The UK Supreme Court hasdeclined an invitation todevelop the tort of passingoff to reflect the changingnature of globaltelecommunications and commerce.

In Starbucks (HK) Limited and another vBritish Sky Broadcasting Group PLC andother [2015] UKSC 31, a major Hong Kongmedia and telecoms group, PCCM, operatedunder license a successful internet TV serviceto subscribers in Hong Kong. “NOW TV” hadno subscribers in the UK, although it had areputation among the Chinese speakingcommunity there, and had visitors tocontent on its website and YouTube channel.

The defendant, Sky, meanwhile launchedan internet TV service in the UK also underthe name “NOW TV”. Litigation inevitablyensued, resulting in PCCM’s CommunityTrade Mark (CTM) being held to be invalidand not infringed by Sky’s use of the name.PCCM’s passing off claim was also dismissed,and PCCM appealed.

The Court of Appeal (CoA) upheld thefirst instance decision. In respect of thepassing off claim, this was on the basis,inter alia, that while PCCM’s NOW TV servicehad a certain level of reputation in the UK,it had no UK subscribers to its set-top boxservice and that “just using the internet toaccess the programmes of a named serviceon a website does not satisfy the basicrequirements of being a customer orforming part of a goodwill of a business”.

PCCM appealed to the Supreme Court onlyagainst the decision dismissing the passingoff claim. In its submissions, PCCM referredto judgments in the UK and other commonlaw jurisdictions, notably the Australiancase of ConAgra Inc v McCain Foods (Aust)Pty Ltd (1992). There it was said that “the’hard line’ cases in England conflict with theneeds of contemporary business andinternational commerce”. Reference was alsomade to Sheraton Corporation of America vSheraton Motels Ltd [1964] RPC 202 wherethe existence of customers makingreservations in overseas hotels through alocal office or booking agents was sufficientto establish an arguable case that it hadgoodwill, justifying the grant of aninterlocutory injunction.

The Supreme Court upheld the CoA’sdecision and reaffirmed the long line ofEnglish case law that reputation alone isnot sufficient to establish a claim inpassing off. A claimant must show that ithas customers within the jurisdiction of thecourt who, by booking or purchasing froman entity in that country, obtained theright to receive the claimant’s serviceabroad. The launch of a substantialadvertising campaign could give rise to agoodwill, but PCCM’s planned launch in theUK was not sufficiently advanced.

The case highlights the tension betweenthe traditional common law view ofgoodwill being a territorial or property rightand the impact of globaltelecommunications on commerce. AlthoughPCCM’s infringement action failed on thefacts, such an action is generally easier toestablish, less costly and does not requireproof of goodwill. Indian businesses shouldconsider registration of a UK trade mark orCTM to secure these advantages.