Starbucks (HK) Ltd and another v British Sky Broadcasting Group Plc and Others

JurisdictionEngland & Wales
JudgeLord Toulson,Lord Sumption,Lord Neuberger,Lord Hodge,Lord Carnwath
Judgment Date13 May 2015
Neutral Citation[2015] UKSC 31
Date13 May 2015
CourtSupreme Court
Starbucks (HK) Limited and another
(Appellants)
and
British Sky Broadcasting Group Plc and others
(Respondents)

[2015] UKSC 31

before

Lord Neuberger, President

Lord Sumption

Lord Carnwath

Lord Toulson

Lord Hodge

THE SUPREME COURT

Easter Term

On Appeal From: [2013] Ewca Civ 1465

Appellants

Michael Silverleaf QC Kathryn Pickard

(Instructed by Dechert LLP)

Respondents

Geoffrey Hobbs QC Iain Purvis QC Guy Hollingworth

(Instructed by King and Wood Mallesons LLP)

Heard on 25 and 26 March 2015

Lord Neuberger

( with whom Lord Sumption, Lord Carnwath, Lord Toulson and Lord Hodge agree)

1

This appeal raises the issue whether, as the appellants contend, a claimant who is seeking to maintain an action in passing off need only establish a reputation among a significant section of the public within the jurisdiction, or whether, as the courts below held, such a claimant must also establish a business with customers within the jurisdiction. It is an issue on which there is conflicting jurisprudence in the common law world, and it is of particularly acute significance in the age of global electronic communication.

The factual background
2

The claim in these proceedings relates to internet protocol television ("IPTV"), which is a way of delivering TV or video content over the internet. There are two main types of IPTV, "closed circuit" and "over the top". Closed circuit IPTV uses dedicated bandwidth on the provider's network. It requires the subscriber to have a set top box to receive the service, the signal for which is encrypted. In many respects, closed circuit IPTV services are akin to traditional cable broadcasts. However, in addition to linear television broadcasts, IPTV services typically include catch-up facilities and other forms of video-on-demand. Over the top ("OTT") IPTV involves the signal being delivered via a standard broadband connection. OTT IPTV can be viewed (with appropriate software applications) on any device with a broadband connection.

3

The appellant claimants, Starbucks (HK) Ltd and PCCW Media Ltd, are members of a substantial group based in Hong Kong headed by PCCW Ltd, and I will refer to group members compendiously as "PCCM". Since 2003, PCCM has provided a closed circuit IPTV service in Hong Kong. The service was launched under the name NOW BROADBAND TV, but in March 2006 the name was changed to NOW TV, under which it has operated ever since. By 2012, after PCCM had spent substantial sums on marketing, NOW TV had become the largest pay TV operator in Hong Kong, with around 1.2m subscribers, covering over half the households in Hong Kong. Having started with 23 channels it now has around 200, and many of the programmes are PCCM's, quite a few of them under brand names using the word NOW. Although the name of the channel has always been English, all PCCM's programmes are in Mandarin or Cantonese, but the channel also carries some English language programmes (including Sky News and Manchester United's channel, MUTV). Ninety per cent of PCCM's pay TV revenue comes from subscriptions, the balance coming from advertising.

4

People in the United Kingdom cannot receive PCCM's closed circuit service. No set top boxes for it have been supplied in the UK, no subscription has been registered to a subscriber with a UK billing address, and there is no evidence of any subscriptions having been paid for with credit or debit cards with billing addresses in the UK. Consistently with this, PCCM has never held an Ofcom licence for broadcasting in the UK. However, a number of Chinese speakers permanently or temporarily resident in the UK in 2012 were aware of the NOW TV service through exposure to it when residing in or visiting Hong Kong.

5

On the findings made by the trial judge, UK residents could also become acquainted with the NOW TV service in three other ways by 2012. First, since July 2007, the Chinese language content had been accessible free of charge via PCCM's own websites. Secondly, programmes and trailers from the NOW TV service had been available free of charge on PCCM's "channel" on the You Tube website. Thirdly, a few of PCCM's programmes from its NOW TV service had been available as videos-on-demand on various international airlines, three of which flew into the UK, but none of whose in-flight magazines made reference to NOW TV.

6

PCCM had been giving consideration to expanding its NOW TV subscription service internationally, including into the UK, since some time in 2009, when it began discussions with a potential UK partner, and those discussions had been continuing during 2012. In June 2012, PCCM had launched a NOW player "app" in the UK, both on its website and via the Apple App Store, in order to warm up the market for the launch of PCCM's NOW TV on the platform of its proposed UK partner. The app and the channels were to be targeted at the Chinese-speaking population in the UK. By October 2012, just over 2,200 people in the UK had downloaded the app.

7

Meanwhile, on 21 March 2012, the three respondent defendants, British Sky Broadcasting Group PLC, British Sky Broadcasting Ltd and Sky IP International Ltd, who are all part of the British Sky Broadcasting Group, and have been referred to throughout these proceedings as "Sky", announced that they intended to launch a new IPTV service under the name NOW TV, as an OTT service. They subsequently effected that launch in beta form in mid-July 2012.

8

The development of Sky's NOW TV service had begun with a presentation to their operating executives in late March 2011, and, after consulting an external branding organisation, Sky chose the name "Sky Movies NOW" in September 2011. However, further consideration suggested that it would be unwise to include the word "Sky" in the name of the new service, and a consumer research agency was instructed to address the naming issue. The agency recommended simply using the word "Now", and Sky decided to follow that advice, while including the phrase "Powered by Sky" in the branding.

The instant proceedings
9

On 19 April 2012, PCCM began these proceedings, seeking to prevent Sky from using the name NOW TV in connection with its OTT IPTV service in the UK, on the grounds that the use of that name amounted to passing off. (There was also a claim that it infringed a trade mark registered in the name of PCCM. That claim was dismissed by the courts below and is not pursued in this appeal.)

10

The claim came before Arnold J, and in the course of his judgment, he found that a substantial number of Chinese speakers permanently or temporarily resident in the UK were acquainted with PCCM's NOW TV service through exposure to it when residing in or visiting Hong Kong. He also found that PCCM's NOW TV service had acquired a reputation amongst members of the Chinese-speaking community in the UK, based on their exposure to it via PCCM's NOW TV "channel" on the You Tube website and PCCM's NOW TV websites (together "the websites") as well as the showing of PCCM's programmes on international flights. Arnold J held that this reputation was modest but more than de minimis.

11

However, Arnold J dismissed PCCM's claim. He rejected the argument that it was sufficient for PCCM to identify a body of people in the UK who associated the mark NOW TV with its IPTV service in Hong Kong: they were not customers in the UK, and therefore did not represent goodwill in the jurisdiction. He also considered that the mere accessibility of PCCM's material in the UK via the websites did not give rise to a protectable goodwill, stating that "the key question is whether the viewers of PCCM's programmes in the [UK] were customers for its service so as to give rise to a protectable goodwill in the UK" [2012] EWHC 3074 Ch, [2013] FSR 29, para 147. Two paragraphs later, he said that the contention that viewers in the UK of PCCM's programmes on the websites represented goodwill would, as he put it, stretch the concept of "customer" to breaking point. As he explained, if it were otherwise, hundreds of television channels worldwide would have customers, and hence protectable goodwill, in the UK, as a result of the You Tube website. In para 150 of his judgment, he concluded that the reality was that "PCCM's primary purpose in making programme content available via You Tube, its own websites and international airlines was to promote its Hong Kong business by encouraging people to subscribe in Hong Kong". Therefore, he held that PCCM's "customers were its viewers in Hong Kong, but not viewers in the UK", and so its "business had goodwill in Hong Kong but not in the UK", so that the passing off claim failed.

12

Arnold J nonetheless added in para 158 that, if he had found PCCM to have a protectable goodwill in the UK, he would have accepted that there was a likelihood that a substantial number of UK viewers who were previously familiar with PCCM's NOW TV would wrongly believe that Sky's NOW TV emanated from the same or a connected source. Arnold J gave PCCM permission to appeal against his decision on the passing off claim.

13

PCCM's appeal to the Court of Appeal was dismissed for reasons given by Sir John Mummery, with whom Patten and Pitchford LJJ agreed – [2013] EWCA Civ 1465, [2014] FSR 20. The Court of Appeal essentially agreed with Arnold J's analysis as briefly summarised in para 11 above. In the circumstances, they did not need to deal with the issues raised in Sky's respondent's notice, in which it was contended that Arnold J had erred in finding that (i) the reputation of PCCM's NOW service in the UK was more than de minimis, and (ii) internet users visiting PCCM's website could access any video content from the UK at any relevant time.

14

With the permission of this Court, PCCM now appeals against the decision of the Court of Appeal, upholding Arnold J's dismissal of its passing off claim.

The issue on this appeal
15

As Lord Oliver of...

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