Case Comment: Starbucks (HK) Limited & Anor v British Sky Broadcasting Group PLC & Ors  UKSC 31
30 Thursday Jul 2015
The appellants, (compendiously ‘PCCM’), are members of the substantial PCCW group based in Hong Kong. The respondents, (compendiously ‘Sky’) are all part of the British Sky Broadcasting Group.
The claim in this case related to a way of delivering TV or video content over the internet known as internet protocol television (‘IPTV’).
Since 2003 PCCM has provided an IPTV service in Hong Kong, originally under the name NOW BRAODBAND TV and since March 2006 under the name NOW TV.
Sky announced its intention to launch a new IPTV service in the UK under the name NOW TV on 21 March 2012 and effected that launch in beta form in mid-July. PCCM commenced proceedings on 19 April 2012, seeking to prevent Sky from using the name NOW TV in connection with its IPTV service in the UK on the grounds that such use amounted to passing off.
By 2012 NOW TV was the largest pay TV operator in Hong Kong. However, although a number of Chinese speakers permanently or temporarily resident in the UK in 2012 were aware of the NOW TV service through exposure in Hong Kong, PCCM has never held an Ofcom licence for broadcasting in the UK and the service could not be received in the UK.
Furthermore, no set top boxes had been supplied in the UK, no subscription had been registered to a subscriber with a UK billing address and there was no evidence that a subscription had ever been paid for with a credit or debit card with a UK billing address. Therefore, for all intents and purposes, PCCM had no customers in the UK on or before 21 March 2012.
The trial judge (Arnold J) found that PCCM’s NOW TV service had acquired a modest, but more than de minimis, reputation amongst members of the Chinese-speaking community resident in the UK via PCCM’s websites, YouTube and as videos-on-demand on various international airlines. However, the claim was dismissed at first instance, and by the Court of Appeal, on the basis that because PCCM did not have customers in the UK it did not have a protectable goodwill in the jurisdiction.
Supreme Court Judgment
The issue before the Supreme Court was whether a claimant who is seeking to maintain an action in passing off need only establish a reputation among a significant section of the public within the jurisdiction or whether such a claimant must also establish a business with customers within the jurisdiction.
The appeal was heard, and unanimously dismissed, by a panel of five Supreme Court justices comprising Lord Neuberger, Lord Sumption, Lord Carnwath, Lord Toulson and Lord Hodge.
The court reaffirmed that a claimant in a passing off claim must establish that it has actual goodwill in this jurisdiction, and that such goodwill involves the presence of clients or customers in the jurisdiction for the products or services in question. It held that for this purpose it is not sufficient that people resident in the jurisdiction may be customers of the claimant when they go abroad, although it could be enough if people in the jurisdiction obtain the right to receive a claimant’s services abroad by booking with, or purchasing from, an entity in this country, even if that entity is not part of the claimant.
Whilst the judgment gives a definitive answer to the issue that was before the court it raises the question whether, in different factual circumstances, that answer may have been different.
At paragraph 49 of Lord Neuberger’s leading judgment, the court pointed out that it could develop or even change the law in relation to a common law principle when that principle has become archaic or unsuited to current practices or beliefs, commenting that this was particularly important in a world which is fast changing in terms of electronic processes, travel and social values.
In paragraph 63 it accepted that PCCM’s case was strengthened by the fact that we are “now in the age of easy worldwide travel and global electronic communication” and commented that there was force in the point that the internet can be said to render the notion of a single international goodwill more attractive.
Read together the above suggests that there is scope for the law in this area to be developed, or changed, in the future.
However, whilst the judgment raises this possibility it simultaneously appears to make it unlikely.
Firstly, the court gave several policy based reasons which in its opinion militated against changing the law and which it seems, without a fundamental change in opinion, may be insurmountable obstacles in any circumstances.
At paragraph 61 it iterated the necessity to bear in mind the balancing exercise underlying the law of passing off between the public interest in free competition and the protection of a trade against unfair competition by others. Its opinion was that if it was enough for a claimant to merely establish reputation within the jurisdiction the balance would be tipped too much in favour of protection.
It was for similar reasons that it dismissed the principle of a single international goodwill created by the internet, its opinion being that being able to lay claim to some reputation within virtually every jurisdiction would exacerbate the imbalance.
The court also considered that legislation, specifically section 56(2) of the Trade Marks Act 1994, already substantially reduces the likelihood of ‘harsh’ results arising without the need to alter the common law. Section 56(2) entitles owners of marks who are domiciled or have a business in a Convention country, but whose marks are well known in the UK, to restrain by injunction the use in the UK of a trade mark which is identical or similar to that mark in relation to identical or similar goods or services where the use is likely to cause confusion.
Secondly, the court appeared to demonstrate a fundamental reluctance to exercise its power to change the law.
At paragraph 49 it said:
“we should bear in mind that changing the common law sometimes risks undermining legal certainty, both because a change can sometimes generate uncertainty and because change can sometimes lead to other actual or suggested consequential changes”
Aside from the general uncertainty as to how, or whether, the law may develop in the future two particular questions were raised by the judgment.
Firstly, Sky advanced an argument based on section 56 of the Trade Marks Act 1994 which the court saw “considerable force” in but felt it unnecessary to rule on. The thrust of the argument was that by section 56 Parliament has already decided that domestic reputation is enough in the case of a “well-known” mark, in doing so it has determined the extent to which protection should be extended and it is not for the courts to extend the common law further.
Secondly, the court left open a point discussed in the judgment of Sundaresh Menon CJ in Staywell Hospitality Group Pty Ltd v Starwood Hotels & Resorts Worldwide Inc  SGCA 65,  1 SLR 911 in the Singapore Court of Appeal as to whether a passing off claim can be brought by a claimant who has not yet attracted goodwill in the UK but has launched a substantial advertising campaign within the UK which makes it clear that it will imminently be marketing its goods or services in the UK under the mark in question.
Whether or not the common law is changed in the future it seems likely that at the very least these questions will be answered in future judgments and the answers may in themselves affect the way the law is applied.