England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE CHANCERY DIVISION
(Mr Justice Lawrence Collins)

		Royal Courts of Justice Strand London WC2 Monday, 22nd April 2002

Monday, 22nd April 2002

1. LORD JUSTICE MAY: This is an application by Dr Vanci for permission to appeal against the decision of Lawrence Collins J given on 31st January 2002. Dr Vanci was then the defendant in proceedings brought by Metalrax Group Plc and Metalrax Ltd, who claimed, and in the result successfully claimed, an injunction to restrain Dr Vanci from acquiring or re-acquiring, registering or re-registering, or taking any steps to acquire, re-acquire or register the domain name www.metalrax.co.uk after cancellation of the current registration.
2. Dr Vanci trades as an organisation called Disability UK, which is a concern raising money in support of the disabled. The Metalrax Group Plc is a publicly quoted company on the London Stock Exchange. It has been in business since 1964. It is an engineering business and it has traded under the name Metalrax for a long time. The judge held that it could seriously be disputed that the claimants have a substantial goodwill in the name Metalrax, and there is no evidence that they are not the exclusive owners of the goodwill in that name. As I understand it, Dr Vanci does not challenge that.
3. The proceedings took the form of an application for judgment in default under CPR Part 12.4(2)(a) because the claim included a claim for injunctive relief. The judge had some things to say about the precise circumstances of the application, but the essence of the dispute before him was that the claimants submitted that Dr Vanci had no arguable defence to their claim and that if he put in a defence it would be struck out. So that was the issue.
4. The brief facts leading to this dispute are as follows. Dr Vanci in 1999 registered a large number of domain names (in the order of 180 or so) including this disputed name. He tells me that he has a home page, or similar, on the internet which has hyper-links to a number of other domains, including www.metalrax.co.uk. He tells me that the purpose of this is to elevate his Disability UK presence on the internet in the ranking produced by search engines, the result of this being that when people search on the Internet for "disability" and that sort of concept, his site or sites will come high on the list and accordingly he will benefit.
5. At the time in 1999 that Dr Vanci registered this among other names he did not have, as the judge accepted, any knowledge, or certainly no bad faith knowledge, in relation to Metalrax Group Plc. The judge said later in his judgment that he accepted that when Dr Vanci registered the domain name he had never heard of the claimants and that there was not, and could not have been at that stage, bad faith. However, by March 2000 the claimants had got to know of the existence of this domain name and were not happy about it. They wrote to Dr Vanci objecting to his use of what they regarded as their name. There was a letter of reply which Dr Vanci wrote dated 27th March 2000 in which, as the judge said, he took the position that a company with the goodwill in the name had no right to use the same name in cyberspace. It was simply a case of first come, first served, as many companies, he said, have found to their cost. The judge quoted this passage from the letter of 27th March:

"The domain metalrax.co.uk represents a jazzy website title, as do many other domain names in our ownership. We have already received an offer for this domain name from an XXX group interested in promoting the site for hosting collections of nude ladies in extremely compromising positions, the theme obviously centering on creation of cold steel fetish eroticism. Not exactly my cup of tea, but then the internet caters for every conceivable taste world wide. As there has been no opportunity this month for a meeting at which such matters would be considered, the domain name metalrax.co.uk is still under offer."

6. The judge goes on:

"Subsequently Dr Vanci licensed the linking of the domain name to a pornographic fetish site operated by www.smut.workx.com, and later in the year [as the judge put it] irate shareholders wrote to the company expressing their disgust that Metalrax was letting their website be used to show pornographic pictures."

7. Whereupon the second claimant lodged a claim with Nominet on the basis that the name was being used in a confusing manner. Nominet dismissed that complaint in January 2001. But it went to an independent expert appointed under the then rules, and on 23rd May 2001 the expert, Mr Tony Willoughby, upheld the complaint and found that the name had been used by Dr Vanci in a manner likely to cause confusion to internet users. He found that those knowing of the existence of the claimant were trying to reach their websites by entering their name and either assuming or speculating that the correct suffix was ".co.uk". That gave rise to confusion. Accordingly Mr Willoughby concluded that the domain name was being used in a manner likely to cause confusion to internet users, and he recommended that Nominet should exercise its discretion to suspend the delegation or cancel the registration of the domain name. So, on 13th July 2001, Nominet suspended the delegation for a period of three months and announced that, if agreement had not been reached by 15th October, it would cancel the registration which would then become available on a first come, first served basis.
8. There was correspondence between the claimants' solicitors and Dr Vanci in which the claimants' solicitors asserted that any re-registration by Dr Vanci would constitute a passing off, as described by Aldous LJ in a case called One in a Million to which I will make reference in a moment, as did the judge. On 4th October 2001 Dr Vanci replied, complaining of the claimants' initial arrogant approach and saying that he wanted, first, a realistic business-oriented offer for the domain name that he owned; second, a letter of apology; and, third, the letter to be addressed to all staff at Disability UK. In those circumstances he would agree to the sale of the domain name to the claimants.
9. There was further correspondence and, agreement not having been reached, the claimant started proceedings, sought an injunction, and so it was that the matter came before Lawrence Collins J.
10. The judge gave an account (on page 8 of his judgment) of the submissions made to him by Dr Vanci. I shall come to those in a moment, because they are essentially the same as those which he has made to me this morning. The judge then referred to what he said was the leading decision of British Telecommunications Plc v One in a Million [1999] 1 WLR 953. That is a decision of the Court of Appeal. The leading judgment was given by Aldous LJ. As the judge in the present case said:

"In that decision it was decided by the Court of Appeal that by registering the distinctive names of the plaintiffs the defendants had made a false representation of association with and ownership of goodwill in the names with the intention of threatening dishonest use and disposal which constituted passing off and a threat to pass off. By registering the domain names the defendant had also created instruments of fraud since any realistic use would result in passing off.

It is just worth quoting a passage from Aldous LJ's judgment, which the judge referred to on page 9, as follows. Aldous LJ said:

"In my view there can be discerned from the cases a jurisdiction to grant injunctive relief where a defendant is equipped with or is intending to equip another with an instrument of fraud. Whether any name is an instrument of fraud will depend upon all the circumstances. A name which will, by reason of its similarity to the name of another, inherently lead to passing off is such an instrument. If it would not inherently lead to passing off, it does not follow that it is not an instrument of fraud. The court should consider the similarity of the names, the intention of the defendant, the type of trade and all the surrounding circumstances. If it be the intention of the defendant to appropriate the goodwill of another or enable others to do so, I can see no reason why the court should not infer that it will happen, even if there is a possibility that such an appropriation would not take place. If, taking all the circumstances into account the court should conclude that the name was produced to enable passing off, is adapted to be used for passing off and, if used, is likely to be fraudulent used, an injunction will be appropriate."

11. As I have said, the judge accepted that when Dr Vanci registered the domain name in the present case he had never heard of the claimants and that there was no bad faith at that stage. He also accepted that many of his subsequent actions could be explained by his reaction to what he considered to be the high-handed behaviour of the claimant. Nevertheless, said the judge, from 27th March 2000 (which is the date of the letter to which I have referred), while having no genuine commercial interest in the name, he has consistently sought to extract money from the claimants to prevent his using the name. The judge then said that the effect of the Nominet decision to hold a registration solely for the purposes of these proceedings is that, irrespective of whether the claim succeed or fails, the domain name will be cancelled. Accordingly, it will be necessary for Dr Vanci to re-register or re-acquire the domain name, and he could not possibly do so in good faith since he has absolutely no commercial interest whatsoever in acquiring the name other than to extort money from the claimant. Consequently, he concluded that Dr Vanci had no arguable defence and gave judgment which included an order for the injunction sought.
12. Dr Vanci has been very careful to put in quite a lot of material by way of grounds of appeal and submissions as to why that judgment was, he says, wrong. He says (and I summarise) in his written piece that the judge made the wrong decision. He said that the judge's conclusion that Dr Vanci had no genuine commercial interest in this domain name was wrong. He said that the judge was entirely wrong to say that the purpose of any re-registration would only be to extort money and he says that the hearing was conducted in what, he says, were plainly biased circumstances. He had no knowledge of the existence of the claimants when he acquired this domain name. There was no element of bad faith such as would be necessary for a claim such as this. He refers to what the judge said about Dr Vanci's subsequent actions being a reaction to his idea of the high-handed behaviour of the claimant, thus explaining what he had done and indicating what he did was not in bad faith. He said there was no threat or intention to extort money in any of the communications of the claimants and any statements of fact. He says that the judge was wrong to say that Dr Vanci consistently sought to extract money and that his response to an offer of £250 could scarcely be regarded as extortion. He says that the judge was wrong to equate this case with that considered in One in a Million, and he explains that his ownership and, so far as he has used it, use of this name shows the requisites of good faith which negative the decision that the judge takes.
13. Dr Vanci this morning has mentioned again, and I understand, his view that the claimants acted in a high-handed manner and wrote a lot of aggressive letters. He has drawn my attention to a recent communication from Nominet to indicate that they may not automatically cancel the registration at the end of these proceedings. The communication says that they will decide upon further action when the order of the court has been seen. Accordingly he says that the judge got it wrong to say that the name would be cancelled. He has submitted that the judge was quite wrong to view this case as equivalent to the One in a Million case, that the judge was wrong to say that Dr Vanci has tried to extract money and that the comparison with the One in a Million case is preposterous: to refuse an offer of £250 is hardly extorting or demanding substantial sums of money. The original acquisition of this name had nothing to do with passing off because he did not at the time know anything about the claimants. It is necessary to renew the licence at some stage in 2003, but that cannot be regarded as fraudulent for passing off in the way of that case.
14. Dr Vanci has also said that case law about this subject has moved forward since the One in a Million case, and he has referred me to summaries of quite a number of cases decided under the aegis of the World Intellectual Property Organisation to the effect, he says, that all the cases have a core requirement of proving bad faith.
15. This splits up into three considerations. The first of them is that the domain name registered by the respondents is identical, or confusingly similar, to a trademark or service mark in which the complainant has rights; second, that the respondent has no rights or legitimate interests in respect of the domain name; and third, that the domain name has been registered and is being used in bad faith. Dr Vanci accepts, at any rate in that part of his submission, that the first of those is satisfied, but does not accept that the second and third have been. He submits that he has a legitimate interest in this domain name, that is to say he uses it as a hyper-link to elevate his own site in the search engines. He says that the domain name was registered in good faith and is not now being used in bad faith. He has referred me to quite a number of these cases. I think the essence of it is what he has referred to at the outset as "the bad faith test". He has drawn my attention to examples of his own letters, which I have read, which, he submits, indicate that so far from being fraudulent in the way that is described in the One in a Million case, he is being perfectly level-headed and is only asking for a realistic business offer and - and he emphasises this - a letter of apology. He also submits that the claimants have failed to demonstrate confusion. He refers me to two handwritten letters where complaints are made. He indicates that these are some time ago, but they come from very closely together in the country and his own searches indicate they may not be internet users at all. Importantly, he says that they were written a month after the association between this domain name and the adult site had been removed. He suggests that the claimants themselves have shown that there was no confusion by carrying out searches which will have placed the domain name so far down any list of sites to indicate that, for practical purposes, no-one would ever get that far.
16. I should perhaps just mention that his written submission alludes to disquiet that the case was changed from Jacob J to Lawrence Collins J, indicating the possibility that the claimants' legal team had brought this about. Dr Vanci has the idea that Jacob J might have been far more sympathetic to his case than was Lawrence Collins J. It seems to me there is absolutely no evidential basis for that suggestion that at all.
17. In summary, he submits the following: first, that the judge was unduly unsympathetic to his defence to this claim, and he suggests even that the judge was acting as a prosecutor; second, he says that he has shown that there has been sustained goodwill use of this domain name; third, he says that there is no, or no sufficient, evidence of confusion; fourth, he says that there is no evidence of bad faith: on the contrary, he is using the domain name, or would do so, with a legitimate interest; and fifth and finally, that one of the important things with which he is concerned is a letter of apology.
18. In my judgment, the judge came to the correct conclusion in this case, and importantly for the present application, Dr Vanci has no real prospect of establishing otherwise if he were given permission to appeal.
19. Put shortly, I have reached that conclusion for the following reasons. It seems to me evident that for the possible application of the principles in British Telecommunication v One in a Million to apply, it is not necessary that the intent to pass off or to use a name for the purposes of passing off should be there from the outset. I accept, as did Lawrence Collins J, that the initial acquisition of this name was in good faith. However, there came a time when, first, Dr Vanci knew that this was a name the ownership of the goodwill of which was in the claimants; and, second, he began to use it in what can only be described as bad faith in the terms of his letter of 27th March 2000. Indeed, the licence linking this name to a pornographic fetish site, as I understand it, after a bit was terminated.
20. Subsequently, a number of things have happened. First, Mr Tony Willoughby has reached the decision that there is confusion, and it seems to me that an assertion by Dr Vanci that there is not cannot stand. Second, Dr Vanci has been attempting to sell this name for consideration to the claimants. Whilst I entirely accept that this is not, simply to use an expression, "high fraud" in the way that may have happened in the One in a Million case, there are, it seems to me, circumstances such as those described in this case. It is important to remember that Aldous LJ said that whether a name is an instrument of fraud will depend upon all the circumstances, and that a name by reason of its similarity to another may inherently lead to passing off by means of that name and its use. It is the inherent risk of passing off which, to my way of thinking, is an important aspect of this decision.
21. As to the other cases that Dr Vanci has referred me to, interesting though they are, the fact remains that the One in a Million case is a decision of this court and is binding on this court, and indeed on me. As I read that case - and I have looked at the whole of it, not just the bit that I have referred to - it seems to me that where there is confusion and the inherent risk or likelihood of passing off, the court in its discretion has jurisdiction to grant an injunction. It seems to me that all the ingredients of that are present in the present case, and I am quite unpersuaded by what Dr Vanci has told me that they are not. It does not seem to me to be critical to any decision that Nominet have yet precisely to decide what they may do at the end of this court case. All it does seem to me is that Lawrence Collins J reached the correct decision and, more importantly, that there is no real prospect of Dr Vanci successfully appealing.
22. Accordingly, and for those reasons, I refuse permission to appeal.
Order: Application refused.