Sky falls in on Crane and Reynolds

Sky falls in on Crane and Reynolds

British Sky Broadcasting Group plc and others v Sky Home Services Ltd and others [2006] EWHC 3165 (Ch) is a decision of Mr Justice Briggs last Friday, 8 December. The IPKat hasn't found it on BAILII yet, but it has been noted on LexisNexis Butterworths' subscription-only service.

BSB Group was the holding company for the Sky group of companies, the other claimants being a selection of its subsidiaries. Collectively, the group operated the Sky digital satellite broadcasting platform, the Sky television channels (broadcast by satellite, cable and via mobile phone networks) and also provided related ancillary products and services. One of Sky's ancillary services was its Sky Repair Protection Plan - a support scheme for an extended warranty contract for satellite broadcast reception equipment. Sky, in offering these services, used the terms SKYCARE, SKY PLAN and SKY REPAIR PROTECTION PLAN.

There were two groups of defendants: Crane and Reynolds. Sky alleged that Crane and Reynolds were connected and that they were passing off their own extended warranty contracts as those offered or supported by Sky. It was claimed that Crane and Reynolds did this (i) by using company names that icluded the word "Sky" or were otherwise confusingly similar to their own trade names, (ii) through the misleading form and content of their marketing materials and (iii) through misleading conduct on the part of their large telesales teams. Crane and Reynolds initially denied the allegations and asserted that they shared no common design or joint liability. However, by the time submissions had closed, passing off could not be realistically supported and the issue had refined itself into one of the extent to which passing off had occurred.

According to Sky, passing off was both the intended and achieved objective of the two sets of defendants' marketing campaign. The latter contended that, even if everything Sky said or sought to infer from statistics was right, the level of complaints was so low as a proportion of the their sale communications that passing off could not be regarded as more than sporadic, amounting to not more than 0.1% of Crane's and Reynolds' communications.

Left: Amazing Sky #21 (part of Two Feet In's great collection of sky-pics)

Briggs J ruled in favour of Sky as follows:

* Where the existence of a de facto monopoly in services gave rise to the likelihood that the arrival on the market of a competing or related product would confuse the relevant section of the public, there was an increased risk that the competitor's marketing methods would cause or contribute to that confusion by an implied misrepresentation in circumstances where, if no such monopoly existed, the same method might not have done.

* In such circumstances the competitor was not subjected to a free-standing duty to distinguish his services from having any connection with the monopolist, but only to take such care as would prevent his chosen marketing method from conveying any misrepresentation to the effect that there was such a connection.

* Separate branding might or might not achieve that result, the adequacy of the steps taken by the competitor to avoid implied misrepresentation being a question of fact.

* When a trader who had made no misrepresentation to his intended customer realised from something the customer said or did that the customer was under a self-induced misapprehension that the trader was, or was connected with, the earlier monopolist and did nothing to correct the customer's mistaken belief, that behaviour constituted misrepresentation by conduct.

* There was ample evidence that customers had, during a call from a member of Reynolds' sales staff, said things that showed they thought the caller was from, or connected with, Sky, the sales agent then clinching a deal without rectifying the customer's misapprehension. Selling a warranty to a customer who had made it clear he thought he was dealing with Sky constituted misrepresentation by conduct if, as here, the warranty came from a wholly independent and non-approved source and the seller did nothing to correct the customer's mistaken belief.

The IPKat approves of Briggs J's warning about the problem facing whoever comes second into a basically monopolistic market: we've seen the same phenomenon in the Jif Lemon case and in Kimberly-Clark v Fort Sterling [1997] FSR 877, in that consumers are more easily led to believe that a new player is connected with the old than if there had been no dominant player in the first place. Merpel says, I don't recall the Gowers Review suggesting any practical ways of tidying up passing off, which is one of the messiest and most expensive ways of protecting intellectual property.