Phones 4u loses court battle over trade mark

John Caudwell, the Phones 4u mobile phone entrepreneur, has suffered a High Court defeat in a legal battle to stop a smaller rival from trading under the name phone4u.co.uk.

John Caudwell, the Phones 4u mobile phone entrepreneur, has suffered a High Court defeat in a legal battle to stop a smaller rival from trading under the name phone4u.co.uk.

In a judgment, which lawyers claim has important implications for all large companies, Richard Sheldon QC said Abby Heykali, the businessman who owns phone4u.co.uk, was not guilty of trade mark infringement or the offence of passing off, as claimed by Caudwell Group which owns Phones 4u.

Mr Heykali said: "I am relieved this is all over. I registered phone4u.co.uk in August 1999 long before I heard of Phones 4u. I have always traded honestly and attract customers because of my low prices, not because they think I am anything to do with Phones 4u."

His law firm, Bird & Bird, said the judgment was highly significant. Jane Mutimear, a partner at Bird & Bird, said: "The case demonstrates the difficulty a company can face if they choose a name which lacks distinctive character. They cannot prevent other traders from using similar names.

"Had there been evidence of people being deceived we would have advised our clients to change the name of the website. Caudwell was unable to show that internet purchasers were confused at the point of purchasing from our clients."

A spokesman for Phones 4u declined to comment but said the company was considering an appeal. It began proceedings against phone4u.co.uk in June last year. It sued for trade mark infringement by Mr Heykali and passing off, claiming the use of domain names including phone4u.co.uk and phone4u.com confused the public.

However, the High Court ruled yesterday that Caudwell had not acquired the requisite goodwill or reputation in the expression "Phones 4u" at the time Mr Heykali registered the phone4u.co.uk domain name and therefore the use of the name did not amount to passing off. The Phones 4u name appeared in 1996.

The internet is an important form of distribution for mobile phone retailers, such as Phones 4u, which are locked in a highly competitive battle for high street dominance. Phones 4u operates a chain of 350 high street stores.