"Brand squatting" is where a company name is registered at Companies House in the UK opportunistically, with an attempt to then sell back the name to the "rightful" brand owner. Unlike the process of registering business domain names, until now, there has previously been no process for brand owners to challenge the registration of company names at Companies House.

Although the opportunistic individual would need to be formally appointed as a company director, the company would not normally trade and would therefore only be required to submit dormant company accounts to Companies House at the appropriate time.

A Scottish postman made the headlines earlier this year when it emerged that he regularly bought up names at Companies House, then demanded up to £100,000 from the companies concerned. It's unclear how much money he made in over 10 years of this practice. Some of his claims were challenged successfully through the courts, though several companies admitted to paying him up to £2,000.

A new statutory body called the Company Names Adjudicator has been established as part of the Act, which will oversee challenges to registered company names at Companies House from October 1 onwards. Under the new law, company names may be forced to be changed on the grounds that they are the same as or similar to those already in use as a brand name and they have been registered at Companies House in bad faith.

The legislation applies to both historically registered company names, as well as future registrations at Companies House. This may potentially lead to a rush of new disputes as brand owners retrospectively make claims.

These legislative changes arose as it became apparent that individuals and companies were registering company names at Companies House with the sole intention of then selling them on to the brand owner. In some cases, this was also done to block a brand owner from being able to register their brand as a company name at Companies House.

The Company Names Adjudicator will decide whether company names which are not used in the course of trade have been registered to capitalise on existing brands. The Adjudicator will decide upon complaints from owners of existing brands who feel third parties are capitalising on their brand name in bad faith by registering it as a company name at Companies House. It will have the power to force companies to change names and pay the costs of the challenging company.