Companies will find it harder to protect well-known brands from being exploited by other businesses following a landmark ruling by Europe’s highest court today.

In a case brought by Intel, the computer giant, the European Court of Justice (ECJ) significantly reduced the circumstances in which businesses can prevent others from creating new brands similar to their own.

The computer chip manufacturer had attempted to stop a marketing company using the brand "Intelmark" in the UK but the court ruled that a mere resemblance between two brands was not enough to refuse a trademark.

Although the case will be referred back to the UK's Court of Appeal to decide the merits of Intelmark's application, the general legal principles laid out in the ECJ's ruling will govern future decisions by the Intellectual Property Office, which grants or denies trademarks to British companies.

Businesses hoping to prevent others from using similar brand names will now have to demonstrate either that they have already suffered damage as a result of the other brand or that there is a reasonable prospect that they will suffer damage in the future.

The ruling, which lawyers said was damaging for big companies, puts powerful brands on a back foot as they must now convince a court they have suffered a loss.

Sahira Khwaja, an intellectual property lawyer at Lovells, said: “In a case like Intel and Intelmark where the two companies operate in different sectors, it is going to be very difficult for the existing brand to prove it has lost out specifically because another company is using a similar brand.”

Joel Smith, a partner at Herbert Smith, said that the court had set a high hurdle. “The big message is that superbrands are denied absolute protection and the ECJ has reined in their monopoly of famous names," he said.

Mr Smith said that the situation was further complicated because brand erosion is extremely difficult to quantify and generally occurs over a number of years.

Although Intel's claim was against a company that operated in a different sector, the court said that the same legal test should be used in situations in which the companies are direct competitors.

However, Mr Smith said that courts were likely to be more sensitive to protecting established brands if, for instance, a new computer manufacturer attempted to use the word "apple" in its marketing.

Paul McClenaghan, an IP lawyer at Stephenson Harwood, said: "This ruling is likely to come as a blow to owners of well-known brands in Europe because the ECJ has refused to follow the American courts in giving brand owners a wide ability to protect against dilution."

"Instead the court has adopted a more pragmatic view where injury or likelihood of injury to the brand is required."

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