Hong Kong media group has no protectable goodwill in the UK; its Community trade mark is ‘now’ invalid

Authors: Joel Smith and Laura Deacon (Herbert Smith Freehills)

Starbucks (HK) Limited and Another v British Sky Broadcasting Group Plc and others [2013] EWCA Civ 1465, Court of Appeal, England and Wales, 15 November 2013

Journal of Intellectual Property Law & Practice (2014) doi: 10.1093/jiplp/jpt257, first published online: January 26, 2014

The Court of Appeal unanimously upheld the High Court's decision that, based on the evidence, the claimant (a Hong Kong-based media group) did not have a valid Community trade mark (CTM) or any goodwill in the UK that would give it the right to prevent BSkyB from using the name ‘NOW TV’ in relation to BSkyB's Internet protocol TV service. The appeal considered the requirement of distinctiveness for a CTM to be valid and whether a reputation established outside the UK could give rise to goodwill in the UK to support a claim for passing off.


Starbucks, a Hong Kong-based media group unrelated to the coffee shop chain, provided an Internet protocol TV (‘IPTV’) service in Hong Kong under the name ‘NOW TV’ with some of the programmes accessible in the UK via the Internet. Starbucks owned a Community trade mark (CTM) in respect of television and telecommunication services for the word ‘now’ (in lower case). The CTM was considered to be figurative because the ‘o’ in the word ‘now’ was depicted with six lines radiating from it so that it appeared like a star or sun. In 2012, BSkyB announced, and later that year launched, a new, stand-alone, IPTV service in the UK under the name ‘NOW TV’. Starbucks commenced proceedings in the UK for infringement of its CTM and for passing off. In the High Court, Arnold J held that Starbucks' CTM was invalid and that the passing-off claim failed. Starbucks appealed.

Legal context

In the High Court, the CTM was held invalid under Article 7(1)(c) of Regulation 207/2009 (the CTM Regulation) on the basis that the word ‘now’ would be considered by the average consumer to be descriptive of the services provided under the mark or was descriptive of a characteristic of those services.

In relation to the passing off claim, the High Court accepted that UK customers could access the claimant's Hong Kong website. However, the website was targeted at consumers in Hong Kong. This was not enough to establish goodwill in the UK. While the court recognized that the claimant had made preparations for the launch in the UK of its own IPTV service with the name ‘Now TV’, this did not give rise to a protectable goodwill. Starbucks appealed. In the High Court, BSkyB relied on Article 7(1)(b) and (c) of the CTM Regulation in support of their claim that the CTM was invalid. For the purposes of the appeal, it was agreed that invalidity under 7(1)(c) also resulted in invalidity under 7(1)(b).


By Article 7(1)(c) of the CTM Regulation, ‘[t]rade marks which consist exclusively of signs or indications which may serve, in trade, to designate the kind, quality, intended purpose, value, geographical origin or the time or production of the goods or of the rendering of the service, or other characteristics of the goods or service’ shall not be registered.

The Court of Appeal confirmed that the effect of this provision is that a sign which designates a characteristic of the relevant service is devoid of any distinctive character: this CTM was devoid of any distinctive character that was able to distinguish Starbucks' services from those offered by other undertakings. The mark itself was not inherently distinctive and the mark had not acquired distinctiveness through use. This did not mean that the word ‘now’ could never be distinctive of a service. Depending on the relevant context, a word could be used in a distinctive way or a descriptive way. It was open to the claimant to choose or invent many other words to identify its IPTV service. However, the claimant had selected a commonplace, easily understood, ordinary English word as its trade mark. It was the instant availability of the programming of the claimant's on-demand service that made it attractive to consumers—the attractive characteristic of the service was its ‘nowness’.

The Court of Appeal therefore confirmed that Arnold J made no error in his determination that the average consumer of the claimant's service would understand the mark ‘NOW’ to designate the attractive instant and immediate characteristic of the service. The mark ‘NOW’ described something about the service, its immediacy: the claimant's CTM was thus invalid.

In relation to the passing-off claim, the main issue was whether Starbucks had ‘customers’ of its IPTV service in the UK who would count as customers for the purposes of supporting the passing-off claim. The discussion focused on the Court of Appeal's previous decision in Anheuser Busch Inc v Budjovicky Budvar NP [1984] FSR 413 that, even though the claimants' beer was on sale to servicemen at US military bases (and a few other locations) in the UK, this did not amount to the beer being available in the UK: the claimants had no customers and were not carrying on a business in the UK. Accordingly, Anheuser Busch had no protectable goodwill in the UK.

In order to establish protectable goodwill in the UK, Starbucks relied on the availability there of its Chinese language TV programmes on its website, ‘now-tv.com’ and on the availability of access to its videos on YouTube under the NOW TV brand, which had been viewed around 238 000 times. Starbucks also cited the availability of a small number of its programmes on video services provided by various international airlines flying to and from the UK, together with its plans to expand its television service to the UK.

The Court of Appeal acknowledged that goodwill can be established without the need for customers to be charged and also in circumstances where the customers are a non-English speaking ethnic minority. It was also possible to establish goodwill in a service by advance advertising and promotional activities. However, the Court of Appeal determined that the actions of Starbucks and the accessibility of the claimant's service in the UK were not sufficient to establish a goodwill in the UK. The legal requirement in order to succeed in a claim of passing off is having goodwill and customers in the UK. Even in circumstances where the Internet is widely available, access in the UK to programmes originating from Hong Kong is not sufficient to establish goodwill and a customer base in the UK. Finally, Starbucks' plans were insufficient to establish goodwill. Further steps, such as promotion or advertising, would be required to have a protectable goodwill in the UK. Therefore, Starbucks' appeal was dismissed.

Practical significance

In the event that there is an appeal to the Supreme Court, Starbucks expressly reserved the right to argue whether there is a legal requirement for customers to be in the UK in order to succeed in a passing-off claim in the light of the obiter remarks made by Lloyd LJ in Hotel Cipriani Srl v Cipriani (Grosvenor Street) Ltd [2010] EWCA Civ 110, that it might be salutary to review the requirement for customers to be in the UK for the kinds of service offered providers operating from abroad.

The current case highlights two important reminders for brand owners. First, a prudent brand owner should create and develop a distinctive brand that cannot be considered to be descriptive of the goods or services provided under that brand.

Secondly, owners of brands that are well-known outside the UK but without a business presence in the UK are at risk of not being able to demonstrate goodwill in the UK that is sufficient to support a successful passing-off claim. However, owners of brands that are well known outside the UK may be able to rely on s 56 of the Trade Marks Act 1994 which gives the owner of a trade mark that is famous outside the UK (and which is entitled to protection under the Paris Convention), the right to apply for an injunction to prevent the use of an identical or similar mark in relation to identical or similar goods or services.

Passing Off and Unfair Competition: after the seminar

Last Thursday's JIPLP-GRUR Int seminar on Passing Off and Unfair Competition, kindly hosted in the London office of international law firm Baker & McKenzie LLP, was a most instructive affair as well as a thoroughly enjoyable one.  Baker & McKenzie partner and JIPLP contributor Ben Allgrove laid out the structure of modern passing off law, following which Gert Würtenberger (partner, Würtenberger Kunze, Munich, JIPLP editorial board member and GRUR member) spoke on the development of the German law on unfair competition and its current scope.

After a break for a little reflection, panellists Birgit Clark and Professors Phillip Johnson and Christopher Wadlow, chaired by newly-appointed Intellectual Property Enterprise Judge Richard Hacon QC, examined the relative advantages and disadvantages of the two doctrines and then opened discussion to the participants -- among whom were some very knowledgeable and experienced IP practitioners and theoreticians.

You can access Ben Allgrove's PowerPoint presentation here or download it here
Gert Würtenberger's PowerPoint presentation can be accessed here or downloaded here

CPD: this event was accredited for 2 hours and 15 minutes.  For the Solicitors Regulation Authority, the authorisation code is 009/BAMC.

The econometrics of IP: The case of patents and innovation

A guest editorial by Neil J. Wilkof

Will this soon be required reading for
the IP fraternity?
IP scholars have not traditionally been known for investigating IP matters from a statistical perspective. Cases and statutes are read and analyzed, doctrines are proposed and debated, policy is floated and vetted. However, IP scholars have largely vacated the empirical research space. It comes as no surprise, therefore, that economists have largely come to dominate this field with little input from or involvement by the IP community. Schooled in the discipline of econometrics, economists are skilled in organizing and aggregating data and then subjecting these data to various forms of statistical analysis.

Perhaps the most notable example is research seeking to measure the nexus between innovation and IP. In seeking to apply econometric techniques to this topic, the threshold challenge is to find a satisfactory metric for measurement. The answer, until now, has been to focus on and make use of the abundant sources of patent data that are available as the most reasonable proxy for measuring the quantity and quality of innovation. And so the question: should we in the IP community pay more critical attention to the use of patent data for this purpose?

Consider the following passage, taken from a much-discussed study by Shai Bernstein, “Does Going Public Affect Innovation?” As can be seen from the title of the paper, a key part of Bernstein's study involved measuring innovation. Bernstein goes about this in typical fashion by focusing on patenting activity. He writes as follows:

“While the literature acknowledges that patents are not a perfect measure [footnote—“For example, inventions may be protected by trade secrets”], their use as a measure of innovative activity is widely accepted (references omitted). Importantly for this analysis, patent information is available for both public and private firms, unlike R&D expenditures, and allows measuring firm innovative output along several dimensions, rather than merely expenditures.

The most basic measure of innovative output is a simple count of the number of patents granted. However, patent counts cannot distinguish between breakthrough innovation and incremental discoveries (reference mitted). The second metric, therefore, reflects the importance or novelty of a patent by counting the number of citations a patent receives following its approval [footnote and reference omitted) illustrate that citations are a good measure of innovative quality and economic importance.”

Bernstein goes on to add further nuances to the relationship between innovation and patents, but the contours of his approach are as stated above. As such, I have reservations about the apparent ease by which patent data are taken as a robust proxy for innovation.

First, many discussions of innovation (deriving from business management rather than from economics) have identified various forms that are far removed from patent activity. Moreover, not every form of innovation is patent-oriented. Indeed, there is something tautological about equating innovations with patent activity, whereby patents are used as a proxy for patent-focused innovation.

Secondly, the effective dismissal of trade secrets in measuring innovation is simply astonishing. The failure to address trade secrets cannot be justified on the ground that they are not material for innovation. It seems that the most salient reason why trade secrets are not included is simply the difficulty in identifying and measuring them. That may true, but any results based solely on patent data must therefore be recognized for what they are—only partial in nature.

Don't get me wrong, I am not a statistics Luddite (my Ph.D. studies included a heavy dose of applied statistics). As such, I have some idea about the strengths and weaknesses of statistical analysis. By the same token, members of the IP community have a view of patent quality and the like that can certainly augment the macro focus of econometric analysis of IP and innovation. Perhaps the time has come for economists to engage the IP community more actively devising better means to measure the nexus between innovation and IP.

February 2014 JIPLP now online

The February 2014 issue of the Journal of Intellectual Property Law & Practice is now available online to e-subscribers.  The contents are listed below.  Although it would be invidious to pick favourites, your editor did enjoy getting to grips with Gary Moss's article on the controversial decision of the UK Supreme Court in Virgin Atlantic v Zodiac, even though he has to say that he disagreed with much of it.  That JIPLP publishes articles which find favour with the peer reviewers, whether they coincide with the editor's preferences and prejudices or not, is something from which prospective contributors as well as readers should take comfort.

Elsewhere in this issue, Alexander Tsoutsanis's piece on his pet subject, bad faith trade mark applications, is a fairly sparky piece of prose, as is Danny Friedmann's surprising but well-argued case for scrapping safe harbour provisions.

Neil J. Wilkof's guest editorial will be posted in full on this weblog tomorrow, for the benefit and interest of non-subscribers too.  All other content can be read by non-subscribers who wish to purchase short-term access via JIPLP's website here.

Guest Editorial

Current Intelligence


From GRUR Int.

IP in Review