UK: The Supreme Court Has Confirmed That Sky's Launch In The UK Of "NOW TV" Did Not Pass Off A Competitor's Service

Starbucks (HK) Limited and another v British Sky Broadcasting Group plc and others [2015] UKSC 31, 13 May 2015

Summary

A claimant in a passing off claim had to establish that it had actual goodwill in the jurisdiction in question, mere reputation would not suffice. After reaching the Supreme Court the final appeal was unanimously dismissed and it was held that Sky's UK internet protocol television ("IPTV") service named "NOW TV" did not pass off the claimants' IPTV service also named "NOW TV", operating in Hong Kong.

Background

The law of passing off prevents one trader from passing off its goods or services as the goods and services of another. The elements of the tort of passing off have been described as:

A goodwill or reputation attached to the relevant goods or services.

• A misrepresentation by the defendant to the public (whether or not intentional) leading, or likely to lead, the public to believe that the goods or services offered by him are those of the claimant.
• Damage to the claimant, arising from the erroneous belief (caused by the defendant's misrepresentation) that the source of the defendant's goods or services is the same as the source of those offered by the claimant.

The UK Courts have previously held that in order to satisfy the requirements for the law of passing off, the claimant must have actual goodwill, in the form of customers, in this jurisdiction. Goodwill in the context of passing off is also territorial in nature and as such the Court had to consider the factual position in the UK.

Facts

The claimants were a broadcasting, media and telecommunications group in Hong Kong, collectively referred to as "PCCM". In 2012 the claimants began proceedings to prevent Sky from using the name NOW TV for its IPTV service in the UK on the grounds of passing off.

IPTV is a way of delivering TV or video content over the internet and it can be "closed circuit" or "over the top". Closed circuit uses dedicated bandwidth on the provider's network whereas over the top can be viewed on any device with a broadband connection. Viewers in the UK could not receive PCCM's closed circuit service and there was no evidence that subscriptions had been paid for from the UK. It was noted, however, that there were other ways of viewing the NOW TV content in the UK via YouTube, other websites and on various international airlines, three of which flew into the UK.

It was found at first instance that a number of Chinese-speakers who were permanently resident in the UK knew of the claimants' NOW TV service and furthermore the service had developed a reputation amongst Chinese-speakers in the UK. The key question raised was whether for the purposes of a passing off claim, these individuals were 'customers' for the service so as to give rise to protectable goodwill in the UK.

One argument put forward by PCCM was that in an age of global electronic communication, it was unrealistic and impractical to limit reputation or goodwill associated with services to jurisdictions in which there is a business with customers and not extending this to jurisdictions in which the association between the mark and the services was based on its reputation.

Decision

The business was based in Hong Kong and it was held that the claimants did not have customers in the UK and as such did not have goodwill in the UK. The viewers who accessed the claimants' NOW TV service via other websites were not considered to be customers in the UK because there was no payment involved and the availability of the product was intended to promote the business in Hong Kong. It was highlighted that this promotion could amount to advertising, but advertising without marketing or launching goods or services may not suffice to maintain a claim in passing off.

Lord Neuberger explained that "the claimant must have customers within the jurisdiction, as opposed to people in the jurisdiction who happen to be customers elsewhere". He added further that allowing a claim in passing off to succeed based on reputation alone could have a negative effect on competition, resulting in a claimant with no market for its goods or services in the UK preventing another person using a particular mark in relation to their business.

The law of passing off involves striking a balance between the public interest in free competition and the protection of the trader and Lord Neuberger warned that the idea of a single international goodwill had the potential to tip the balance towards protection and could stifle competition.

Comment

It is interesting to see that at a time where advances in technologies are constantly increasing the access to and speed of global electronic communications the Supreme Court chose not to expand the position in relation to passing off. As residents of one jurisdiction can now so easily be made aware of a business in another, it was considered important not to allow reputation alone to be enough to establish goodwill. 

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