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Starbucks (HK) Ltd. v British Sky Broadcasting Group and Other (No.2) [2015] UKSC 31

The Supreme Court’s recent decision in Starbucks (HK) v BSB has upheld the longstanding principle that to bring an action in passing off the Claimant must have more than a reputation in the UK - it must have actual paying customers and that the application of this principle is not altered by the fact that the service in question is one that is known to individuals living in the UK.

The Supreme Court’s recent decision in Starbucks (HK) v BSB has upheld the longstanding principle that to bring an action in passing off the Claimant must have more than a reputation in the UK - it must have actual paying customers and that the application of this principle is not altered by the fact that the service in question is one that is known to individuals living in the UK.

The Claimant in Starbucks (HK) was the operator of the largest subscription TV service in Hong Kong through its NOW TV channel. Whilst the Defendant had launched an internet based pay-per-view channel in the UK operating under the name NOW TV. The Claimant objected and brought an action for passing off against the Defendant – its parallel trade mark infringement claim was not pursued on appeal to the SC.

The trial Judge, Mr Justice Arnold, in dismissing the Claimant’s claim had found that whilst the Claimant’s subscription service had never been made available in the UK some UK based individuals could have become aware of its NOW TV channel via the Claimant’s own website, or its YouTube channel, or through videos-on-demand offered on some international flights to the UK – and hence its NOW TV channel could have a reputation in the UK. Crucially the Judge also concluded that there were no customers paying for the Claimant’s services from the UK.

The SC’s decision (confirming the judgments of the trial judge and the CA) was clear that reputation alone was no basis for a claim in passing off as the there is no “goodwill” in the absence of actual customers for the goods or services in question – “goodwill” being the first ingredient in any claim for passing off. In coming to this conclusion the SC relied upon the considered opinion of Oliver LJ in Anheuser-Busch (a case dealing with the right to use the Budweiser brand) who stated; “...reputation which may, no doubt, and frequently does, exist with without any supporting local business,…does not by itself constitute a property which the law protects.”

As such, the Claimant’s reputation in the UK (such as it was) could not be equated to the goodwill necessary for a claim in passing off and its appeal was therefore refused.

Whilst this decision of the SC upholds the traditional position on paying customers in the UK being a necessary requirement for establishing protectable goodwill it must be questioned how long that is a sustainable one in relation to digital media services. Why, for example, should actual payment by the UK based customer be relevant where the provider of the on-line content could generate all its revenue from off-shore advertising or sponsorship rather than subscriptions? In a fast changing world it is somewhat unlikely that Starbucks (HK) will be the last time this issue troubles the UK Courts.

Dr Tim Sampson / 1st Jun 2015


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