Properta successful in a Supreme Court landmark case (KKO:2024:11)

The Finnish Supreme Court issued a significant precedent on 12 February 2024 in a landmark case, confirming that a law firm did not have the right to use the surname of its former shareholder in its business name and trademarks without an agreement, when the former shareholder’s employment had been terminated and the shareholding had ceased, and the use of the surname had been prohibited. Retaining the former shareholder’s name in the law firm’s name, according to the Supreme Court, could give the impression that the former shareholder still had connections to the law firm. Consequently, the registrations of the law firm’s business names were revoked, and the registered trademark was declared forfeited. The precedent holds significant importance within the legal landscape of Finland.

With its precedent, the Supreme Court amended the interim decision of the Market Court (“MAO“) (MAO:H284/2022). The Supreme Court confirmed that in the absence of an explicit agreement regarding the conditions and validity of consent to the use of a surname, the validity of consent must be assessed on a case-by-case basis. Factors to be considered include the circumstances prevailing at the time of consent, the parties’ conduct in using the business name in business activities, marketing and other investments made in the business name’s recognition, the duration of using the business name, any industry practices regarding the business name, and the significance of changes in circumstances relevant to consent.

Regarding the aforementioned legal guideline, the Supreme Court considered, among others, that the situation significantly differed from a scenario where the surname of a voluntarily departed, retired, or long-deceased shareholder remained part of the law firm’s business name. In the present case, however, the prior partner had also continued to use said surname in the name of the new law firm. Additionally, it was deemed that the model agreement of the Finnish Bar Association supported the interpretation that the business name of a corporation-based law firm would be changed when a shareholder relinquishes his/her shareholding. Therefore, the Supreme Court concluded that the registrations of the law firm’s business name, parallel business name, and auxiliary business name should be revoked because the attorney’s consent to the use of the surname in the law firm’s business names had ceased, rendering the business names unlawful. The Supreme Court ruled that the registrations of the law firm’s business names could remain in the register for a reasonable period of 60 days from the date of the Supreme Court’s decision to allow the registration of a new business name. As also the registered trademark of the law firm constituted a significant identifying part of the annulled business name, the Supreme Court determined that the trademark had become misleading regarding the origin of the services for which the trademark was registered. Trademark registration number 237984 was therefore declared forfeited.

The Supreme Court’s precedent highlights the special status of surnames in the Finnish legislation concerning business names and trademark rights. It also underscores the importance of contractual terms in preparing for various changes in circumstances. Law firms named based on the surnames of the so-called name partners should either manage the risks associated with the use of surnames in advance or alternatively be prepared for changes in the business names and trademarks when the legal basis for using the surname ends.