Second success for Sky as the Supreme Court rules Sky’s use of “NOW TV” is not ‘passing off’

An appeal brought by the Hong Kong based PCCW Group against Sky for passing off was dismissed by the Supreme Court (“the Court”) on 13 May 2015.

Interestingly, this is the first ‘passing off’ case heard by the highest court of England since the iconic Jif Lemon case in 1990.

The PCCW Group (referred to in the judgment as “PCCM”) has operated the internet television service known as “NOW TV” in Hong Kong since March 2006.  The service is not available in the UK but a number of Chinese speaking residents (both permanent and temporary) were aware of the NOW TV service and the Court considered it was possible for UK residents to be aware of it via You Tube or PCCM’s  own websites.

In March 2012 British Sky Broadcasting Group (“Sky'”) announced its intention to launch a new internet based television service ‘NOW TV’. Shortly after this announcement PCCM issued proceedings against Sky on the basis that its use of “NOW TV” amounted to passing off.

The Court affirmed the earlier decisions at first instance and the Court of Appeal. The Court considered that PCCM did not have actual goodwill in the jurisdiction. The existence of such goodwill is a key ingredient in the context of a passing off action. Mere ‘reputation’ was held to be insufficient.

The Court considered both the importance of protection from unfair competition and the public interest in free competition in making its decision. Lord Neuberger commented:

“In my view, a claimant who has simply obtained a reputation for its mark in this jurisdiction in respect of his products or services outside this jurisdiction has not done enough to justify granting him an effective monopoly in respect of that mark within the jurisdiction.”

The Court held that PCCM could not make out a case of passing off in this instance as PCCM’s business was based in Hong Kong and the availability of NOW TV service via websites in the UK was intended to promote the business in Hong Kong only. Whilst PCCM had developed a small reputation in the UK, no goodwill had attached to PCCM’s NOW TV service in the UK as there were no UK customers.

For traders, the message from the Court is that the traditional approach continues to apply. The English Courts will not protect traders who do not enjoy custom in the jurisdiction who are seeking to restrain their competitors by reference to passing off. Given the reach now afforded through the internet, the Court’s view is that ‘reputation’ can easily be acquired and to allow this to form the basis of a passing off claim would tip the balance in favour of unfair competition. Traders therefore still need to demonstrate sufficient goodwill to acquire this form of protection and this should be carefully considered when bringing or defending passing off claims.

Read the case in full