E-business companies that set up internet domains will increasingly find themselves in legal battles over trademarked names, a city internet law firm warned last week.

George Gardiner, a partner at Tarlo Lyons, said that a potential minefield was looming over who owns rights to domain names.

He said the problem was that trademark law was conflicting with the way people get domain names.

"Trademark law allows for two companies to have the same name if they produce different products or services - Bell the clothing company would have no problems with Bell the telephone company," he explained.

However, rules relating to domains allow for only one company to have the name and companies are now beginning to take up their cause through the courts, he said.

"UK companies could find themselves locked in trademark battles with companies in the US who have the same dot-com rating," said Gardiner.

The first wave of trademark cases over domain names are starting in the US, where the judge in a court battle between Caesar's World and Caesar's Palace has already adjudicated that a trademark can be translated into a global internet domain name.

Gardiner thinks that domain name issues are set to become more complicated in the coming months as British e-businesses fight their corners with no UK legal precedents.

"It is a problem that has been building for two years, and all the commentators have been waiting for a test case," Gardiner said.

The main problem seems to be caused by internet lawyers suggesting that their clients be overly cautious.

The Internet Corporation of Assigned Names and Number (Icann) has been unable to resolve the desperate and increasing shortage of domain names by adding additional general categories such as .bank and .shop.