In Starbucks (HK) Ltd and others v British Sky Broadcasting Group plc and others  EWCA Civ 1465, the Court of Appeal of England and Wales confirmed that a figurative Community trade mark (CTM) for “NOW” was descriptive and therefore invalid and that use of the mark in Hong Kong did not give rise to goodwill protectable in the United Kingdom.
Since at least 2006, Starbucks had broadcast in Hong Kong an internet protocol TV service under the name NOW TV and had established goodwill in the mark in Hong Kong. Certain of Starbucks’ programmes were accessible in the United Kingdom via the internet.
Starbucks owned a figurative CTM comprising the word NOW accompanied by simple graphic elements composed by lines radiating from the word NOW. The mark was registered in respect of various goods and services, including television and telecommunication services, in Class 38. Starbucks planned to expand “NOW TV” as a subscription service to the United Kingdom. There was no advance advertising or promotion for the proposed service.
Starbucks issued the present proceedings in April 2012 following an announcement by British Sky Broadcasting Group of a new, stand-alone internet protocol service in the United Kingdom called NOW TV. Starbucks claimed that Sky’s choice of name infringed its figurative mark under Articles 9(1)(b) and (c) of CTM Regulation 207/2009, as there was a likelihood of confusion on the part of the public between Starbuck’s CTM and Sky's NOW TV sign. Starbucks also brought proceedings for passing off against Sky, arguing that Starbucks had goodwill in the mark in the United Kingdom.
Sky counterclaimed that Starbucks’ CTM was invalid under Articles 7(1)(b) and (c) of the CTM Regulation, arguing that it was descriptive and non-distinctive and that Starbucks had no protectable goodwill in the United Kingdom.
Upholding the High Court decision, Sir John Mummery, giving the leading judgment in the Court of Appeal, dismissed both the trade mark infringement and passing off claims.
TRADE MARK INFRINGEMENT
Sir John Mummery confirmed that the registered mark NOW was neither inherently distinctive of Starbucks’ TV service, nor had it acquired distinctiveness through use. He remarked that in choosing a commonplace, easily understood, ordinary English word, Starbucks was running the risk of it being declared invalid on the ground that the mark would be understood by the average consumer as an appealing characteristic of that service, namely, the offer of programmes of choice being available immediately on demand without having to wait around for the arrival of a scheduled waiting time. The figurative elements of Starbucks’ CTM did not affect this conclusion.
Sir John Mummery noted that Starbucks was required to establish by evidence the existence of the claimed goodwill in the United Kingdom at the date when Sky made its announcement to launch their NOW TV service. In order to establish goodwill in the United Kingdom, Starbucks had sought to rely on access in the United Kingdom to its Chinese language TV programmes on its website, now-tv.com, access to videos on YouTube under the NOW TV brand and the availability of a small number of its programmes on various international airlines flying to and from the United Kingdom.
Sir John Mummery noted that it was possible to establish goodwill in the supply of a service even where customers were not charged and where the customers were a foreign speaking minority section of the UK public. The universal presence and accessibility of the internet, which enabled access to be gained in the United Kingdom to programmes emanating from Hong Kong, was not, however, sufficient to establish an identifiable goodwill with a customer base in the United Kingdom. All that happened in the United Kingdom was the viewing of programmes coming from Hong Kong. To generate goodwill, Starbucks would have had to have made some connections with UK customers, or at least attempted to make such connections, with a view to transacting business with them.
The evidence of Starbucks’ plans to launch in the United Kingdom was found insufficient to establish that Starbucks’ had generated any protectable goodwill in the United Kingdom in the mark NOW; it was necessary to either have or promote and advertise to a customer base in the United Kingdom.
The case serves as a reminder to carefully consider the possible implications when choosing a descriptive or non-distinctive brand name. As Arnold J noted at first instance, there can be astute consequences when “registering descriptive marks under the cover of a figurative figleaf of distinctiveness”. Even where a registry does not initially refuse the registration, the validity of such marks may be challenged by a direct competitor of the brand owner.