your application that the main purpose of the respondent in registering the name was “to obtain money (or other consideration) from the applicant or prevent him from registering the name.

Applications to the Company Names Adjudicator are neither an alternative nor an equivalent to an action for infringement or passing-off. You may find it helpful to read the factsheet on our website.

As such, your application has no reasonable prospect of success and is misconceived, unless you can show that section 69(5) of the Act applies. Consequently, under rule 5(2) of the Company Names Adjudicator Rules 2008, I am minded to strike out the application.

If you consider that my preliminary view is erroneous, you can request a hearing in relation to this matter. If you want a hearing in relation to this matter you will need to submit form CNA4, with the fee of £100, on or before 18 November 2022.”

In response, on 14 November 2022, by email, the applicants’ representative wrote to the Tribunal as follows;

Before we can advise our client on whether to request a hearing, we need to better understand the basis for the Preliminary View. No cases or other authority has been provided nor any Practice Note. Kindly provide some legal authorities or case references or Practice Note.

On 15 November 2022 the Tribunal responded in the following terms;

I am writing in response to your email, received by the Tribunal 14 November 2022.

The basis for the Tribunal’s preliminary view is the relevant legislation quoted in its letter of 04 November 2022: specifically, the reference to the trading defence under section 69(4)(b)(i), section 69(5) of the Companies Act 2006 Companies Act 2006 (legislation.gov.uk) and the power to strike out an application under rule 5(2) of the Company Names Adjudicator Rules 2008 The Company Names Adjudicator Rules 2008 (legislation.gov.uk) if it has no reasonable prospect of success or is otherwise misconceived.

May I draw your attention to the underlined part of the letter which the applicant must show to avoid strike out, having stated that the primary respondent is trading (and therefore has a defence under section 69(4)(b)(i)).

May I also draw your attention to the “About us” section on the website (About us - Company Names Tribunal - GOV.UK (www.gov.uk)) and specifically to the last paragraph under the heading “The role of the Tribunal”, which is the paragraph immediately preceding the heading “Who we are”:

It is to be noted that one of the defences is that the company is operating under the company name; an application to the Tribunal is not an alternative to an action for passing-off or trade mark infringement.

The applicants’ attention was also drawn to previous decisions published on the website.

The applicant wrote to the Tribunal on 16 November 2022 by email, to query the status of the proceedings as follows:

There either is a live proceeding–which would mean the CNA1 has been served. If so, a PV could in theory be given in the proceeding, after such proper service and the other party can be copied in correspondence. Or, there is not an active proceeding as there has been no service - when a PV cannot be given nor can any unserved person, and therefore non-party, receive copies of anything. You cannot have it both ways and there is no middle position. It is our view that there is a serious procedural irregularity and the quasi position taken is without precedent in any legal system.

Kindly clarify the status of service and the proceeding. We note that we reserve our client’s substantive position………

This is not a request for a hearing but a request to enable us to advise our client on whether to request one.

On 17 November 2022 the Tribunal responded to the applicants’ communication of 14 November 2022 in the following terms:

I refer to your email of 16 November 2022.

The adjudicator has the power to strike out an application at any stage, including before service, as per rule 5(2) of The Company Names Adjudicator Rules 2008:

(2) The adjudicator may strike out the application or any defence in whole or in part if it is vexatious, has no reasonable prospect of success or is otherwise misconceived.

Regarding your point that there are no live proceedings, the Tribunal and the Intellectual Property Office (“IPO”), which operates the Trade Marks, Patents and Designs tribunals, frequently require parties who have made a claim to amend their pleadings prior to service. It is standard practice in the Company Names Tribunal and in all the IPO tribunals to copy the other side for information. It is also standard practice that if the direction to amend is not complied with, the claimant has a right to a hearing. If this were not so, the matter would go around in circles, with the IPO refusing to serve and the claimant refusing to amend pleadings.

If you wish to contest the preliminary view and to make submissions regarding the rebuttable presumption and shifting burdens to which you refer and which our letters of 4 November 2022 and 15 November 2022 addressed, you must request a hearing which will be held before a company names adjudicator.

On 2 December 2022, the Tribunal wrote to the applicant in the following terms:

I refer to the official letter dated 04 November 2022, whereby, a preliminary view was issued, and an opportunity was provided for you to request a hearing.

As no hearing request was received by the deadline of 18 November 2022, the application has been struck out and a decision will be issued shortly to that effect.

Decision

Section 69 of the companies Act states:

(1) A person (“the applicant”) may object to a company’s registered name on the ground

(a) that it is the same as a name associated with the applicant in which he has goodwill, or

(b) that is sufficiently similar to such a name that its use in the United Kingdom would be likely to mislead by suggesting a connection between the company and the applicant.

(2)…

(3)…

(4) If the ground specified in subsection 1(a) or (b) is established, it is for the respondents to show-

(a) that the name was registered before the commencement of the activities on which the applicant relies to show goodwill; or

(b) that the company

(i) is operating under the name, or

(ii) is proposing to do so and has incurred substantial start-up costs in preparation, or

(iii) was formerly operating under the name and is now dormant; or

(c) that the name was registered in the ordinary course of a company formation business and the company is available for sale to the applicant on the standard terms of that business; or

(d) that the name was adopted in good faith; or

(e) that the interests of the applicant are not adversely affected to any significant extent.

If none of those is shown, the objection shall be upheld.

(5) If the facts mentioned in subsection 4(a), (b) or (c) are established, the main objection shall nevertheless be upheld if the applicant shows that the maoin purpose of the respondents (or any of them) in registering the name was to obtain money (or other consideration) from the applicant or prevent him from registering the name.

(6) If the objection is not upheld under subsection (4) or (5), it shall be dismissed.

(7)…..

The application states “The Applicants also have filmed footage of her running classes for the Company in June 2022” and “The Company runs classes for small children promoted and marketed under the Company Name, THE TODDLER CLOUD.” The application also states: “From 16 July 2021, when the Company was incorporated, it has had its registered office at the Premises and offered services at the Premises.” In addition, it is stated: “Now, she offers the same services at the same location (the Premises) under the Company name, THE TODDLER CLOUD.” At section 18 of the application it is stated: “The Company has assumed the goodwill of the licensed franchise that was at the Premises under the Mark by the selection of the Company Name and its use in trade at the Premises.” These statements indicate that the company was operating under the name at the time of the application, which is a defence to the application under section 69(4)(b)(i) of the Act. Under the provisions of section 69(5), however, even if it is shown that the company is operating under the name, this defence may be insufficient to defeat the application if the applicant shows the main purpose of the respondent in registering the name was to obtain money (or other consideration) from the applicant or prevent him from registering the name.

The applicants have provided no indication either in the application or in any response to the adjudicator’s letter of 4 November 2022 that they have grounds under section 69(5) to rebut the company’s defence under section 69(4)(b)(i). The applicants made no request to be heard in relation to the preliminary view to strike out the application.

Rule 5(2) of the Company Names Adjudicator Rules provides:

The adjudicator may strike out the application or any defence in whole or in part if it is vexatious, has no reasonable prospect of success or is otherwise misconceived.

The presence of the word “may” indicates that the adjudicator has a discretion in this matter. The applicants have provided no indication that section 69(5) may come into play in these proceedings. In this case I can see no reason to allow the application to continue and, therefore, decline to do so.

I hereby strike out the application made on 14 October 2022, by BABY SENSORY INTERNATIONAL LTD and BABY SENSORY LTD for a change of the company name of company registration no 13515565 because the application has no reasonable prospect of success and is misconceived.

Any notice of appeal against this decision to order a change of name must be given within one month of the date of this order. Appeal is to the High Court in England, Wales and Northern Ireland and to the Court of Session in Scotland.

The company names adjudicator must be advised if an appeal is lodged.

Dated 16 December 2022

Susan Eaves
Company Names Adjudicator