The recent High Court ruling in Paksons Enterprises Limited v Kipkoech t/a Paksons Agroveterinary Solutions underscores a recurring challenge in Kenya's intellectual property (IP) landscape: the gap between business name and trademark registration.
Introduction
The ruling in Paksons Enterprises Limited v Kipkoech t/a Paksons Agroveterinary Solutions (Civil Case 4 of 2018, [2024] KEHC 15435 (KLR), 5 December 2024) illustrates that while both systems grant rights, they operate independently, and securing one does not shield a business from disputes under the other.
Background
Paksons Enterprises Limited is a manufacturer and supplier of agricultural products and services. The defendant, Kipkoech, operates under the business name Paksons Agroveterinary Solutions, distributing agricultural and veterinary products sourced from other manufacturers.
Timeline of Events
- May 2016: Kipkoech registered his business name "Paksons Agroveterinary Solutions"
- July 2016: Paksons Enterprises secured trademark registration (two months later)
This timing became crucial in the dispute, as it set the stage for a conflict over the striking similarity of their names. This formed the basis of the Plaintiff's claims of trademark infringement and passing off.
Court's Reasoning
Trademark Infringement: Prior Use Defense under Section 10
The Court found that the Plaintiff was indeed the registered proprietor of the trademark 'Paksons' with exclusive right to use the name. The Defendant's business name was strikingly similar and used within the same agricultural and veterinary market, making confusion likely among the public.
The Prior Use Defense
However, Kipkoech's earlier business name registration took precedence. In reaching this decision, the Court relied on Section 10 of the Trademarks Act, which safeguards parties who can demonstrate prior use of a mark, even where the opposing party later secures formal trademark registration.
Potential for Confusion, but No Passing Off
The Court recognised that the close similarity between the parties' names was likely to cause public confusion, especially given that both operated within the agricultural sector, one as a manufacturer and the other as a retailer.
However, it held that no actual passing off had occurred, since the defendant did not use his business name to brand or label products.
Root Cause: Separate Registries
The judgment highlighted that business names are registered with the Companies Registry (Business Registration System), while trademarks are registered with the Kenya Industrial Property Institute (KIPI). Since the two systems do not cross-check, businesses can obtain conflicting rights, creating both commercial disputes and public confusion.
Lessons for Businesses and Legal Practitioners
1. Prior Use Matters as Much as Registration
Section 10 of the Trademarks Act protects earlier users. A later trademark registration can be trumped if someone else can show prior honest use of a similar name.
2. Dual Registration Is Not Enough
Even if you register both a business name and a trademark, failure to search thoroughly across both registries (and the market itself) leaves you exposed.
3. Brand Strategy is Legal Strategy
Businesses should treat Intellectual Property protection as an integral part of corporate structuring, not an afterthought. That means checking business names, trademarks, company names, and even domain names before investing in a brand.
4. Passing Off Remains Alive and Well
Even in the absence of trademark protection, goodwill and reputation can be defended. Courts will assess confusion, misrepresentation, and damage.
5. Regulatory Fragmentation is a Risk
Kenya's split between the Companies Registry, Business Names Registry, and the Trademarks Registry creates overlap and gaps. Until these systems are harmonised, businesses must take extra care to police their identities.
6. Litigation is an Expensive Cure
The Paksons case shows that relying solely on the courts to "fix" brand disputes is risky. Preventive registration and IP strategy are far cheaper than a drawn-out suit.
Practical Recommendations
For New Businesses
- Conduct comprehensive searches across all registries before selecting a business name
- Register both business name and trademark simultaneously when possible
- Check domain name availability and social media handles
- Consider market research to identify similar brands already in use
For Existing Businesses
- Audit your current IP portfolio for gaps and vulnerabilities
- Monitor the market for potential infringers or conflicting registrations
- Take swift action against unauthorized use of your brand
- Maintain evidence of continuous use and goodwill
Conclusion
The Paksons case serves as a stark reminder that intellectual property protection in Kenya requires a holistic approach. The fragmentation between different registration systems means that businesses cannot rely on a single registration to protect their brand identity.
The doctrine of prior use remains a powerful defense, even against registered trademarks. This underscores the importance of comprehensive due diligence before adopting a business name or brand, and the need for proactive IP management strategies that go beyond simple registration.
Key Takeaway: In the battle between business names and trademarks, prior use can prevail over later registration. The best defense is a thorough IP strategy from day one.
