Trade names

A trade name is the name under which a company operates. Traditionally, the first or last name of the owner is often used for this purpose. Nowadays, companies are free to choose their own trade name and all possible trade names are in use.

What is the difference between a trade name and a company name?

In practice, the terms “trade name” and “company name” are often used interchangeably, but legally there is an important difference. The trade name is the name under which a company actually operates. It is the face of the company towards customers, suppliers and the market. This name is protected by the Trade Name Act (HNW), provided that it is actually used in economic transactions. If this use is only local (e.g. in one city), it does not apply regionally or nationally. In other words, a trade name is in principle assessed on the basis of its use in a particular territory. This can be deduced, for example, from the addresses of the customers’ places of business. This also applies if the trade name is used outside the Netherlands, for example in Belgium.

The company name, on the other hand, is a broader designation: it is simply the name under which the company is registered with the Chamber of Commerce. This does not necessarily have to be the same name as the name on the façade or on the website.

Only the trade name offers legal protection against confusion or counterfeiting. Do you want to be sure that your use of the name is legally correct and protected? Our solicitors will be happy to advise you on the correct use of trade names and the associated strategy.

Trade Name Act (HNW)

The Trade Name Act (HNW) sets out the rights and obligations associated with using a trade name. The basic principle is that you are free to choose your own trade name. However, there are restrictions on that choice in the form of prohibitions, such as the prohibition that the trade name may not be misleading. It is prohibited to mislead third parties (the public) about the ownership of a company and/or its legal form.

It is also important to note that, in principle, the trade name is inextricably linked to the company. In general, therefore, a trade name cannot be sold separately from the company.

The vast majority of disputes about trade names relate to the use of a trade name that is already used by someone else or that is (too) similar to an existing name, where confusion is to be feared. To illustrate:

Optician J. Jansen will (under certain circumstances) be able to oppose the use of the trade name Optician Jansen if this could lead to confusion.

With regard to the circumstances, the HNW is characterised by, among other things, looking at the location of the companies in question. Two (virtually) identical trade names in the same place are more likely to cause confusion than if the companies are located in a large city and/or in a completely different part of the country.

Another important point with regard to trade names is that they do not need to be distinctive. As in the example given, they can therefore be purely descriptive names that leave nothing to the imagination. This is different from trademarks, for example, which are explicitly required to have distinctive character. A purely descriptive trade name, such as Optician Jansen, does have the disadvantage that the scope of protection is very limited.

At the time the HNW was drafted, however, it was not foreseeable that the location criterion would become less important with the advent of modern means of communication, such as the internet. The internet, and search engines such as Google in particular, produce results that transcend village boundaries, thereby increasing the risk of confusion.

With the increased use of the internet and domain names, the number of disputes over trade names has also increased. The main reason for this is that domains can be trade names depending on the circumstances. In principle, a domain name is merely the address of the domain name holder. If the holder uses the designation “X” on their website not only as a domain name but also as a trade name for their business activities, they thereby “colour” that domain name as a trade name. The intertwining of the use of that domain name with the company means that the domain name can be regarded as trade name use.

It is also prohibited to use a trade name that is too similar to an existing (i.e. older) trademark. The criterion here is whether there is a risk of confusion as to the origin of the goods. Incidentally, an older trade name does not have to give way to a younger trademark.

With regard to enforcement, the rightful owner can choose. He can submit a petition to a subdistrict court and demand that the trade name in question be changed on pain of a penalty. Another option is to initiate summary proceedings, for example if there is also an infringement of an existing trademark. Both procedures have advantages and disadvantages, on which the solicitors at Fruytier Lawyers in Business can advise you further.

For questions and/or advice about trade names, please contact our solicitors.