Ever confused venture capital firm 3i with online personal finance company "iii" otherwise known as Interactive Investor International?

3i believes someone could. It considers the risk of mistaken identity is enough to warrant court action and is fighting a legal battle with iii for it to drop the use of its initials.

The venture capitalists - originally known as Investors In Industry - claim that the use of the iii logo has infringed on 3i's trademarks and consequently claims to have suffered "loss and damage".

There are some obvious similarities; 3i's listing code, for example, on the London stock exchange is III.

However, iii has dug its heels in and is confident it can prove that no such confusion exists among the public.

An iii spokesman yesterday said iii established and patented its trading identity five years ago. "This is an action which we will robustly defend," the spokesman said.

3i was not available for comment yesterday but the venture capital group is also understood to want iii to stop using the internet address www.iii.co.uk and has demanded a copy of the internet company's client list. Interactive Investor had more than 1m registered accounts at the end of June.

The ultimate arbiter of who owns the web address www.iii.co.uk is the World Intellectual Property Organisation in Switzerland. The battle between the two companies is expected to take place in the high court next year.

The action is unfortunate timing for iii, which confirmed last week that a drop in transaction-related revenues had curbed revenue growth in the third quarter.

The transaction revenues - which include fees from online share placings and the sale of Isas - fell 37% compared with the previous quarter.

Tomas Carruthers, chief executive of iii, blamed the decline on seasonal factors and the fall in investor activity after the internet investment hype in the first few months of the year.

However, overall revenues were flat at £1.8m with iii having benefited from solid growth in advertising turnover. Pre-tax losses for iii widened to £3.8m compared with £2m for the corresponding period last year.

The company listed in February and its shares peaked at 415p in the midst of the internet frenzy but were trading at 48.5p on Friday.

Internet stocks have lost their lustre since the beginning of the year as investors have focused more closely on revenue projections.