Protection of descriptive trade names

The Butcher vs. The Butcher Shop, The Baker vs. The Bakery: what can the owner of a descriptive trade name do against another company with a descriptive trade name? This question occupied many a lawyer with an interest in intellectual property law. The Supreme Court has now made a decision in its ruling in DOC Dairy Partners/Dairy Partners.

Back to the beginning for a moment: why is the protection of a trade name such as "The Butcher" so fascinating? Based on the Trade Name Act, a user of a trade name can take action against the use of a younger identical or only slightly different trade name if this may cause confusion among the public. However, this is not so fair for a trade name like "The Butcher" because this describes what it is: a butcher shop. There is a public interest that anyone can use such a descriptive designation.

Can the company Dairy Partners invoke the Trade Name Act at all? That question was under discussion in DOC Dairy Partners. The Arnhem-Leeuwarden Court of Appeal asked the Supreme Court whether ‘additional circumstances’ are required besides likelihood of confusion, in order to successfully invoke the Trade Name Act with a descriptive trade name. The Supreme Court answered that this is not the case.

For descriptive trade names likelihood of confusion between the companies is decisive. In principle, a descriptive indication is therefore not suitable to distinguish a company from other companies and hence to serve as a tradename. This is only different if a descriptive trade name has been used so intensively by a company that people associate the descriptive indication with the company itself, just like ‘acquired distinctiveness’ known from trademark law.

When assessing this, all circumstances of the case at hand are taken into account (for example, there is a greater risk of confusion if two companies with the same name are located opposite each other). The Supreme Court assumes that confusion will not easily occur: people are used to the fact that many different companies use descriptive trade names (e.g. for search enginge optimization on the Internet). In case of a risk of confusion a small variation in the name may be sufficient to eliminate this risk. It may therefore be difficult for "The Butcher" to take action against "the Butcher Shop", but it is at least possible for everyone to use descriptive designations.

Mathijs Peijnenburg