Lebara Mobile Ltd and Others v Lycamobile Uk Ltd and Others
| Jurisdiction | England & Wales |
| Judge | Nicholas Lavender |
| Judgment Date | 17 November 2015 |
| Neutral Citation | [2015] EWHC 3318 (Ch) |
| Docket Number | Case No: HC 2015 004000 |
| Court | Chancery Division |
| Date | 17 November 2015 |
[2015] EWHC 3318 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Nicholas Lavender QC
Case No: HC 2015 004000
Thomas de la Mare QC, Ben Jaffey and James Segan (instructed by Ashurst LLP) for the Claimants
Jeffery Onions QC, Robert O'Donoghue and Tom Pascoe (instructed by Jones Day) for the Defendants
Hearing dates: 9–11 November 2015
Nicholas Lavender QC, sitting as a High Court Judge:
(1) Introduction
This is an application for an interim injunction made by seven Claimant companies who are members of, or associated with, the Lebara group of companies. The five Defendants are members of the Lyca group of companies. I will refer to the Claimants as Lebara and to the Defendants as Lyca. On the whole, it is not necessary for the purposes of this judgment to distinguish the position of individual Claimants or Defendants, and I do not do so save where necessary.
(2) Background
Lebara and Lyca are each in the mobile telephone business. Specifically, they are mobile virtual network operators (known as MVNOs). An MVNO leases spare network capacity and frequency allocations from mobile network operators (known as MNOs) in one or more states. Customers buy the MVNO's SIM cards and are thereby able to access the MVNO's telephone network, known as Lebara Mobile and Lycamobile.
Lyca are what is known as a "full" MVNO, whereas Lebara are what is known as a "light" MVNO, the principal difference being that Lyca have made substantial investment in hardware, namely a Master Switching Centre and a Gateway GPRS Support Node (known as a "GGSN"), both of which are located in London.
Lyca operate as an MVNO in 19 countries, and Lebara in only 7. Lyca's turnover is about 2 1/2 times that of Lebara. Lebara and Lyca each target the migrant community and they are fierce competitors.
In February 2015 Lebara launched a new product, known as "Lebara Talk", which is a "voice-over-internet protocol" ("VoIP") product. Customers download an "app" (i.e. software) to their smartphone or other mobile device and, if they have internet access, can use the app:
(1) to make or receive telephone calls to or from other Lebara Talk users free of charge (although this possibility may be of limited use to potential customers, since Lebara have not launched Lebara Talk in those countries in Asia and Africa to which members of the migrant community in Europe might be expected to want to make international calls); and
(2) to make (but not receive) calls to other telephones for a charge payable to Lebara.
Lyca were aware of the launch of Lebara Talk and wanted to stop their customers using Lyca's SIM cards to access the Lebara Talk service. Accordingly, on 21 February 2015 Lyca introduced into their GGSN in London a mechanism (which was referred to as "the Block") for blocking any attempt by Lyca's customers to access Lebara's websites or to download or use Lebara's apps.
The Block operates as follows:
(1) When a Lyca customer uses a Lyca SIM to access the internet and seeks to access a website, the Lyca GGSN in London scans the data by which the request for access is made.
(2) If it detects the word "lebara" in the URL for that website, then the Lyca GGSN both blocks the attempted communication and adds the website's IP address to its list of blocked addresses.
(3) The customer is not told that his access to the website has been blocked by Lyca. He receives a message which is generated by Lyca and which states "This web page is not available".
(4) When a Lyca customer uses a Lyca SIM to activate or operate the Lebara Talk app (or another Lebara app), the app seeks to communicate with one of Lebara's websites using an IP address, but is blocked from doing so.
The effect of the Block is therefore threefold. Lyca's customers cannot use Lyca's SIMs:
(1) to access Lebara's websites;
(2) to activate the Lebara Talk app (or other Lebara apps); or
(3) to operate the Lebara Talk app (or other Lebara apps).
However, Lyca's customers can do these things when they are connected to Wi-Fi.
The Block thus goes further than simply preventing the use of Lebara Talk by Lyca's customers using Lyca's SIMs. It also prevents them using Lyca's SIMs to access Lebara's websites and Lebara's other products. These products include Lebara Play, a video streaming product which allows customers to watch TV programmes on demand on their mobile and other devices, and Lebara Community, which is a social networking platform. Lebara Community is accessible from any country where individuals have access to the internet, although its content is primarily targeted at the United Kingdom.
There is an issue between the parties as to why Lyca introduced the Block.
(1) Lyca contend that they introduced the Block for 3 reasons. In summary, these were:
(a) to maintain Lyca's profitability by avoiding two potential consequences of the use to a significant extent by Lyca's customers of Lebara Talk (and their consequent switch from using phone to data capacity), i.e.:
(i) the loss of revenue from Lyca's customers; and
(ii) the surcharges which Lyca would incur under their contracts with their MNOs in the event of a substantial and unforeseen increase in customer data usage, so as to exceed certain levels set in those contracts;
(b) to avoid the congestion and capacity constraints which might result from "a potential substantial increase in data use resulting from customers making large volumes of calls on VoIP products or streaming television on products such as Lebara Play"; and
(c) because the use of Lebara Talk by Lyca's customers in France and Germany would put Lyca in breach of their contracts with their French and German MNOs, which prohibit the use of VoIP.
(2) Lebara contend that Lyca introduced the Block to stifle competition from Lebara, at least to the extent of depriving Lebara of the advantage of being the "first-mover" in marketing VoIP and video streaming services targeted at the migrant market. Since introducing the Block, Lyca have launched their own products, namely:
(a) Lycachat, which is a VoIP service like Lebara Talk, but which also offers video calls; and
(b) LycaTV, which is a video streaming service like Lebara Play.
Lebara contend that the introduction of the Block was an actionable wrong, both under English law and under the laws of the 18 other states where it has taken effect. After Lebara had spent some time investigating the Block and potential means of overcoming it, Lebara's solicitors wrote a letter before action on 3 September 2015, Lebara issued a Claim Form on 15 September 2015 and subsequently Lebara served Particulars of Claim which run to 47 pages, plus Annexes.
Also on 15 September 2015 Lebara issued this application for an interim injunction. That led to a hearing before Nugee J. on 21 September 2015, when directions were given for the hearing of the application. Lyca have served a Defence and the parties have each served a substantial quantity of evidence.
In addition, on 29 October 2015 Lyca's solicitors wrote to Lebara's solicitors to say that Lyca would be amending their standard terms in all relevant countries to provide as follows;
"[Lycamobile] reserves the right, in its absolute discretion (and without prior notice), to restrict or prevent access to certain websites and services over its Network, including Voice over Internet protocol ("VoIP") services. When we decide to restrict or prevent access under this paragraph, you may receive a message stating that the website or service is "not available"."
This letter was written only days before the hearing of Lebara's application on 3 to 5 November 2015. Lyca contended, and Lebara denied, that this amendment would dispose of Lebara's claim that Lyca were not entitled to introduce the Block.
(3) The Orders Sought by Lebara
On this application, Lebara sought an order requiring Lyca to cease the Block in all EU Member States and not to implement the Block at any time hereafter in any EU Member State.
In the alternative, Lebara sought an order in the following terms:
"The Defendant shall publish on the homepage of each of their websites a notice which informs each visitor to those websites of: (i) the fact of the Block; (ii) the Block's period of operation; and (iii) the effects upon customers trying to access or use Lebara apps or Lebara websites."
Lebara do not seek an order in respect of the 5 non-EU states where the Block has been implemented, i.e. Australia, Hong Kong, Norway, Switzerland and the United States of America.
Of the 28 EU Member States, Lyca have implemented the Block in 14, those being the only EU Member States where Lyca operate as an MVNO. These 14 states can be broken down as follows:
(1) 5 states where Lebara have launched Lebara Talk: Austria, Belgium, Italy, Portugal and Sweden. Lebara do not operate as an MVNO in any of these states. Lebara launched Lebara Talk in these states in February 2015. Lebara contended in the Particulars of Claim, dated 21 September 2015, that they would be launching Lebara Talk in France and the United Kingdom "soon", but they have not done so yet and their evidence did not give any more detail of their plans.
(2) 6 states where Lebara operate as an MVNO: Denmark, France, Germany, the Netherlands, Spain and the United Kingdom.
(3) 3 states where Lebara have not launched Lebara Talk and do not operate as an MVNO: Ireland, Poland and Romania.
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