17/01/2014
The NOW case involves a trade mark dispute between Starbucks (HK) Ltd (not the coffee chain) and British Sky Broadcasting Group, who both wanted to use the trade mark “NOW” in relation to television subscription or broadcasting services.
The marks in question were as follows.
and 
Starbucks (HK) Ltd’s mark British Sky Broadcasting Group’s mark
Summary & Comment
The Starbucks mark was held to be invalid and Sky’s use of the mark would not have infringed the registration even if it had been valid. Sky’s use of NOW TV also would not have constituted an act of passing off either.
In his decision, Mr Justice Arnold commented that Starbucks only managed to obtain a registration for NOW because it included ‘figleaf’ figurative elements and he took issue with the fact that Starbucks tried to enforce the registration against a sign which did not include the same or similar figurative elements. Arnold J commented that this was ‘an entirely foreseeable consequence of permitting registration of the CTM. Trade mark registries should be astute to this consequence of registering descriptive marks under the cover of a figurative figleaf of distinctiveness, and refuse registration of such marks in the first place’.
A word of warning then to those who use slight stylisation or discreet figurative elements in order to register an essentially descriptive or non-distinctive word (for the goods and services in question) as a trade mark. It is relatively well known that it is much easier get a descriptive or non-distinctive mark on the register if one adds a figurative element to the mark. This case suggests that, at least in the UK, judges are not blind to this practice and will make decisions accordingly. Therefore, a ‘figleaf’ registration may not be as enforceable as one would hope, unless, of course, the alleged infringer is using the same or similar figurative elements to those covered by the registration.
The Dispute
This dispute began in June 2012 when Starbucks learnt that Sky intended to launch NOW TV service. Starbucks believed that it had goodwill in the NOW internet television service, which it operated in Hong Kong and had a CTM registration for on the basis that it intended to enter the UK market. In response to receiving a letter before action from Starbucks citing trade mark infringement and passing off, Sky applied to OHIM to invalidate Starbucks’ CTM registration for the mark .
Starbucks applied for an expedited trial of the claims for trade mark infringement and passing off and Sky counterclaimed by requesting a stay of the proceedings until OHIM had reached a decision with regards to their invalidity action.
Starbucks was granted an expedited trial some of the reasons being that:
- Sky had committed substantial resources to launching the NOW TV service and that after the launch Starbucks’ goodwill would be engulfed by Sky’s and the launch would undermine Starbucks’ plans to launch its imminent rival services in the UK later that year;
- Even if Starbucks’ trade mark registration was declared valid, it would become commercially worthless because it would become inherently associated with Sky and;
- Sky was a very large entity with significant resources to be able to prepare for a trial in a matter of months.
Sky appealed the decision not to grant a stay of the proceedings. Sky’s appeal was dismissed on the ground that the judge was entitled to take the view that there were exceptional circumstances of urgency – that Sky had plans to launch its new service very shortly, as it did indeed do so on 17 July.
Sky then applied for leave to appeal to the Supreme Court. This application was refused, one of the reasons being that appealing to the Supreme Court would take over a year which would undermine the request for an expedited trial. In appealing to the Supreme Court Sky would achieve the effect of a stay even if it eventually lost the appeal to the Supreme Court.
So then, the time came for the expedited trial. Unfortunately for Starbucks, despite winning the first three ’rounds’, they lost their claim and their Community Trade Mark Registration.
Mr Justice Arnold, who was the judge in the case, held that the registration for was invalid and even if it had been valid, Sky would not have infringed it. Starbucks’ claim for passing off also failed. The reasons for the decision included the following;
- The mark was precluded from registration in relation to the services in issue (which were basically television broadcasting services) because 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. The figurative elements of the CTM did not affect this conclusion
- In the alternative, if the inclusion of the figurative elements meant that the CTM did not consist exclusively of the unregistrable word NOW, the CTM was devoid of distinctive character and thus unregistrable.
- Even if the registration was valid, the marks used by Sky were not similar to the Starbucks mark because none of Sky’s marks included anything like the figurative elements of the Starbucks mark. There was, therefore, no likelihood of confusion.
Mr Justice Arnold also commented that “it appears to me that [Starbucks] only succeeded in obtaining registration of the CTM because it included figurative elements. Yet [Starbucks] is seeking to enforce the CTM against signs which do not include the figurative elements or anything like them. That was an entirely foreseeable consequence of permitting registration of the CTM. Trade mark registries should be astute to this consequence of registering descriptive marks under the cover of a figurative figleaf of distinctiveness, and refuse registration of such marks in the first place”.
Starbucks appealed the decision and argued that Arnold J was wrong to find that the mark was invalid and that it had not generated any protectable goodwill in the UK because although its goodwill originated from subscribers in Hong Kong, they argued that it had spread geographically to Chinese-speaking residents in England.
The Court of Appeal dismissed the appeal and stated that so far as the figurative mark NOW was concerned, the word NOW was capable of being descriptive of a characteristic of the service and thus the mark could not be validly registered.
With regards to a passing off claim brought in England and Wales, a claimant had to establish by evidence the existence of the claimed goodwill within the jurisdiction of the court i.e. England and Wales. It was not enough that the claimants had undoubtedly acquired a goodwill somewhere else. Furthermore, whilst the court agreed that goodwill could be established in the supply of service and to establish a goodwill in a service by advertising it and by advance promotional activities, on the facts of the case, Starbucks’ preparatory activities in this country were insufficient to establish that they had generated any goodwill in the UK for the TV subscription service supplied by them.
The Court of Appeal also gave a word of warning to those losing parties who try use the appeal system to get a ‘second bite of the cherry’ by stating that “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.”
This article is for general information only. Its content is not a statement of the law on any subject and does not constitute advice. Please contact Reddie & Grose LLP for advice before taking before any action in reliance on it.
