UK goodwill still reigns Supreme

The question to the Supreme Court was whether a claimant in a passing off action needs to have actual customers in the UK or whether it is sufficient to demonstrate that it has a reputation in the UK and internationally.

Background

Two Hong Kong-based media companies, Starbucks and PCCW Media Ltd (collectively "PCCM"), claimed Sky’s Now TV traded off the goodwill of its own identical service operating under an identical name.

PCCM’s service was the largest pay TV operator in Hong Kong in 2012. PCCM’s service was only available to subscribers based in Hong Kong as only they could receive its closed circuit service. People based in the UK were, however, able to access some Chinese content on their website. Some broadcasts from PCCM’s service could also be accessed via their YouTube channel and were also made available on certain airlines that flew to the UK. Many Chinese speaking residents of the UK were aware of PCCM's NOW TV.

In June 2012 PCCM launched a mobile app for its NOW TV service, in anticipation of launching the service in the UK.  Within four months of the launch approximately 2,000 people in the UK had downloaded the app. On 21 March 2012 Sky announced that they intended to launch an internet TV service under the name NOW TV, and subsequently they launched the service in mid-July 2012.

PCCM alleged that use of the name amounted to passing off. PCCM's claim was dismissed by the High Court and Court of Appeal on the basis that it had no protectable goodwill in the UK. Although PCCM’s service had acquired a reputation amongst the Chinese-speaking community in the UK, their actual customers were based in Hong King and therefore their goodwill was limited to Hong Kong.

Supreme Court decision

This issue was appealed to the Supreme Court. The question for the Court was whether a claimant required customers within the jurisdiction, or whether a reputation within the jurisdiction would be sufficient to succeed in a claim for passing off.

PCCM argued that due to the nature of the internet and relatively quick and cheap travel, it was inconsistent with commercial reality for goodwill to be restricted. They argued that it was unrealistic to suggest that goodwill is incapable of extending to territories were the mark is known.

The UK Supreme Court rejected the passing off claim. All five judges agreed that PCCM did not have any customers in the UK and therefore it lacked goodwill. They held that goodwill in the context of passing off is territorial in nature.  The Court accepted that a significant number of people within the Chinese community in the UK would associate NOW TV with PCCM's service, but they were not considered customers. Only in Hong Kong could they enjoy the service in question, those who got access in other ways were not PCCM customers as there was no payment involved in any way.

Comments

This decision reiterates the established position that in order to succeed in a passing off action, a claimant will need to establish goodwill in the UK, namely having a customer base in the UK – mere reputation or knowledge of a brand is not enough.  It is notable that in certain other common law countries, such as Australia, the Courts take a different approach.