Digital Satellite Warranty Cover Ltd sent out mailings advertising extended warranty cover for Sky boxes. BSkyB were concerned that the use of the Sky brand implied the broadcaster’s endorsement. There were also suspicions over where they got the Sky subscriber database. Miah Ramanathan reports on the court’s verdict.
Who: British Sky Broadcasting Group Plc. & Others ("BSkyB") and Digital Satellite Warranty Cover Limited & Others (the "Defendants")
Where: Chancery Division, High Court
When: 27 October 2011
Law stated as at: 26 November 2011
BSkyB filed an application for summary judgment against the Defendants who had been in the business of providing warranties and service plans for BSkyB satellite television equipment in competition with BSkyB's authorised provider. The Defendants illegally obtained customer data from BSkyB's customer databases and targeted BSkyB customers whose existing 12 month warranty provided as standard by BSkyB with satellite television equipment was due to expire.
The High Court granted the summary judgment against the Defendants for:
(a) breach of confidence and infringement of BSkyB's database rights under the Copyright and Rights in Databases Regulations 1997 for the unlawful extraction and utilisation of customer data from BSkyB's customer databases for the purposes of marketing the Defendants' warranties and service plans;
(b) infringement under Article 5(1) of the European Council Directive 2008/95/EC (the "Directive") of BSkyB's UK registered trade mark "SKY" (the "Trade Mark"). The Trade Mark is registered for a range of goods and services, including "the provision of warranties, extended warranties and assistance in relation to broadcast reception apparatus and instruments and parts and fittings therefore including cable, satellite and digital reception"; and
(c) passing off their warranties and service plans to consumers as those of BSkyB, during the course of their marketing activities.
The Defendants infringed BSkyB's Trade Mark during the course of their marketing activities
Article 5(1) of the Directive provides BSkyB with the right to prevent any third party, such as the Defendants, from using, without its consent and in the course of trade, any sign which is identical to the Trade Mark in relation to goods or services which are identical to those for which the Trade Mark is registered. The Defendants accepted that they had used a sign identical to the Trade Mark. However, they attempted to rely on the following defences claiming that:
(a) their use did not adversely affect any of the functions of the Trade Mark, namely the origin function; and
(b) their use, in the course of trade, either indicated characteristics or the intended purpose of the goods or services and was in accordance with honest practices in industrial and commercial matters pursuant to Articles 6(1)(b) and (c) of the Directive.
In his judgment Arnold J boiled this all down to a question of whether the Defendants' use of an identical sign to market its warranty and services plans gave rise to a likelihood of confusion on the part of the average Sky satellite television consumer. Arnold J concluded that those consumers would be and had in fact been misled and confused.
The Defendants' marketing literature together with their telephone marketing campaign was found to have been calculated to mislead, and confused the average consumer into believing that their warranties and service plans either were from BSkyB or an organisation authorised by BSkyB. Notably the marketing literature included the wording "extend your Sky warranty with us" and the policy documentation was titled "Sky Digital Warranty Certificate". Hence consumers were left with the impression that the Defendants' services simply renewed their existing 12 month Sky warranty that had come as standard with the BSkyB television equipment.
The significant number of complaints received by Knowsley Borough Council Trading Standards from consumers was evidence of the confusion caused by the Defendants' marketing activities.
The Defendants passed off their services either as those of BSkyB or as being provided in association with BSkyB
A striking example of the evidence submitted to demonstrate that the Defendants had passed off their warranties either as those of BSkyB or as being provided in association with BSkyB was a transcript of a sales call to an existing BSkyB customer.
In response to the question "How do I know you're from Sky?" the Defendants' representative simply answered "you will get all your confirmation, everything you need to know" and did not disabuse any false impressions.
Why this matters:
Non-authorised third parties who provide warranties and service plans for goods and services sold under registered trade marks should take heed of this decision. Whilst businesses can capitalise on the reputation and popularity of branded goods with warranties and service plans, their marketing activities must not in any way confuse or mislead the consumer into believing that their offerings originate from the brand owner or are provided in association with the brand, if that is not the case.
Marketing literature must clearly and prominently indicate the details of the actual service provider. In this case, this information was provided in the fine print. However, that did not suffice because it was deemed likely that some consumers would not notice it and the proportion that did would conclude that the Defendants were part of the BSkyB group or authorised by BSkyB.
The case also serves as a reminder that the use of customer data gleaned from a database created by another business may lead to liability for infringement of database rights.