Who: Starbucks (HK) Limited and PCCW Media Limited (together the “Claimants”); British Sky Broadcasting Group Plc; British Sky Broadcasting Limited and Sky IP International Limited (together the “Defendants”).
Where: Supreme Court
When: 13 May 2015
Law stated as at: 29 May 2015
The Supreme Court has upheld the High Court and Court of Appeal’s decision that mere reputation is not sufficient to establish goodwill in a passing off claim, confirming that it is necessary to establish a business with customers within the jurisdiction.
The Claimants are members of a large group of companies based in Hong Kong, they provide an internet TV subscription (“IPTV”) service in Hong Kong. Since March 2006 the services have been provided under the name NOW TV.
UK residents cannot receive the Claimants’ closed circuit IPTV services and no set top boxes for it have been supplied in the UK nor has a subscription ever been applied for with a UK billing address.
However, UK residents could become aware of the Claimants’ NOW TV service since (i) the Chinese language content is accessible via the claimants’ websites; (ii) programmes and trailers from NOW TV were available on the Claimants’ You Tube channel; and (iii) some of the programmes have been shown on international flights which fly into the UK.
Also, in June 2012, the Claimants launched a NOW player app in the UK on its website and on the Apple App store. The app and channels were to be targeted to the Chinese-speaking population of the UK. By October 2012, over 2,200 people in the UK had downloaded the app.
In March 2012, the Defendants announced that they intended to launch a new IPTV service under the name NOW TV. The service was then launched in mid-July 2012.
In April 2012, the Claimants issued proceedings against the Defendant alleging passing of.
Supreme Court decision
It was common ground that in order to succeed, a claimant in a passing off action has to establish its claim as at the inception of the use complained of. The Claimants’ NOW player app was launched after this date.
Whilst the Supreme Court could see force in the Claimants’ arguments, they ultimately came to the same conclusion as that of the courts below. This was that a claimant in a passing off claim must establish that it has actual goodwill in the UK, and that such goodwill involves the presence of clients or customers in the UK.
The Supreme Court commented on what might constitute sufficient business in the UK to amount to goodwill and noted that (i) it is not necessary that the claimant actually has an establishment or office in this country and (ii) in order to establish goodwill, the claimant must have customers within the jurisdiction as opposed to people in the jurisdiction who happen to be customers elsewhere.
Therefore, where the claimant’s business is carried on abroad it is not enough for a claimant to show that there are people in the jurisdiction who happen to be its customers when they are abroad. However, it could be enough if they could show that there were people in this jurisdiction, who, by booking with or purchasing from, an entity in this country obtained the right to receive the claimant’s service abroad.
The Supreme Court was not persuaded by the argument that with the ease of worldwide travel and improved global electronic communication, the scope of goodwill should be reconsidered. In fact, the court considered that this poses the risk that the use of marks could be cut off far too easily where a claimant’s product or service happens to be recognised even though the claimant has not in fact invested any time or money in developing any market in the UK.
The Court left open as to whether launching a substantial marketing campaign within the UK and making it clear that it will imminently be marketing goods or services in the UK would be sufficient, noting that it would depend on the facts of the case and that this would likely be an exception rather than an extension to the scope of goodwill.
Why this matters:
This is the first time that the UK Supreme Court has confirmed the scope of goodwill in a passing off claim. Whilst it has left open, since it was not relevant to the facts in this case, whether a substantial marketing campaign which makes it clear that there would be an imminent launch would be sufficient, it has confirmed that mere reputation will not suffice.