"Institute" as part of a company name is no longer impermissible in general

A company name with the element "Institute" may be permissible. This applies in the event that further additions avoid the impression that the company is a scientific institution.

Facts of the case

The decision of the Higher Regional Court of Düsseldorf ("OLG") was based on the following case: The shareholders of a Limited Liability Company under German Law ("GmbH") applied for entry in the commercial register with the company name "Institut für Einfachheit GmbH" (“Institute for Simplicity”). The court rejected the entry. In the opinion of the court, the use of the term "Institute" in the company name is misleading. The element institute may give the impression that the company was a public institution or an institution under public supervision. The GmbH shareholders appealed against the decision.

The decision of the OLG Düsseldorf of August 15, 2023 (I-3 Wx 104/23)

The complaint was successful. In this respect, the OLG Düsseldorf deviates from the previous jurisdiction. According to the OLG Düsseldorf, the use of the term "Institut" is not necessarily misleading. Due to changes in social perceptions, this term alone no longer justifies the idea that it is a public institution serving the general public and science. However, additional characteristics and / or elements would then have to be included in the company name to make its character as a private company clear. In this way, misleading information could be avoided in this case. The company name "Institut für Einfachheit" is sufficient for this purpose. This is because the addition "for simplicity" makes it possible to distinguish the company from academic disciplines or scientific branches of research.

Practical note

The company name is the name of the company and is therefore an important part of the company. It has a significant impact on the external perception in legal and commercial transactions. Accordingly, there are a large number of creative name inventions (e.g. with the use of special symbols such as "@") and court decisions on the (in)admissibility of company names (see also: Is it possible to mark a company with special symbols"//"?).  

In principle, the design of the company name can be freely chosen. Nevertheless, certain requirements must be observed.

In particular, a company name (i) must not be misleading, (ii) must be clear and distinguishable and (iii) must distinguish the company externally. Recent developments show that, for example, a company using non-Latin letters (such as Arabic or Chinese letters) is not accepted for entry in the commercial register.

If the competent court deems a selected company name to be inadmissible, it will refuse to register this company or delete it. Changes, especially subsequent ones, are not only inconvenient and sometimes costs a lot of time and money, but can also lead to damage to the company's image that should not be underestimated. The participants should be careful and take care when they choose a name of the company.

The decision of the OLG Düsseldorf now clarifies: The use of the term "Institute" in company name may be permissible. However, this does not mean that every use is permissible without restriction. If such a company name is actually being considered, the further parts of the name should be chosen with care. Attention must be taken to ensure that the further parts of the company name does not create the impression of a scientific or public institution. The addition of the legal form alone (e.g. GmbH) is not sufficient. It should be clear from the further implemented parts that the company is a private enterprise with private activities (e.g. "Institute for Beauty Care", "Cleaning Institute", "Financial Services Institute for Private Investment", "Detective Institute", "Opinion Research Institute").

In general, the participants should use clear terms to avoid rejection of the company name court. This also applies in particular from the perspective of competition law. Rejections of companies by the court are annoying and costs a lot of time and money, but can be avoided by carefully selecting and creating the companies name.