The month of May has seen a ray of sunshine for Sky in the courts: firstly, the EU General Court has upheld Sky’s opposition of Skype community trade mark applications (CTMs) on appeal; secondly, in the Supreme Court in London, it has successfully defended an appeal in a passing off claim relating to the use of “NOW TV” for its internet television service.
Sky and Skype
When you make an application to register a CTM (or a UK trade mark), there are various grounds for registration to be refused. There are the absolute grounds, for example, where the mark lacks any distinctiveness or is purely descriptive of the goods and services your application seeks to cover. There are also the relative grounds, which allow the owner of an earlier trade mark to oppose registration of your mark in certain circumstances.
In 2004 and 2005, Skype applied to register three Community Trade Marks (CTMs), two for the word “Skype” and one for its logo featuring that word, covering various goods and services over several classes.
Sky opposed Skype’s applications. The relative ground it asserted was that it had an earlier CTM registration for the word “Sky”, “Skype” being very similar, for identical goods and services to those Skype were seeking registration for. As a result of that similarity and identity, there was a likelihood of confusion on the part of the public. The Office for Harmonisation of the Internal Market (OHIM) upheld Sky’s opposition and Skype was refused registration.
Skype appealed to OHIM but was unsuccessful. A Board of Appeal found that the services covered by the marks were identical and that there was an average degree of visual, aural and conceptual similarity between the marks at issue. The Sky brand was found to have a high degree of distinctiveness in the UK in respect of the telecommunication and online services in class 38 and therefore there was likelihood of confusion.
Microsoft, having bought Skype for $8.5billion, appealed to the EU General Court, who upheld the earlier decisions. It was argued that any similarities between the “Skype” marks and “Sky” were counteracted by “Skype” having acquired a secondary meaning for the goods and services for which registration was sought. However, it was held that:
- Any “secondary meaning” was merely distinctiveness arising out of use;
- If “Skype” had become synonymous with its services (which, you might think, it has!), it would be a descriptive mark and not registrable;
- In any case, only recognition of “Sky” as the earlier mark should be taken into account when assessing a likelihood of confusion.
Skype also argued that “Sky” and “Skype” had peacefully co-existed and therefore that there was no likelihood of confusion. This was rejected as when it made its first application in 2004, “Skype” had only been used for 22 months for services that did not form part of Sky’s core offering. Further, Sky not suing for infringement did not mean that it lacked belief in a likelihood of confusion.
Microsoft has indicated it will appeal to the European Court of Justice so the war is not yet over. The decision only prevents it from registering the “Skype” marks, not from using them. In theory, Sky could pursue it for a licensing fee or to block use of “Skype” altogether.
Skype Ultd v OHIM, Cases T-183/13, T-184/13 and T-423/12, 5 May 2015
NOW TV
Now TV is a paid subscription internet protocol television (IPTV) service in Hong Kong, operated by a group of companies headed by PCCM Ltd since 2006. PCCM claimed it was known to a number of UK residents who were able to watch some programmes over the internet, for example on YouTube. No revenue was generated in the UK, however, as you cannot subscribe directly from the UK and there was no other revenue stream such as advertising.
In March 2012, Sky announced a new IPTV service under the name “NOW TV”. PCCM issued proceedings for trade mark infringement (based on a CTM) and passing off. “Passing off” is an English law tort that allows a trader to protect a name or trade mark (whether registered or not) or get-up to which it can attach goodwill. (A reminder of the three elements to establish can be found in our recent blog, Case Update: Court of Appeal finds Topshop in a hopeless place.)
In the High Court, PCCM’s CTM was held to be invalid as it was purely descriptive of the service (i.e. TV available instantly) and lacking any distinctiveness. Its trade mark infringement claim fell away (and was not appealed). Its passing off claim also failed at the first hurdle – there was insufficient goodwill in the UK attached to the NOW TV name, particularly as UK viewers did not pay to subscribe (as in Hong Kong) and were therefore not customers. Basically, reputation alone was not enough to prove goodwill.
On appeal, the Court of Appeal confirmed the High Court’s decision, so PCCM appealed to the Supreme Court. It argued that the lower courts were wrong that reputation alone was not enough, requiring a customer base in the UK. It asserted that it had a reputation with a significant number of UK residents, even if they were subscribers in Hong Kong, not the UK. It also said that a significant number of UK residents were customers having seen NOW TV programmes on the internet and international flights, even if when not in the UK.
The Supreme Court sided with Sky. There was much case law stating that custom within the jurisdiction is required for a passing off claim. Lord Neuberger commented that reputation for a mark in the UK in respect of products or services outside the UK is not enough to grant an effective monopoly in respect of that mark. Frequent worldwide travel and global electronic communication make it easier to claim a reputation within virtually every jurisdiction. That could allow a claimant to shut off the use of a mark in the UK even where it had no customers or business here and did not even intend to develop the market.
Starbucks (HK) Limited and another v British Sky Broadcasting Group PLC and others [2015] UKSC 31, 13 May 2015
All in all, a good month for Sky and, coupled with the Tory election win, for its owner Rupert Murdoch too.
Charles Hylton-Potts
