Starbucks (HK) Limited and another v British Sky Broadcasting Group PLC and others

A claimant in passing off must possess actual goodwill within the jurisdiction. Reputation alone is insufficient. Goodwill requires customers in the jurisdiction for the relevant goods or services, although the claimant need not maintain a local office or establishment.

People present in the jurisdiction who become customers only when abroad do not establish local goodwill. Customers may, however, obtain an overseas service by booking or purchasing through a local entity acting for the claimant. Mere accessibility of free internet content, where it promotes an overseas business and creates no local custom, amounts only to advertising. A possible exception for substantial public advertising of an imminent local launch remains open.

The appellants operated a Hong Kong IPTV service under the name NOW TV. Their closed-circuit service was unavailable in the United Kingdom, although some UK residents knew it through visits to Hong Kong, freely accessible internet content and programmes shown on international flights. The respondents later launched a UK IPTV service under the same name.

The appellants brought a passing-off claim. Arnold J dismissed it because they had no UK customers and therefore no goodwill in the jurisdiction: [2012] EWHC 3074 Ch. The Court of Appeal dismissed their appeal: [2013] EWCA Civ 1465.

The central issue was whether a significant UK reputation sufficed for passing off, or whether the claimant also required a UK business with customers for the relevant service.

1. Appeal dismissed unanimously. Lord Neuberger, with whom Lord Sumption, Lord Carnwath, Lord Toulson and Lord Hodge agreed, held that a passing-off claimant must establish actual goodwill within the jurisdiction. That requires clients or customers there for the relevant goods or services. A significant local reputation, unsupported by local custom, does not suffice.
2. Goodwill is property attached to a business. For passing-off purposes it is territorial. The court must examine whether the claimant’s business has goodwill within its own jurisdiction, although goodwill need not be divided territorially for every conceivable legal purpose. The established domestic approach was reaffirmed consistently with AG Spalding, Star Industrial, Erven Warnink and Anheuser-Busch.
3. A foreign claimant need not maintain an establishment or office in the United Kingdom. Local customers can exist where people in the jurisdiction book or purchase through a local entity, including an independent agent, and thereby acquire the right to receive the claimant’s service abroad. People who merely use the claimant’s business while abroad remain customers abroad.
4. The appellants had no UK customers. Their subscription service was available only in Hong Kong and was neither marketed nor offered in the United Kingdom. Free website, YouTube and airline content generated no payment and served only to promote the Hong Kong business. It was therefore advertising, and any reputation created by it did not constitute protectable goodwill.
5. The requirement maintained the proper balance between protection from unfair competition and freedom of competition. Copying and reputation alone do not justify an indefinite local monopoly, particularly where global communications can create awareness without any local market.
6. Trade Marks Act 1994, section 56 separately protects qualifying well-known foreign marks, thereby reducing possible harshness. The court did not decide whether that provision exhaustively defines when reputation alone receives protection.
7. The court also left open whether substantial public advertising of an actual, publicised and imminent UK launch could itself generate goodwill. Any such limited exception could not assist because the appellants’ plans were not public. Sky’s remaining respondent’s-notice issues consequently required no determination.

1. United Kingdom Supreme Court: The appeal was dismissed unanimously. The Court of Appeal’s dismissal of the passing-off appeal was upheld: [2015] UKSC 31 .
2. Court of Appeal: The appeal was dismissed because reputation without UK customers did not establish goodwill: [2013] EWCA Civ 1465 .
3. High Court: Arnold J dismissed the passing-off claim because the appellants had no customers, and therefore no protectable goodwill, in the United Kingdom: [2012] EWHC 3074 Ch.