On 13 May 2015, the Supreme Court gave its judgment in the case of Starbucks v BSkyB1. The court confirmed that, in a passing off case, the claimant must establish that it has goodwill in the UK, involving customers in the UK for the relevant products or services. It is not sufficient for there to be people in the UK who are customers of the claimant’s business when they go abroad.
The case has been ongoing for several years, and relates to BSkyB’s use of the mark “NOW” for its UK NOW TV internet television service. Starbucks (HK) Limited and other group companies (referred to together in this article as “Starbucks”) took legal action against BSkyB for trade mark infringement and passing off on the basis of their NOW TV (and related NOW-branded) internet television and video services, mainly operating in Hong Kong, and their associated registered Community Trade Mark (CTM) for “now” (stylised).
I reported on the initial 2012 High Court judgments (in BSkyB’s favour) in my articles “now” is the trade mark of their discontent: Starbucks v BSkyB and High Court is content with BSkyB using “NOW”. The case was appealed to the Court of Appeal in 20132, which agreed with the High Court judgment.
The main reasons that Starbucks’ claim failed in these courts were that:
On the second point, the High Court acknowledged that a limited set of Starbucks’ NOW TV content was available in the UK (via its website, YouTube and some airlines), and that some UK-resident Chinese speakers with a Hong Kong connection were aware of the service in Hong Kong. This was sufficient to give them a reputation in the UK (which was more than de minimis).
However, this reputation was not sufficient to amount to protectable goodwill. The main purpose of the available (free) content in the UK was to promote the Hong Kong services and encourage people to subscribe in Hong Kong. The relevant customers were Hong Kong viewers and not the viewers in the UK. Otherwise hundreds of television channels worldwide would have customers and goodwill in the UK courtesy of YouTube.
Starbucks appealed to the Supreme Court in relation to the passing off claim (but not the CTM claim). It claimed that it was sufficient for the goodwill element of passing off that:
It argued that, particularly in an age of global electronic communication and relatively quick and cheap travel, it is not practical to treat the “reputation or goodwill” associated with a mark as limited to jurisdictions in which there is a business with customers for the relevant product or service. In addition, it would be arbitrary if there was no right to bring passing off proceedings despite having a reputation simply because users viewed programmes for free (rather than paid for) on websites.
Starbucks also referred the court to a number of passing off cases in other common law jurisdictions: Ireland, Canada, New Zealand, Australia, South Africa, Hong Kong and Singapore.
The court considered previous UK passing off cases and noted that it has been consistently held over the last century that it is necessary for a claimant to have a customer base in the UK before it can satisfy the “goodwill” element of passing off. The judge referred to a number of precedents emphasising that goodwill exists where the business (to which it attaches) is carried on.
Whilst the cases from other jurisdictions provided some arguments in support of its case, they did not provide a clear deviation from the “hard line” UK approach.
The court also pointed out that, if it were enough merely to establish reputation within the UK, it would tip the balance too much in favour of protection in a passing off action. It would mean that a claimant could prevent another person using an ordinary word such as “now” for a similar product or service in the UK, even though they do not have any business in the UK and have not spent (and do not intend to spend) any time or money developing a market in the UK.
Therefore, in order for Starbucks’ claim in passing off to succeed it must establish goodwill in the UK from the presence of customers in the UK for its internet television services. The court considered that this was not satisfied:
On this basis, Starbucks’ business is based in Hong Kong and it has no customers, and therefore no goodwill, in the UK. The court therefore dismissed Starbucks’ appeal.
1 Starbucks (HK) Limited and another v British Sky Broadcasting Group PLC and others  UKSC 31
2  EWCA Civ 1465
Olivia Whitcroft, principal of OBEP, 13 May 2015
This article provides general information on the subject matter and is not intended to be relied upon as legal advice. If you would like to discuss this topic, please contact Olivia Whitcroft using the contact details set out here: Contact Details