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England and Wales High Court (Chancery Division) Decisions |
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You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> International Businesss Machines Corporation & Anor v Web-Sphere Ltd & Ors [2004] EWHC 529 (Ch) (17 March 2004) URL: http://www.bailii.org/ew/cases/EWHC/Ch/2004/529.html Cite as: [2004] EWHC 529 (Ch) |
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CHANCERY DIVISION
Strand, London, WC2A 2LL |
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B e f o r e :
____________________
| (1) INTERNATIONAL BUSINESSS MACHINES CORPORATION (2) I.B.M. UNITED KINGDOM LTD |
Claimants |
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| - and - |
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| (1) WEB-SPHERE LTD (2) RICHARD DE SERVILLE (3) DAVID MARKSON |
Defendants |
____________________
Mr. Richard de Serville in person for the First & Second Defendant
Mr. David Markson in person as Third Defendant
Hearing dates : 8th & 9th March 2004
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Crown Copyright ©
Mr Justice Lewison:
Introduction
Development of WebSphere
The CTM
Web-Sphere Ltd comes onto the scene
"We are concerned about any confusion caused through our joint use of almost identical names in the same business, indeed a comment was made to my co-director about "our" recent advertisement in the newspaper."
"There is well established precedent in common usage in the English language, the law and upon the internet, of the use of hyphens to link words or phrases for use as domain signals and trademarks as distinct to those same words juxtaposed together without a hyphen which can then bear different meanings or constructs. We consider that the fact that your trademark has been registered as one word while our domains and company names are two words to be significant in this and other regards."
"To IBM UK, IBM USA and all IBM Web Sphere Customers TAKE NOTICE
WE Web-Sphere limited have traded without interference under our lawful trade name & company name for some years. Further, we have traded globally and operated the digital global internet and call-signs www.web-sphere.com www.web-sphere.net and www.web-sphere.org et al without challenge for some years.
…
In July 2000, without lawful excuse or authority IBM UK Ltd issued a letter demanding that we cease trading under our proper name and cease using our domain signals….
Further we stated in writing … that we consider that the US and EC trademarks websphere and WEBSPHERE were improperly registered, inter alia, in that the publish to opposition procedures required by US and EC laws [were] not complied with. Further, the use of the name written as Web Sphere is not in accordance with the purported trade mark registration but is in fact our name and design. Further that any entry into the IBM search engine at www.ibm.com of the words web-sphere (with hyphen) is used to improperly list websphere products of IBM.
The brand websphere is not duly and lawfully trademarked….
[IBM] UK has been silent upon these matters since November 2000 realising that we are the lawful owners of this trade name and good faith broadcasters and holders of our various domain names. IBM's silence has caused us damage and is an example of a powerful corporation acting improperly towards a small company by threats and effective restraint of trade.
We hereby give notice to IBM and its shareholders that the value attributed in your accounts to the brand Web Sphere is doubtful. Further, we hereby give notice that customers of IBM's websphere products may be liable to pay damages if so ordered by a court. Further, to the management and staff of IBM, take notice that your continued use of the trade name Web Sphere is an infringement of our rights and a passing off. We reserve the right to take action and seek restitution from any individuals or corporation using any product bearing this name."
"Web-Sphere Ltd of Great Britain Announcement
You and your customers can save £Thousand$ on WebSphere.Web Applications
WE are the original Web-Sphere Company
Please note that OVERLEAF IS A LEGAL WARNING
…
WE offer a global range of valuable Internet services and we are now proud to announce [our] own Web-Sphere Software based on 1.3 million lines of code developed and copyrighted over 14 years by our US consultants – originally for clients such as NASA and Hughes Technology.
WEB-Sphere now offer tailor made web application solutions for a wide array of commercial and technical uses. …
WE are launching our world telecoms unified messaging application later this year in partnership with major international telecoms corporations.
WE plan to issue 600,000 free global telecoms numbers that will unify text voice voicemail email faxes and global roaming messaging services.
That's Web-Sphere!
Yes we know that there are products on the market using similar names – and the confusion hurts us – we have challenged these usages – but the stubbornness of some giant corporations and their arrogant attitude toward small legitimate competitors has stalled any dialogue and forced us to Plough on with our international launches of our highly advance easy to use Web-Sphere products."
Community trademarks: the law
"The proprietor shall be entitled to prevent all third parties not having his consent from using in the course of trade:
(a) any sign which is identical with the Community trade mark in relation to goods or services which are identical with those for which the Community trade mark is registered;
(b) any sign where, because of its identity with or similarity to the Community trade mark and the identity or similarity of the goods or services covered by the Community trade mark and the sign, there exists a likelihood of confusion on the part of the public; the likelihood of confusion includes, the likelihood of association between the sign and the Community trade mark."
"50. The criterion of identity of the sign and the trade mark must be interpreted strictly. The very definition of identity implies that the two elements compared should be the same in all respects. Indeed, the absolute protection in the case of a sign which is identical with the trade mark in relation to goods or services which are identical with those for which the trade mark is registered, which is guaranteed by art 5(1)(a) of the directive, cannot be extended beyond the situations for which it was envisaged, in particular to those situations which are more specifically protected by art 5(1)(b) of the directive.
51. There is therefore identity between the sign and the trade mark where the former reproduces, without any modification or addition, all the elements constituting the latter.
52. However, the perception of identity between the sign and the trade mark must be assessed globally with respect to an average consumer who is deemed to be reasonably well informed, reasonably observant and circumspect. The sign produces an overall impression on such a consumer. That consumer only rarely has the chance to make a direct comparison between signs and trade marks and must place his trust in the imperfect picture of them that he has kept in his mind. Moreover, his level of attention is likely to vary according to the category of goods or services in question (see, to that effect, Lloyd Schuhfabrik Meyer v Klijsen Handel Case C-342/97 [1999] IP & T, [1999] ECR I-3819 (para 26)).
53. Since the perception of identity between the sign and the trade mark is not the result of a direct comparison of all the characteristics of the elements compared, insignificant differences between the sign and the trade mark may go unnoticed by an average consumer.
54. In those circumstances, the answer to the question referred must be that art 5(1)(a) of the directive must be interpreted as meaning that a sign is identical with the trade mark where it reproduces, without any modification or addition, all the elements constituting the trade mark or where, viewed as a whole, it contains differences so insignificant that they may go unnoticed by an average consumer."
i) There is a tension between para 50, which requires a strict interpretation of identity and para 52 which requires the court to allow for the imperfect picture of the average consumer. Although, as Jacob LJ said, the latter is a concept more aptly related to the question whether there is a likelihood of confusion, it is clear, in my judgment, that the ECJ held that same concept applies to the absolute protection given by Article 9 (a).
ii) An addition in the sign (as compared with the mark) may take the case outside one of "identity". However, the addition (or difference) may be so minute as to leave the sign and the mark identical.
iii) As a matter of policy there is no reason to suppose that the ECJ meant to soften the edges of "identity" very far; because, even where a mark and a sign are not identical, the proprietor of the mark will be protected if there is likelihood of confusion.
"In addition, the global appreciation of the likelihood of confusion must, as regards the visual aural or conceptual similarity of the marks in question, be based on the overall impression created by them, bearing in mind their distinctive and dominant components."
"(a) his own name or address;
(b) indications concerning the kind, quality, quantity, intended purpose, value, geographical origin, the time of production of the goods or of the rendering of the service, or other characteristics of the goods or service;
(c) the trade mark where it is necessary to indicate the intended purpose of a product or service, in particular as accessories or spare parts,
provided he uses them in accordance with honest practices in industrial or commercial matters."
"As the judge said, the defence has never been held to apply to names of new companies as otherwise a route to piracy would be obvious."
i) The mark is "devoid of any distinctive character": Article 7 (1)(b);
ii) The mark consists "exclusively of signs or indications which may serve, in trade, to designate the kind, quality, quantity, intended purpose, value, geographical origin or the time of production of the goods or the rendering of the service, or other characteristics of the goods or service" Article 7 (1)(c); and
iii) The mark consists "exclusively of signs or indications which have become customary in the current language or in the bona fide and established practices of the trade": Article 7 (1)(d).
"40. As regards trade marks composed of words, such as the mark at issue here, descriptiveness must be determined not only in relation to each word taken separately but also in relation to the whole which they form. Any perceptible difference between the combination of words submitted for registration and the terms used in the common parlance of the relevant class of consumers to designate the goods or services or their essential characteristics is apt to confer distinctive character on the word combination enabling it to be registered as a trade mark.
41. It is true that article 7(2) of Regulation No 40/94 states that article 7(1) is to apply notwithstanding that the grounds of non-registrability obtain in only part of the Community. That provision, which was rightly cited at paragraph 24 of the contested judgment [2000] 1 WLR 91, 94, implies that, if a combination of words is purely descriptive in one of the languages used in trade within the Community, that is sufficient to render it ineligible for registration as a Community trade mark.
42. In order to assess whether a word combination such as "Baby-Dry" is capable of distinctiveness, it is therefore necessary to put oneself in the shoes of an English-speaking consumer. From that point of view, and given that the goods concerned in this case are babies' nappies, the determination to be made depends on whether the word combination in question may be viewed as a normal way of referring to the goods or of representing their essential characteristics in common parlance.
43. As it is, that word combination, whilst it does unquestionably allude to the function which the goods are supposed to fulfil, still does not satisfy the disqualifying criteria set forth in paragraphs 39 to 42 of this judgment. Whilst each of the two words in the combination may form part of expressions used in everyday speech to designate the function of babies' nappies, their syntactically unusual juxtaposition is not a familiar expression in the English language, either for designating babies' nappies or for describing their essential characteristics.
44. Word combinations like "Baby-Dry" cannot therefore be regarded as exhibiting, as a whole, descriptive character; they are lexical inventions bestowing distinctive power on the mark so formed and may not be refused registration under article 7(1)(c) of Regulation No 40/94."
"In order for OHIM to refuse to register a trade mark under Art 7 (1)(c) of Reg 40/94, it is not necessary that the signs and indications composing the mark that are referred to in the article actually be in use at the time of the application for registration in a way that is descriptive of goods or services such as those in relation to which the application is filed, or of characteristics of those goods and services. It is sufficient, as the wording of that provision itself indicates, that such signs and indications could be used for such purposes. A sign must therefore be refused registration under that provision if at least one of its possible meanings designates a characteristic of the goods or services concerned."
"39. As a general rule, the mere combination of elements, each of which is descriptive of characteristics of the goods or services in respect of which registration is sought, itself remains descriptive of those characteristics within the meaning of Article 3 (1)(c) of the Directive even if the combination creates a neologism. Merely bringing those elements together without introducing any unusual variations, in particular as to syntax or meaning, cannot result in anything other than a mark consisting exclusively of signs or indications which may serve, in trade, to designate characteristics of the goods or services concerned.
40. However, such a combination may not be descriptive within Article 3 (1)(c) of the Directive, provided that it creates an impression which is sufficiently far removed from that produced by the simple combination of those elements. In the case of a word mark, which is intended to be heard as much as to be read, that condition will have to be satisfied as regards both the aural and visual impression produced by the mark.
41. Thus, a mark consisting of a neologism composed of elements, each of which is descriptive of characteristics of the goods or services in respect of which registration is sought, is itself descriptive of those characteristics within the meaning of Article 3 (1)(c) of the Directive, unless there is a perceptible difference between the neologism and the mere sum of its parts."
i) In considering a neologism, it is necessary to consider both the individual components of the word and also the overall impression created by the word that they form;
ii) If considered both individually and as a whole, the components or the word could be used to describe characteristics of the goods or services in relation to which registration is sought, registration should be refused, even if the words (or the components) are not actually used in that way at the time of the application;
iii) Even if the individual components are (or could be) descriptive of the goods or services in question, the whole may not be if the overall impression created is more than the sum of its parts;
iv) In the case of a word mark both the visual and aural impression must be considered.
Should WEBSPHERE have been registered in the first place?
Is there identity between the mark and the sign?
"You and your customers can save £Thousand$ on WebSphere.Web Applications"
"Web-Sphere branded products have proved to be very successful for IBM and well received by the IT industry."
Is there identity of goods and services?
Is there likelihood of confusion?
Can Web-Sphere rely on the use of its own name?
i) The name did not exist before the launch of IBM's WebSphere products, which was itself well-publicised, or before IBM's application to register the Community trademark;
ii) There is no evidence that, before changing its name, Publiweb conducted any search of trademark registers;
iii) The name is being used as a brand for software products, and Web-Sphere has not taken steps to minimise the risk of confusion;
iv) It is difficult to avoid the inference that the name was deliberately chosen to take advantage of IBM's reputation and goodwill.
Are Mr de Serville and Mr Markson jointly liable with Web-Sphere?
i) A director will not be treated as liable with the company as a joint tortfeasor if he does no more than carry out his constitutional role in the governance of the company – that is to say by voting at board meetings.
ii) There is no reason why a person who happens to be a director or controlling shareholder of a company should not be liable with the company as a joint tortfeasor if he is not exercising control through the constitutional organs of the company and the circumstances are such that he would be so liable if he were not a director or controlling shareholder.
iii) Liability as a joint tortfeasor may arise where the individual intends and procures and shares a common design with the company that the tort shall take place.
Trade libel: the law
"The essentials of this tort are that the defendant has published about the plaintiff words which are false, that they were published maliciously, and that special damage has followed as the direct and natural result of their publication. As to special damage, the effect of section 3 (1) of the Defamation Act 1952 is that it is sufficient if the words published in writing are calculated to cause pecuniary damage to the plaintiff. Malice will be inferred if it be proved that the words were calculated to produce damage and that the defendant knew when he published the words that they were false or was reckless as to whether they were false or not."
"But indifference to the truth of what he publishes is not to be equated with carelessness, impulsiveness or irrationality in arriving at a positive belief that it is true. The freedom of speech protected by the law of qualified privilege may be availed of by all sorts and conditions of men. In affording to them immunity from suit if they have acted in good faith in compliance with a legal or moral duty or in protection of a legitimate interest the law must take them as it finds them. In ordinary life it is rare indeed for people to form their beliefs by a process of logical deduction from facts ascertained by a rigorous search for all available evidence and a judicious assessment of its probative value. In greater or in less degree according to their temperaments, their training, their intelligence, they are swayed by prejudice, rely on intuition instead of reasoning, leap to conclusions on inadequate evidence and fail to recognise the cogency of material which might cast doubt on the validity of the conclusions they reach. But despite the imperfection of the mental process by which the belief is arrived at it may still be "honest," that is, a positive belief that the conclusions they have reached are true. The law demands no more."
The false statements
i) "we consider that the US and EC trademarks websphere and WEBSPHERE were improperly registered, inter alia, in that the publish to opposition procedures required by US and EC laws [were] not complied with."
ii) "The brand websphere is not duly and lawfully trademarked"
iii) "[IBM] UK has been silent upon these matters since November 2000 realising that we are the lawful owners of this trade name and good faith broadcasters and holders of our various domain names."
iv) "Further, we hereby give notice that customers of IBM's websphere products may be liable to pay damages if so ordered by a court."
Malice
"Given the history of dealings between the parties a degree of ill-feeling and exaggeration was to be expected."
Damage
Conclusion
