A recent decision of the U.K. Supreme Court has confirmed that a foreign plaintiff who brings an action for passing-off must establish that it does business with customers within the U.K. in order to succeed.
The appeal arose from a decision that we discussed in our newsletter in January 2013. Click here to read the discussion.
The appellants are members of a substantial group based in Hong Kong. Since March 2006 the appellants have provided a closed circuit Internet protocol television service in Hong Kong in association with the trademark NOWTV. By 2012 the appellants had spent substantial sums on marketing and NOWTV had become the largest paid TV operator in Hong Kong with more than 1.2 million subscribers and approximately 200 channels.
While the appellants did not directly provide their service in the U.K., a number of Chinese speaking individuals permanently or temporarily resident in the U.K. in 2012 were aware of the NOWTV service. In addition, U.K. residents could access the appellant's website and download programming. The programming was also available, free of charge, on the appellants "channel" on the Youtube website. Finally, some of the appellants programming had been made available on various international airlines which flew into the U.K.
The appellants had been giving consideration to expanding their NOWTV subscription service into the U.K. since 2009. In June 2012 the appellants launched a NOW player "app" in the U.K. on its website and at the Apple App Store.
In March 2012 the respondents announced that they intended to launch a new Internet protocol television service under the name NOWTV. The signal was to be delivered by a standard broadband connection and was launched in mid-July 2012.
The appellants brought proceedings for trademark infringement and passing off but the action was dismissed. With respect to the appellants claim for passing-off, the trial judge found that the appellants had not established the existence of goodwill in the U.K.
The appellants appealed from this decision and eventually took the matter to the U.K. Supreme Court. This issue before the Supreme Court was whether the appellants needed only to establish a reputation among a significant section of the public within the U.K. or whether, as the courts below had found, the appellants must establish a business with customers in the U.K. There was conflicting jurisprudence in the common law world concerning this issue and it was said to be a particularly significant issue in the age of global electronic communication.
Based on existing precedents in the United Kingdom the court reaffirmed that the law in that jurisdiction is that a claimant in a passing-off action must establish that it has actual goodwill in the U.K. and that such goodwill involves the presence of clients or customers in the U.K. for the products or services in question. In addition, where the claimant's business is abroad, people who are in the U.K. but who are not customers of the claimant in the U.K., will not do, even if they are customers of the claimant when they go abroad. This is consistent with applying a very territorial approach to the concept of goodwill.
Interestingly the appellants relied on a decision of the Ontario Court of Appeal. In that case the defendant relied on the position taken in English cases in an attempt to justify its attempt to secure the plaintiff's trademark in Canada. The plaintiff did not carry on business in Ontario but was well known in Ontario. The court refused to adopt the English position and concluded that the defendant was precluded from taking the plaintiff's mark in Canada.
The court said that it was nothing more than speculation to try to explain the differences between the English decisions which required business activity by the foreign plaintiff in the U.K. and Canadian and U.S. cases which did not adopt a similar approach. It was observed that perhaps in the various North American jurisdictions, the places where the plaintiffs and the defendants carried on business had substantially more in common with respect to language and other cultural features, including consumer attitudes, than do the places from which the parties in the English cases came. Having regard to the travel patterns of the population and mass advertising through television, radio and various publications, the flow of trans-border goodwill was almost inevitable in North America. The English cases involve foreign plaintiffs who were separated from England by the Atlantic Ocean or the English Channel and it is possible that this was an underlying factor in the development of the relatively "hardline" position followed in the English Cases.
It will be interesting to see what effect the decision of the U.K. Supreme Court will have in North America. While a decision is not binding, traditionally decisions of that court and its predecessor, The House of Lords, have been persuasive, particularly in Canada.
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