A recent decision of the Supreme Court provides some useful guidance as to the necessary elements to establish a claim for passing off and confirms that the Court will not find in favour of the claimant where it has no customers, and therefore no goodwill, within the jurisdiction.

The Dispute

The Claimants, Starbucks (HK) Limited and PCCW Media Ltd (collectively “PCCW”), are members of a substantial group of companies based in Hong Kong. PCCW has provided a closed circuit IPTV (internet protocol television) service in Hong Kong since 2003, originally under the name of ‘NOW BROADBAND TV’, but, since 2006, under the name of ‘NOW TV’. By 2012, ‘NOW TV’ was the largest pay TV operator in Hong Kong, with around 1.2m subscribers.

UK residents cannot receive PCCW’s closed circuit service. However, a number of Chinese speakers permanently or temporarily resident in the UK in 2012 were aware of the ‘NOW TV’ service through exposure to it when residing in or visiting Hong Kong. UK residents could also become aware of the ‘NOW TV’ service in the following ways: (i) since July 2007, Chinese language content has been available free of charge via PCCW’s own websites; (ii) programmes and trailers from the ‘NOW TV’ service are available free of charge on PCCW’s YouTube channel; and (iii) some ‘NOW TV’ programmes were available as videos-on-demand on various international airlines (3 of which flew into the UK).

Meanwhile, on 21 March 2012, the three respondent Defendants, British Sky Broadcasting Group PLC, British Sky Broadcasting Ltd and Sky IP International Ltd (who are all part of the British Sky Broadcasting Group) (together “Sky”), announced that they intended to launch a new IPTV service under the name of ‘NOW TV’. This was launched in beta form in mid-July 2012.

On 19 April 2012, PCCW issued proceedings against Sky, seeking to prevent it from using the name ‘NOW TV’ on the grounds that the use of the name amounted to passing off. However, the first instance claim was dismissed and this decision was then upheld by the Court of Appeal. PCCW therefore took its claim to the Supreme Court.

The Application

It is well established that, in order to succeed in a claim for passing off, a Claimant must establish three elements:

  1. In the mind of the purchasing public, there must be goodwill or reputation attached to the goods/services, such that the ‘get-up’ (e.g. a brand name, trade description, labelling or packaging)is recognised by the public as specifically distinctive of the Claimant’s good/services; 
  2. There must be a misrepresentation by the defendant to the public (whether or not intentional) leading or likely to lead the public to believe that the goods/services offered by the defendant are the goods/services of the Claimant; and
  3. The Claimant must suffer or be likely to suffer damage by reason of the erroneous belief engendered by the defendant’s misrepresentation.

Whilst the lower Courts had accepted that PCCW had established the second and third elements, they dismissed PCCW’s claim by rejecting the argument that, with regards to the first element, it was sufficient for PCCW to identify a single body of people in the UK who associated the mark ‘NOW TV’ with its IPTV service in Hong Kong. The Court held that these people were not customers in the UK and as such did not represent goodwill in the jurisdiction. The Court also held that mere accessibility of PCCW’s material in the UK via the websites did not give rise to a protectable goodwill, which would “stretch the definition of ‘customer’ to breaking point”.

The arguments on this appeal therefore focused on the first element, with PCCW basing its appeal on the following grounds:

  1. There is no requirement that a Claimant in a passing off action should be able to establish goodwill as opposed to mere reputation in the jurisdiction. For PCCW to succeed in its passing off claim, it would therefore be sufficient that it had established a reputation for the ‘NOW TV’ name in connection with its IPTV service among a significant number of people in the UK, even if they were not customers of PCCW’s IPTV services in the UK, but in Hong Kong. Particularly in an age of global electronic communication and relatively quick and cheap travel, PCCW argued that it is inconsistent with commercial reality and unrealistic in terms of practicality to treat the ‘reputation and goodwill’ associated with a mark as limited to jurisdictions in which there is a business with customers for the product/service and incapable of extending to jurisdictions where the mark is simply associated with the particular product/service as a matter of reputation.
  2. In the alternative, there should be no requirement that a Claimant in a passing off action should be able to establish goodwill as opposed to mere reputation in the jurisdiction. The notion that goodwill should be limited to jurisdictions where the Claimant has business is wrong in principle: the question of where the Claimant had goodwill was a matter of fact and evidence, not law. In the present age of international travel and the internet, it would be anachronistic and unjust if there was no right to bring passing off proceedings, particularly in relation to an electronically communicated service, in a jurisdiction where, as a matter of fact, the Claimant’s mark had acquired a reputation. The mere fact that the customers are in Hong Kong when they enjoy the service should not undermine PCCW’s case as they have a strong reputation in the UK which deserves to be protected. The law would be arbitrary if PCCW had no right to bring passing off proceedings despite having a reputation in this country simply because users did not pay when they viewed PCCW’s programmes for free online. 
  3. Should the Court find that there is such a requirement, PCCW argued that it did have sufficient goodwill or reputation in the mind of the purchasing public in the UK by association with the identifying ‘get-up’ of ‘NOW TV’ attached to its products and services to satisfy the first element of its passing off claim. PCCW argued that the facts were comparable to those of a previous case, in which a US hotel company was held to have a sufficiently arguable case for saying that it had goodwill in the UK to justify an interlocutory injunction against the use of its mark. This goodwill was based on the fact that customers living in the UK booked rooms through the Claimant’s London office or UK-based travel agents.

The Decision

Whilst the Court acknowledged that PCCW’s case was ‘not without force’, it upheld the decision of the Court of Appeal and dismissed this appeal on the same grounds, finding the following:

  1. The Court reaffirmed the law that there is a requirement for a claimant in passing off to establish that it has actual goodwill in the jurisdiction and that such goodwill involves the presence of clients or customers in the jurisdiction for the products/services in question; mere reputation is not enough. PCCW’s business is based in Hong Kong and it has no customers, and therefore no goodwill, in the UK. The Court held 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 be sufficient, even if they are customers of the claimant when they go abroad
  2. The people who are in the UK and can access PCCW’s ‘NOW TV’ programmes via the websites or international airlines, are not PCCW’s customers in the UK because there is no payment involved. The availability of the service via these outlets was intended to promote PCCW’s Hong Kong business and as such simply amounted to advertising in the UK, which is not sufficient to found a claim in passing off. PCCW’s services were not offered for sale in the UK and therefore there could be no goodwill attached.

The Court did, however, leave open the point 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 making it clear that it will imminently be marketing its goods/services in the UK under the mark in question. The Court noted that to allow such claims would be an ‘extension’ of the ‘hard line’ in that public advertising with an actual and publicised imminent intention to market, coupled with a reputation thereby established may be sufficient to generate a protectable goodwill. In any event, however, this would not assist PCCW in its claim as its plans were not in the public domain at the date that Sky launched its ‘NOW TV’ service and, as such, the Court felt that it would be better to decide the point when such a case arises.

This decision re-affirms the position that the Court will take a strict approach to the definition of goodwill and a mere reputation through advertising or otherwise will not be sufficient to establish a claim for passing off. Particularly in the modern age of international travel, business and the internet, many businesses operate across many different jurisdictions and this decision highlights the importance of taking a proactive approach to the registration of marks in each jurisdiction, so as to try to minimise the risk of having to establish this element of a passing off claim in the event of any infringement.