Injunction refused in “net neutrality” case

Ryan Dolby-Stevens

In Lebara Mobile Ltd and others v Lycamobile UK Ltd and others, the High Court refused an injunction in a “net neutrality” case.  The injunction was intended to remove a blocking mechanism which Lyca had imposed to prevent its own customers from accessing Lebara’s websites over its mobile network, and in particular a new VoIP (voice over internet protocol) service.

This is one of the first cases to deal with the implications of the EU’s forthcoming “net neutrality” regulation (which will come into force next year) and it almost certainly will not be the last.

Background

Lebara and Lyca are both mobile virtual network operators (“MVNOs”) which are in the business of leasing spare network capacity from local mobile network operators across a number of different countries. Customers who buy a SIM card from an MVNO are thereby able to access that MVNO’s entire network of international partners, typically giving rise to substantial savings on international calls. Lebara and Lyca are fierce competitors, although Lyca has a substantially wider international reach and has a turnover of over double that of Lebara.

In February 2015, Lebara launched a new VoIP (voice over internet protocol) service whereby customers can download an app (“Lebara Talk”) which allows them, whenever they are connected to the internet, to make free calls to other Lebara users.

Lyca wanted to prevent its own customers from accessing the service and so introduced a blocking mechanism. The block operated by scanning any URL which its customers tried to access; for any URLs which contained the word “lebara”, access was prevented and the URL itself was also added to a list of blocked addresses. The customer received a message which stated “this web page is not available”. The block also served to prevent the Lebara Talk app from working on devices with Lyca SIMs installed. The block did not operate when customers were connected to WiFi.

It should also be noted that a new EU Regulation relating to “net neutrality” will come into force at the end of April 2016; it was common ground that the mechanism by which the block was implemented will be proscribed under the the draft regulation.

The application

On 15 September 2015, Lebara issued both a claim form (Lebara’s claim pleads 27 causes of action across five jurisdictions) and an application for an interim injunction requiring the lifting of Lyca’s block in all EU Member States. Alternatively, Lebara sought an order requiring Lyca to publish notices on its websites informing visitors of the fact of the block, its period of operation and the effect it has on customers trying to access Lebara apps or websites.

The application was heard by Nicolas Lavender QC on 17 November 2015. At the hearing, counsel for Lebara agreed to give an undertaking to keep its VoIP traffic on defined IP addresses and to give three working days’ notice of any intention to launch a VoIP service in any new jurisdiction. As a result of this, Lyca stated that it would be prepared to limit the block so that it only affected the Lebara Talk app and that Lyca’s customers would no longer receive the “this web page is not available” message.

Judgment

Deputy Judge Lavender held that Lebara’s claims did indeed raise serious issues to be tried, commenting that it was “sufficient to say that there are at least some causes of action which I cannot dismiss at this stage as frivolous, vexatious or unarguable”.

On the issue of whether damages would be an adequate remedy for Lebara, the judge had “real doubts” as to whether the block (as modified) was likely to cause Lebara significant loss.  Any damage to Lebara was unlikely to be substantial on the bases that (i) Lebara Talk was only available on Apple and Android devices, which only a small proportion of Lyca’s customers use; and (ii) it was still possible for Lyca customers to access Lebara’s content via WiFi or via a desktop computer.

Deputy Judge Lavender’s judgment also touched on the proper approach towards applications for mandatory interim injunctions, rejecting the suggestion put on behalf of Lyca that the step from American Cyanamid which asks whether damages would be an adequate remedy should be omitted in the case of applications for mandatory interim injunctions.

The judge was therefore convinced that the balance of convenience weighed against granting the injunction and also held that it would not be appropriate (particularly in the light of the agreed modification to the block) to make the “publicity order” requiring Lyca to make a statement about the block on is website. The judge stressed that his judgment had not dealt with what his decision would have been had Lyca not agreed to modify the block.

Lebara Mobile Ltd and others v Lycamobile UK Ltd and others [2015] EWHC 3318 (Ch)

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