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A customer where? Cross-border passing off claims

The Supreme Court recently dismissed the Claimant’s appeal in Starbucks (HK) Ltd v British Sky Broadcasting Group Plc [2015] UKSC 31, a case which has significant implications for cases of alleged passing off which span several jurisdictions.

The Appellant companies were members of a large Hong Kong based group headed by PCCW Ltd. That group launched a service in 2003 known as ‘NOW BROADBAND TV’ but subsequently changed the name in March 2006 to ‘NOW TV’. By 2012, NOW TV was the largest pay TV operator in Hong Kong.

There was no facility to receive the Appellants’ service in the UK. However, UK residents could become acquainted with the service through Chinese language content on the Appellants’ website, their channel, on the YouTube website and on certain on-demand videos available on airlines.

On 21 March 2012, the Respondent Defendants, being part of British Sky Broadcasting Group, announced their intention to launch a similar service in the UK under the name ‘NOW TV’.

The Appellants began proceedings on 19 April 2012 seeking to prevent the Respondents from using the name NOW TV in connection with its service in the UK, on the grounds that use of that name amounted to passing off.

At first instance, Arnold J held, dismissing the claim, that whilst a substantial number of Chinese speakers resident in the UK were acquainted with the Appellant’s service and associated the mark ‘NOW TV’ with the Appellants’ service, they were not customers in the UK and therefore did not represent goodwill in the UK. The Appellants’ business had goodwill in Hong Kong, but not in the UK. Permission to appeal was granted.

The Court of Appeal dismissed the appeal for the reasons given by Arnold J. Permission to appeal that decision was granted by the Supreme Court.

Lord Neuberger gave the leading judgment of the Court, with whom Lords Carnwath, Hodge, Sumption and Toulson agreed.

The issue before the Court, in essence, was whether it is sufficient to establish merely a reputation among a significant section of the public within the jurisdiction or whether the Claimant must go further, and establish business with customers within the jurisdiction.

Lord Neuberger took the opportunity to reaffirm the law in this area. In cross-border cases, the position is that ‘where the Claimant’s business is abroad, people who are in the jurisdiction, but who are not customers of the Claimant in the jurisdiction, will not do, even if they are customers of the Claimant when they go abroad’ (at [47]).

Goodwill is territorial in this context. It exists or not according to the whether the laws of the jurisdiction protect the owner of the goodwill. That approach to the matter was approved by Lord Neuberger, citing Professor Wadlow (at [59]-[60]).

The development of the internet and of travel has not led of itself to the notion of a single international goodwill. Such an approach would render it too easy for a prospective claimant to ‘lay claim to some reputation within virtually every jurisdiction’ (at [63]).

Lord Neuberger left some stones unturned.

It may be that a person in the jurisdiction booking or purchasing from an entity in this country receives the right to obtain the service abroad. In those circumstances, the Claimant may well be able to establish that it has customers in the jurisdiction who are customers in that jurisdiction (at [52]).

Further, he explicitly left open the question of whether a claim can be brought where the claimant has yet to attract goodwill in the jurisdiction, but has launched an advertising campaign within the jurisdiction and by doing so made it clear that the claimant will imminently be launching the relevant goods or services in question in the jurisdiction (at [66]).

As to the instant case, however, Lord Neuberger was clear, ‘It is true that, according to the Judge, there are a significant number of people who are, temporarily or in the longer term, members of the Chinese community in the UK, with whom the mark NOW TV is associated with PCCM’s IPTV service. In so far as they are customers of PCCM, they are customers in Hong Kong, and not in the UK, because it is only in Hong Kong that they can enjoy the service in question, and the service is not marketed, sold or offered in the UK’ (at [67]).

International claimants considering issuing passing off cases must hereafter bear in mind that the question is not, ‘where are my customers?’ but rather ‘where are my customers constituted as customers?’

ASA JACK TOLSON

23ES Commercial

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