The suit was filed in December 2006 but was not served until earlier this month. According to Office Live, it had been trying to negotiate a settlement with Microsoft but the talks have been unsuccessful. It is seeking damages and an injunction to prevent Microsoft from using the Office Live name.

Office Live provides free professional advise such as legal and accountancy, to consumers, and marketing services such as customer leads and virtual office services to businesses via its series of web sites such as Legalofficelive.com, Realtorsofficelive.com, and Accountantsofficelive.com.

Microsoft will be defending the right to use the name and said it doubts the legitimacy of the trademark. It is planning to invalidate Office Live’s claim to trademark the phrase Office Live on the grounds that its own use of the word Live is commonplace. According to Microsoft, it views the word Live as a descriptor, as in AOL Live, Vodafone Live, or Xbox Live.

However, Microsoft may end up muddying its own water in the case as a result of prior actions it had takenwhen it lodged multiple applications to register Windows Live as a trademark.

Microsoft uses the Live moniker to denominate its hosted services, which it started rolling out last year, most of which are branded as Windows Live plus the particular application name. For example, it has launched Windows Live Messenger, Windows Live Search, and Windows Live Hotmail. Windows Office Live was launched in November 2006 and was the catalyst for the lawsuit.

Losing the right to use the Live or Office Live name would be a substantial blow to Microsoft because it has marketed its on-demand strategy around the name, having made a late u-turn over the concept of hosted services. During 2006 it was testing the market, developing the first of the technology building blocks and the rolling out the first applications, 2007 is expected to see a major push, but that could be hampered by the lawsuit.