The world has “internationalised” at an astonishing rate in the last 20 to 30 years. People are better travelled and are familiar with overseas hotels, restaurants and media. And it is the same with consumer brands: in the UK we are as familiar with Hershey’s chocolate from the US and Vegemite spread from Australia as we are with homegrown brands.
The law tries to keep up: international conventions such as the Madrid arrangements help brandowners register their brands across national boundaries relatively easily, and the Paris Convention and the WTO Treaty also provide protection for “well known” unregistered marks.
However, national boundaries still apply for unregistered trade marks which cannot claim to be “well known”. In the UK, this was illustrated fairly effectively in May by a decision of our highest court, the Supreme Court, in the case of Starbucks (HK) Limited and Another v British Sky Broadcasting Group Plc and Others(1). Despite the name of the claimant, the dispute was nothing to do with coffee shops.
Outline of the dispute
The facts of the case were as follows:
- A Hong Kong based company called PCCM established a Hong Kong cable TV service in 2006 under the name “NOW TV” to provide Mandarin and Cantonese language services to a Hong Kong audience. It later launched an internet protocol TV (IPTV) service.
- NOW TV’s subscribers were confined to Hong Kong. Outside Hong Kong, it had a YouTube channel and provided content to airlines for inflight services. This meant that it certainly had brand recognition and reputation in the UK among the Chinese community, but it could not identify any subscriptions taken out by UK residents for its services in Hong Kong. It did not have a UK broadcasting licence.
- In 2012, PCCM decided to launch its IPTV service in the UK and began preparations by launching an app and signing up a UK local partner.
- At the same time in 2012, Sky TV, which is the UK’s largest satellite TV provider, decided to launch an IPTV service and selected the name NOW TV for its new service. PCCM objected to the choice of name and commenced proceedings against Sky.
PCCM did have a registered Community Trade Mark (CTM) for the NOW TV brand, but a lower court decided that the mark lacked inherent distinctiveness and that PCCM had not used the mark in Europe sufficiently to assert acquired distinctiveness, so the CTM was invalid. PCCM therefore had to rely on its unregistered trade mark rights, which in the UK take the form of a claim called passing-off.
A successful passing-off claim requires three things:
- the claimant has goodwill in the UK to protect in a brand (name, logo or product get-up);
- that by using the same or similar branding, the defendant has misrepresented its products as those of, or as associated with, the claimant; and
- that there has been deception or confusion amongst consumers in the UK as a result, leading to damage to the claimant’s goodwill.
The whole case centred around point 1: whether PCCM had sufficient goodwill attached to the NOW TV mark within the UK.
The Supreme Court’s decision
The Supreme Court said no, there was no goodwill at all. The Court acknowledged that it was taking a “hard line”, and refused to overturn a series of older cases which had established that a claimant had to establish actual goodwill in the UK, involving “the presence of clients or customers in [the UK] for the products or services in question”.
The Court said that where the claimant was basing the claim on a business which operates overseas, people who are in the UK, but who are not customers in the UK, will not be sufficient to establish goodwill, even if they are customers of the claimant business when they go abroad.
It also said that services such as the YouTube service and the inflight entertainment service were designed to promote PCCM’s Hong Kong service and so amounted to advertising in the UK. The Court said that a reputation based on advertising in the UK was not enough; customers in the UK are required.
So, unless it is big enough to qualify for protection under conventions as “well known”, a business cannot rely on an international reputation to protect its unregistered brand, even if it has advertised in the UK, unless it has actual customers buying its products or services under the brand within the UK.
Readers of this article could be forgiven for thinking that if the business is entirely location-based, then that would be fatal for a passing-off claim, because UK customers would have to travel abroad to use the service. Hotels and restaurants would be the best example of this.
However, there have been a number of cases which have confirmed that overseas hotels and restaurants, which by their very nature are confined to a particular location outside the UK, can acquire the necessary goodwill and can claim in passing-off, if they can demonstrate that they have customers who have booked their tables or rooms while still in the UK. That rule is certainly true, as a result of older cases, when the sale is made through an associated office in the UK or through an agent in the UK(2), but a decision of middle-tier appeal court (the Court of Appeal) indicated that that would also be true if the booking was placed by phone or via the internet from the UK(3). My view is that this must hold true even if (as is so common these days) consumers make their booking through the medium of a website or app such as Tripadvisor, and I do not think the NOW TV decision alters this.
So the conclusion to draw from this case is that a business looking to protect its name through passing-off might only trade in a certain jurisdiction, but as long as it has customers who are based in the UK and it can show that they have bought the service while still in the UK, then that should be enough. But capturing this information at the time, and having it ready to use if an infringement issue arises, is crucial.
But as PCCM found, it is a difficult proposition when no one in the UK is likely to buy a service that they cannot use because it is only available to subscribers in Hong Kong. If content providers, such as TV companies, want to take advantage of this rule, then it would make sense for them to ensure that even if they are confining their activities to a specified place, and a specified market, they try (subject to broadcast regulations) to gain registered and verifiable customers from outside their core market territory using the internet.
As I said at the beginning, the world is a more internationalised place. The UK is an extremely internationalised country, so getting customers within the UK, even on a small scale, should not be difficult for most brands.
Eddie Powell, Partner, Fladgate LLP (email@example.com)
(1) Starbucks (HK) Limited and Another v British Sky Broadcasting Group Plc and others ( UKSC 31)
(2) Sheraton Corp of America v Sheraton Motels Ltd ( RPC 202)
(3) Hotel Cipriani SRL and others v Cipriani (Grosvenor Street) Limited and others ( EWCA Civ 110)