The court in The Hague recently rendered judgment in a matter in which the defendant used a trade name which included the word element 'Royal' in the name 'Royal Dutch Holding'. The only problem was that the company had never been granted permission to use this designation.
Under the laws of the Netherlands the King may confer an honour on organisations and businesses including granting the right to use the designation 'Royal' (Koninklijk) as part of the trade name. Such honour can be granted if certain conditions which are laid down in a Royal Decision are met, including the fact that the business is important in its field of business, the company has existed for at least 100 years, the financials of the company are solid and the directors of the business have a good reputation. Finally, the company needs to be Dutch in order to be granted the honour of entitlement to use the 'Royal' designation.
The Foundation Sigillis Regiis Praesidio has been established to ensure that the designation 'Royal' is only used legitimately. In this case the Foundation was of the opinion that the defendant, who was never granted the right to use the 'Royal' designation, was not lawfully using the designation as part of its trade name. The Foundation commenced proceedings.
The basis for the claim in these proceedings was the Dutch Trade Name Act (Handelsnaamwet). Article 5b of the Dutch Trade Name Act prohibits the use of a trade name that gives an incorrect impression of the company that is run under the trade name, and is likely to mislead the public.
In its decision the court ruled that the use of 'Royal' in the trade name was likely to mislead the public. The relevant public in the Netherlands is aware of the fact that the honour of using the designation is exceptional and reserved for only a few businesses in the Netherlands. The use gives the incorrect impression that the company was granted the honour to use the designation and that the company meets the cumulative conditions required for such honour as laid down in the Royal Decision. The fact that the defendant did not use the (Dutch) designation Koninklijk in its trade name but the English translation thereof is irrelevant to the outcome, since the relevant public has sufficient knowledge of the English language to understand the meaning of the word.
The requested injunction was granted by the court. The defendant will have to change its trade name by removing the word 'Royal' from it. It should be noted that the injunction is limited to the territory of the Netherlands because the protection of the Dutch Trade Name Act is limited to use of trade names in the Netherlands.
Comment
The outcome of this dispute is not surprising. However, the judgment could have been drawn up more carefully. It follows from case law in particular in the field of trade mark law and advertising law that for the concept of misleading to apply it does not suffice for a trade name to evoke an incorrect impression. The impression must relate to elements or characteristics of a name that are relevant for the public in such manner that it might influence the consumer's economic behaviour or purchase decisions. The court did not assess whether the incorrect use of the word 'Royal' was relevant for the public. Having said this, I do believe that while the relevant public may probably not understand all conditions that need to be met before the honour of using the 'Royal' designation is granted, it has a general sense of it, and the public in the Netherlands will understand the designation as an indication of a solid and reputable business with a lengthy history. It is certain that such information would be beneficial to the business in acquiring clients.
Finally, the prohibition on using misleading signs also applies to trade marks. The national and European trade mark offices will take the potential misleading character into account when assessing the admissibility of the trade mark application.
The court in The Hague recently rendered judgment in a matter in which the defendant used a trade name which included the word element 'Royal' in the name 'Royal Dutch Holding'. The only problem was that the company had never been granted permission to use this designation.
Under the laws of the Netherlands the King may confer an honour on organisations and businesses including granting the right to use the designation 'Royal' (Koninklijk) as part of the trade name. Such honour can be granted if certain conditions which are laid down in a Royal Decision are met, including the fact that the business is important in its field of business, the company has existed for at least 100 years, the financials of the company are solid and the directors of the business have a good reputation. Finally, the company needs to be Dutch in order to be granted the honour of entitlement to use the 'Royal' designation.
The Foundation Sigillis Regiis Praesidio has been established to ensure that the designation 'Royal' is only used legitimately. In this case the Foundation was of the opinion that the defendant, who was never granted the right to use the 'Royal' designation, was not lawfully using the designation as part of its trade name. The Foundation commenced proceedings.
The basis for the claim in these proceedings was the Dutch Trade Name Act (Handelsnaamwet). Article 5b of the Dutch Trade Name Act prohibits the use of a trade name that gives an incorrect impression of the company that is run under the trade name, and is likely to mislead the public.
In its decision the court ruled that the use of 'Royal' in the trade name was likely to mislead the public. The relevant public in the Netherlands is aware of the fact that the honour of using the designation is exceptional and reserved for only a few businesses in the Netherlands. The use gives the incorrect impression that the company was granted the honour to use the designation and that the company meets the cumulative conditions required for such honour as laid down in the Royal Decision. The fact that the defendant did not use the (Dutch) designation Koninklijk in its trade name but the English translation thereof is irrelevant to the outcome, since the relevant public has sufficient knowledge of the English language to understand the meaning of the word.
The requested injunction was granted by the court. The defendant will have to change its trade name by removing the word 'Royal' from it. It should be noted that the injunction is limited to the territory of the Netherlands because the protection of the Dutch Trade Name Act is limited to use of trade names in the Netherlands.
Comment
The outcome of this dispute is not surprising. However, the judgment could have been drawn up more carefully. It follows from case law in particular in the field of trade mark law and advertising law that for the concept of misleading to apply it does not suffice for a trade name to evoke an incorrect impression. The impression must relate to elements or characteristics of a name that are relevant for the public in such manner that it might influence the consumer's economic behaviour or purchase decisions. The court did not assess whether the incorrect use of the word 'Royal' was relevant for the public. Having said this, I do believe that while the relevant public may probably not understand all conditions that need to be met before the honour of using the 'Royal' designation is granted, it has a general sense of it, and the public in the Netherlands will understand the designation as an indication of a solid and reputable business with a lengthy history. It is certain that such information would be beneficial to the business in acquiring clients.
Finally, the prohibition on using misleading signs also applies to trade marks. The national and European trade mark offices will take the potential misleading character into account when assessing the admissibility of the trade mark application.