SPEECHWORKS LIMITED v. SPEECHWORKS INTERNATIONAL INCORPORATED
| OUTER HOUSE, COURT OF SESSION |
| A1933/00 | OPINION OF LORD NIMMO SMITH in the cause SPEECHWORKS LIMITED Pursuers; against SPEECHWORKS INTERNATIONAL INCORPORATED Defenders: ________________ |
Pursuers: Mackenzie; Masons
Defenders: McLean; Maclay Murray & Spens
14 July 2000
[1]The pursuers are a limited company incorporated under the Companies Acts. They have their registered office at Coatbridge Business Centre, 204 Main Street, Coatbridge. The defenders are a company incorporated under the laws of the State of Delaware and have their principal offices in Boston, Massachusetts, USA. They have a place of business at Knyvett House, The Causeway, Staines, Middlesex. The directors of the pursuers are David Robertson and his wife Angela Robertson. Both parties spell the first word of their names as "SpeechWorks" (with a capital W). In terms of a registration certificate under the Trade Marks Act 1994 ("the Act") the mark "SPEECHWORKS" has been registered under No.2186182 as of 14 January 1999 in the Trade Marks Registry in the name of David Robertson in respect of Class 09:
"Computer software; computer programmes; encoded programmes for computers and for data processing apparatus; computer software and publications in electronic format supplied online from databases or from facilities provided on the Internet; electronic apparatus and instruments adapted for speech recognition; electronic apparatus and instruments adapted to receive audio commands; parts and fittings for all of the aforesaid goods; all included in Class 9."
Although the mark appears in capital letters in the certificate, the pursuers prefer to use the spelling "SpeechWorks". In terms of a licence agreement between David Robertson and the pursuers, the pursuers are exclusive licensees of this registered trade mark: see section 29 of the Act. During the hearing it was referred to as the pursuers' trade mark, and for convenience I shall do likewise. I should, however, point out that I was not addressed on section 30(4) of the Act, and have accordingly not yet decided whether or not the pursuers should be allowed to proceed with the action unless Mr Robertson is either joined as a pursuer or added as a defender. In terms of the conclusion to the summons the pursuers seek interdict against the defenders from infringing their exclusive right to use their trade mark by using any mark whether alone or in combination which is identical with or a colourable imitation of their trade mark in relation to any speech recognition software applications or similar software applications; and interdict ad interim. The pursuers have enrolled a motion for interim interdict in terms of this conclusion. After sundry procedure to enable the defenders to obtain representation and provide information I heard the motion on 6 and 7 July 2000. Having heard submissions from Mr Mackenzie, solicitor-advocate for the pursuers and Mr McLean, counsel for the defenders, I continued the motion until today so that I could consider what my decision should be.
[2]The solicitor-advocate for the pursuers opened his submissions by arguing that the pursuers had a prima facie case and that the balance of convenience favoured the granting of interim interdict. He referred to the registration certificate and the licence agreement relating to the trade mark in terms of which the pursuers are exclusive licensees of the trade mark. Both of these documents have been produced. The licence agreement, although signed, is undated except for the year 2000. I was informed that it was signed shortly before 24 May 2000 when Form TM50 was sent to the Patent Office Trade Marks Registry. By letter dated 21 June 2000 the Trade Marks Register Administrator stated that the pursuers would be entered in the register as a licensee of the trade mark with effect from 1 January 2000. It is appropriate to mention at this stage section 72 of the Act which provides inter alia that in all legal proceedings relating to a registered trade mark the registration of a person as proprietor of a trade mark shall be prima facie evidence of the validity of the original registration and of any subsequent assignment or other transmission of it; by section 102 in the application of the Act to Scotland "assignment" means assignation. The solicitor-advocate submitted that the pursuers stand in effect as owners of the registered trade mark and have indeed been trading under the name "SpeechWorks" since their name was changed on 26 January 1999, shortly after they were incorporated. Prior to that David Robertson traded under that name. During the course of the hearing I allowed the solicitor-advocate to amend an averment in Article 3 of condescendence, which after amendment reads:
"Since on or about 18 October 1998 the said David Robertson and the pursuers in succession to him have traded in Scotland using the name SpeechWorks."
This Article goes on to aver inter alia that the pursuers develop speech recognition software, that they specialise in providing custom-built solutions using state-of-the-art technologies, and that they develop speech recognition solutions for desktop computing, networked systems, e-commerce and internet applications, telephony and telecommunications, access technology, home automation and consumer electronics.
[3]The solicitor-advocate went on to submit that the pursuers' case was that the defenders had come to the United Kingdom using the name "SpeechWorks". He referred to Article 4 of condescendence, in which it is averred inter alia that the defenders' corporate profile on their website states that they are developers of automated speech recognition software for large scale, customer services solutions and speech enabled e-commerce. On or about 25 October 1999 they announced their intention to establish a European headquarters in Staines. The pursuers were not aware of that announcement, but events in December 1999 and February 2000 made them aware that there was another company using the name "SpeechWorks". Reference was made in particular to e-mail received by the pursuers at their Internet domain www.speechworks.co.uk, but relating to the trading activities of the defenders. This domain name is registered in name of the pursuers, but no web-site has yet been published on it. The solicitor-advocate submitted that the defenders were using a mark identical with that of the pursuers as a means of promoting goods and services identical with those of the pursuers. Reference was made to section 10(1) of the Act, which provides that a person infringes a registered trade mark if he uses in the course of trade a sign which is identical with the trade mark in relation to goods or services which are identical with those for which it is registered. Having regard to the instances of confusion between the two companies, reference was made to section 10(2), which provides that a person infringes a registered trade mark if he uses in the course of trade a sign where because inter alia (a) the sign is identical with the trade mark and is used in relation to goods or services similar to those for which the trade mark is registered, there exists a likelihood of confusion on the part of the public, which includes the likelihood of association with the trade mark. In the circumstances there was a prima facie case of infringement by the defenders under either of these provisions.
[4]Turning to the balance of convenience, the solicitor-advocate submitted that one factor to be taken into account was the relative strength of the pursuers' case, which was clear-cut (see Toynar Limited v Whitbread & Co plc 1988 S.L.T. 433 and NWL Limited v Woods [1979] 1 W.L.R. 1294 per Lord Fraser at p.1310). The pursuers had taken steps to protect their rights and had gone through the United Kingdom registration process in respect of their trade mark. There were indications in the affidavit lodged by the defenders (which I discuss below) that the defenders knew of the existence of the pursuers more than one year ago, in June 1999, before they opened their branch in Staines. In the expression adopted by Lord Hamilton in Thistle v Thistle Telecom Limited 2000 S.L.T. 262 at p.266F, they had taken a calculated risk. They had chosen to come to the United Kingdom, knowing of the existence of the pursuers, and had chosen to do nothing about it. Under reference to Dash Limited v Philip King Tailoring Limited 1988 S.C. 92, the solicitor-advocate advanced three submissions. Firstly, the defenders already had a number of different trade marks which they used for a number of products. Whatever they might prefer, it was open to them to change the brand name which they used in the United Kingdom. This was entirely practical. Secondly, any damages for the loss suffered by the pursuers by reason of the infringement would be difficult to quantify and could be substantial. Any damages to which the defenders would be entitled should it subsequently be held that interim interdict had been wrongfully obtained would be restricted to the cost of re-branding. This was in the context that the defenders had known of the existence of the pursuers at the time of starting to trade in the United Kingdom. Thirdly, in assessing any loss, there were difficulties in discriminating between losses arising from legitimate competition and losses arising from wrongful use of the mark.
[5]Finally, under reference to a passage in the affidavit relating to a trade show called Voice Europe to be held in London from 31 October to 3 November 2000, which the defenders are to attend, the solicitor-advocate said that the pursuers would be prepared, if interim interdict was granted, to agree to its suspension until the end of the trade show. This was to take account of the expense to the defenders of changing their name before then. The pursuers recognised that the defenders should be given an opportunity to go through the process of re-branding. They accepted that the defenders are a substantial company, with goodwill in the name "SpeechWorks", but confined to the USA. Attendance at the trade show would do nothing more than enhance the defenders' goodwill in the USA. Attendance at a single event such as this did not of itself generate goodwill. The pursuers were not simply using the present procedure as a tactical device, and were entitled to interim interdict.
[6]Counsel for the defenders made reference in the first place to an affidavit, the sworn version of which became available during the hearing, by Rick M Olin, Vice-President and General Counsel of the defenders. From this affidavit and the productions referred to therein, supplemented by information provided by counsel, it appears that the defenders were incorporated in 1994. Their original name was Applied Language Technologies Inc ("ALTech"). The defenders are a leading provider of software products and professional services that enable enterprises and communications carriers to offer automated speech-activated services. They have used the name "SpeechWorks" in connection with their products since May 1996. Their solutions let customers direct their calls, obtain information and complete transactions automatically, simply by speaking naturally over the telephone. Their solutions are designed to help businesses built sustainable customer relationships over the telephone by providing improved and cost effective customer service systems, increase the returns on their Internet-related investments and capitalise on a variety of new business opportunities. The defenders are currently in registration with a view to becoming a publicly traded company on NASDAQ. They have filed a registration statement in April 2000, amended on 7 July 2000, with the Securities and Exchange Commission ("SEC") in Washington DC in order to sell shares of their common stock to the public. In their most recent round of financing completed in April 2000 the defenders received about $20 million in a round led by iGateVentures and including other prominent investors. Previous rounds of funding also involved prominent investors. In their most recent public filing with the SEC the defenders' total consolidated revenues for the fiscal years 1997, 1998 and 1999 were approximately $2 million, $6 million and $14 million respectively. The defenders would therefore have no difficulty in meeting any award of damages. Reference was made by counsel to press releases relating to the defenders' financial position.
[7]The affidavit continues by stating that the defenders have done business with many companies throughout the world, including some located in the United Kingdom, and appeared at a number of trade shows and the like, as well as hosting web seminars. Customers in the USA include several well-known companies. Reference was made to a list of awards made by publications and at trade shows to the defenders for various versions of their SpeechWorks product. The defenders are due to exhibit at a number of trade shows in 2000, in North and South America and at Voice Europe in London from 31 October to 3 November 2000. At the latter trade show, in addition to having a booth, the defenders are to host the "Speech Symposium" and to be the primary sponsor of this "track" of the conference. In addition, they are scheduled to give two of the keynote presentations this year.
[8]During the period from 1997 to the present date the defenders have issued over the Internet a large number of press releases, a list of which has been produced. Counsel drew attention to a number of entries in this list. On 23 September 1998 the introduction of the version of their product known as SpeechWorks 4.0 was announced. On 1 December 1998 a change of name by the defenders to SpeechWorks International Incorporated was announced. On 14 June 1999 an announcement was made that the defenders had entered into a partnership with CS Communications & Systems, France's largest integrator of enterprise networks and telecommunication solutions, and had the capability to provide French and German language systems as well. On the same occasion the opening of the defenders' European office in Staines was announced. On 16 December 1999 it was announced that the defenders had formed an alliance with the University of Edinburgh to support linguistics research. The announcement stated that the University's Communication Research Division was helping advance the adoption of SpeechWorks speech recognition systems. On 14 February 2000 an announcement was made of the United Kingdom's first voice-activated stock quotation system using SpeechWorks: Stocktrade, Brewin Dolphin Securities' telephone and internet division were the first to offer speech-enabled access to real time share prices over the telephone. Reference was also made to a number of announcements of similar activities in other countries and using languages other than English.
[9]The affidavit continues with information about the defenders' sales. Their products are sold directly and through re-sellers. One product is called "SpeechWorks Host", which is an automated speech recognition product for Windows NT. This is marketed in the United Kingdom through Dialogic Corporation, a re-seller. The product guide for this product is dated June 1998. A copyright notice at the beginning of this includes the statement that "SpeechWorks" is a trade mark of the defenders. Although the defenders were marketing in the United Kingdom during 1997, including an appearance at the Voice Europe exhibition in October 1997, their first major entry into Europe was at the Voice Europe exhibition which started on 22 October 1998 in London. There were about 250 exhibitors at the show, and about 10,000 people attended. These included computer telephony integrators, developers and end-users, and others active in the voice recognition industry. Some figures were given by counsel relating to the defenders' activities in the United Kingdom. Since 1997 they have spent about $200,000 on marketing. They first sold their product through Dialogic in 1998. In 1999 their sales to customers in the United Kingdom included sales in 1999 worth $150,000 to Energis plc and $60,000 to Stocktrade, and $194,000 to Energis plc and $63,000 to Stocktrade in 2000 up to the date of the hearing.
[10]The defenders are owners of the trade mark "SpeechWorks" in the USA. They applied for it on 18 March 1996 and the trade mark was registered on 30 March 1999. It was registered in International Class 009 in respect of speech recognition systems comprising a set of software modules for speech recognition. According to the entry in the register, the date of first use of the mark and its first use in commerce was May 1996. According to the affidavit the defenders' trade mark has been used continuously by them in North America since May 1996 and in Europe, including the United Kingdom, on any product marketed or sold since then by the defenders or any of their re-sellers, as well as on their website. The domain name www.speechworks.com is registered in name of the defenders. The defenders' web site was set up under their former corporate name in January 1997, featuring SpeechWorks products. The domain name was changed to its present one on 1 December 1998. Application was made in name of the defenders for registration of the trade mark "SpeechWorks" in France on 3 December 1999 in Classes 9 and 42 and the defenders expect it to be granted soon. A similar application was made in Germany on 2 December 1999 and awaits grant.
[11]The defenders first became aware of the existence of the pursuers in June 1999, and shortly thereafter learned that the trade mark "SpeechWorks" was registered in name of the pursuers in the United Kingdom. They instructed enquiry agents to investigate the pursuers, and received a report from them dated 25 October 1999, which in their view failed to show any evidence of trading by the pursuers and that all the evidence about the name and trade mark "SpeechWorks" related to the defenders. I was taken through the enquiry agents' report, but I think it more convenient to deal with the information relating to the pursuers when I come to my summary of the second speech by the solicitor-advocate for the pursuers. After receiving the report the defenders made an approach to the pursuers, at first anonymously through agents, with a view to reaching a settlement with them, but in the event this was unsuccessful. There is only one other matter of fact which I would take from the contents of the affidavit at this stage. This is that the pursuers have lodged as productions copies of e-mails received by them at their www.speechworks.co.uk domain name. It is quite clear that these were e-mails intended for recipients at the defenders' www.speechworks.com domain name. The point made in the affidavit is that while this is evidence of confusion, it is confusion in connection with the defenders' rather than the pursuers' business.
[12]Counsel for the defenders submitted that the pursuers had established no prima facie case on the merits. This was because in terms of section 11(2)(a) of the Act a registered trade mark is not infringed by the use by a person of his own name or address, provided the use is in accordance with honest practice in industrial or commercial matters. Reference was made to Scandecor Development AB v Scandecor Marketing AB [1998] F.S.R. 500, [1999] F.S.R. 26. In a passage in The Trade Mark Handbook, para.119.3.4 there is discussion of the question whether this provision extends to natural persons only and thus excludes juristic persons such as companies. Counsel submitted, however, that by virtue of section 5 of and schedule 1 to the Interpretation Act 1978 I should construe it as extending to a company name.
[13]Counsel went on to submit that the point I have just mentioned, along with other points, affected the relative strength of the parties' cases. The defenders' position was that the pursuers' trade mark is invalid and liable to be set aside in appropriate proceedings. The defenders were considering bringing proceedings against the pursuers and Mr Robertson for breach of section 56 of the Act and for passing off at common law. The defenders had a substantial goodwill overseas and in the United Kingdom in the name "SpeechWorks", which pre-dated the incorporation of the pursuers, let alone registration of their trade mark. The name had been used on the defenders' website in connection with their products since 1997. There was evidence of its use by them in the United Kingdom since at least October 1998. Counsel referred to the grounds for invalidity of registration of a trade mark set out in section 47(2) of the Act, which provides that registration of a trade mark may be declared invalid on the ground either that there is an earlier trade mark in relation to which the conditions set out in section 5(1), (2) or (3) obtain, or (b) that there is an earlier right in relation to which the condition set out in section 5(4) is satisfied. Under reference to the relevant provisions of section 5, section 6(1)(c) and sections 55 and 56, counsel submitted that the defenders had a well-known trade mark and were entitled to receive protection in the United Kingdom regardless of whether or not they had goodwill here. Reference was made to Philips Electronics BV v Remington Consumer Products [1998] R.P.C. 283. What was important was that the defenders were able to show that they had a pre-existing reputation in the United Kingdom, whether or not they had goodwill in the sense of having customers here. It was necessary to look at the relative market. When dealing with technical material of this kind, the market was international, though restricted to customers with a requirement for products of this kind. This could be seen from the attendances at the annual trade shows in London.
[14]Counsel for the defenders continued his submissions by pointing out that by section 2(2) of the Act nothing in it affects the law relating to passing-of. The defenders had reasonable prospects of success in a passing-off action against the pursuers. The defenders had goodwill in the name "SpeechWorks", there was a misrepresentation by the pursuers, and this was causing damage to the defenders. On the question of what constitutes goodwill, counsel referred to Pete Waterman Ltd and Others v CBS United Kingdom Limited [1993] E.M.L.R. 27, the Stair Memorial Encyclopaedia, Vol.18, para.1367, McDonald's Corporation v McDonald's Corporation Limited and Vincent Chang [1997] F.S.R. 760 and Whirlpool Trade Mark [1997] F.S.R. 905. He submitted that there had been sufficient business activity by the defenders to generate goodwill in Scotland as well as in England. Misrepresentation arose where there was evidence of deception, in this case actual deception. There was no need that there be fraudulent intention in the use of the name, which was in this case identical: Chill Foods (Scotland) Limited v Cool Foods Limited 1977 S.L.T. 38. There was a clear risk of damage to the defenders in the form of loss of custom. Accordingly there was a sufficient basis for a passing-off action. Counsel also indicated that action might be taken in respect of the pursuers' domain name.
[15]Counsel for the defenders referred to certain practical considerations. The first of these was the likely effect of an interim interdict on the defenders if the pursuers were successful. The conclusion contained no geographical limit whatsoever, so that anything done by the defenders, even in the USA, might render them liable to be punished in Scotland. Moreover, there was the question of the defenders' presence on the internet. How was their website to be used, short of closure? Even if interdict was restricted to the United Kingdom, there were consequences for the defenders' European office in Staines. All the defenders' products, advertising, stationery and so on used the name "SpeechWorks". If the defenders were forced to use another name in the United Kingdom, this would involve them in enormous cost. To suspend the interim interdict until after the trade show later this year would put the defenders in no better position. There would in any event be difficulties with Edinburgh University and Brewin Dolphin, for example, who might be put to expense and whose goodwill towards the defenders would be affected.
[16]Counsel contrasted the positions of the two parties. The defenders were a well-established international company. There could be no doubt about their ability to pay any damages for which they might be found liable. By contrast, the pursuers were a start-up company with no known assets and no substantial business. There was no prospect that if they were found liable in an action for wrongful interdict they could pay the damages which would arise from the costs the defenders would incur and the goodwill they were likely to lose. The pursuers were effectively interlopers in the use of "SpeechWorks". Under Scots law an established name would be protected against an interloper: Dash Limited v Philip King Tailoring Limited 1988 S.C. 87. It would not be difficult for the pursuers to change their name where their business was only newly established. Counsel said that he was authorised to offer a formal undertaking that the defenders would keep an account of the profits made by them in the United Kingdom under the name "SpeechWorks".
[17]Finally, counsel criticised the geographical extent of the order sought. He referred to section 9(1) of the Act, and submitted that at its widest any interim interdict should be confined to the United Kingdom. At this point the solicitor-advocate for the pursuers intervened to concede that the interim interdict should be restricted to the United Kingdom. Counsel for the defenders, however, submitted that the interim interdict should apply only to Scotland. He referred to the opinion of Lord Reed in UVG Ambulances Limited v Auto Conversions Limited, 12 May 2000.
[18]In his second speech, the solicitor-advocate for the pursuers referred to a number of productions, including two which I allowed to be lodged at that stage. Mr Robertson had approached Monklands Enterprise Development Company Limited, who wrote to him on 2 September 1998 about starting his own business. As a result he and his wife went to a seminar on 14 September 1998. Mr Robertson prepared a business plan dated 9 and 13 October 1998. In it the name "SpeechWorks" was used. In the executive summary it was stated that the focus of the business was to become a speech recognition specialist company, providing a wide range of software and hardware products and associated services. Three distinct phases of business development and expansion were identified. In the first phase the business would concentrate on selling, supporting and supplementing voice dictation and recognition software to all business sectors that use computer equipment to implement, or help implement, their daily business activities. Initially voice recognition and dictation software by Dragon Systems would be offered for sale, with the business operating as a re-seller. In phase 2, with a scheduled start date of 1 November 2000, the company would design and develop voice enabled products, and in phase 3, with a scheduled start date of 1 November 2001, the company would engage in research and development of speech recognition technologies. The solicitor-advocate said that the pursuers could not get away from the fact that they were a start-up company, but they were experiencing an exponential curve of growth. The idea for their name came to Mrs Robertson in September 1998. The spelling of the name "SpeechWorks" was associated with the letters SW, which were an abbreviation of "software". Thereafter Mr and Mrs Robertson acquired the pursuers, whose name was changed on 26 January 1999 from Millbry 166 Limited. The pursuers' premises were at Coatbridge Business Centre. A document dated 25 February 1999, which was an initial draft for a project, showed that the pursuers were developing products. Various documents showed that they had been incurring substantial expenditure in setting themselves up in business. Their turnover to September 1999 was about £15,000, which was related to setting themselves up. Their projected turnover in the year to September 2000 was £128,000, of which £80,000 or £90,000 represented their turnover to date. They had entered into a substantial contract with North Lanarkshire Council under which they were to be paid £60,000 in three stages for the provision of services, including software development, database integration and training. They had not yet lodged accounts with the Companies Office because there had been an extension of the time limit within which they were required to lodge accounts.
[19]The solicitor-advocate said that the pursuers recognise that the defenders are a substantial company with a substantial turnover in the USA. The goodwill which they have there should however be related to their change of name in December 1998. They only entered into Europe in October 1998. Of critical importance was the fact that the defenders had learnt of the existence of the pursuers and of the fact that the trade mark "SpeechWorks" has been registered in the United Kingdom in June 1999 and they had done nothing. For their part, the pursuers became aware of the defenders in February and March 2000 and took action. Communications between the parties in May and June 2000 had led to no satisfactory conclusion. The pursuers had prepared a website for publication at their www.speechworks.co.uk domain. They had intended to publish it in about March 2000 but they then became aware of the activities of the defenders and decided not to provoke them by publishing their website in case of possible proceedings in the USA. All that the pursuers sought to do was to protect their United Kingdom trade mark rights. It was not the case that the defenders had promoted their mark in the United Kingdom or Europe since May 1996. They had done so in North America, but their entry into the European market only took place in October 1998. For present purposes, their use of their USA trade mark in the USA was irrelevant unless they could establish that it was a well-known mark, within the meaning of the Act, or that they had goodwill in the United Kingdom. Scandecor, supra showed that this was a question of fact. Reference was also made to The Athlete's Foot Marketing Association Inc. v Cobra Sports Limited and Another [1980] R.P.C. 343. In the present case it was not at all clear, having regard to a number of different brand names used by the defenders, just what was generating their goodwill.
[20]In response to the point made by counsel for the defenders about the use of their name under reference to section 11(2)(a) of the Act, the solicitor-advocate submitted that the defenders would need to show that they were known by the name "SpeechWorks", rather than their corporate name, in the United Kingdom. They would have to show that this use pre-dated the pursuers' application for registration of their trade mark on 14 January 1999. Knowing of the existence of the pursuers from June 1999 onwards they had taken a chance. Thereafter their use of the name was not in accordance with honest practices. Accordingly the defence based on section 11(2)(a) of the Act was not clear-cut, by contrast with the clear-cut infringement of the pursuers' trade mark. For the defenders to succeed in their contention that theirs was a well-known mark within the meaning of the Act, they must show that their mark was well-known in the United Kingdom. They would not be able to do this. The case law about passing-off was still developing. Reference was made to Anheuser-Busch Inc. v Budejovicky Budvar NP and Others [1984] F.S.R. 413. On the facts of the present case the defenders would not be able to establish the goodwill necessary for an action of passing-off.
[21]Turning to the question of the effects of interim interdict, if pronounced, the solicitor-advocate submitted that as holders of the registered trade mark in the United Kingdom the pursuers were taking steps to develop their brand, on which their business plan depended. This was of critical importance for the success of the company. The pursuers would simply not know the impact of a refusal of interim interdict because the company as it stood would come to an end. The defenders should compete fairly by using a different brand. The whole circumstances favoured the pronouncing of interim interdict in some form: Thistle v Thistle Telecom Limited, supra. The respective financial positions of the parties were not dissimilar, when regard was had to the turnover of each of them in the United Kingdom.
[22]Turning finally to the question of the scope of the interim interdict, the solicitor-advocate submitted that it should not be restricted to Scotland. Section 9 of the Act related to the whole of the United Kingdom. Burn-Murdoch on Interdict at p.346 stated that, within the principle of effectiveness, interdict against a foreigner need not be limited in its operation to acts committed in Scotland, but it would be granted only in respect of acts, some of which at least are committed there. A Scottish court should protect the holder of a United Kingdom registered trade mark by pronouncing an interim interdict to prevent infringement anywhere in the United Kingdom.
[23]In his second speech, counsel for the defenders made a number of minor points. I need only mention that, on the question of the entitlement of a company based in England to prevent passing-off in Scotland, counsel referred to Flaxcell Limited v Freedman 1981 S.L.T. (Notes) 131 and Pegasus Security Limited v Gilbert, 20 January 1989.
[24]After counsel had spoken the solicitor-advocate for the pursuers raised the question of the defenders' website. He suggested that it could be excluded from the interim interdict or it could be understood between the parties that the interim interdict would not affect the defenders' website so long as it was not used to attract custom to the United Kingdom.
[25]In considering whether or not to pronounce interim interdict I take account in the first place of the procedural position. The summons is relatively brief. The defenders have not yet lodged defences. It is clear from what I was told at the hearing that by the time the Record closes there will be extensive pleadings for both parties. A number of substantive issues were raised at the hearing in a manner which represented no more than the initial thoughts of each party, and no doubt these issues will be further developed in the pleadings. Moreover, the defenders may lodge a counterclaim, or raise a fresh action, or both, in respect of the issues relating to the validity of the pursuers' trade mark and to alleged passing-off by the pursuers. In this situation it would be entirely inappropriate for me to express anything more than a tentative view about the parties' relative prospects of success. This is particularly so when to a large extent the outcome will depend on the resolution of questions of fact, in respect of which evidence will require to be led. All I propose to say just now is that in my opinion the pursuers do have a prima facie case and that it is not open to me to conclude otherwise at this stage. This is because they have the benefit of a registered trade mark in "SpeechWorks" and the undisputed actings of the defenders are capable of amounting to an infringement of the trade mark. Only the submission made under reference to section 11(2)(a) of the Act was directed to the question whether the pursuers have a prima facie case. "SpeechWorks" is only part of the defenders' name, and it is for them to establish that it is their name for the purposes of this provision. In respect of this issue, therefore, it appears to me that each party has a case to argue. The same applies to the issues relating to the validity of the pursuers' trade mark and to alleged passing-off by them. It would be premature to express any view as to the prospects of success on either side. To adopt Lord Hamilton's way of putting it, in Thistle v Thistle Telecom Limited, supra, at p.266D-E, this is not in my view a case in which the likelihood of success is so clear on one side or the other that it can materially influence the determination of the balance of convenience.
[26]The defenders are without doubt a very substantial company. They have successfully promoted their "SpeechWorks" products since well before Mr Robertson conceived his business plan or the pursuers were incorporated. The change of name of the defenders is a reflection of the success of "SpeechWorks". It is clear, moreover, that the name has been known in the United Kingdom before it occurred to Mr or Mrs Robertson. Although I express no view about it at this stage, there may be a question as to their good faith in deciding to use the name "SpeechWorks" and in Mr Robertson's application for the United Kingdom trade mark. The defenders' activities in relation to the United States, French and German trade marks may be seen as a development of the success of the name associated with the "SpeechWorks" product, and their opening of their European office in Staines may be regarded in the same light. This may therefore not readily be characterised as a case in which the defenders as interlopers are attempting to exploit existing property of the pursuers. Given that the pursuers are still in the first phase of their business plan, and having regard to the rather imprecise nature of the information I was given about their current business activities, it is by no means obvious how much of their business depends on their existing name and trade mark. Such information as I was given suggests that their business is still very local, and may depend as much on Mr Robertson's personal reputation as on any other factor. There would, on the other hand, be very real difficulties for the defenders if they were prevented from using the name "SpeechWorks" in connection with their business in the United Kingdom. They are developing a world-wide market for their products under the name "SpeechWorks", and they have already entered into business relationships in the United Kingdom using that name. In exhibiting at the Voice Europe trade show in London later this year, as in previous years,
they may reasonably be expected to solicit business in the United Kingdom as well as in other countries. The concessions offered on behalf of the pursuers about a suspension of the interim interdict until after the trade show, and about the defenders' website, appear to me to give credence to these difficulties. In short, I find it hard to see how the defenders could reasonably be expected immediately to start using a name other than "SpeechWorks" in connection with their business in the United Kingdom, or how the pursuers would be able to compensate them should the defenders obtain an award of damages for wrongful use of interim interdict. On the other hand, the defenders are clearly in a position to pay any award of damages to the pursuers, and have undertaken to keep an appropriate account. On the whole matter, therefore, I am not satisfied that the balance of convenience favours the granting of interim interdict, and I shall refuse the pursuers' motion.
[27]I should add that if I had been minded to grant interim interdict, I would have restricted it to Scotland. This is not because I necessarily take the view that it would not be open to me to pronounce an interim interdict that extended to the whole of the United Kingdom in a suitable case relating to the alleged infringement of a trade mark; but before reaching any concluded view on this, I would require to hear fuller submissions than were addressed to me during the hearing. My reason for restricting the interim interdict to Scotland would have been based on the balance of convenience. The pursuers do not appear to have any business outside Scotland, while the defenders' business in the whole of Europe, and not just in England, is conducted from their office in Staines. It would be adequate protection to the pursuers' business interests meantime if this court pronounced an interim interdict extending only to Scotland. It would remain open to the pursuers to seek remedies in the English court. I would add that if I had been minded to pronounce an interim interdict extending only to Scotland, I would have asked for further submissions on the manner in which the defenders' use of the name "SpeechWorks" in their website could be accommodated.