Starbucks (HK) Ltd v British Sky Broadcasting Group Plc & Ors (Rev 2)

Under Article 104(1) of the CTM Regulation, a stay is the strong default where validity is already being challenged before OHIM. Special grounds are rare and must arise from factual circumstances specific to the case. Systemic delay at OHIM, procedural differences, reactive cancellation applications, pre-action conduct, routine passing off claims, related cancellation applications and general commercial uncertainty do not ordinarily qualify. Specific urgency may qualify where it is sufficiently exceptional, the claimant faces particular harm, and provisional or protective measures cannot adequately protect its position. Applying that approach, exceptional urgency justified continuation of the Starbucks proceedings, but the EMI proceedings were properly stayed because there were no definite plans for exploitation and loss was adequately compensable in damages.

These were two appeals concerning Sky’s proposed launch of an internet television service under the name NOW TV. Starbucks and EMI each brought proceedings alleging trade mark infringement and passing off, while Sky applied to OHIM to invalidate the relevant Community trade marks and sought stays under Article 104(1) of the CTM Regulation.

In the Starbucks proceedings, Arnold J refused a stay and ordered an expedited trial: (2012) EWHC 1842 (Ch). In the EMI proceedings, Deputy Judge Baldwin QC granted a stay: (2012) EWHC 1644 (Ch). The central issue was the meaning and application of special grounds for continuing infringement proceedings despite pending OHIM validity proceedings.

Etherton LJ, with Patten and Tomlinson LJJ agreeing, dismissed both appeals.

1. Article 104(1) framework. The provision is directed principally to avoiding inconsistent decisions. The presumption in favour of a stay is strong, and special grounds will be rare and exceptional. The court itself must decide the issue; agreement between the parties cannot determine it.
2. Meaning of special grounds. Special grounds have the same meaning as special reasons under Article 102 of the CTM Regulation. They must arise from factual circumstances specific to the case and must be sufficiently important and substantial to justify continuation despite the risk of inconsistent decisions. Systemic differences between OHIM and national courts, including delay, procedural rules, case-management powers and pre-action requirements, are irrelevant.
3. The relevant question is whether the infringement claim should proceed after a counterclaim or OHIM application concerning validity. The inquiry is not confined to avoiding inconsistent decisions, because OHIM cannot determine infringement and the Regulation itself contemplates some consequences from decisions made at different stages. Nevertheless, the strong policy favouring a stay remains central.
4. Specific urgency may amount to special grounds if it is sufficiently exceptional to overcome the presumption. General commercial uncertainty and the ordinary need for businesses to know their position are insufficient. The availability and adequacy of provisional or protective measures are highly relevant.
5. The reactive nature of Sky’s OHIM applications, any failure to clear the way, and compliance with the pre-action protocol did not constitute special grounds. A routine passing off claim, even with evidential overlap, was not special. Nor were the multiple related cancellation applications before OHIM.
6. In the Starbucks proceedings, Arnold J had been wrong to treat the reactive filing and passing off claim as relevant factors. Nevertheless, he was entitled to find exceptional urgency. Sky’s launch was imminent, evidence indicated likely harm to Starbucks’ goodwill and ability to exploit its mark, and Starbucks did not consider it appropriate to seek interim relief stopping the launch. The court also rejected the argument that Starbucks’ claims were too flimsy; a real prospect of success rather than a fanciful prospect was sufficient, and no detailed merits analysis was required.
7. In the EMI proceedings, the deputy judge was entitled and right to find no comparable urgency. EMI had no definite plans, investment or commitment for a NOW-branded television channel, and any loss could be compensated in damages. The stay therefore remained appropriate.

• Court of Appeal (Civil Division): Both appeals dismissed. The refusal of a stay and order for expedition in the Starbucks proceedings were upheld, as was the stay in the EMI proceedings.
• High Court, Chancery Division: Arnold J refused Sky’s stay application and ordered an expedited trial in the Starbucks proceedings: (2012) EWHC 1842 (Ch). Deputy Judge Baldwin QC granted Sky a stay in the EMI proceedings: (2012) EWHC 1644 (Ch).