Not NOW -- and maybe never!

Now, now .... The Court of Appeal for England and Wales came up with a decision that was as predictable as the fact that the trial judge's ruling was going to be appealed in Starbucks (HK) Ltd & Another v British Sky Broadcasting Group Plc & Others [2013] EWCA Civ 1465. Here, last week, Lords Justices Patten and Pitchford LJ, together with Sir John Mummery, had no difficulty in upholding the ruling of Mr Justice Arnold, almost exactly one year earlier, that Starbucks' figurativeCommunity trade mark for the word NOW (illustrated, right) was invalid and that Sky's use of its trade mark (below, left) would not only have not infringed it if it had been valid but would not in any case have constituted an act of passing off.

This dispute has been the subject of some pretty vigorous litigation so far.  To remind readers, it all started in June 2012 when Starbucks sought and were granted an expedited trial and Sky wanted a stay pending an OHIM decision on Sky's invalidity application (on which see Kingsley Egbuonu's guest Katpost here).  In September the Court of Appeal dismissed Sky's appeal (noted by this Kat here) and, a couple of months later, the UK Supreme Court refused Sky leave to appeal (see Katnote here), adding that it was necessary to refer any questions to the Court of Justice of the European Union for a preliminary ruling before this dispute could be decided.  So far, from Starbucks' perspective, so good -- a three-nil lead over one of the most enthusiastic and diligent litigation-oriented businesses on the planet. However, the wheel of fortune was about to turn.  In an acute case of "be careful what you ask for", Starbucks' expedited trial went exceedingly pear-shaped when it lost its claim and its Community trade mark (on which see this Kat's note here).  Starbucks' appeal has now been roundly dismissed.

So what actually happened before their Lordships?  Nothing to do with coffee, for a start.  This Starbucks -- Starbucks (HK) Ltd  -- enjoyed goodwill in the NOW internet television service, which it operated in Hong Kong; the company had also registered its Community trade mark since it intended to enter the UK broadcasting market.  After Sky announced that it was intending to launch a new, stand-alone internet protocol television service in the UK under the word mark NOW TV, Starbucks (HK) maintained that its Community trade mark was about to be infringed and that Sky was indulging in some rather unsportsmanlike passing off. Sky counterclaimed for invalidity. On appeal, Starbucks (HK) argued that Arnold J was wrong to find that its mark was invalid and that it had not generated any protectable goodwill in the UK on the basis that, although its goodwill originated from subscribers in Hong Kong, it had spread geographically to Chinese-speaking residents in England.

The Court of Appeal, for whom Sir John Mummery delivered the judgment was not impressed and dismissed the appeal. In their view:

* So far as the figurative mark NOW was concerned, this word -- which was the only meaningful feature of the mark since the non-verbal elements were pretty nondescript -- was capable of being descriptively used of a characteristic of the service [the fact that it is 'instant' and 'immediate', though aren't these characteristics so capable of describing so many services that most people would never think of using them as trade marks, which in a weird and wonderful way would make them quite distinctive, thinks the mischievous Merpel] and thus could not be validly registered.

* With regard to passing off, while common law did not recognise any property as such in a word, mark or sign, it did recognise that goodwill to which the name or mark had become attached in trade might be entitled to protection. However, In proceedings brought in England and Wales, a claimant had to establish by evidence the existence of the claimed goodwill within the jurisdiction of the court: Hong Kong was a bit far away for these purposes and the use of the internet to access the programmes of a named service on a website satisfied neither the basic requirements of being a customer nor of forming part of a goodwill of a business.

* It was possible to establish goodwill by advertising and by advance promotional activities.  However, on the facts, Starbucks (UK)'s preparatory activities in the UK were insufficient to establish any goodwill in the UK for the service to which the word NOW was attached.

The IPKat urges anyone considering an appeal, very possibly an unmeritorious and wasteful one, to consider carefully the words of the Court of Appeal regarding the three preliminary factors listed by the judges and which are relevant not only to trade mark infringement and passing off but, mutatis mutandis, in many other types of IP dispute:
  1. The first is commercial context. This dispute is between substantial undertakings in direct competition with one another in the very thick of the cut and thrust of the mass media world. Competitors of every kind can and sometimes do stoop to conquer. Competitive conduct is not in itself actionable by a business rival, even if it seems extreme and results in market spoiling and the rival's loss of potentially valuable business advantages and opportunities. The competitor's antics may be unanticipated, even unattractive, yet lawful [Says this Kat: these words resonate with the observation of Jacob J, as he then was, in Hodgkinson & Corby Ltd v Wards Mobility Services Ltd (No.1) [1995] F.S.R. 169 that the law essentially lets a business do what it wants in a competitive environment, unless there is a specific rule to prevent it].

  2. The second factor is legal context. The legal dispute is not about what is fair or unfair play in competition. It is about determining the proper scope of the exclusive rights relied on as recognised and defined by law: the exclusive rights conferred by the registration of a CTM under the CTM Regulation, and the extent of a business goodwill for which exclusivity is claimed on the basis of the sole use of a name or mark as indicating a particular service supplied in a particular market. In their very nature exclusive rights are analogous to property rights in things generally and call for careful definition. It is necessary for a monopoly-like right to be identified with a reasonable degree of precision. Regard must be had to the pervasive strands of permanence, stability and continuity in what is claimed as exclusive. Only then can the right claimed exhibit the characteristics of enforceability against infringers, assignable value and exploitation by dealings that give exclusivity its meaning and substance. The law to be interpreted and applied in the overall context of those two general factors is that contained in the CTM Regulation, as construed in Luxembourg, and the principles of the law of passing off, as developed in the cases.

  3. Then there is the appeal factor. At the end of some appeals this court is left with the impression that the losing party really wants this court to try the case all over again on paper. That is not the function of this court. This court is only allowed to interfere with the decision of Arnold J if it is shown to be wrong. That may be so in consequence of a self-misdirection about what the law is or of a misapplication of law to the facts. This trial judge heard the whole case which was brought in the specialist jurisdiction in which he usually sits and uses his expertise. This court should respect his assessments of the overall situation and of the discrete issues, unless it is demonstrated how and why they are wrong. ... this is not, at its core, an appeal on fact: it is about how the judge applied the law to the facts found by him, how he made his assessments and reached his conclusions overall.
It's now or never, here
Not now, here
Not now Bernard, here
Not NOW -- and maybe never! Not NOW -- and maybe never! Reviewed by Jeremy on Tuesday, November 19, 2013 Rating: 5

1 comment:

  1. I don't disagree with the IPKat's comments about 'unmeritorious and wasteful' appeals. However in HGS v Lilly, the core issues of patentability went up the Supreme Court which reversed the High Court and Court of Appeal decisions on it, and therefore the entire case be redecided on appeal in practice.


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