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NOW we have the Supreme Court’s ruling
On 13 May 2015, the Supreme Court gave its judgment in the case of Starbucks v BSkyB1. The court confirmed that, in a passing off case, the claimant must establish that it has goodwill in the UK, involving customers in the UK for the relevant products or services. It is not sufficient for there to be people in the UK who are customers of the claimant’s business when they go abroad.
The case has been ongoing for several years, and relates to BSkyB’s use of the mark “NOW” for its UK NOW TV internet television service. Starbucks (HK) Limited and other group companies (referred to together in this article as “Starbucks”) took legal action against BSkyB for trade mark infringement and passing off on the basis of their NOW TV (and related NOW-branded) internet television and video services, mainly operating in Hong Kong, and their associated registered Community Trade Mark (CTM) for “now” (stylised).
High Court and Court of Appeal — 2012 and 2013
I reported on the initial 2012 High Court judgments (in BSkyB’s favour) in my articles “now” is the trade mark of their discontent: Starbucks v BSkyB and High Court is content with BSkyB using “NOW”. The case was appealed to the Court of Appeal in 20132, which agreed with the High Court judgment.
The main reasons that Starbucks’ claim failed in these courts were that:
- the CTM lacked distinctiveness so was either invalid or not infringed by BSkyB; and
- Starbucks was unable to demonstrate sufficient goodwill in the UK for the passing off claim.
On the second point, the High Court acknowledged that a limited set of Starbucks’ NOW TV content was available in the UK (via its website, YouTube and some airlines), and that some UK-resident Chinese speakers with a Hong Kong connection were aware of the service in Hong Kong. This was sufficient to give them a reputation in the UK (which was more than de minimis).
However, this reputation was not sufficient to amount to protectable goodwill. The main purpose of the available (free) content in the UK was to promote the Hong Kong services and encourage people to subscribe in Hong Kong. The relevant customers were Hong Kong viewers and not the viewers in the UK. Otherwise hundreds of television channels worldwide would have customers and goodwill in the UK courtesy of YouTube.
Supreme Court – 2015 – Starbucks’ appeal
Starbucks appealed to the Supreme Court in relation to the passing off claim (but not the CTM claim). It claimed that it was sufficient for the goodwill element of passing off that:
- it had a reputation for the NOW TV name in connection with its internet television service;
- such reputation was among a significant number of people in the UK, even if they were not customers of the services in the UK (as they were customers in Hong Kong); and
- in addition, they had a significant number of customers in this country by virtue of having been exposed to the programmes on websites and international flights.
It argued that, particularly in an age of global electronic communication and relatively quick and cheap travel, it is not practical to treat the “reputation or goodwill” associated with a mark as limited to jurisdictions in which there is a business with customers for the relevant product or service. In addition, it would be arbitrary if there was no right to bring passing off proceedings despite having a reputation simply because users viewed programmes for free (rather than paid for) on websites.
Starbucks also referred the court to a number of passing off cases in other common law jurisdictions: Ireland, Canada, New Zealand, Australia, South Africa, Hong Kong and Singapore.
Supreme Court decision
The court considered previous UK passing off cases and noted that it has been consistently held over the last century that it is necessary for a claimant to have a customer base in the UK before it can satisfy the “goodwill” element of passing off. The judge referred to a number of precedents emphasising that goodwill exists where the business (to which it attaches) is carried on.
Whilst the cases from other jurisdictions provided some arguments in support of its case, they did not provide a clear deviation from the “hard line” UK approach.
The court also pointed out that, if it were enough merely to establish reputation within the UK, it would tip the balance too much in favour of protection in a passing off action. It would mean that a claimant could prevent another person using an ordinary word such as “now” for a similar product or service in the UK, even though they do not have any business in the UK and have not spent (and do not intend to spend) any time or money developing a market in the UK.
Therefore, in order for Starbucks’ claim in passing off to succeed it must establish goodwill in the UK from the presence of customers in the UK for its internet television services. The court considered that this was not satisfied:
- Whilst there are members of the Chinese community in the UK who associate NOW TV with Starbucks’ service, they are customers in Hong Kong and not the UK. It is in Hong Kong that they can enjoy the service, which is not marketed, sold or offered in the UK.
- The people who access Starbucks’ NOW TV programmes via websites or on airlines are not customers in the UK either, because there is no payment involved and the availability of the services is intended to promote the Hong Kong business. A reputation acquired through advertising (to be distinguished from marketing) is not sufficient for a claim in passing off.
On this basis, Starbucks’ business is based in Hong Kong and it has no customers, and therefore no goodwill, in the UK. The court therefore dismissed Starbucks’ appeal.
Other interesting points to note
- Addressing Starbucks’ points relating to the age we now live in, the court acknowledged that common law can adapt to practical and commercial realities, which is particularly important in a “world which is fast changing in terms of electronic processes, travel and societal values”. However, such changes can risk undermining legal certainty and lead to other consequential changes.
- The court referred to trade mark decisions in the Court of Justice of the European Union, which provided indirect support for its decision. In particular, in relation to the accessibility of websites in different countries: “the mere fact that a website [advertising or selling the product or service concerned] is accessible from the territory covered by the trade mark is not a sufficient basis for concluding that the offers for sale displayed there are targeted at consumers in that territory”.
- The court left open the issue of whether a passing off claim could be brought by a claimant who has not yet attracted goodwill in the UK, but has launched a substantial advertising campaign in the UK with a view imminently to be marketing its goods or services in the UK under the mark.
- Although it is necessary to show that the claimant has customers in the UK to establish the relevant goodwill, it is not necessary that the claimant has an establishment or office in the UK.
- In order to demonstrate there are customers in the UK, it could be enough to show there are people in the UK who book or purchase from a UK entity to obtain the right to receive the claimant’s service abroad.
1 Starbucks (HK) Limited and another v British Sky Broadcasting Group PLC and others [2015] UKSC 31
2 [2013] EWCA Civ 1465
Olivia Whitcroft, principal of OBEP, 13 May 2015
This article provides general information on the subject matter and is not intended to be relied upon as legal advice. If you would like to discuss this topic, please contact Olivia Whitcroft using the contact details set out here: Contact Details
