UK: No Good(Will) For Starbucks

Last Updated: 2 December 2013
Article by Michael Gardner, Adam Edwards and Kate Meagher

Media company Starbucks (HK) Limited (no relation to the well-known coffee bar chain) operates Hong Kong's NOW internet television service.

Sky is the well-known TV and internet company. Starbucks appealed Mr Justice Arnold's decision in the High Court in Starbucks (HK) Ltd v British Sky Broadcasting Group Plc.

Arnold J's ruling in November 2012 had seen BSkyB successfully defend its right to launch a television service of its own under the name NOW TV. Starbucks had sued Sky for passing off as well as for trade mark infringement of Starbucks' figurative Community trade mark ("CTM") for the word NOW.

In the Court of Appeal, Sir John Mummery, together with Lord Justices Patten and Pitchford, unanimously upheld Arnold J's verdict that Starbucks' CTM had not been infringed. They agreed with the judge that the CTM was invalid. The court upheld his finding that the CTM for NOW was "devoid of distinctive character that would serve to identify the claimants' service and to distinguish it from the service offered by other undertakings". They also agreed with the judge that NOW also denoted an essential characteristic of Starbucks' TV service, namely that it had an immediacy or "nowness" that ordinary television services did not have. As a result, the CTM was also invalid as falling foul of Article 7(1)(b) of the governing CTM Regulation because it was descriptive.

The appeal judges also dismissed the appeal on passing off because of Starbucks' failure to acquire goodwill by reference to its NOW television service in the UK, as opposed to Hong Kong. The Court said "It is not enough that the claimants have undoubtedly acquired a goodwill somewhere else. The legal requirement of a goodwill and of customers here may present problems of proof for a business which is in the process of expanding from a base established in another country".

The court did, however make the point that in principle it is possible to acquire the necessary goodwill for passing off purposes in the UK for the supply of a service even where the service is made without charge or profit and even if it is supplied only to a foreign-speaking ethnic minority section of the public. Advertising and advance promotional activities can also be enough for these purposes. Starbucks, however, had not done enough in the present case.

Starbucks (HK) Ltd v British Sky Broadcasting Group Plc: Court of Appeal (Civil Division), 15 November 2013

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