WHG (International) Ltd (A Gibraltar Company) and Others v 32 Red Plc (A Gibraltar Company)
| Jurisdiction | England & Wales |
| Judge | Mr Justice Henderson |
| Judgment Date | 21 January 2011 |
| Neutral Citation | [2011] EWHC 62 (Ch) |
| Docket Number | Case No: HC09C00662 |
| Court | Chancery Division |
| Date | 21 January 2011 |
[2011] EWHC 62 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Justice Henderson
Case No: HC09C00662
Mr Michael Silverleaf QC and Mr Tom Moody-Stuart (instructed by McDermott Will & Emery) for the Claimant
Mr Henry Carr QC and Mr Giles Fernando (instructed by Linklaters LLP) for the Defendants
Hearing dates: 13, 14, 15, 18, 19 and 20 October 2010
Contents
| Topic | Para |
| Introduction | 1–14 |
| The witnesses of fact for 32 Red | 15–25 |
| (a) Mr Ware | 16 |
| (b) Mr Brear | 17–20 |
| (c) Mr Beveridge | 21–25 |
| The witnesses of fact for William Hill Online | 26–53 |
| (a) Mr Murphy | 27–35 |
| (b) Mr Cole-Johnson | 36–43 |
| (c) Mr Green | 44–53 |
| The expert evidence | 54–67 |
| (1) 32 Red: Mr Bailey | 54–59 |
| (2) William Hill Online: Mr Bartlett | 60–67 |
| The Community marks: use and reputation | 68–79 |
| The alleged infringing signs | 80–83 |
| The Community marks: infringement | 84–134 |
| (1) Introduction | 84–88 |
| (2) Infringement under Article 9(1)(b): the law | 89–92 |
| (3) Infringement under Article 9(1)(b): discussion | 93–103 |
| (4) Evidence of actual confusion | 104–125 |
| (a) Documentary evidence | 106–112 |
| (b) The evidence of witnesses | 113–126 |
| (5) Infringement under Article 9(1)(c) | 127–134 |
| The Community marks: validity | 135–147 |
| The UK mark: validity | 148–163 |
| The UK mark: infringement | 164–166 |
| Summary of conclusions | 167–169 |
Introduction
This is a trade mark dispute between online gaming and casino operators. The claimant, 32Red Plc ("32Red"), is a Gibraltar-registered company which first started to operate an online casino under the 32Red brand in 2002. It has always traded under the same brand name, and has sought to establish a distinctive reputation in that brand coupled with a reputation for excellent customer service. In comparison with the largest operators in the field, the business of 32Red, although substantial, is of no more than medium size. In 2009 it had approximately 25,000 active casino players who placed over 130 million bets with a value of around £170 million, generating gross revenue for 32Red of some £11 million. About 74% of this income was derived from players based in the UK.
On 6 May 2004 32Red was registered as the owner of the European Community word trade mark "32RED", pursuant to an application filed on 16 August 200. The number of this mark was 002814424. On 3 January 2006 32Red was also registered as the owner of a figurative sign in the form of a logo showing the number 32 and the word Red in a distinctive red cursive script on a white background, with a broken red circle around the 32. This registration was made pursuant to an application filed on 18 October 2002. The number of the mark was 002907426. Each registration was made for a range of goods and services in Classes 9, 16 and 41 of the Nice Classification, including (in Class 9) "Computer software relating to games, gaming and gambling", and in Class 41 "Casino services; … gaming services; gambling services; … casino, betting, gaming, gambling and bookmaking services provided by means of electronic media, the Internet …". I will refer to 32Red's word and figurative Community trademarks as "the Community marks".
In December 2005 the domain name "32vegas.com" was registered by an Antiguan company called Crown Solutions Gaming Limited ("Crown Solutions"), and in 2006 an online casino began to operate under the name "32Vegas". This casino had no connection with 32Red, and its ultimate ownership at this date is still unknown. It was regulated first in Antigua and then in the Canadian Mohawk Territory of Kahnawake. It was, however, prohibited from advertising in the UK by the regulatory regime set up under the Gambling Act 2005.
These activities came to the attention of 32Red, and on 24 May 2006 a "cease and desist" letter was sent to Crown Solutions by 32Red's lawyers in Gibraltar, Hodgson Bilton. The letter complained of wilful and fraudulent infringement of 32Red's intellectual property rights, including in particular the Community marks, and threatened the immediate commencement of proceedings for injunctive relief if a satisfactory response was not received within seven days. The letter was copied to the Kahnawake Gaming Commission. No reply was received from either Crown Solutions or the Commission. However, 32Red took no steps to implement or follow up its threat, and the matter was allowed to rest.
According to 32Red's founder and chief executive, Mr Edward Ware, the 32Vegas casino appeared to be a small-scale operation, the threat which it posed to 32Red's business was limited because of its inability to operate in the UK, and in view of its offshore base and regulatory regime it was thought that enforcement proceedings would be difficult. Mr Ware accepted in cross-examination that he knew the 32Vegas website was being used by players within the EU, because otherwise infringement of the Community marks could not have been alleged; but he said he was never told by his lawyers that it would be open to 32Red to sue Crown Solutions in the UK, and he did not think to ask them.
The next important development came in October 2008, when the William Hill Group entered into a joint venture with Playtech, one of the two leading providers of gaming software. I will need to explain the background to and rationale of the joint venture in more detail later in this judgment. For now, it is enough to say that it involved the purchase of an established online gaming business run by an entity called Uniplay, which was affiliated in some way to Playtech. The Uniplay assets included the unregistered mark "32Vegas" as well as several other brands owned by Crown Solutions. From the point of view of the William Hill Group, the acquisition by the joint venture of the 32Vegas mark and the online casino business carried on under it was a small and relatively insignificant part of a much larger operation which was designed to expand and re-launch William Hill's presence in the online gaming sector. When the joint venture was announced on 20 October 2008, the business of Crown Solutions was described as having "multiple low-key brands", one of which was 32Vegas.
The joint venture was completed on 30 December 2008. As part of the arrangements, the domain name "32vegas.com" had been transferred from Crown Solutions to a Playtech company called Genuity Services Limited, and on 30 December 2008 Genuity Services Limited granted a licence to use the domain name together with any associated marks (whether registered or unregistered) to the first and second defendants, WHG (International) Limited and WHG Trading Limited. These are both Gibraltar-registered companies, and their function at all material times has been to carry on all aspects of the William Hill business that involve online gaming. That business is known as "William Hill Online", a description which I will use in this judgment to refer to the first and second defendants collectively. The only relevant distinction between them is that UK customers contract with WHG Trading and non-UK customers contract with WHG (International). Otherwise the companies mirror each other and share the same assets, staff, and so on.
Under the joint venture, William Hill Online is owned as to 71% by William Hill Organisation Limited, the main trading company within the William Hill Group, and as to 29% by Genuity Services Limited. William Hill Organisation Limited is a wholly-owned subsidiary of the third defendant, William Hill Plc, which is registered in England and Wales and listed on the London Stock Exchange.
The William Hill Online companies are not only registered in Gibraltar, but they are also (like 32Red) licensed by the Gibraltar Licensing Authority and regulated by the Gibraltar Gambling Commission. An important consequence of this is that the prohibition of the advertisement of foreign gambling in section 331 of the Gambling Act 2005 does not apply to William Hill Online, because Gibraltar is (in effect) deemed by subsection (3) to be an EEA state for the purposes of the section. "Foreign gambling" is relevantly defined in subsection (2)(b) as meaning:
"Remote gambling none of the arrangements for which are subject to the law about gambling of an EEA State (whether by being regulated, exempted, prohibited or otherwise)."
It follows from all this that the 32Vegas online casino, instead of being a shadowy Antiguan-owned and Canadian-regulated business which could not advertise its services in the UK, on pain of committing a criminal offence, now became a Gibraltar-owned and regulated business which formed part of William Hill Online and was free to compete with 32Red on equal terms in its home market.
On 19 January 2009, less than 3 weeks after William Hill Online had begun trading, Hodgson Bilton wrote a "cease and desist" letter on behalf of 32Red to William Hill Online. Copies of the letter were also sent to the regulatory authorities in Gibraltar. The letter said this:
"Our client's business is well established, has won numerous awards and is widely acknowledged as one of the best casinos operating on the Internet.
It has come to our attention that you have made an unauthorised use of our client's intellectual property rights in that you have registered the following domain name:
32vegas.com
This amounts to a wilful infringement, in particular, of the intellectual property rights of 32Red Plc in [ the Community marks] and other registered trade marks around the world. Your use of the distinctive " 32", being part of our client's registered trade...
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