High Court rejects Hong Kong companies' claims regarding use of 'NOW TV' by Sky

In Starbucks (HK) Ltd v British Sky Broadcasting Group Plc ([2012] EWHC 3074 (Ch), November 2 2012), the High Court of England and Wales has rejected claims of trademark infringement and passing off in connection with the use of the name NOW TV.

The court held that the claimants' Community trademark (CTM) was invalid as it was descriptive. The court went on to conclude that, even if it had been valid, there was no infringement, because the distinctive figurative element was not used and there was no likelihood of confusion. The passing-off claim failed due to insufficient evidence of the claimants' goodwill in the United Kingdom and evidence of the actual confusion or likelihood of confusion among a substantial number of customers.

The claimants were members of a Hong Kong group of broadcasting, media and telecommunications companies (PCCW Media Limited). The defendants were members of a UK group of broadcasting and telecommunications companies (Sky).

PCCW owned the following figurative CTM:

The CTM was registered in a number of classes of the Nice Classification, including Class 38 for telecommunication services and broadcasting.

The dispute arose when Sky launched a new online television service using the signs NOW TV, NOWTV.com and the following logo:

PCCW claimed that Sky's use constituted trademark infringement and passing off. Sky brought a counterclaim stating that PCCW's CTM was invalid, as it was descriptive and devoid of any distinctive character.

The dispute mainly related to the following provisions of the Community Trademark Regulation (207/2009):

• Article 7(1)(b), which states that a trademark cannot be registered if it is devoid of any distinctive character;
• Article 7(1)(c), which states that a trademark cannot be registered if it consists exclusively of signs or indications which may serve, in trade, to designate characteristics of the goods or service, such as their kind, quality, quantity, intended purpose, value and geographical origin;
• Article 9(1)(b), which says that a trademark proprietor is entitled to prevent third parties from using, in the course of trade, without his consent, any identical or similar sign in relation to identical or similar goods or services, where such a use gives rise to a likelihood of confusion;
• Article 12(b), which states that the proprietor of a CTM cannot stop a third party from using, in the course of trade, signs concerning the characteristics of good or services; and
• Article 52(1)(a), which establishes that a CTM shall be declared invalid where it has been registered contrary to the provisions of Article 7 of the regulation.

The passing-off claim was based on the UK case law and consists of the following elements:

• goodwill acquired by the claimant in the market;
• a misrepresentation to customers as to origin of goods/services; and
• damage suffered by the claimant resulting from this misrepresentation.

These principles were affirmed by the House of Lords in Reckitt & Colman Products Ltd v Borden Inc ([1990] RPC 341).

With regard to the validity of the CTM, the High Court analysed the scope of Article 7(1)(b) and Article 7(1)(c), and confirmed that a sign may be devoid of any distinctive character even if it is not descriptive. The court stressed that these provisions overlap, as Article 7(1)(b) covers all the circumstances when the sign is not capable of distinguishing goods/services, including the situation where the sign is descriptive.

The court held that PCCW's CTM was invalid by virtue of Article 7(1)(c) of the regulation due to its descriptive character. The court explained that the dominant element of the CTM, the word 'now', "would be understood by the average consumer as a description of a characteristic of the service, namely the instant, immediate nature of the service", and "figurative elements of the CTM does not affect this conclusion" (see Paragraph 116 of the High Court decision). The court also went on to say that, even if the sign was not exclusively descriptive because it contained a figurative element, it was devoid of any distinctive character, and so was unregistrable under Article 7(1)(b).

The High Court also considered what the situation would have been had PCCW's CTM been valid. It came to the conclusion that there would have been no infringement. The court reasoned that the signs used by PCCW and Sky contained only one common element: the word 'now'; no figurative elements were used by Sky, and there was insufficient evidence of a likelihood of confusion as required by Article 9(1)(b).

In addition, the court considered whether the descriptive use defence (Article 12(b) of the regulation) would have applied had infringement been established. The court concluded that Sky's use of the sign was as a trademark for its services, rather than purely descriptive use and, therefore, this defence would not be applied.

With regard to passing off, the High Court held that not all the elements for a passing-off action to succeed were presented - in particular, evidence of the claimants' goodwill in the United Kingdom and of the actual confusion/likelihood of confusion of a substantial number of customers. As a consequence, the court rejected the passing-off claim.

This first instance decision shows the difficulties in relying on a trademark that is largely or exclusively descriptive, or otherwise devoid of any distinctive character (Articles 7(1)(b) and (c) of the regulation). It also demonstrates that a passing-off claim cannot be successful without strong evidence of all elements of the tort. It is not yet clear whether the claimants intend to appeal the decision.

Mark Lubbock, Ashurst LLP, London