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Starbucks v Sky -an invalid mark, a squeeze argument and an absence of passing off

1 December 2012

Starbucks (HK) Ltd & Ors v British Sky Broadcasting Group Plc & Ors [2012] EWHC 3074 (Ch) (02 November 2012)

The English High Court found a device mark NOW invalid, held that if it was valid it would have had eggshell distinctiveness and so would not have been infringed, and found no protectable goodwill arose from visitors to websites which were not directed to the UK

Legal Context

This was an action brought by the PCCW group of companies in the English High Court for trade mark infringement and passing off against Sky. Sky counterclaimed for a declaration of invalidity.

Article 7(1)(b) of the Community Trade Mark Regulation 207/2009/EC prohibits registration of marks devoid of distinctive character, and Article 7(1)(c) prohibits registration of marks that are descriptive.

Article 9(1)(b) states that a trade mark will be infringed by an identical or similar sign used for identical or similar services if there exists a likelihood of confusion on the part of the public.

Article 12 (b) provides a defence to trade mark infringement if the defendant has used descriptive indications, and if his behaviour is in accordance with honest practices in industrial or commercial matters.

Passing off protects claimants with goodwill in their goods or services from misrepresentations (intentional or otherwise) by a defendant that the defendants goods are connected with the Claimant. There has long been debate about the extent to which businesses based outside the UK can bring actions in passing off.


The Claimants are all members of a Hong Kong-based media group headed by PCCW Ltd, and had a trade mark registered in classes 9, 35, 38, 41 and 42 for the figurative word now in lower case sans serif letters with six lines arranged in a star or sun shape emanating from the central o. The mark was registered on 17 September 2008.

The Claimants did not argue that this mark had acquired distinctiveness, but did claim that they had acquired goodwill sufficient to fuel a passing off claim against Sky. In particular, PCCW relied on the following activity by its group companies:

· Provision of an internet television service called Network of the World and now between 2000 and 2002 (PCCUs service);

· provision of broadband under the name now since 2005 (UKBs service); and

· provision of internet protocol television (IPTV) called NOW BROADBAND TV and NOW TV since 2003. Until 2007, this was the world leader in IPTV, and at the time of trial more than half of the households in Hong Kong subscribed. This set top service was not available in the UK, but it was possible to view the service through YouTube, through PCCWs own websites, and as part of in-flight entertainment on aeroplanes (PCCMs service).

PCCW had planned to launch its NOW TV service in the UK. However, in March 2011, Sky began developing an internet television service called "NOW TV", which was announced in March 2012. PCCW complained about Skys use of the signs NOW TV, NOWTV.COM, and a logo incorporating the words NOW TV Powered by Sky.


The judge held that PCCWs mark was invalid. The dominant element of the mark was the word NOW, and the figurative elements added nothing. Skys evidence of considerable nominative use of the word NOW was double-edged because it showed that NOW could function as a trade mark in certain circumstances. However, the evidence of descriptive use of NOW was more compelling - a neat illustration being the question whats on Now?. The mark was therefore precluded from registration by 7(1)(c) because it would be understood as a description of the characteristics of the instant, immediate nature of the service. If the figurative elements meant that the mark did not just consist of the unregistrable word NOW, the mark was still devoid of distinctive character and therefore unregistrable by virtue of 7(1)(b). The judge emphasised that trade mark registries "should be astute to the consequence of registering descriptive marks under the cover of a figurative fig leaf of distinctiveness, and refuse registration of such marks in the first place".

Had the CTM been valid, the judge said that it could only have been valid because of the contribution to distinctive character made by the figurative elements - and thus it could only have needlepoint or eggshell distinctive character - and as the signs that Sky used were held to not contain the figurative elements of the CTM, there was no infringement.

The decision can be contrasted with that of Hasbro v 123 Nahrmittel [2011] EWHC 199 (Ch), where Mr Justice Floyd said that he did not think a squeeze argument commonly found in patent law between validity and infringement worked in relation to trade marks: "the precise basis on which a mark is originally admitted to the Register does not restrict the scope of protection when one comes to infringement, particularly as a mark may grow in strength by reason of acquired distinctiveness". This allowed the court to find that a trade mark for Play-Doh was distinctive over Play Dough, and also that the strap line the edible play dough infringed the registered mark. The cases are different in that PCCW did not claim that its mark had acquired distinctiveness; but even considering that, there are clearly differing views about whether or not squeeze arguments can be run.

Had infringement been found, the judge found that Sky would not have had a defence under 12(b). Skys use was not descriptive but was squarely as a trade mark. Further, Sky had been aware of PCCWs mark before launching their service, and had not disclosed any legal advice they had obtained in relation to the mark.

When considering passing off, the judge held that goodwill can survive after trading has ceased. On the facts, however, no continuing goodwill could be found in relation to PCCUs service. In relation to UKBs service, there was some residual goodwill, but there was no evidence of actual confusion as to trade origin. This was not itself fatal, but as the goodwill was modest, the name was not strongly distinctive, the names were slightly different, third parties had used now, and given the context of Skys use, the court did not find that any confusion was likely. Furthermore, the court cited with approval Lord Simonds comments in Office Cleaning Services (1943) 63 RPC 39 that where a trader adopts words in common use, the courts will accept that small differences in wording are sufficient to avert confusion.

In relation to PCCMs service, the judge found that it had a reputation amongst UK residents. It was not a bar that reputation was confined to the Chinese speaking community; it was not inherently a bar that the service was free; and protectable goodwill can arise as a result of promotion in advance of goods or services being made available for purchase.

However, the judge held that for protectable goodwill to arise, it is not merely enough that a website can be accessed in the UK; the website must be targeted at consumers in the UK. In this case, PCCWs primary purpose had been to promote its Hong Kong service, and accordingly, the business had goodwill in Hong Kong, but not in the UK. So UKBs service, which only had 81 active subscribers in 2012, and had no turnover since 2009, had protectable goodwill; but an IPTV service did not have protectable goodwill despite being accessible by a website that had been visited by 2,000-4,000 UK IP addresses each month, and by a YouTube channel that had 238,246 views in the UK between November 2008 and July 2012.

The judge considered that if he was wrong, and PCCW had protectable goodwill, then despite the absence of actual confusion, the identity of the names and the services meant that there would have been an actionable likelihood of confusion; and in this scenario, he did not think that the Office Cleaning Services principle helped Sky.

Practical advice

This judgment is another example of Mr. Justice Arnolds careful exegesis of trade mark and passing off law, and highlights the difficulty of bringing a passing off action without UK sales. Had the circumstances been slightly different, the case would have been an example of how to succeed in an infringement case despite an invalid trade mark.This article was co-authored by Peter Ellis and Giles Parsons and first appearted in the Journal of Intellectual Property Law & Practice

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