Parties


In the High Court (Chancery Division), March 2004.

Introduction

This case involved IBM, the global computer giant and Web-Sphere Ltd, a small software solutions provider. Following a tip-off, IBM told Web-Sphere (founded in 1997 under a different name and adopting that name in 1999) that its Web-Sphere software products infringed IBM's trade marks in with WebSphere middleware which it had been producing since 1998. Web-Sphere responded that the name was slightly different, and IBM's applications not properly publicised.

In 2001 two directors of Web-Sphere Ltd, Mr De Serville and Mr Markson attended an IBM event at which they stood up and Mr Markson made a short speech critical of IBM. Both men then handed out a leaflet critical of IBM which they had jointly written and which detailed the trade mark dispute from their point of view.

Further letters followed and Mr De Serville and Mr Markson continued their instance that nothing was wrong - Mr Markson continued to distribute leaflets (by putting them under car windscreen wipers etc.) which protested the legitimacy of the Web-Sphere business and the supposed defects of the IBM trade mark registrations, presenting the situation as a David v Goliath battle.

IBM considered that these leaflets amounted to trade libel, and sued for trade mark infringement and malicious falsehood.

The judgement

Justice Lewison gave the judgement (external link) in March 2004. In summary, he decided against the malicious falsehood, not least because no damage was shown. We will not detail this side of the claim in further detail.

Trade Marks

The judge reminded us that a registered community trade mark gives certain rights to prevent third parties using, in the course of trade;

1. a sign or mark which is identical for identical goods or services; or
2. a sign or mark which is similar for similar goods or services where there exists a likelihood of confusion.

The judge therefore faced the same questions of whether the marks were identical as were faced in Reed v Reed and he referred to Jacob LJ's comments in that judgement.

The question of the "own name" defence also arises, because the Community Trade Mark does not prevent third parties from using their own name or address or certain other descriptive or factual phrases. The judge referred to various cases in this area, and also made it clear (by referring to Reed v Reed again) that naming a company in order to take advantage of this defence would not be a legitimate practice. As set out in Reed v Reed, the key is that if "what the trader does, viewed objectively, amounts to unfair competition" then there will be infringement.

Web-Sphere had claimed that IBM's mark:

1. was "devoid of any distinctive character";
2. was descriptive of the goods or products; and
3. consisted only of words in common use in the trade i.e. was generic.

The judge referred to the European Court of Justice (ECJ) decision in the BABY-DRY case (where it said that BABY-DRY was distinctive and not generic as a nappy brand) and to other cases about generic-ness in trade marks.

Should the WEBSPHERE trade mark (IBM's mark) have been registered?

If it should not have been registered, then the claim for infringement would fail. Although consisting of two dictionary words, the judge felt that it clearly added up to more than the sum of its parts and that SPHERE at least had nothing internet-like about it. He therefore found it to have distinctive character, and not be descriptive of the goods.

As far as claiming that it was generic, the judge pointed out that Web-Sphere had produced no evidence to back this up - so that failed.

The mark was valid.

Is the trade mark identical to the alleged infringing sign?

Aurally, yes - WEBSPHERE and WEB-SPHERE sound identical.
Visually, too, the judge felt that they were identical. The normal consumer would not notice the difference, particularly where they were not side by side, and indeed witnesses had got it wrong in their statements.

Web-Sphere had argued that <websphere> and <web-sphere> would be different in a domain name to the extent that they would be different domain names and internet users might know that - and while the judge noted the argument, he disagreed that it was relevant.

Are the goods identical?

Both parties were producing software, so the judge found that they were. However, he noted that even if they were not, they were clearly similar, and he found that there was a likelihood of confusion, which would fall into the second heading.

Does the own-name defence apply?

If not, the the defendant was in trouble.

The judge felt that it could not, because:

• The name change happened after IBM launched their products.
• There was no evidence that Web-Sphere had checked the name on trade mark registers before making the name-change.
• Web-Sphere had taken no steps to minimise confusion, given their use.
• "It is difficult to avoid the inference that the name was deliberately chosen to take advantage of IBM's reputation and goodwill".

Trade mark infringement was therefore found.

Could the directors be jointly liable?

Normally directors are no liable for the actions of a company, but the judge noted that Mr Markson was actually a disqualified director, but that the company did whatever he and Mr de Serville wished - on balance therefore, the judge found a 'common design' and found joint liability.

Outcome

The judge was prepared to hear further arguments, but noted that he might require the domain names in issue to be transferred under the principles in One in a Million.