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– April 18, 2024

The distinctiveness of companies

In its decision of August 28, 2023, the Federal Supreme Court clarified the question of the requirements for the distinctiveness of two companies (BGer 4A_238/2023).

Nobilis Estate AG (plaintiff) has been entered in the commercial register since February 2012. In June 2021, NOBILIS Switzerland GmbH (defendant) was entered in the commercial register. In an action filed in November 2021, the plaintiff sought to prohibit the defendant from operating a company with the element “NOBILIS”. The lower court upheld the action, the defendant appealed to the Federal Supreme Court.

Requirements for the company

Colloquially, we use “company” to refer to the entire company. In legal terms, the “company” is the designation of a company or cooperative, its name, so to speak. Art. 951 CO requires that the company name of a trading company or cooperative be clearly distinguishable from all other companies of this type already registered in Switzerland. In the event of a conflict, the owner of the older company name can take legal action to stop the use of the younger company name. However, there must be a risk of confusion, which is examined by the court.

In principle, trading companies and cooperatives are free to choose their company name. For this reason, case law places high demands on the distinctiveness of companies. These are stricter if two companies are in competition with each other, for example if they pursue the same purpose, or if they target the same clientele for other reasons (especially if the companies are geographically close).

Concept of likelihood of confusion

Whether two companies are sufficiently different must be assessed on the basis of the overall impression they make on the public. The companies must not only be clearly distinguishable from each other when carefully compared at the same time, but it must also be possible to keep them apart in the memory.

Company components that stand out due to their sound or meaning are particularly memorable. This is why they are more important for the assessment of the overall impression.

In our case, the designation “Nobilis” or “NOBILIS” is the element that must be examined for likelihood of confusion. The following words “Estate” and “Switzerland” only refer to the respective field of activity and territory, which is why they are only slightly distinctive. These are not capable of eliminating a likelihood of confusion.

In the present case, the Federal Supreme Court affirmed the likelihood of confusion and dismissed the appeal of NOBILIS Switzerland GmbH. The latter was not allowed to use the company name.

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