UK Supreme Court rejects Starbucks passing off case
The UK Supreme Court has rejected a passing off claim filed by two Hong Kong-based media companies against broadcaster Sky.
The claim was asserted by both Hong-Kong based Starbucks and PCCW Media. In the judgment, published today (May 13), Judge David Neuberger referred to both parties as “PCCM”.
Neuberger said all five judges presiding over the case agreed that because PCCM did not have any paying customers in the UK for its Now TV service, it therefore lacked “goodwill”.
Neuberger said: “Its business is based in Hong Kong, and it has no customers, and therefore no goodwill, in the UK.
“The people in the UK who get access to PCCM’s Now TV programmes via the websites are not PCCM customers in the UK, because there is no payment involved and the availability of PCCM’s product was intended to promote PCCM’s Hong Kong business; as such it amounted to advertising in the UK which is insufficient to maintain a claim in passing off.”
Neuberger argued that “goodwill in the context of passing off is territorial in nature” and for a party to claim it has “significant goodwill” it must demonstrate that it has a customer base.
The case concerned PCCM’s claim that Sky’s internet protocol television (IPTV) service Now TV traded off the goodwill of its own IPTV service operating under the same name.
PCCM’s service started in 2003.
Sky, then operating under the name BSkyB, announced the creation of its own Now TV service in March 2012. A month later PCCM filed a passing off claim.
PCCM’s Now TV service is only available to subscribers based in Hong Kong, but internet users in the UK can access the service. It broadcast shows in both Cantonese and Mandarin and by 2012 it had become the largest pay TV service in Hong Kong.
In November 2012, Judge Richard Arnold of the English High Court, ruled against Starbucks and said Sky was not liable for trademark infringement. A year later, the English Court of Appeal rejected PCCM’s attempt to reverse the ruling.
PCCM registered a Community trademark (CTM) covering the name of the service in 2012, but this was declared invalid by Arnold.
But PCCM argued that due to the nature of the internet, restricting the goodwill of an international brand to how it is seen in individual jurisdictions is “inconsistent with commercial reality”.
But the court rejected the argument. It added that if a succesful passing off claim only needed a claimant to have established a “reputation” in the jurisdiction in which it is asserting its rights, then it would have tipped the balance heavily in its favour.
Neuberger said: “I am unpersuaded that PCCM’s case is strengthened by the fact that we are now in the age of easy worldwide travel and global electronic communication.
“If PCCMs’ case were correct, it would mean a claimant could shut off use of the mark in this jurisdiction even though it had no customers or business here, and had not spent any time or money in developing a market here,” he added.
A spokesperson for Sky told WIPR: “The Supreme Court has confirmed, following similar rulings by the High Court and Court of Appeal, that there is nothing to prevent us continuing to use the Now TV name. We are pleased the matter has been resolved.”
Leighton Cassidy, partner at law firm Fieldfisher, told WIPR: "The court thought that the internet made it easy to penetrate the minds of people anywhere in the world.
"However, without a customer base in the UK, you should not be able to prevent others from using a mark for a potentially indefinite period for a similar product or service.
"In the court's opinion which I support, this strikes the right balance between fair competition and protection against unfair competition," he added.
PCCM did not respond to a request for comment at the time of publication.
