With Trade Marks – it’s Dog eat Dog!

April 30, 1999

In scenes that could have come straight from the hidden world of `OperationLemon Dog’, where Lemon Dog, 1 (secret) desktopagent, operates, Inner Workings Limited 2 came faceto face with Microsoft Corporation.

The Background

Inner Workings Limited are the trading company of Inner Workings plc, thewell known interactive production company who are involved in the development ofgames and interactive computer software. Headed up by Lesley Keen, they have,since formation in 1991, gained recognition as having a quality interactiveproduction house.

Lemon Dog (the character) was first developed by them in about April 1996 andwas, originally, part of a product called `Lemon Dog in Soundlands’. TheSoundlands product had already been developed and Lemon Dog was introduced. Asan aside, the character was conceived by one of their employees, who had a dreamabout cutting open a lemon and finding a little yellow dog inside (yes, really).Lemon Dog has been marketed by them since then. Lemon Dog is unsurprisingly ayellow colour and has a blue bow tie around his neck.

Inner Workings developed a software program that operates under the MicrosoftWindows operating system that has Lemon Dog as a `desktop agent’. The programenables users to carry out standard tasks by `clicking’ on Lemon Dog. It iscalled `Operation Lemon Dog’. It is aimed at those of us who welcome userfriendly ways to perform the more mundane computer tasks including the abilityto clean the desktop, interact with Jane Airedale, Sir Harry Hound-Baskervilleor the dastardly Sour Puss, and change desktop patterns.

In the course of developing `Operation Lemon Dog’ Inner Workings workedclosely with Microsoft, having instigated a good working relationship with them.They are part of the Microsoft Developer Relations Group and one of the leadingexponents of a technology developed by Microsoft known as `DirectX’. Microsoftworked with InnerWorkings to solve difficulties that they encountered in havingLemon Dog work properly in the Windows environment, in particular how to `free’the character from the constraints of a `window’ and allow him to roam freelyaround your screen area.

Inner Workings had taken steps to protect the Lemon Dog character and, aftera fair bit of discussion with the Trade Marks Registry, trademarks 2106686, and2106685A and B, all dated 1st August 1996, were granted. Trade Mark 2106686 isfor the words `Lemon Dog’ and trademarks 2106685A and B show the device `LemonDog’ as a number of line drawings.

As is well known and has been trailed in the computing press, Microsoft havedevised a development of their office software suite called `Office 2000′ whichthey propose to launch onto the market in or about March 1999, although they didnot specify a precise date for the launch. One of its features is an`OfficeAssistant’called `Rocky the Dog’. He is described in Microsoft literature asbeing a`cheerful, eager to please dog that will speed up your Office work andput a smile on your face.’

A smile did not come over the faces of those at Inner Workings! One employeecame into the office saying `When did we do the deal with Microsoft? When did wesell Lemon Dog to Microsoft?’.

Like Lemon Dog in `Operation Lemon Dog’, Rocky the Dog allowed users ofpersonal computers to carry out help functions in the `Office 2000′ suite ofproducts. `Rocky the Dog’ is yellow in colour and has around his neck a red bandwith a blue disk. He was being marketed as a key feature of `Office 2000′ andInner Working feared that he would become a marketing `hook’ for the Office 2000suite. They thought that he was very similar to Lemon Dog and they thought thathe was so similar to Lemon Dog that members of the public were going to beconfused. They thought that members of the public wishing to purchase `OperationLemon Dog’ might purchase the Defenders’ `Office 2000’in error, because of thesimilarity between the two dogs. They sought the help of their legal advisors,and they attempted to contact Microsoft. No response was forthcoming untileventually a lengthy letter from Microsof’s London solicitors asserted thatthere was no case to answer.

The Proceedings

The decision was taken to raise proceedings and a hearing on the applicationto interim interdict took place on 27th February, Microsoft having askedfor, and Inner Workings having agreed to, a week’s adjournment so that Microsoftcould prepare for the hearing. Despite last-minute attempts by Inner Workings totry to get Microsoft to speak to them, Microsoft would not budge.

The Patent Judge who heard the application was Lord Nimmo-Smith. Anne SmithQC set the scene for Inner Workings. After going through the marked similaritybetween the characters (`they were perhaps not one egg twins, but two eggtwins’) she dealt with the functional similarity. Lord Nimmo-Smith, whendiscussing the`desktop agent’ wondered if the companies had decided upon dogsfor their animation to carry out `dogs body’ tasks ^ smiles all round. Mrs Smiththen laid out the law as she said it applied to the case.

Section 10 of the Trade Marks Act 1994 provides that: `A person infringes atrade mark if he uses in the course of trade a sign where because . . . (b) thesign is similar to the trade mark and is used in relation to goods . . . similarto those for which the trade mark is registered, there exists a likelihood ofconfusion on the part of the public, which includes the likelihood ofassociation with the trade mark’.

There was precious little case law of assistance, but the case of Origins wasreferred to. She submitted that in the circumstances Microsoft were infringingthe trade mark rights of Inner Workings and that they had established a primafacie case.

So far as the balance of convenience was concerned, she submitted that itfavoured the granting of interdict ad interim. Microsoft intended thelaunch of `Office 2000′ to have maximum impact on the market in which bothparties operated. They had secured considerable advance publicity and the launchwas being described as `the biggy for 1999.’ She said that the confusion createdwas liable to cause substantial and immediate losses to Inner Workings, who haveinvested heavily in the development of Lemon Dog, but it would be extremelydifficult to establish the precise extent of those losses.

In response Raymond Doherty QC sought to persuade Lord Nimmo Smith that therewas no similarity between the two dogs. In one of the more entertainingpassages, he pointed to the fact that Lemon Dog had no definable `toes’ unlikeRocky the Dog, but Lord Nimmo Smith quickly pointed out that Rocky had three`fingers’, just like Lemon Dog.

There then followed a history lesson with not one, but three laptopcomputers. Microsoft sought to lay out the background to the development of theRocky character. They said that a character `Rover’ was used in association withthe `BOB’ operating system. Rover was the predecessor of Rocky. Rocky wasdeveloped in the US and included in their `Greetings Workshop’ which wasreleased in the UK in around October 1996. Rocky the Office Assistant has beenavailable for download from their Web site since January 1998, and in February1998 they released Office 98 for the Apple Mac. It was against this backgroundthat Rocky was to be included in Office 2000.

In relation to the balance of convenience, Microsoft said that the only wayin which they could comply with an interdict would be to remove Rockyaltogether. This removal would take at least one week and they estimated thateach week of delay would result in revenue losses of tens of millions ofdollars. In a moment of drama Mr Doherty said his client was prepared to producea note giving the actual date for the release of Office 2000. Mrs Smith hadcriticised Microsoft for fearing delay, but not specifying deadline. Lord NimmoSmith was able to deal with matters without this secret information.

Microsoft were concerned that they could be held to ransom. They were theestablished operators in the market, and Inner Workings were the interlopers.Interdict should not be granted where it would effectively bring the developmentof their flagship product to a halt. Lord Nimmo Smith commented that this mightbe seen as Microsoft `steam-rollering’ companies who were not establishedoperators.

At the conclusion of day one, minds were focussing on the observations ofLord Nimmo-Smith in relation to the use of a mark in the course of trade. Whenwas a mark not a mark, and when was it used in the course of trade. If acharacter, which is similar to a registered trade mark, appears within aproduct, but is not seen before the product is purchased, does that constitutetrade mark infringement? If there are a number of marks being used on a product,on packaging and in promotional literature, will that constitute use within theterms of the Act. What is the significance of the character being available onthe Internet?

None of these questions were answered. On day two, Mr Doherty, before MrsSmith could rise to her feet, produced an undertaking that Microsoft wereprepared to grant. There was silence as the scale of the undertaking wasrevealed. The undertaking was in the following terms:

`That neither they nor anyone acting with their authority will make use oftheir `Rocky the Dog’ figure in any way whatsoever on:

  1. packaging, as of 29th January 1999;
  2. advertising of any sort, as of 29th January1999;
  3. marketing or promotional material of any sort, as of 29th of January 1999;
  4. point of sale material of any sort, as of 29th of January 1999; or
  5. any Internet website, as of 5pm Pacific time on 8th February 1999.’

After a little toing and froing the terms of the undertaking were agreed.With the`dog eat dog’and `Lemon Dog bites back’ soundbites drawing theinevitable press interest, the team from Inner Workings retired to deal with theever increasing number of telephone enquiries from the press.

The Issues

While this is a great story, there are some very real issues.

The case demonstrates that trade mark protection is of crucial importance,regardless of the stage of development of a particular product. Withmerchandising opportunities being based on characters and concepts, it isimportant that their impact be preserved. Regardless of the opponent, actionmust be taken otherwise the trade mark registration is worthless. As Lesley Keensaid `I admit that we were a bit worried at taking on the largest company in theworld. But we had no choice but to fight for our property’.


1. See Lemon Dog’s own Web site at http://www.lemondog.com.

2. http:///www.innerworkings.co.uk.