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England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> 1-800 Flowers Inc v Phonenames Ltd  EWCA Civ 721 (17 May 2001)
Cite as:  Masons CLR 5,  EWCA Civ 721,  2 Costs LR 286,  FSR 12, (2001) 24(7) IPD 24042
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COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT,
CHANCERY DIVISION (Mr Justice Jacob)
Strand, London, WC2A 2LL
B e f o r e :
LORD JUSTICE BUXTON
LORD JUSTICE JONATHAN PARKER
| 1-800 FLOWERS INC
|- and -
Smith Bernal Reporting Limited, 190 Fleet Street
London EC4A 2AG
Tel No: 020 7421 4040, Fax No: 020 7831 8838
Official Shorthand Writers to the Court)
Mr Mark Platts-Mills QC and Mr James Abrahams (instructed by Messrs Field Fisher Waterhouse for the Opponent)
Crown Copyright ©
LORD JUSTICE JONATHAN PARKER:
"We were purchasing stock in a corporation whose primary assets were its registered United States service marks DIAL 800-FLOWERS and 800-FLOWERS, which were accorded incontestable status, and the right to use the telephone number 1-800-356-9377, which corresponds to 1-800-FLOWERS. With these assets we believed that we could build a nationwide floral telemarketing business from a struggling company that unquestionably required new management and a commitment to marketing principles that we undertook to establish and implement."
"5. In October 1986, my Company was a floundering business. Since I have been involved in its management, my Company has invested millions of dollars and enormous time and effort to enhance its name and brand recognition throughout the United States. 800 Flowers is the mnemonic for the toll free number by which customers can place orders with my Company but it is also my Company's corporate and trade name as well as an internationally recognized and well known Trade Mark. Customers choose to do business with my Company because of the world renown of the Company name and Trade Mark 800-FLOWERS.
6. My Company's advertising efforts have occurred at national, regional and local levels, and we have advertised in all mediums, including television, radio, print billboards and, more recently, on the "internet". Our advertising and promotional efforts have been devoted to establishing positive consumer association between the products, the trade name of the Company and the 800-FLOWERS "brand"."
"My Company has a large volume of international sales under the Trade Mark 800-FLOWERS. In fiscal year 1996 international sales were in the region of $250million (£183million) with sales taking place in over 85 countries."
"The Opponents are the company responsible for promoting and marketing the alpha-numeric concept. This involves educating the consumer about what numbers go with what letters to form a standard keypad. This is accomplished, for example, by showing consumers and our potential licensees samples of standard keypads and producing templates to fit over existing telephone keypads. It is necessary to educate the consumer to use the letter "O" (not the number "0") when dialling a phonename. The Zockoll Group leases the telephone numbers from the service providers and licenses them to third parties through the Opponents."
"The Opponents intend to license or franchise the use of trade names. The Opponents have uninterrupted rights to use, for example, the telephone number 0800 758 6237 which translates to the phone name 0800 PLUMBER."
"It is convenient and of enormous value for small companies who can be licensed by us for the use of a generic phonename as it offers them great opportunities to establish a valuable brand which normally they could not afford. Many such opportunities would be lost if the market for generic phonenames did not exist. The concept of telemarketing is becoming increasingly popular, not least because of the convenience to the consumer."
The relevant statutory provisions
"10(1) In order for a service mark to be registrable in Part B of the register it must be capable, in relation to the services in respect of which it is registered or proposed to be registered, of distinguishing services with the provision of which the proprietor of the mark is or may be connected in the course of business from services with the provision of which he is not so connected, either generally or, where the service mark is registered or proposed to be registered subject to limitations, in relation to use within the extent of the registration.
(2) In determining whether a service mark is capable of distinguishing as aforesaid the tribunal may have regard to the extent to which:(a) the service mark is inherently capable of distinguishing as aforesaid; and(b) by reason of the use of the service mark or of any other circumstances, the service mark is in fact capable of distinguishing as aforesaid......"
21. Section 11 of the 1938 Act provides as follows:
"It shall not be lawful to register as a service mark .... any matter the use of which would, by reason of its being likely to deceive or cause confusion or otherwise, be disentitled to protection in a court of justice, or would be contrary to law or morality, or any scandalous design."
"(1) Any person claiming to be the proprietor of a service mark used or proposed to be used by him who is desirous of registering it must apply in writing to the Registrar in the prescribed manner for registration either in Part A or in Part B of the register.
(2) Subject to the provisions of this Act, the Registrar may refuse the application, or may accept it absolutely or subject to such amendments, modifications, conditions of limitations, if any, as he may think right."
".... a mark (including a device, name, signature, word, letter, numeral or any combination thereof) used or proposed to be used in relation to services for the purpose of indicating, or so as to indicate, that a particular person is connected, in the course of business, with the provision of those services, whether with or without any indication of the identity of that person."
"... their provision for money or money's worth."
".... shall be construed as references to the use of a printed or other visual representation of the mark, and references therein to the use of the mark in relation to services shall be construed as references to the use of the mark as or as part of any statement about the availability or performance of services."
The Opponent's Grounds for Opposition
The Decision of the Registrar
".... that the term 800-FLOWERS represents an allusion to the service provided."
"Perhaps it is not the most covert and skilful of allusions, based upon the combination of two non-distinctive elements, but definitely an allusion. I find, therefore, that that trade mark is capable of distinguishing the services of the applicant from those of other providers and so I dismiss this ground of opposition based upon section 10 of the  Act."
"In the circumstances, it seems to me that the applicants, if their trade mark is registered, will have the right to stop anyone else using the trade-mark 800-FLOWERS in respect of the same or similar services for which the trade mark is registered and that right will predate the right the opponents have obtained in respect of telephone number 0800 3569377. Therefore, it is use of the alpha-numeric version of the telephone number by the opponents which is likely to cause confusion and deception." (My italics.)
"In so far as the use of alpha-numerics as phonenames is concerned I have no doubt that the public at large have yet to become accustomed to their use. No evidence has been adduced by the opponents to show that, whatever may be the position in the United States of America, they are a settled part of business practice here in the United Kingdom. And even if phonenames were increasingly becoming a feature of every day life I would not consider that a phone name constructed from a telephone number should put the holder into an advantageous position over the owner of a similar (or the same) earlier trade mark. Unless, of course, an applicant for registration had by their [sic] actions put themselves in a position, as a result of some illegality, of being disentitled to protection in a Court of Law. No evidence has been adduced that they have done so in this case. Thus, there is no reason to believe that any use by the applicants of their 800-FLOWERS trade mark is likely to lead to deception and confusion as to source of origin in relation to the use by the opponent of the telephone number 0800-3569377 and I have no evidence before me that the applicants have taken any action themselves which would render the trade mark deceptive or in any way disentitled themselves from protection. (Indeed the applicants' interest in obtaining the telephone number 0800-3569377 from the opponents indicates that they have attempted to take action to ensure no confusion.) I therefore dismiss the grounds of opposition founded on section 11 of the  Act."
"I can see no reason why the trade mark in suit cannot be used in relation to a telephone number other than 0800-3569377: especially when the majority of the population are not educated in the use of alpha-numerics (and who may not even possess telephones with alpha-numeric annotations)."
The judgment of Jacob J. on the substantive appeal
"It is fair to assume at the date of the application, early 1993, the return of letters to telephones was clearly both foreseeable and intended. And so it has been. Modern telephones all have letters on their number buttons. I suspect that most people who have had a new phone in the last few years do not yet make use of the letters: some [may] have wondered why they are there and others may not even have noticed them. But there can be no doubt that alpha-numeric buttons are here to stay and that people will gradually make more and more use of them for telephone number purposes (they have other uses too).....
Technical developments in the phone industry have meant that telephone numbers no longer have as much "locality" about them. In particular freephone numbers have none. This makes it possible to run a nation-wide franchising business using just one number. You can have a central operator system to take "orders" or to put you in contact with the local franchisee. It is also possible for the telephone company to arrange that its system itself detects the locality of a caller and routes the phone call to the nearest centre using that number ("origin dependent routing"). In that way the "owner" of the number can license the number to a variety of different users.....
In the USA knowledge and use of alpha-numeric numbers were more advanced by 1993. Many telephones already had letters indeed I am not sure that letters were ever wholly abandoned. By 1993 the applicants had a substantial US business. The general freephone number in the US is 1-800 (number). The applicants have the number corresponding to 1-800 FLOWERS. If you phoned that number in the US in 1992 you could place an order for flowers to be delivered anywhere in the world. The order would be taken and transmitted via an intermediary to a local flower shop...."
"Although the applicants claim some use in the UK before their date of application they do not suggest that by reason of that use their mark acquired any factual distinctiveness. So the question is whether the mark is "capable of distinguishing" having regard to its inherent nature.
I have come to the conclusion that it is not. Consider first the position if the mark had been 0800 FLOWERS. At the time of application the number 0800 was, as Mr Hobbs QC for the applicants, conceded "freighted with telephonic significance". That does not mean, however, that the general public would at the time have realised that the whole mark was something that you could actually dial. At that time the use of letters on buttons had only just commenced and there can have been few telephones which carried letters. Nor had there been any education of the public about the letters. So at the time of application the public would have been puzzled by the mark 0800 says something about freephone, but FLOWERS would have little meaning, so somewhat "de-freighting" the mark as a whole. The mark would, however, not have been a puzzle to anyone who knew of the coming return of letters to phone buttons. He or she would have understood at once that 0800 FLOWERS was an encoded phone number and particularly so in relation to the specification of services, namely receiving and transmitting orders for flowers.
[The Hearing Officer] accepted that 0800 FLOWERS did not have any inherent capacity to distinguish in 1993.... He was right because, anyone knowing the facts would say, correctly, that the mark had a direct reference to the character of the service to be provided under the mark. Section 10 in its reference to "capacity" to distinguish must include within its scope the foreseeable future. In the future, as perceived in 1993, 0800-FLOWERS would very likely be taken by anyone knowing the facts to be a phone number for ordering flowers. That would be so, whether or not anyone actually used that number for that purpose in the future it would be the future growth in the practice of traders generally to use 0800 (word) which would have that effect. So the mark would convey a clear descriptive meaning in the future, irrespective of any use by the mark owner."
"I think it is more than a mere allusion. Once people became aware that 0800 (word) marks worked, they would inevitably see this mark as the 0800 (word) with the zero missing. This is particularly so given the specification of services, namely taking and transmitting orders. One of the most obvious ways of doing that is by telephone. I would add that many people would also be aware that an initial zero is the way into many telephone numbers you use it when you are not making a local call (either national or international) and for other freephone services such as that of Mercury (now AT&T) which begin 0500....
Of course in so saying I am not saying the mark could not also be used in other ways. In principle it could be used for the name of a shop (odd though that might be) and it could be used as a company name or domain name. But these other possible uses do not disguise the real substance of the mark. It is indeed virtually 0800 FLOWERS. It forms the heart of that alphanumeric number.
Two further factors reinforce this conclusion. Firstly there is no escape from the fact that the applicants themselves intended that the mark be understood as a telephone number in the future. That is their whole, or at least their substantial purpose in applying for the mark. They want a trade monopoly which covers 0800 FLOWERS. This registration, if granted, would give them just that. Secondly in support of their application the applicants have sought to allege actual use of the mark. But what they claim to have used in the UK is only the US equivalent of an 0800 number, namely 1-800-FLOWERS. I think they are right in saying that use of 1-800 FLOWERS would be a use of 800 FLOWERS, but it follows that use of 0800 FLOWERS is also use of 800 FLOWERS."
"This provision normally is applied to situations where there is a prior mark in use which is said to conflict with the mark proposed for registration. But it covers other situations too any situation where the use of the mark propounded will lead to deception or confusion of the public would be treated in a court of justice as disentitling the mark to protection.
Now at the time of application the applicants had not obtained the telephone number corresponding to 0800 FLOWERS. So, if and when that number was allocated to someone else and upon the assumption that the trade mark was put into use, a deceptive situation was bound to arise. When the public phoned 0800 FLOWERS, as they would be bound to do, they would get a wrong number. And the "owner" of the number (who has to pay for the freephone calls to it) would find himself paying for those calls. The use of the trade mark was therefore bound to lead to confusion and deception unless and until the applicants themselves obtained the number.....
Mr Hobbs QC, for the applicants, submitted that this was putting the cart before the horse. He said it was objectionable for the registration of a trade mark to depend upon who had got the telephone number it was making the trade marks register subservient to the telephone companies. I do not see why it is objectionable. Registration of a trade mark is to protect trade marks. If external factors such as who has the telephone number make the mark deceptive in the hands of the applicant that is just a fact which makes the mark deceptive. For instance the registrar will normally allow registration for a mineral water of the name of the source but only the owner of the source may obtain registration precisely because in other hands the mark would be deceptive. I think this is a fair analogy: although the "owner" of a telephone number does not have the same legal security over the number as the landowner may have over a mineral water source, he is reasonably secure in his number as recent litigation about telephone numbers has shown.
I think, therefore, that registration would be contrary to section 11. In this connection [the Hearing Officer] seems to have rather misunderstood the argument below. It is not so much that the phone number belongs to the opponents (as it does) but that it does not belong to the applicants and did not at the date of application. [The Hearing Officer] could not see how the obtaining of the number by the opponents could disentitle the applicants to protection in a court of law. But it was not the fact that the opponents obtained the mark which mattered. What mattered is that at the date of the application confusion was likely indeed inevitable so soon as the public were educated about 0800 (word) numbers and the mark was put into use. [The Hearing Officer] gave credit to the applicants for trying to obtain the number or its use as attempting to ensure no confusion. But that is because at the time of the application confusion would be inevitable unless they obtained the number or the right to use it."
"Mr Platts-Mills [for the Opponent] points to the inter partes correspondence in which the applicants were seeking to obtain the rights to or at least the right to use the telephone number 0800 FLOWERS. In 1995 one of their letters concerning this expressed the view that "several things right now are waiting on the completion of our deal with you so that we may get moving in the European market". That indicates as clearly as anything that up until then the applicants did not regard themselves as having got going here and that they needed the number to get going a mere conditional intention to use.
So I do not think the applicants can claim that 800 FLOWERS in their hands is properly a trade mark or that they are properly proprietors. That their intention was purely conditional, if and when they get the use of the number, is not good enough."
"Nor does the detailed evidence put forward amount to use of the mark here. It shows that some people with UK addresses for their credit cards have used the US number 1-800 FLOWERS. It is unlikely that those people were in the UK and asking for flower deliveries for someone in this country. The customer was either in the US already and had a UK credit card or, perhaps, was in the UK, knew about the applicants' US number and telephoned them there for flower delivery in the US. The evidence also shows that flowers have been delivered to people in the UK following use of the applicants' services. This must surely be US customers asking for delivery to UK addresses."
"So I think that the mere fact that websites can be accessed anywhere in the world does not mean, for trade mark purposes, that the law should regard them as being used everywhere in the world. It all depends upon the circumstances, particularly the intention of the website owner and what the reader will understand if he accesses the site. In other fields of law, publication on a website may well amount to a universal publication, but I am not concerned with that.But even if Mr Hobbs were right in saying that website use amounted, for trade mark purposes, to use in omnipresent cyberspace, I cannot see how that would help here. If you access the applicant's site in the UK, you can order flowers. But the service of receiving and [transferring] (i.e. the service of the specification) is carried out wholly in New York. ......
In the result, I do not think that the applicants have the requisite intention to use or in fact use the mark 800 FLOWERS."
The arguments on the appeal
"The presence of customers in this country is sufficient to constitute the carrying on of business here whether or not there is otherwise a place of business here and whether or not the services are provided here. Once it is found that there are customers, it is open to find that there is a business here to which the local goodwill is attached."
"I would like to thank you for your efforts to date in helping us to start operating our business in Ireland. As you and I have spoken, we have been trying to establish a presence in the UK and Ireland for some time now.
The only thing blocking us in the UK to date has been attaining the 0800 356937 [sic] number from BT. We were contacted by a person by the name of Jim Zockoll approximately one year ago who had the 0800 356937 number and wanted to sell it to us. We have been trying to reach an agreement with Mr Zockoll during the course of this past year, until such time when we realised that the laws governing the brokering of telephone numbers in the UK are quite different than they are here in the US. Upon finding this out, recently we have ceased to contract with Mr Zockoll and are pursuing other routes. It was also brought to our attention that when we requested the corresponding number from Telecom Eireann for use in Ireland that Jim Zockoll was an impediment to our establishing our business in Ireland as well.
Once the hurdles of attaining these numbers are overcome, we plan to move ahead in establishing a point of presence for our business in the European Community, specifically starting off with Ireland and then the UK. ...."
Conclusions on the appeal
"A person who adopts the mantle of another can by his silence represent that he is that other. Thus a person who selects a confusingly similar telephone number or a similar name may well represent that he is that other by either saying so or by failing to take steps when telephoned or called to disabuse the person who is making the telephone call. A person who takes steps which will lead a person who acts in a particular way to conclude that his business is that of another is guilty of passing off just as much as a person who states that his business is that of another."
"From the material which was placed before the Comptroller, it is clear that labels displaying the name "Chipie" were sent to Mauritius by the [opposing party] and applied to garments manufactured in Mauritius by a firm called Cogimex (Mtius) Ltd. This was clearly done on a significant scale. Furthermore, there were a number of invoices produced relating to sales transactions passing between the [opposing party] and Cogimex in the course of which the former used the name "Chipie". A question was raised by counsel for the appellant regarding the propriety of taking account of manufacturing work where such work was carried out within an exclusive export zone, that is to say a zone set apart for the purposes of fiscal provisions in which goods manufactured exclusively for the export market could be carried on. But that has not been presented as a live question in the instant case and there is no finding that in fact the manufacture on which the [opposing party] found was conducted in such a zone. A broader issue raised was whether manufacture for export would qualify as user for the relevant purpose."
"Their Lordships are satisfied that the foregoing activities amounted to user of the [opposing party]'s mark in Mauritius since 1987, that is before the appellant began to use it, and that the user was quite sufficient to give the [opposing party] the right to use the mark in Mauritius so as to make it impossible for the appellant to claim a right for the purposes of [the relevant statutory provision]."
"Following their success on this appeal, the opponents sought summary assessment of costs. The sum they were seeking was £38,000 for the matter before me. There is an undisputed figure of £3,000 odd resulting from a half day application before Evans-Lombe J. When they saw which way the wind was blowing, Mr Platts-Mills suggested there should have been a detailed assessment. I rejected that.
This case, just like the case before me last week of ELLE Trade Mark, is an appeal from the Trade Mark Registrar. The appeal was on the documents below. There was no disclosure, there were no witnesses, there were no witnesses to be interviewed; it was simply an appeal on the documents below. The appeal lasted, essentially, one day, as did the case last week.
It is quite true that this case has been seen as of considerable importance by both sides. Financially that must be so, but a figure of £38,000 for a paper only one-day case in the High Court is simply, in common parlance, out of order. Of course lawyers, as I said last week, can agree with their clients to charge as much as they like, and they can talk to their clients as long as they like. One would hope that the client is warned that the clock is turning all the time. I expect in this case the client knew that. One can spend a certain amount of time on the documents, and essentially, as I say, on this appeal all that had to be done was to photocopy the documents before the registrar. In fact there are only about 60 odd pages of actual evidence; all the rest is photocopies of exhibits in the other volumes.
If this had been the sort of case I have seen daily in the provinces, or even see here, the figures would seem very large even at £10,000, and that is why I think the figure of £10,000 for a one-day case in the High Court is pretty close to the appropriate amount, unless of course there are special things like disclosure or interviewing witnesses and so on which may have increased the cost. But with a case of immense importance it can still be done for £10,000.
I look at the figures and I just cannot imagine what people were doing; but whatever they were doing it was wholly disproportionate to what such a one-day case would involve. I say that with respect to the figures on both sides.
The court must control costs. No one can feel that they can run up an enormous bill on their side which, if they are successful, can be visited on the other side. That will be true even in cases where both sides are playing the same game.
I assess the costs here at £10,000."
LORD JUSTICE BUXTON:
"in support of their application the applicants have sought to allege actual use of the mark. But what they claim to have used in the UK is only the US equivalent of an 0800 number, namely 1-800-FLOWERS. I think they are right in saying that use of 1-800-FLOWERS would be a use of 800 FLOWERS, but it follows that use of 0800 FLOWERS is also use of 800 FLOWERS"
Section 10 of the 1938 Act
Section 11 of the 1938 Act
Use in the United Kingdom
"the length of user may be immaterial, that is particularly the case where the mark is already in use as a trade mark by a trader elsewhere in the world. Proprietorship of the mark can then be proved by a minimal user in the country where the mark is proposed to be registered"
but even that statement requires some assessment to be made of the nature and extent of the use. The evidence in this case does not permit of even that modest enquiry.
"any use of a trade mark on any website, wherever the owner of the site was, was potentially a trade mark infringement anywhere in the world because website use is in an omnipresent cyberspace; that placing a mark on a web was 'putting a tentacle' into the computer user's premises "
LORD JUSTICE PETER GIBSON: