Google, the internet search engine, is facing a renewed threat of legal action from a company that claims to own the intellectual property rights to its GMail e-mail service.

Independent International Investment Research, a British company that specialises in research and has several leading City investment banks as clients, argues that it launched "G-MailTM web based email" in May 2002.

IIR's version of G-Mail was developed by one of its subsidiaries, Pronet, which specialises in research about the currency markets for banks and other financial institutions.

The idea was that subscribers to its research could use G-Mail to disseminate it and discuss it over the web confidentially.

The development came nearly two years before Google unveiled its own branded e-mail service, known at "GMailTM".

Google's GMail services give subscribers their own web-based e-mail account with the benefit of vast amounts of storage space.

IIR said this morning that, after about 15 months of "correspondence and negotiations" with Google in an effort to have the "superiority" of its claim over the trade mark to G-Mail recognised, discussions are now at an end with no agreement having been reached.

IIR, led by chairman and chief executive Shane Smith, accused the search engine of "failing to respect the intellectual property rights of others" and said it had no alternative but to pursue an expensive legal action that it admitted it could ill afford.

Mr Smith, who founded the company and is the leading shareholder, told Times Online that the two companies had held "detailed discussions" over the terms of a possible settlement, with both sides making offers but failing "to meet in the middle".

He said he was "reluctantly" considering taking legal action against Google, which could involve his family trust selling shares in the group to fund the claim.

"I feel it is up to me as the founder and the major shareholder. We're not going to sit on the sidelines while a company uses our intellectual property rights," he said. "We're confident that we have the funding available to us and we're girding our loins," he said.

An independent valuation report commissioned at the end of last year by IIR, whose clients include Bank of America and Commerzbank, estimated a "conservative" value of between £25 million and £34 million for a royalty claim against Google for the G-Mail trademark.

IIR has already indicated that it would be prepared to settle for less than this amount, which was calculated using a royalty fee of 0.5 per cent.

IIR pointed this morning to a similar trade mark disagreement between Google and a company in Germany, stating that both firms were "frustrated" with Google's behaviour.

IIR is considering joining forces with this company in its possible legal action against Google.

IIR said this morning that "despite strenuous efforts, achievement of a settlement involving agreement on a fair value [for the intellectual property rights to G-Mail] is currently out of reach. Your board has not been able to reach a settlement with Google and is therefore considering taking further legal action to protect the group's intellectual property.

"This has also been the experience of the owner of a similar trade mark in Germany, who has recently sought and obtained a preliminary injunction against Google extending its use of the Gmail trade mark in that country.

"The party in Germany and your board are both frustrated with the manner in which we believe that Google is failing to respect the intellectual property rights of others, and shares with your board a commitment to take whatever steps are necessary (collaboration where appropriate) to seek to protect those rights."

Google was not immediately available for comment.

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive