IP and IT Law Bytes: Trade marks: Validity and passing off

10 February 2014

Summary

The Court of Appeal has held that the figurative “now” Community trade mark (CTM) for an internet television service in Hong Kong was descriptive and therefore invalid, and that it had no protectable goodwill in the UK to bring a passing off action against the launch of “NOW TV”.

Background. The CTM Regulation (207/2009/EC) prohibits the registration of trade marks that, among other things:

  • Are devoid of any distinctive character (Article 7(1)(b)) (Article 7(1)(b)).
  • Consist exclusively of signs or indications that may serve, in trade, to designate the kind, quality, quantity, intended purpose, or geographical origin of the goods or services covered by the trade mark application or registration (Article 7(1)(c)) (Article 7(1)(c)).

A CTM will be declared invalid if it was registered in breach of any of the grounds for non-registrability (Article 51(1)(a), CTM Regulation).

The elements of the tort of passing off are:

  • Goodwill or reputation attached to the relevant goods or services.
  • A misrepresentation by the defendant to the public, leading or likely to lead the public to believe that its goods or services are those of the claimant.
  • Resulting damage to the claimant (Reckitt & Coleman Products Ltd v Borden Inc [1990] RPC 341).

Facts

S owned a CTM comprising the word "now". B announced that it intended to launch a new television service under the name "NOW" TV. S brought actions for trade mark infringement and passing off.

The High Court held that the CTM was invalid under Article 7(1)(b) as it was devoid of any distinctive character, and it was also invalid under Article 7(1)(c) as it would be understood by the hypothetical average consumer to describe the instant and immediate character of the service ([2012] EWHC 3074 (Ch)). The High Court also held that S had not generated a protectable goodwill in the UK for a business carried on by it under the name “NOW TV”  and so the passing-off claim failed. S appealed.

Decision

The court dismissed the appeal, observing that, although B’s competitive conduct might be considered unattractive, it was not necessarily unlawful.

The court dismissed the trade mark appeal for the following reasons:

  • NOW was devoid of distinctive character that would serve to identify S’s service from that offered by other undertakings. It was irrelevant that other uses of the word “now” were distinctive of other services or products.
  • S had chosen as its trade mark a commonplace, ordinary English word when it could have chosen or invented another to designate its service.
  • It must have been obvious to S that it was running the risk of invalidity as the word designated a characteristic of that service; that is, the essential appeal of S’s service was that programmes of choice were available on demand in an instant. NOW would be understood by the hypothetical average consumer as describing this characteristic.

The main issue in the passing-off claim was whether S had customers in the UK at the relevant date. The universal accessibility of the internet, enabling access to be gained in the UK to programmes emanating from Hong Kong, was not a sufficiently close market link to establish an identifiable goodwill with a customer base in the UK. It was necessary to have some kind of connection with customers in the market with a view to transacting business and repeat business with them.

The preparatory activities in the UK were also insufficient to establish sufficient goodwill at the relevant date. It was not enough to have planned to launch NOW TV in the UK; it was necessary either to have, or promote and publicise or advertise, a customer base in the UK to establish goodwill protectable in law.

Comment

The decisive factor in the trade mark infringement claim was that the CTM would be understood by the average consumer as a description of the characteristics of the instant and immediate nature of the claimants’ online television service, as contrasted with an ordinary television service broadcasting scheduled programmes at pre-set times.

The court’s decision on passing-off illustrates the difficulty in demonstrating that there is a protectable goodwill in the UK when a business is expanding from a base established in another country. However, the court said that goodwill could, in principle, be established in the supply of a service, even where it was supplied free of charge or profit, and even though it was only supplied to a foreign-speaking ethnic minority section of the public (here, expatriate Chinese speakers resident in the UK). The court also said that a protectable goodwill could arise as a result of advertising and promotion in advance of a launch of new goods or services, although this had not been established on the facts by the relevant date.

Case: Starbucks (HK) Ltd and others v British Sky Broadcasting Group plc and others [2013] EWCA Civ 1465.

First published in the March 2014 issue of PLC Magazine and reproduced with the kind permission of the publishers. Subscription enquiries 020 7202 1200.