Two for the price of one: Court of Appeal affirms twin "stay" decisions

"Now is the winter of our discontent", said the recently unearthed King Richard III. Now was also the bone of contention in a couple of hot little trade mark disputes, both of which this Kat has previously reported --  and today, at [2012] EWCA Civ 1201, the Court of Appeal handed down its decision in two trade mark disputes that are so closely related that they might be regarded as non-identical twins.

In the first case, EMI (IP) Ltd v British Sky Broadcasting Group plc [2012] EWHC 1644 (Ch), noted by the IPKat here, the facts were as follows. EMI, owner of the NOW Community trade mark (CTM) and the promoter of albums sold under the name NOW THAT’S WHAT I CALL MUSIC, sued Sky for trade mark infringement and passing off in relation of Sky's proposed use of the name ‘NOW TV’ in relation to its shortly-to-be-launched television service, seeking an interim injunction to stop Sky using the name NOW TV or the logo comprising those words. EMI also sought an order for an expedited trial. Sky sought a stay of the proceedings pending the outcome of an application it had made to the Office for Harmonisation in the Internal Market (OHIM) to have the NOW mark removed from the register.  John Baldwin QC, sitting as a Deputy Judge of the Chancery Division, England and Wales, refused the injunction and ordered that the infringement proceedings be stayed. In his view:
  • Sky would suffer damage if an interim injunction werre granted, since Sky would have to select a new name if they went ahead with the launch of their TV service and, having done so, they would be likely to abandon future use of NOW TV because of the cost and inconvenience of rebranding the service after its launch.

  • EMI had shown no definite plans to use their own NOW mark in connection with TV channels or TV platforms and had already agreed to permit a third party, Starbucks, to use its own NOW mark in relation to a TV service.  None of this really supported the argument that use of NOW TV by Sky would damage EMI.

  • EMI had not made out a case for expediting the trial, since it had not shown any plans to exploit the NOW mark in relation to TV channels or programmes -- and it was likely thatSky's launch of its NOW TV service would take place ahead of any trial date.

  • 4. Article 104(1) of the CTM Regulation provided that a CTM Court must grant a stay of infringement proceedings where the validity of the disputed mark was contested in proceedings before another tribunal -- unless there are special ground for not granting the stay. On the facts before the court there were no such special grounds. EMI's argument that Article 104(1) only applied to Sky's filing of an application to invalidate the NOW mark did not amount to a special ground, since the filing of an application to invalidate a trade mark may be regarded as an expected response to the bringing of trade mark infringement proceedings. Secondly, while Sky had taken no steps to clear the way for the proposed launch of their NOW TV service, despite being aware of EMI's mark, it was not necessarily practical for them to do so. Thirdly, the fact that the passing off claim would continue even if the trade mark infringement action were to be stayed was irrelevant, since EMI did not intend to rely on this ground in its application for an interim injunction. Finally, there was no greater need on these facts than in any other situation for commercial certainty.
In the second case, Starbucks (UK) Ltd v British Sky Broadcasting Group Plc & Others [2012] EWHC 1842 (Ch) (on which see "No coffee in sight, but Starbucks speeds to trial", guested by Kingsley Egbuonu here), Mr Justice Arnold in the Chancery Division, England and Wales, had a slightly different set of facts and reached an entirely different conclusion.

Starbucks -- a subsidiary of the Hong Kong company PCCW -- sued Sky in respect of the same proposed launch, on the basis that NOW TV would infringe its CTM for a figurative mark containing the word “now”, registered in relation to a range of goods and services including “telecommunications services, telecommunication of information (web pages), computer programs and data; radio and television communication services; television broadcasting services; broadcasting and transmission of radio and television programmes; cable television broadcasting; transmission of music, films, interactive programmes, videos, electronic computer games" in Class 38.

Starbucks said it had goodwill and reputation in the UK in the names NOW TV and NOW, to such an extent that Sky's use of NOW TV would amount to passing off. What's more, taking into account PCCW's commercial activity in Hong Kong, substantial goodwill and reputation had been acquired within the Chinese population in the UK. Starbucks also submitted that, between 2000 and 2002, PCCW offered an internet television service in English to consumers across the globe through the domain name and that, while its use of this name had ceased some time ago, goodwill had not disappeared. Finally, said Starbucks, another company in the PCCW group, UK Broadband Limited, had been using the name NOW and the NOW mark under licence since 2004 in relation to the provision of broadband services, these being services which were sufficiently similar enough to an internet television service for any goodwill accumulated by it to be relevant to a passing off action.

Receiving Starbucks' letter before action, Sky applied to OHIM to invalidate Starbucks' NOW mark as being devoid of distinctive character and/or descriptive in relation to the services for which it was registered. According to Sky, even if the CTM was valid, the scope of protection of that mark would be so narrow that it would not be infringed by the signs which Sky planned to  to use, because there was no likelihood that any confusion would occur through their use of the name NOW TV. Sky also denied passing off.

Starbucks then sought an interim injunction, should a stay be granted, and an application for an order for an expedited trial. Subsequently, Sky applied to stay the infringement proceedings brought.  Arnold J, ordering an expedited trial, refused Sky's application for a stay. In his view:
  • Starbucks had established special grounds, as required under Article 104(1) of the CTM Regulation, to support its submission that a stay of infringement proceedings should not be granted. Sky only sought a stay after it had been issued with a letter before action. If Starbucks hadn't sent a letter before action but simply issued proceedings;

  • If the stay were granted, it might take years to resolve the invalidity proceedings before OHIM.

  • It would not be right to stay the passing off claim -- which was not affected by Article 104(1).
The Court of Appeal (Lords Justices Etherton, Patten and Tomlinson) today dismissed both appeals. This Kat has not yet had the chance to read the judgment and suspects that either he or another Kat might revert to it. In the meantime, he has noted the comments of Etherton LJ, for the Court, at [114] to [118] of the Court in Starbucks:
"114. It follows from what I have said above that I agree with some of Sky's criticisms of the Judge's judgment. I do not agree with the Judge that the reactive nature of Sky's applications to OHIM is of any relevance to the determination of the stay application. 
115. Nor do I agree with the Judge that the fact there is a passing off claim is of any relevance. It is commonplace that infringement claims are accompanied by passing off claims. That is not a special feature of these proceedings distinguishing them from others for the purpose of compromising the strong policy considerations underlying Article 104(1) and overcoming the high bar for establishing special grounds. 
116. Furthermore, the Judge did not approach the resolution of the issue by a structured approach which expressly set Starbucks' arguments against the strong policy considerations underlying Article 104(1) and the strong presumption in favour of a stay the special grounds relied upon. 
116. On the other hand, in fairness to the Judge, it must be remembered that he did not have the benefit of (because he was not shown) the illuminating judgment of Lewison J in Guccio Gucci v Shipton & Heanage Ltd. Nor did he have the advantage of the extensive oral argument by three leading counsel that we have had. 
117. Despite all those matters, I consider that the appeal should be dismissed on the ground that the Judge was entitled to take the view that there were exceptional circumstances of urgency. Sky had plans to launch its new service very shortly, and it was in its interests to be able to do so. It did in fact do so on 17 July. Starbucks' evidence was that the promotion of that service would soon undermine its goodwill and would undermine its ability to exploit its registered mark and undermine its plans to expand its imminent rival service later this year. Nevertheless, as Starbucks itself considered, it was not a case in which it would have been appropriate to delay Sky's launch by interim relief. In that respect, the situation was unusual. In the usual case, the claimant's interests can be adequately protected by provisional and protective measures".
Two for the price of one: Court of Appeal affirms twin "stay" decisions Two for the price of one: Court of Appeal affirms twin "stay" decisions Reviewed by Jeremy on Thursday, September 13, 2012 Rating: 5

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