Trade mark decision could be bad news for small companies

SpeechWorks Limited, based in Coatbridge near Glasgow, set up in 1998 and started writing speech recognition software. The company registered the word SpeechWorks as a UK trade mark in January 1999, having checked that no other company had done so. Six months later, SpeechWorks International Inc., a US software company that previously had no UK dealings, opened an office in Staines, England. The US company also owned the domain name SpeechWorks.com.

The UK company brought an action for trade mark infringement against its US rival, asking a court order to stop the US company trading under the name in the UK pending a full hearing on the issue of damages for infringement. However, Lord Nimmo Smith in the Intellectual Property Causes Court, Edinburgh has ruled that the court order should not be granted, although he acknowledged that the SpeechWorks Limited has a case to argue.

His reasoning was that, on the balance of convenience (the test applied to requests for interim interdicts, known as injunctions in England), he could not support the Scottish company. He based his reasoning on the relative sizes of the two companies, observing that the bigger US company was better placed to compensate the smaller Scottish company if the Scottish company was successful.

David Robertson, a director of SpeechWorks Limited, told OUT-LAW.COM:

"It is astonishing to believe that after registering a legitimate and bona fide trademark in the UK during the business start-up process, a young Scottish company cannot rely on the protection afforded under trade mark law, purely on the basis that it would be too inconvenient for the infringing multi-national company to cease using their conflicting mark.

"This is a classic business case of size really does matter."

Although this case may yet go to further courtroom debate, it could have implications for other small UK companies with legitimate UK trade marks which find themselves forced to give in to larger rivals overseas, unless they have the resources to fund a long and potentially expensive fight.