O2 Holdings Ltd v Hutchison 3G UK Ltd (Application for Interim Injunction)

JurisdictionEngland & Wales
CourtChancery Division
JudgeMr. Justice Pumfrey
Judgment Date09 November 2004
Neutral Citation[2004] EWHC 2571 (Ch)
Docket NumberCase No: HC 04 C02776

[2004] EWHC 2571 (Ch)

IN THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

Royal Courts of Justice

Strand, London, WC2A 2LL

Before

The Honourable Mr. Justice Pumfrey

Case No: HC 04 C02776

(1) O2 Limited
(2) O2 (Uk) Limited
Claimants
and
Hutchison 3G UK Limited
Defendant

MR. ALASTAIR WILSON QC (instructed by Messrs Bristows) for the Claimant

MR. MARK PLATTS-MILLS QC (instructed by Messrs. Lewis Silkin) for the Defendant

Approved Judgment

Mr. Justice Pumfrey

Mr. Justice Pumfrey

1

This is an application by the claimants, who are the well-known suppliers of mobile phone services, to (a) restrain the defendant from further causing a certain television advertisement to be shown (b) from using in any television advertisement a representation of bubbles and (c) from using any of a large number of the claimants' registered trade marks in any advertisement which makes "any comparison which suggests a price disparity between the parties' telecommunication services which is greater than would exist if a comparison were made between their services which are identical to each other or as close to each other as their respective price structures permit".

2

Similar heads of injunctive relief are sought upon an interim basis against a press advertisement and against a radio advertisement. While the issues affecting the press advertisement are somewhat different, the radio advertisement is, as far as I can see, substantially identical in all material respects to the television advertisement. I shall concentrate on the television advertisement and deal with the press advertisement as is necessary.

3

The advertisement in question, which is a price comparison between 02's mobile prices and those of the comparatively new network, called 3, was first shown on 20th August this year. The claimants say they came to know of it on 23rd August. On 25th August they applied to the vacation judge. On that date, no interlocutory relief was granted. On 26th August the application was renewed. The defendant then informed the claimants that the run was scheduled to cease on 31st August and interim relief on incomplete evidence at that point was not sought. The defendant, however, reserves the right to use its advertisement in the future, and this accordingly is the effective hearing of the claimants' application for interim relief.

4

The claimants, to whom I shall refer collectively as 02, or as the claimants, carry on the business which was originally known as Cellnet and then BT Cellnet. They are owned by a company called MM02 Plc. I think I can safely say that they are very well known indeed. They have heavily advertised the services provided by them under the 02 brand, both directly in press and broadcast media, and by sponsorship, notably of the Arsenal but also of television programs such as Big Brother.

5

According to the parent company's annual report, the company had at the end of the year 2003 reporting period 8 million pre-pay and 4 million post-pay customers in the United Kingdom. The average revenue per user in 2003 was about £121 for the pre-pay customers and £503 for the post-pay customers, giving a service turnover of no less than £2.74 billion. I am told that the average revenue per user in 2004 is £141 for the pre-pay customers, and this is a figure to which I shall have to return.

6

The mark 0 2 is, as is well known, written like the chemical formula for oxygen and the claimants' advertisements frequently figure bubbles, no doubt intended association with the gas, and again a subject to which I shall have to return.

7

The defendant is a comparative newcomer to the market. Its name reflects the fact that it has entered the market for so-called third generation or 3G services. It acquired its 3G licence in the year 2000 and started trading in 2002. Its principal mark consists of a stylized digit 3.

8

The business with which I am concerned is the pre-pay business. As is, I think, now generally known, pre-pay mobile phone business, which is often called "pay-as-you-go", enables the user to purchase call time or SMS time in advance. Top-up time is purchased by credit card or swipe card and activated, permitting use for the periods and at the times permitted by the particular tariff on which the time has been purchased. If the claimants' figures are correct, pre-pay users are numerically far and away more important than post-pay users, but pay on average much less per head than post-pay or account customers.

9

The claimants have three pre-pay tariffs, called Talkalot, Talkalotmore and Original. I am concerned with the Talkalot and Talkalotmore tariffs. These are summarised in an objective way in a page exhibited at JPH13 to the witness statement of Julian Hough, who is the defendant's advertising strategist. This page is an extract from the Carphone Warehouse catalogue and compares the offerings of the principal "pay-as-you-go" service providers.

10

In addition to the three basic tariffs, the claimants provide what they call bolt-ons. A bolt-on is a service purchased additional to the basic tariff. Thus, for example, the claimants have a messaging bolt-on which enables the customer to purchase the ability to send a number of additional SMSs. This bolt-on, as it happens, is valid for 30 days. If any of the units purchased remain unused at the end of the 30-day period, they are lost.

11

This appears to be a method of charging which is by no means unique either to the claimants or to the defendant, and it formed the basis for a submission by Mr. Platts-Mills, to which I shall have to return, that the interested public are well familiar with this kind of charging in which a number of call minutes or a number of SMSs are purchased; and are lost so far as unused at the end of a period of validity, in this case 30 days.

12

The defendant, which has many fewer customers, but none the less a large number, now I am told in excess of 1 million in the United Kingdom, has in effect three tariffs for its pre-payment service, which is called Threepay. Using a similar method of pricing to that employed by the claimants in their messaging bolt-on, it offers a fixed pre-payment of either £15, £25 or £35. A payment of £25 entitles the user to 500 minutes call time in a 30-day period, starting with the date of activation, which must itself be within 90 days of the date of purchase. The time purchased but unused at the end of the 30-day period is lost. These facts are readily ascertainable from the summary of the tariffs in the Carphone Warehouse catalogue, together with the notes which appear beneath them.

13

The television advertisement with which I am concerned is intended as a price comparison between the claimants' Talkalot and Talkalotmore tariff on the one hand and the defendant's VideoTalk 25 voucher on the other. A description does not do it justice and it should be seen.

14

In order, however, to make this judgment comprehensible, I shall attempt to summarise the advertisement as well as I can. It begins in black and white with a shot of a circular field of bubbles. This circular region expands to fill the screen, accompanied more or less immediately by a voice over as follows: "On 0 2 'pay-as-you-go' the first 3 minute peak rate call each day could cost you 75 pence." By the words "75 pence", which happen about nine seconds into the advertisement, what is called a "Super" appears at about 7.5 seconds into the advertisement. This consists of three lines at the foot of the screen and reads: "O2 Talkalot & Talkalotmore 5p per minute thereafter. Based on a £25 VideoTalk voucher with a 30 day validity period. Certain calls excluded. See three.co.uk." The screen clears at 9 second while leaving the Super in place. Then an animated figure 3, enters stage right and performs a motor bicycle-like journey to stage front with the same Super and with the following voice over: "Or. With ThreePay, that exact same call could cost you 15p." By this stage we have got through 15 seconds of advertisement and the Super vanishes. The 3 becomes fixed in the middle of the screen, losing a trail, which it has hitherto drawn behind it, and a further voice over 'Threepay—Pay as you go from 3." The whole lasts almost exactly 20 seconds.

15

The radio advertisement is substantially identical to the voiceover, with the Super being read, but lacks the reference to 5 pence a minute in respect of the claimants' Talkalot and Talkalotmore tariffs.

16

The claimants make the following complaints in general terms about this advertisement. First of all, the price comparison, that is to say the first 3 minute peak rate call at 75 pence as against 15 pence for "the exact same call", is grossly misleading and an over simplification of any legitimate comparison which can be made. Second, the advertisement infringes the claimants' series of United Kingdom registered trade marks were referred to at the hearing before me as the Bubble marks, or one or more of them. Thirdly, the advertisement infringes the claimants' United Kingdom registered trade mark for the letter and digit O2 and a substantially identical Community Trade Mark.

17

The defendants say that the price comparison is accurate or, alternatively, fair. There is no possibility, they say, of infringement of the Bubble marks because the bubbles in the advertisement are insufficiently similar to the registered marks to be infringements. In any event, the use of the bubble marks is entitled to the protection of section 10(6) of the Trade Marks Act 1994.

18

So far as the 0 2 marks are concerned, their use, so far as the UK mark is concerned, is again entitled to the protection of section 10(6) of the 1994 Act. So far as the Community Trade Mark is...

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