Phones 4u Ltd v Phone4u.Company uk Internet Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Richard Sheldon QC (sitting as a Deputy Judge of the High Court),Richard Sheldon QC |
| Judgment Date | 09 March 2005 |
| Neutral Citation | [2005] EWHC 334 (Ch) |
| Docket Number | Case No: HC 04 C 00516 |
| Court | Chancery Division |
| Date | 09 March 2005 |
[2005] EWHC 334 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Richard Sheldon QC (Sitting as a Deputy Judge of the High Court)
Case No: HC 04 C 00516
Michael Hicks (instructed by Eversheds) for the Claimants
Lindsay Lane (instructed by Bird & Bird) for the First and Second Defendants
Hearing dates : 31 January, 1–4 February 2005
I direct pursuant to CPR PD 39A para 6.1 that no official shorthand note shall be taken of this judgment and that copies of this judgment as handed down may be treated as authentic
March 2005
The First Claimant operates a chain of shops called "Phones 4u" and is part of the Caudwell Group of companies (founded by Mr. John Caudwell) of which the parent company is the Second Claimant. In this action, the First Claimant complains of passing off arising out of web sites operated by the Second Defendant which use domain names which incorporate the phrase "phone4u". There is also a claim, based on the same facts, for infringement of the Second Claimant's registered trade mark.
The Third Defendant has never acknowledged service and has played no part in these proceedings. I was told by Mr Hicks for the Claimants that they will seek remedies against the Third Defendant commensurate with any remedies they may be entitled to against the First and Second Defendants.
An unusual aspect of this case is that proceedings were only brought by the Claimants in February 2004, and the trial took place in early 2005, whereas the acts of which the Claimants complain commenced in August 1999. This aspect has a bearing on a number of the issues which has arisen between the parties which I consider in more detail below. It is necessary first of all to set out in outline the facts which are not disputed.
The Facts
The Claimants
The Caudwell Group of companies has been involved in the business of selling mobile phones and related products and services since about 1987. It first adopted the trading style of "Phones 4u" for its retail operations in 1995 when two of its stores adopted that trading style and the "Phones 4u" mail order business was launched. On 7 March 1997, the First Claimant's name was changed to its current name and it took over the business and marketing of the "Phones 4u" trading style. Since that time the First Claimant has been the arm of the business which has dealt specifically with the provision of mobile phones and related products and services to the retail market.
Two other companies in the Caudwell Group have used "4U" in their names. Singlepoint 4U Ltd was incorporated on 3 March 1996 and was involved in the business of providing mobile telecommunication airtime service: it was sold out of the Caudwell Group in October 2003. The other, which features in the evidence I have heard, is 4U Limited which was incorporated on 13 October 1996 and involved in the supply of equipment, services and airtime connections to independent dealers.
The business of the First Claimant under the "Phones 4u" trading style has expanded rapidly, as is illustrated by the following table of the number of "Phones 4u" shops and approximate annual turnover under the "Phones 4u" trading style:
| End of calendar year | Approximate number of Phones 4u shops | Annual turnover of First Claimant under Phones 4u trading style |
| 1995 | 2 |
|
| 1996 | 7 | £5,970,000 |
| 1997 | 17 | £10,770,000 |
| 1998 | 51 | £22,842,435 |
| 1999 | 63 | £43,685,754 |
| 2000 | 113 | £69,986,418 |
| 2001 | 256 | £156,988,886 |
| 2002 | 334 | £345,712,178 |
| 2003 | 337 | £485,590,620 |
| 2004 (18 November) | 353 |
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The trading style "Phones 4u" adopted by the First Claimant was originally a logo in magenta and black and white. It incorporated the phrase "Phones 4u" in stylised form. The logo appeared on the First Claimant's shop fascias (other than on some three shops which were Vodafone sites) and on the First Claimant's advertising and promotional material.
In about February 1997, the logo was changed to its current red, white and blue logo which contains the words "Phones 4u" in stylised form. A copy is attached to this Judgment as "Annex 1". Thereafter, when new shops were opened or existing shops resited, the fascias would show the new logo. I was told that up to about 17 of the then existing shops (including the three Vodafone sites) retained their old logos until they were resited. In 2001 the last shop bearing the old logo closed. By about early 1999, the First Claimant's advertising and promotional material used the new coloured logo.
This coincided with the application by the Second Claimant to register the red, white and blue logo as a trade mark (in both colour and black and white) which was made on 7 January 1999. I deal with this application, and a second application made on 25 August 2001 to register the word mark "Phones 4U", in more detail later in this Judgment.
For a period from about 1999 to about 2002, the First Claimant's mail order business was operated under the style "Phones 4u Direct" after which it reverted to "Phones 4u". The logo which was adopted for "Phones 4u Direct" was similar in style to the "Phones 4u" logo but in addition had at its foot a blue strip on which the word "Direct" appeared in white.
As regards the Claimants' internet activities, the Claimants accepted in opening that "this case is not dependent upon whether or not the Claimants have a web site, because the Claimants' reputation has arisen primarily by reason of its retail shop activities". It is nevertheless of some significance to the matters I consider below to note that, on 30 May 1997, the domain name phones4u.co.uk was registered by the First Claimant. It was used from about this time for emails and only became live as a web site on 18 October 2000 and e-commerce enabled at about Easter 2001. On 15 October 1999, the First Claimant acquired the following domain names: phones4udirect.co.uk and phones4u.direct. com. The "phones4udirect" web site started up on 6 December 2000.
The Defendants
The Second Defendant, Abdul Heykali ("Mr Heykali"), became involved in the mobile phone selling business after his university studies. Having obtained a degree in petroleum engineering from Imperial College, London, in 1993–4 he attended a postgraduate course at Brunel University where he obtained an MSc in Decision Modelling and Information Systems. He says he has been using the internet since then. In 1998–9, he attended a government-sponsored training course in Web Technologies. On 16 August 1999, he started work in Goodge Street at Eurocell Phone and Computer Centre, a small One 2 One mobile phones retailer. So much is not in dispute.
Mr Heykali's state of knowledge of the Claimants and motivation in taking the steps that follow is disputed by the Claimants. At this stage, I shall therefore set out the bare facts which are not in dispute.
Towards the end of 1999, Mr Heykali asked a friend of his, Mr Jazebi-Zadeh, whether he would be interested in setting up business with him. Mr Jazebi-Zadeh accepted and they became business partners.
In November 1999, they found leasehold premises for the business at 84 Balham High Road, Balham, London SW12 9AG ("the Balham premises"). On 17 January 2000, Mobile Communication Centre Limited was incorporated. The shop opened for business in late February/early March 2000 under the trading style "Mobile Communication Centre". The business from the shop did not prosper and it closed on 27 February 2001. According to Mr Heykali, sales generated at the shop were for the account of Mobile Communication Centre Ltd.
I now need to step back a little in time to describe the steps taken by Mr Heykali which lie at the heart of the complaints made against him by the Claimants. In August 1999, Mr Heykali arranged for the registration in his own name of the domain name "phone4u.co.uk". Such registration was made on 23 August 1999 using the Nominet UK registration service. The agent of Mr Heykali as registrant was stated to be a company called Skymarket Ltd.
Once a domain name has been registered, it can be used as part of an e-mail address to receive e-mails and as part of a web site address. In order to discover the details of the history of the web site "www.phone4u.co.uk", the parties represented before me have relied on the results of searches of the web site obtained from an internet archive site called "Waybackmachine" whose http name is "web.archive.org". It was common ground that the results of these searches were not perfect, but that they are the best evidence available of how the web site being searched against would appear at any of the given dates. It was also common ground that in general, web.archive.org identified dates when the content of the web site in question changed and displayed what would then have appeared on the web site. The particular imperfections which came to light in the course of evidence were: (a) web.archive.org only picked up changes to the web site once these could be identified from the commonly used search engines; however, those search engines might themselves have only picked up changes to the web site some time (perhaps 4–8 weeks) after the changes were made; (b) the results of searches from web.archive.org sometimes showed content from the web site in question which bore a date subsequent to that appearing on the result of the search for the home page (I refer below to relevant examples of this occurring): however, the parties appearing before me were...
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