England and Wales High Court (Patents Court) Decisions

 1. This is an application by the Plaintiffs, Bell Atlantic Corporation and Bell IP Holdings LLC, both Delaware Corporations, for judgment under RSC Order 14 against the Defendants, Bell Atlantic Communications Plc and Bell Atlantic Limited, both companies incorporated in England. By their action, and this summons, the Plaintiffs claim injunctions restraining the Defendants from passing off their businesses as that of the First Plaintiff by using the name or mark "Bell Atlantic" or otherwise, restraining the Defendants from infringing the Second Plaintiff's UK Registered Trademark numbered 2062372 (BELL (word) and BELL (device)) and remaining on the UK Companies register, or any other register (including any register of domain names) in their present corporate title or in any other form comprising or including the name or mark "BELL" or "BELL ATLANTIC", other consequential relief and damages.

2. The First Plaintiff is a substantial US Company with many subsidiaries, operating in the telecommunications industry worldwide, including within the UK. Its business originated in the formation of the Bell Telephone Company in the United States in 1887. Over many years, that business expanded under the name "Bell" and using a pictorial representation of a Bell as a logo. The First Plaintiff itself is one of seven regional "Bell" companies which were formed in 1983 as part of the resolution of an anti-trust suit against the holding company (American Telephone and Telegraph Company) of the huge business which had developed out of the original Bell Telephone Company, taking over the "Atlantic" region. With the other Regional Bell companies it became the joint owner of the rights and goodwill associated with the "Bell" marks used by the AT&T business in the United States. Rights in relation to trademarks outside the US, including in the UK, were held in trust for the regional Bell companies including the First Plaintiff, initially by Bell Communications Research Corporation Inc, and latterly, since 1997, by the Second Plaintiff. In 1997 the First Plaintiff also took over one of the other Regional Bell Companies, Nynex Corporation. I take the above short history from the evidence of Ms Deutsch, the Plaintiffs' Intellectual property Counsel.

3. The First Plaintiff therefore inherited the goodwill and reputation of the "Bell" telecommunications business and it claims that since 1984 it has traded extensively using the "Bell" device and the trading name or style "Bell Atlantic" worldwide including in the UK.

4. The Defendants are companies incorporated by a Mr David Farrell. He had worked in the telecommunications industry for 15 years and says that he conceived the idea of selling personal telephone numbers, and incorporated both of the Defendants for this purpose.

5. The First Defendant was incorporated on 27th November 1995, initially as a private limited company. It re-registered as a plc in July 1997 Its Directors' Report for the 15 months of trading until 28th February 1997, filed in June 1997, state its principal activities to have been "the purchase and sale of computer and telephone equipment"; in its annual return it is described as a "supplier of computer and networking equipment". Its Accounts for this period show a gross turnover of £103,233 on which it made a profit of £2,962 and no fixed assets. Its authorised and issued share capital of £1,000 was held by Mr Farrell, who was also the company's first director and secretary. These shares were not paid up, however. A Mr Peter Ingram was appointed a director on 1st December 1995 and two further directors were appointed in May 1996. The latest List of Members, filed on 25th January 1998, shows the First Defendant now to have eleven shareholders and an issued share capital of £50,000 in total. There is no indication as to how much of this is paid up.

6. As to the Second Defendant, there is only the sketchy information contained in an annual return filed on 29th January 1998; it has as yet apparently filed no accounts. It is a £100 company whose business is stated to be the supply of computer equipment. Its shareholders and directors are Mr Farrell and Mr Ingram.

7. The Defendants' activities first came to the attention of the Plaintiffs in May 1998 when they discovered that the Defendants had registered the domain name "Bellatlantic.co.uk". The Plaintiff's have their own registered name, "bellatlantic.com". The Plaintiffs caused further investigations to be made, and discovered that the Second Defendant had attempted to register in the UK a trade mark comprising a logo of a representation of a bell in a circle, which inspection shows to be indistinguishable from the bell and circle which forms the device on the Second Plaintiff's UK registered trademark 2062372, with the words "Bell Atlantic Limited" centred beneath it. The Plaintiffs' mark uses only the word "BELL" beneath the circle device.

8. A visit to the Defendants' common premises, in June 1998, showed the First Defendant, at least, to be apparently engaged mainly in the supply of computer equipment and peripherals, as an agent for Hewlett Packard. A business card produced by Mr Ingram carried the same bell-and-circle device beside the name "Bell Atlantic" with "Communications plc" added in smaller type, together also with a Hewlett Packard logo. However, there was no specifically "Bell Atlantic" promotional literature.

9. Following this, letters before action were sent by the Plaintiffs' solicitors to the Defendants on 23rd June 1998, and again on 7th July 1998 and 17th July 1998. No substantive replies were received until 7th August 1998, after proceedings had already been commenced. On 19th September 1998, following service of the Defence, solicitors acting for the Second Defendants offered an undertaking to the Plaintiffs, not without prior consent to use the circled "Bell" device forming part of the Plaintiffs' registered trademark "in relation to telecommunications equipment and instruments, parts and fittings therefor or telecommunications services, other than is allowed for by the Trade Marks Act 1994". The Plaintiffs found this unclear and unsatisfactory. They sought clarification of what was intended, but did not obtain it prior to the issue of the summons.

10. On 19th October 1998 the Defendants' solicitors wrote to state that, in effect, their clients were undertaking not to use the bell device in the course of their business. The Defendants have now changed their logo to a device of a square outline shape which encloses a line representation of a section of a world-globe, with the word "BELL" in bold typescript on its side up the left of the square, the word "ATLANTIC" in lighter typescript on the top of the square and the words "Communications plc" in smaller script across the foot of the logo.

11. This is an Order 14 case. I therefore remind myself that it is for the Plaintiffs to satisfy me that the Defendants have no defence to the claims on which they are seeking summary judgment. The test is a "threshold" test: namely, do the Defendants have a "fair or reasonable probability of a real or bona fide defence" to the claims which have been pleaded by the Plaintiffs, and on which they claim judgment? If I am satisfied that there is an arguable defence in this sense, I should allow the case, or the relevant claim, to go to trial.

12. The Plaintiffs' first claim is that of the First Plaintiff with regard to passing off.

13. Both Miss McFarland, who appeared for the Plaintiffs, and Mr Edenborough, who appeared for the Defendants, agreed that for the Plaintiffs to establish a case of passing off, they must prove the "classic trinity" of (i) an established reputation or goodwill acquired by the Plaintiff in his goods, name, mark, etc in the United Kingdom, (ii) a misrepresentation by the Defendants leading to confusion or deception, (ie to the effect that the Defendants' business or goods is or are that of the Plaintiff, or are associated with the Plaintiff), and (iii) damage to the Plaintiff as a result.

14. As to the first requirement, namely goodwill, the Defendants say there is a triable issue as to the whether the First Plaintiff can establish that it has sufficient goodwill or reputation in the UK so support its action. The Defendants say that there is no evidence of either turnover or advertising spend by the Plaintiffs in the UK, as contrasted with worldwide, in relation to either telecommunications equipment or computer equipment and services. They point out that the evidence of UK advertisements on behalf of "Bell Atlantic" is all historic, being no later than 1990, and relates to US business.

15. They object that the only recent projects listed by Ms Deutsch, who swore evidence for the Plaintiffs, demonstrate no real or sufficient trading involvement in the UK. The first, the "FLAG" project was a project carried out in conjunction with Cable & Wireless, for the installation in 1997 of a fibreoptic cable linking the UK to Japan, and involved merely association with the operation of the station for the cable in the UK. The operations of two subsidiary companies, Sorbus UK Ltd and Bell Communications Limited, in the fields of computer peripherals and support and data collection and communications systems respectively, did not (it is said) use the "Bell Atlantic" name or device extensively or prominently, if at all, and these companies were, in any event sold in 1995.

16. Miss McFarland argues that goodwill is not lost merely by ceasing to carry on business (a proposition which I note is supported in Copinger and Skone James on Copyright 13th Edition p 750 footnote 13) and that for the Defendants to make out a defence on this score, they would have to demonstrate that the First Plaintiff had, in fact, abandoned its goodwill, which it demonstrably has not. Mr Edenborough says that as there is no evidence of any intention by the Plaintiffs to resume business, there must, at least, be a triable issue on this score.

17. Before dealing with this point, I will consider the next requirement, namely of misrepresentation.

18. As to this, Mr Edenborough first takes a pleading point, that no misrepresentation is pleaded. I reject this argument. The Plaintiffs have expressly pleaded that the Defendants have passed off their business as being or being connected with the First Plaintiff's business by using the First Defendant's name and device, and in my judgment that is a perfectly good pleading of passing off, even if the word "misrepresentation" does not expressly appear.

19. Mr Edenborough's argument of substance is that there is no evidence of actual confusion or deception, which shows (he says) that it is at least arguable that there can have been no misrepresentation. Ms McFarland says that there is no need for such evidence; the question is whether the evidence before the court, properly interpreted and assessed shows that there is obviously a likelihood of confusion or deception, and this is a matter which the court can judge for itself. In any event, she says that there is some evidence of confusion in relation, at least, to telephone cards issued by the First Plaintiff, because owners of such cards have been caused to telephone the First Defendant in the belief that they were the Plaintiffs.

20. In my judgment, there really can be no defence on the question of whether a misrepresentation has occurred or not, and indeed, is occurring. The use of the device which is identical to the device on the Plaintiffs' logo, and the use of the Plaintiffs' name on business cards and in advertisements, which have been put in evidence, has quite clearly constituted a misrepresentation which is, in my judgment, likely to cause confusion, or to deceive. The use of the Plaintiff's name at all is, in principle, inherently likely to lead to passing off.

21. In this context, I was referred to the dictum of Aldous LJ in British Telecommunications plc v One in a Million Ltd CA (unreported) 23 July 1988:

22. "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 fraudulently used, an injunction will be appropriate"

23. It is therefore appropriate for me to consider here, the Defendants'; evidence as to how they come to be using the name "Bell" or "Bell Atlantic" at all.

24. Mr Farrell's evidence is that the name came about perfectly innocently. He chose "Bell" because he thought the word "Bell" was symbolic of telephones. He wanted an associated name beginning with "A" which would put his enterprise at the top of telephone listings. He lighted on "Atlantic" but decided that "Bell Atlantic" was nicer than "Atlantic Bell". I find this evidence completely incredible. The idea that the First Plaintiff's corporate name was coincidentally lighted upon defies belief, particularly when Mr Farrell has been admittedly involved in the telecommunications industry for 15 years. The incredibility of this evidence is compounded when the alleged reason for selecting the word "Atlantic" at all is completely defeated by then changing the order of the words used. Moreover, it is not even suggested that the choice of this name has any other positive independent justification.

25. The evidence about how the identical circled bell device came to be used is only marginally less incredible. It is suggested that this was produced as one among many examples, by an unknown desktop publisher who cannot now be traced, and was, selected, again coincidentally. When this is associated with the evidence about the name "Bell Atlantic" this account loses any possible faint credibility it might have had on its own.

26. As I find this evidence of the origin of the name and the original use of the Bell device so incredible, I also find that there is no fair or reasonable prospect of the Defendants establishing that it was anything other than a deliberate use, and an attempt to appropriate the goodwill of the Plaintiffs' name and device. Whilst the blatant use of the device may have ceased, the use of the name is continuing.

27. This finding therefore takes me back to the question of goodwill. My finding that it is wholly incredible that the Defendants should have used the Plaintiffs' name, and initially their device, entirely innocently and coincidentally, and that it must therefore have been deliberate, supports, in my judgment the continued existence of the goodwill which the Plaintiffs assert, and of which they have produced some evidence, notwithstanding that this is criticised by Mr Edenborough as I have mentioned. I am therefore perfectly satisfied that the Defendants can have no defence to the action for passing off on the grounds that the Plaintiffs have never established a sufficient goodwill in the UK at all.

28. The only question is, therefore, whether there can be a triable issue on the question whether that goodwill has been abandoned. Whilst this question initially caused me some difficulty, having reviewed the evidence I have come to the conclusion that, the existence of that goodwill having once been clearly established, there is nothing in the evidence to suggest that the Defendants have a fair or reasonable prospect of proving that the First Plaintiff has positively abandoned that goodwill. That is what, in my judgment, would have to be proved at trial, namely a positive intention to abandon the goodwill, as opposed to mere non-use. Whilst mere non-use for a sufficiently long period might amount to evidence of abandonment, the evidence presently comes nowhere near that position. In my judgment, the Defendants would have no arguable defence on this point.

29. The final requirement is that of damage to the Plaintiff. However, Miss McFarland cites Draper v Trist 1939 56 RPC 429 at 442 as authority that there need be no proof of actual damage. Mr Edenborough does not argue to the contrary.

30. I therefore find that the First Plaintiff succeeds in its claim to be entitled to summary judgment on its claim in relation to passing off. This goes in particular to the relief sought in Paragraph 1 and Paragraph 2 (b) of the summons. I will therefore grant the relief sought in these two paragraphs but subject to argument on the precise form which it should take. In particular, I am presently minded to think that paragraph 2(b) is too widely worded in that it prevents the Defendants from using a name which includes the word "BELL" at all; that may not be impermissible so long as that word is included in a combination which sufficiently distinguishes it from plain "BELL" or "Bell Atlantic" and I wish to be addressed on this point.

31. The next claim is that of infringement of the Second Plaintiff's registered trademark, although, given my findings on passing of, this claim may have become somewhat academic.

32. I have described the Second Plaintiff's registered mark. It is registered in relation to the Nice Agreement on the International Classification of Goods and Services, in "Class 9 telecommunications and apparatus; parts and fittings therefor" and "Class 38 Communications services"

33. The infringement claim is made under Section 10 of the Trademarks Act 1994. That section sets out three separate circumstances in which an action for infringement will succeed, in sub-sections 10(1) (2) and (3).

34. Section 10 (1) lays down that there is infringement where a defendant uses and identical sign to the Plaintiff's registered mark on identical goods or services to those of the Plaintiff.

35. Section 10 (2) lays down that there is infringement where the Defendant uses an identical sign to the Plaintiff's mark on goods or services which are similar to those of the Plaintiff, or a similar sign to the Plaintiff's mark on goods or services which are identical or similar to those of the Plaintiffs, and there exists the likelihood of confusion, which includes the public's thinking that there is an association with the Plaintiff's mark.

36. Section 10 (3) lays down that there is infringement where the defendant uses an identical or similar sign to the Plaintiff's mark on goods or services which are dissimilar to those of the Plaintiff and the trade mark has a reputation in the UK and the use of the sign takes unfair advantage of, or damages, the distinctive character or reputation of the mark.

37. Section 10(4) gives particular examples of what is meant by "using" a sign, and it includes use on stationery or advertising materials.

38. Mr Edenborough complains that the pleading does not state which of subsections (1) - (3) of Section 10 are relied on. He says that a claim under sub-section (1) must raise a triable issue on the facts, as to identicality both of the mark/sign, and of the goods/services in question. He argues that the pleading is fatally flawed in any other respect, because it fails to plead any likelihood of confusion, if Section 10(2) is relied on, and it fails to allege dissimilarity of goods, or damage to reputation if Section 10(3) is relied on.

39. Miss MacFarland in fact puts the second Plaintiff's case for Order 14 purposes on sub-section 10(1) and 10(2) in her skeleton argument. She did not appear to rely on Section 10(3), although in argument she helpfully explained the whle scheme of Section 10 to me.

40. With regard to Mr Edenborough's pleading point in relation to sub-sections 10(2) or 10(3), that is, in my judgment, a matter for particulars. None were sought by the Defendants, and they have not suggested that they have any difficulty in knowing what the case of the Plaintiffs really is. In my judgment, having pleaded Section 10, Miss McFarland is entitled to invoke any of the sub-sections in question and implicitly has pleaded the necessary requirements of whichever she may choose, in practice to rely on.

41. As to Section 10 (1), Miss McFarland argues that the sign used by the Defendants is "identical" with the Second Plaintiff's registered trademark because it incorporates the entirety of that mark, unaltered. All that has happened is that other matter, namely the words "Atlantic" or "Atlantic Communications plc" have been added to that mark. She referred me to the case of British Sugar plc v James Robertson & Sons Limited 1996 RPC 281 and argued that these words were "added matter" and should simply be discounted on the question of "identicality". Mr Edenborough says that one cannot divide out trade marks or signs in this way, and the Defendants sign is simply not identical to the Plaintiffs' mark.

42. In my judgment the question of whether a sign used is identical to a registered mark where the registered mark is present, unaltered, but with added matter, depends on whether the added matter actually renders the sign so different from the registered mark as to distinguish it from the mark. Here the device itself is very distinctive, and it is combined with the use of the word "Bell" The addition of the word "Atlantic" or "Atlantic Communications plc" do not, to my mind distinguish the Defendants' sign from the Plaintiffs' mark, and the Defendants have therefore been, in my judgment, using an identical sign to the Plaintiffs' mark.

43. If I were wrong on that, however, the Defendants have quite plainly been using a sign which is "similar" to the Second Plaintiff's mark, within the meaning of Section 10(2), by using the circled bell device which is so strikingly the same as the Plaintiff's design. I have seen examples of this on business cards used by the Plaintiff and in advertising material exhibited by Mr Farrell.

44. Miss McFarland also argues that the Defendants have been using their sign on "identical" goods to those of the Plaintiffs, in that they have, by their own admission, used this mark in relation to telecommunications equipment, although their supply of such equipment is now minimal. She argues, alternatively, that insofar as the Defendants are supplying computer equipment, that equipment is "similar" to the goods and services supplied by the Plaintiffs and for which their mark is registered. "Data processing equipment and computers" appears in Class 9 of the Nice classification along with telecommunications equipment. She says that evidence of the convergence of the technologies of data communications in the telephone and computer areas supports the argument for similarity, and common sense tells one that these days, with the introduction of equipment such as modems and other items designed to enable the transmission of data from computers to distant computers via telephone cables, the similarity of such equipment with telephones and telecommunications equipment is perfectly apparent.

45. Mr Edenborough argued that in relation to telecommunications equipment, which was all that could be "identical" goods there was no evidence of infringement now, since the Defendants were no longer using the offending sign, even in relation to any minimal residual supply of mobile telephones. He argued that the Defendants' real business, was that of supplying computers, ie stand alone PCs and similar equipment, (pointing to the advertisements which had been produced, as well as to the Defendants' descriptions of their businesses) and that these are totally dissimilar to telecommunications equipment.

46. Both parties referred me to the approach of Jacob J in the British Sugar case above (see page 296 l.30 to 297 l.5), and the six considerations there set out, although of course recognising that each of these requires adaptation from its application there to a supermarket item, to goods in the nature of high technology items such as those here. Mr Edenborough contended that the comparisons of, respectively (a) uses, (b) users, (c) physical nature (d) respective trade channels of supply and (f) competitiveness of the relevant goods showed that these were different for all save for users. Miss MacFarland contended that each comparison showed either similarity or overlap. She pointed out, for example, that e-mail now competes with faxes.

47. Mr Edenborough argued that these different contentions demonstrated that there was a triable issue as to whether computers were "similar" to telecommunications equipment.

48. With regard to the "possibility of confusion" argument, a requirement for infringement under Section 10 (2), apart from the pleading point which I have dismissed, Mr Edenborough also argued that there was no evidence of confusion, such that that too would raise a triable issue in respect of Section 10 (2). However, in the light of the findings which I have made above in relation to the Defendant's use of the Plaintiff's device in the context of passing off, I consider that the evidence demonstrates beyond peradventure a likelihood of confusion in the public's mind, extending at least to a likelihood that an association with the Plaintiffs would be perceived. I therefore reject this as a grounds of possible defence.

49. The comparison which is to be made is between the use of the Plaintiff's mark in a normal and fair manner in relation to the goods for which it is registered, and the way in which the Defendants have actually used their sign. My conclusions, on the evidence before me, are that that the Second Plaintiff's trademark has clearly been infringed, in the past, either in relation to "identical" goods, or, if that is wrong, certainly in relation to "similar" goods, namely telecommunications equipment sold by the Defendants. The Second Plaintiff is therefore, in principle, entitled to a judgment based on that finding pursuant to Section 10 of the 1994 Act. I shall have to return to this in a moment.

50. However, the less easy question is how far such an infringement extends. The Defendants have supplied not only telephone equipment, but also computers, and Mr Edenborough relies, in particular, on the fact that he says that their business is primarily the supply of stand alone PC systems, which are not "similar" to telecommunications equipment. The converging technologies cannot bring into the protected "penumbra" of the Plaintiff's mark, equipment which is not, rightly within it at all.

51. The test for "similarity of goods" is, apparently, a narrow one: see Jacob J in the British Sugar case at pp 295 l.34 to 297 l.14. Having read that judgment I am of the view that there would be a triable issue as to the similarity of the Defendants goods in this instance, insofar as these consisted of computer equipment. This is an issue which I do not consider can plainly be resolved in the Plaintiff's favour, on the affidavit evidence alone. I therefore express no view upon it.

52. There is, though, in addition, an area of equipment such as modems, which enables computers to be linked into telephone systems, ie by effecting or facilitating the transmission of data for the purpose of telecommunication of it. I consider that this kind of equipment would, sufficiently plainly, be "similar" goods to the telecommunications equipment for which the Plaintiffs' mark is registered. However, there is no sufficiently clear evidence as to the extent to which this equipment has been or is being sold, likely though it is that this is occurring.

53. Moreover, even if the computers sold by the Defendants are not "similar" goods within Section 10(2), the question whether the Plaintiff would be entitled to allege Section 10 (3) would arise. It appears to me that this must be likely, but, as I have already said, Miss MacFarland has not sought to support her case today, based on this sub-section.

54. Mr Edenborough raises two matters of defence independent of the question of the Plaintiff's establishing its position on identical or similar goods.

55. The first is a defence of honest or innocent concurrent use. In view of my findings about the origins of the Defendants' use of the Plaintiffs mark, I reject this.

56. The second is that Mr Edenborough points out that the Second Defendant only became registered proprietor of the registered trademark on 16th July 1998. He argues that it appears that more than six months elapsed between the transaction by which the mark was transferred to the Second Plaintiff from its previous proprietor, Bell Communications Research Inc (in 1997) so that the Second Plaintiff may well not be able to claim damages for infringement since the date of the transfer and before the date of registration (see Section 25 (4) of the Act), and that there is no evidence of any assignment of accrued causes of action. Miss MacFarland says that this point goes only to quantum. I agree with Miss MacFarland; this is a point which can be taken, and should be dealt with, on the enquiry as to damages which will have to be undertaken.

57. The upshot, therefore, is that the Second Plaintiff is entitled to a judgment for infringement of its trade mark. Its claim is established in relation to telecommunications items, and that is sufficient to justify a judgment for damages to be assessed and an injunction. The question of "similarity" of its computer goods, or the application of Section 10(3) then affects only the extent of the infringement and therefore the quantum of damage, and is a matter which can therefore be taken up on any enquiry as to damages. However, as I have already said, in view of my findings on passing off, that may prove academic.

58. With regard to an injunction, in principle I would be inclined to grant an injunction to the Second Plaintiff to restrain infringement of the Second Plaintiff's registered trademark in the respects in which I have found that there have been examples of infringement by the Defendants so far. I do not regard the undertaking which has been offered as satisfactory. First, it extends only specifically to telecommunications equipment and services. Second, the way in which it has been worded suggests clearly that the Defendants would be looking to sail very close to the wind in interpreting this undertaking, which would be a recipe for further litigation. The Defendants conduct to date inspires no confidence that they would be behaving otherwise. In my judgment the Second Plaintiff is, therefore, entitled to an injunction to protect its position from the likelihood of future infringing behaviour by the Defendants.

59. I will hear counsel on the precise form of order. I should mention that a further claim in the summons, based on Section 56 of the 1994 Act, has been accepted by Miss MacFarland to stand or fall with the claim in passing off, and I therefore do not need to deal with it.