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Friday, February 12, 1999 Published at 17:08 GMT

Business: The Company File

Lemon Dog v Microsoft

Computer industry analyst Graham Lea reports on the success of a bold Scottish challenge to the largest computer company in the world.

It was a bold move for a 60-person Scottish software company to challenge the largest computer company in the world, but the Inner Workings of Glasgow has successfully defended one of its registered trademarks against a similar mark being used by Microsoft.


IW, an interactive games developer for children, registered a trademark for its Lemon Dog character in 1996. The company has also developed a CD-ROM for BBC Worldwide Media called "The Wallace and Gromit Fun Pack".

To overcome difficulties in training Lemon Dog to behave properly in the Windows environment, IW had shown Lemon Dog to Microsoft's Music Group and Kids Group, and to Microsoft at a trade show in Frankfurt.

It was with some surprise that the company saw that a very similar looking yellow dog called Rocky had appeared in Microsoft's forthcoming Office 2000 suite, as an office assistant.

[ image: Microsoft and Lemon Dog reached an
Microsoft and Lemon Dog reached an "amicable" solution
Lesley Keen, IW's managing director, wrote twice to Microsoft to protest, but received no reply. Because of IW's policy of protecting its intellectual property rights and the fact it intended to use Lemon Dog as a desktop agent in Windows, the company's lawyers issued a summons in the Court of Sessions in Edinburgh.

IW's concern was that the public would be confused between Lemon Dog and Microsoft's Rocky, and that this could result in lower sales for Lemon Dog if potential purchasers thought it was included in Office 2000.

Big guns brought out

Microsoft sent seven lawyers to argue against just two from IW. A complication was that IW had to retain a good working relationship with Microsoft because of the co-operation it needed as a developer using Microsoft's DirectX product.

Microsoft denied in its defence that the dogs were similar, and noted that Rocky had a tail. Furthermore, Microsoft claimed that Rocky had a predecessor called Rover, who pre-dated Lemon Dog, in a product called Bob.

However, the bloodline was not shown and Bob had been withdrawn because of poor sales.

Microsoft uses Rocky in Office 98 for the Apple Macintosh, for which over 25,000 licences have been sold in the UK, and in some 500,000 copies of the beta version of Office 2000. Microsoft said that it would cost "tens of million of dollars" a week if the testing of Office 2000 were held up.

If it were necessary to withdraw sales of Office 98, there would be a delay of some three months before a Rocky-free version could be produced. In court, IW presented its case, knowing of a possible legal difficulty.

Since the hearing was for an interdict ad interim (temporary injunction), IW might have to show that it could afford to pay all Microsoft's costs and losses if Microsoft won at a full hearing but lost at the preliminary hearing.

Scottish law to the rescue

IW would have had difficulty doing this, but a significant difference between Scottish and English law came to the rescue. In Scottish law, a so-called cross-undertaking was a factor, and not a requirement. John MacKenzie of Bird Semple, IW's solicitors, said that "in Scotland, you were allowed to be poor and right".

On the second day of the hearing, a Microsoft lawyer stood up and very unexpectedly offered, in open court, an undertaking that Microsoft would remove Rocky from all packaging, advertising, marketing and promotional material, as well as from Microsoft's web site.

The reason for the sudden decision to surrender is probably related to the undesirability of adverse publicity during the current Microsoft trial in Washington, where Microsoft is struggling in the District Court to defend itself against charges by the US Government of unfair competition.

The settlement terms were not disclosed, but Lesley Keen, a leading light in the growing Scottish software industry who met the Prime Minister recently, said she was happy to announce "an amicable solution".

Graham Lea is a computer industry analyst who specialises in Microsoft.

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