Man U is arguing that their logo has been ‘passed off’ in the popular game and that this "deprives the registered proprietor of its right to have the club crest licensed".
Sega and SI say the use of the club's name is "a legitimate reference to the Manchester United football team in a football context" and has been used in Football Manager and its predecessor, Championship Manager, since 1992 "without complaint by the claimant".
In their defence, the video gaming firm argues that Man U is attempting to "prevent legitimate competition in the video games field by preventing parties not licensed by the claimant from using the name of the Manchester United football team within such games".
At a preliminary remote hearing on Friday, Man U barrister Simon Malynicz QC said "the name 'Manchester United' is one of the world's most valuable and recognised brands" and that any association with it is a very significant benefit.
He said the alleged infringement of the trademark was a wrongful use of brand identity.
However, he accepted that while the claim is somewhat novel, he said it was “certainly arguable".
The judge was asked to allow the club to amend their claim against Sega and SI to include allegations involving "the practice of supplying 'patches' or 'mods', essentially downloadable files containing replica trademarks, which consumers then incorporate into the game".
This was opposed by Roger Wyand QC, representing the defendants.
Sega and SI said in their written defence that "The claimant has acquiesced in the use by the defendants of the name of the Manchester United football team in the Football Manager game and cannot now complain of such use."
Mr Wyand said the game’s "simplified" club badge is "one of 14 generic logo templates that is randomly chosen by the Football Manager game engine each time a new game is started" and "clearly indicates that the use of the (logo of) Manchester United is not licensed by the claimant".
He argued that preventing Sega and SI from using Manchester United's name "would amount to an unreasonable restraint on the right to freedom of expression to restrain the use of the words 'Manchester United' to refer to a team in a computer game".
Mr Wyand said that copies of the game have also been sent by SI to a number of officials and players at the (club) for a number of years, leading to positive commentary.
He also said that Man U has used data generated by the game for scouting and research purposes.
Mr Justice Morgan reserved his judgment on Man U's application to amend its claim to a later date.