International Businesss Machines Corporation & Anor v Web-Sphere Ltd & Ors

A Community trade mark consisting of a neologism may be distinctive even where one component alludes to the relevant field, if the mark as a whole is more than the sum of its parts. Identity between a mark and a sign is assessed globally, including visual, aural and conceptual similarity. A minor difference such as a hyphen may be insignificant to the average consumer. The own-name exception requires use in accordance with honest practices and does not protect a recently adopted company name chosen without appropriate searches where confusion and an attempt to exploit existing goodwill are inferred. Malicious falsehood requires publication of false words with malice and either special damage or written words calculated, objectively, to cause pecuniary damage.

The claimants owned a registered Community trade mark for WEBSPHERE, used for software and related internet services. The first defendant had changed its name from Publiweb Ltd to Web-Sphere Ltd and used the hyphenated name for internet services, domain names and proposed software. The claimants alleged infringement under Article 9 of Council Regulation 40/94 and sued the individual defendants jointly. They also alleged malicious falsehood arising from leaflets asserting that the claimants’ trade mark was invalid and that customers might incur liability.

The issues included validity of the registration, identity or similarity of the sign and goods or services, the own-name exception, personal liability, and whether the leaflet statements were actionable.

1. Trade mark validity. WEBSPHERE was a neologism. Although “web” alluded to the internet, neither component described the relevant goods or services and the mark as a whole was more than the sum of its parts. The objections under Articles 7(1)(b), 7(1)(c) and 7(1)(d) failed. The mark was validly registered.
2. Identity and confusion. Applying the guidance in LTJ Diffusion v Sadas Vertbaudet and Reed Executive plc v Reed Business Information Ltd, identity was assessed globally by reference to the overall visual, aural and conceptual impression on the average consumer. The hyphen was aurally irrelevant and visually insignificant when the consumer relied on imperfect recollection. The mark and sign were therefore identical for Article 9(1)(a). The goods and services were also sufficiently identical.
3. Alternatively, the marks and goods or services were similar and there was a real likelihood of confusion for Article 9(1)(b). Actual confusion was unnecessary.
4. Own-name exception. Assuming that a company could rely on the exception, use had to comply with honest practices. The exception did not protect a changed company name adopted after the claimant’s highly publicised launch and registration, without evidence of searches, where the name was used as a software brand without steps to minimise confusion and the circumstances suggested exploitation of the claimant’s goodwill. The exception in Article 12 therefore failed.
5. Personal liability. Applying MCA Records Inc v Charly Records, the individual defendants shared a common design with the company to commit the infringement. They were jointly liable.
6. Malicious falsehood. The statements concerning the registration and customers’ liability were false, and the defendants published them maliciously in the sense that they intended to injure or embarrass the claimants. However, the limited and amateurish distribution did not make pecuniary damage likely in the objective sense required by section 3(1) of the Defamation Act 1952. The malicious falsehood claim failed.
7. The trade mark infringement claim succeeded and the malicious falsehood claim failed. The court had jurisdiction to require the first defendant to change its name and to restrain or transfer the domain names, with consequential relief to be considered after further submissions.