IBM succeeds in WEBSPHERE infringement claim

In International Business Machines Corp v Web-Sphere Ltd, the UK High Court has held that the defendant's use of the company name Web-Sphere infringed the plaintiff's Community trademark WEBSPHERE.

International Business Machines (IBM) registered the WEBSPHERE mark for computer software and communications services. The defendant company, which provides internet-related services, changed its name to Web-Sphere Ltd following IBM's trademark registration. Once IBM became aware of Web-Sphere, it asked that company to change its name. Not only did it refuse to do so, but at two subsequent events held for IBM's customers, Web-Sphere's sole director and sales manager distributed leaflets, which asserted that IBM (i) had acted improperly because it had made threats and had caused an effective restraint of trade, and (ii) did not have proper trademark protection.

IBM sued for trademark infringement and malicious falsehood. In response, Web-Sphere argued that:

• IBM's mark should not have been registered on the basis that it was either devoid of distinctiveness or descriptive;
  
  
• the Web-Sphere name and the WEBSPHERE mark were different on account of the hyphen; and
  
  
• its name was not actually used on the same goods and services as those for which IBM had registered its trademark.

The High Court dismissed the malicious falsehood claim but upheld IBM's trademark infringement claim. It held that WEBSPHERE was a distinctive mark that had been validly registered. Following the ECJ's guidance in LTJ Diffusion v Sadas Vertbaudet (see ECJ interpretation of 'identical' narrows trademark owners' rights), the High Court stated that the WEBSPHERE mark and the Web-Sphere name were identical, and there was sufficient identity between both parties' goods and services for there to be a real likelihood of confusion.

The court also dismissed Web-Sphere's assertion that, pursuant to Section 11(2) of the UK Trademarks Act 1994, it had a defence of entitlement to use its own name, since Web-Sphere did not start using the name until after IBM launched its WEBSPHERE-marked range of products. In the circumstances, it was difficult to avoid the inference that Web-Sphere had chosen its name to take advantage of IBM's reputation and goodwill.

Jeremy Phillips, Slaughter and May, London