Starbucks (UK) Ltd v British Sky Broadcasting Group Plc & Ors [2012] EWHC 1842 (Ch)

Case No HC 12 B01589[2012] EWHC 1842 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
PATENTS COURT
Venue Royal Courts of Justice, The Rolls Building, 7 Rolls Building, Fetter LaneDate Friday, 29 June 2012
London EC4A 1NL
Before
MR. JUSTICE ARNOLD
Between
STARBUCKS (UK) LIMITEDClaimant(1) BRITISH SKY BROADCASTING GROUP PLCDefendants(2) BRITISH SKY BROADCASTING LIMITEDDefendant(3) SKY IP INTERNATIONAL LIMITEDDefendant
Transcript of the Shorthand/Stenographic Notes of Marten Walsh Cherer Ltd.,1 st Floor, Quality House, 6-9 Quality CourtChancery Lane, London WC2A 1HPTelephone No: 020 7067 2900.DX 410 LDE info@martenwalshcherer.com
Mr Michael Silverleaf QC (instructed by Dechert LLP) appeared for Claimant.Mr Geoffrey Hobbs QC and Mr Guy Hollingworth (instructed by S.J. Berwin LLP) appeared for Defendants.
JUDGMENTMr. Justice Arnold:Introduction
[1]I have before me an application by the Claimant (“Starbucks”) for an expedited trial of these proceedings and a cross-application by the Defendants (who I will refer to as “Sky”) for a stay of part of the claim pursuant to Article 104(1) of Council Regulation 207/2009/EC of 26 February 2009 on the Community Trade Mark (codified version) (“the CTM Regulation”). There is also before the court a contingent application by Starbucks for an interim injunction, but that only arises if the stay is granted. Accordingly, I have not yet heard argument on that application.[2]Starbucks is a subsidiary of the substantial Hong Kong company, PCCW Ltd. Sky are the well-known broadcaster. The casus belli in the proceedings is Sky’s announcement on 21 March 2012 that they intend to launch a new standalone internet television service under the name NOW TV. Starbucks contends that the use of that name will infringe Starbucks’ Community Trade Mark No 4504891 (“the CTM”) and will amount to passing off.

The CTM

[3]The CTM is a figurative mark which comprises the word “now” in lower-case letters with six fine lines arranged in a star or sun shape emanating from the central letter “o”. It is registered for various goods and services in classes 9, 35, 38, 41 and 42, including in particular “telecommunication services; … telecommunication of information (web pages), computer programs and data; … radio and television communication services; … television broadcasting services; broadcasting and transmission of radio and television programmes; cable television broadcasting; … transmission of music, films, interactive programmes, videos, electronic computer games” in class 38. It has a filing date of 22 June 2005 and a registration date of 17 September 2008.[4]It is important to note that Starbucks has not relied in these proceedings on two earlier Community Trade Marks, Nos. 1417831 and 1421700, for the same mark originally registered, between the two of them, in respect of essentially the same goods and services as the CTM. Sky suggest that that is because Starbucks appreciates that those two earlier registrations are vulnerable to non-use, whereas the CTM cannot yet be attacked on that ground. Indeed, proceedings have been brought in the Office for Harmonisation in the Internal Market (Trade Marks and Designs) (“OHIM”) by a third party seeking revocation of those two trade marks on grounds of non-use. In the course of those proceedings Starbucks voluntarily cancelled some of the goods and services. In decisions by the Cancellation Division (OHIM reference nos. 4320C and 4321C) issued on 28 November 2011, the Cancellation Division held that what remained of the application for revocation of the 1421700 registration was partially, but not completely, successful. As for 1417831, the Cancellation Division held that Starbucks had proved genuine use of the trade mark in respect of all the goods and services which remained within the specification after voluntary cancellation. As counsel for Sky pointed out, the goods and services cancelled included, in particular, the services in class 38 relating to broadcasting. He informed me that those two decisions were under appeal by the applicant for revocation.[5]Sky contend that the CTM is plainly and obviously invalid pursuant to Article 7(1)(b) and/or 7(1)(c) of the CTM Regulation. Sky says that the word NOW is devoid of distinctive character in relation to class 38 services, and in particular broadcasting and internet services of the kind germane to the present dispute. In support of that they rely, in addition to well-known authorities, upon two decisions of OHIM Boards of Appeal in Case R 735/2009-2 in relation to the mark PLAY NOW and Case R 1415/2009-1 in relation to the mark ANYTIME.[6]Sky then says that the figurative elements add nothing to the distinctiveness of the trade mark, relying upon the judgments of the Court of Justice of the European Union in C-37/03 P BioID v OHIM [2005] ECR 1-7975, and C-92/10P Media-Saturn-Holding GmbH v OHIM [2011] ECR I-0000. They also point out that in Starbucks’ Reply and Defence to Counterclaim no claim is made by Starbucks to acquired distinctiveness.[7]As counsel for Starbucks pointed out, Sky has not brought any application for summary judgment before this court. Counsel for Sky argued that that was unnecessary, and indeed inappropriate in circumstances where Sky is seeking a stay of the proceedings. He submitted that the claim for invalidity was unanswerable, to the extent that this court could say now that there was no serious issue to be tried, and accordingly that Starbucks had no real prospect of success in maintaining its registration.[8]In my judgment, it is not possible to reach the conclusion at this stage of the proceedings that the claim for a declaration of invalidity is bound to succeed. In my judgment, there are serious issues to be tried as to the validity of the CTM, and accordingly Starbucks has a real prospect of success as opposed to a fanciful one.[9]So far as the issue of infringement is concerned, Sky say that, if the CTM is valid at all, its scope can only be ultra-narrow. Accordingly, they say that it will not be infringed by the signs which Sky is proposing to use. Those signs include, even in plain type, the addition of the letters “TV”. They also, more importantly, include a specific form of logo and a strapline containing the words “Powered by Sky”. In those circumstances it is said that there is no likelihood of confusion.[10]Again, it seems to me that the issue of infringement, assuming that the CTM is valid at all, is a matter on which Starbucks has a real as opposed to a fanciful prospect of success.

Passing off

[11]Starbucks contends that it has a substantial goodwill and reputation in the United Kingdom under the names NOW TV and NOW. That reputation and goodwill is said to have arisen in three ways. The first way is pleaded in Starbucks’ Particulars of Claim as follows:
“6. Since 2003, PCCW Media Ltd has provided a very successful internet protocol television (‘IPTV’) service in Hong Kong, which was launched under the name NOW BROADBAND TV. It was renamed ‘now TV’in or around March 2006 (‘now TV’). Until at least 2007 now tv was the world leader in IPTV and it is now the largest pay TV operator in Hong Kong, offering over 190 channels of local, Asian and international programming, including premium sports and movies, and a range of interactive services. 7. Since 2005, the channels provided by now tv have included ‘Sky News’ which is owned and operated by BSkyB [that is to say, Sky] and 10 ‘Star TV’ channels, pursuant to a written agreement dated 8 July 2005 between Star TV (also a member of the BSKYB group) and PCCW Media Limited. 8. In late 2010, PCCW decided to expand the distribution of its now tv services internationally, including into the UK. The intention was initially to produce and/or acquire Chinese language content (and subsequently content in other languages, including English) for international distribution under the ‘NOW’ and now TV brands. Distribution of this extended Chinese language service has already commenced in mainland China, Malaysia and on international air carriers including Cathay Pacific, Virgin Atlantic, Singapore Airlines and Qantas, and is intended to be extended to the UK in the fourth quarter of 2012.”
[12]That pleading has been supplemented in the evidence in various ways. So far as use in Hong Kong is concerned, I have been shown evidence to the effect that in 2011 NOW TV gained a series of prestigious awards and that it had some 1.1 million subscribers.[13]So far as the intended extension of the service into the United Kingdom is concerned, evidence has been adduced as to two things. First, there is evidence of discussions between Starbucks and a potential partner in the United Kingdom which is a competitor to Sky. The identity of that partner is confidential, and accordingly I will not mention it in this judgment. It is fair to say, however, that, as counsel for Sky pointed out, as yet those discussions do not appear to have resulted in any concrete agreement. Secondly, and perhaps slightly more pertinently, on 18 June 2012 Starbucks launched an application for use on computers and mobile telephones called NOW PLAYER, which offers selected NOW TV content. It is, as indicated in the Particulars of Claim, Starbucks’ evidence that a fuller launch of NOW TV in the United Kingdom is intended for the fourth quarter of this year.[14]For present purposes, however, the point that is made more strongly by counsel for Starbucks is not so much the effect of the activities, such as they are, that have been undertaken or are planned in the United Kingdom, but rather the effect of the activities that have undoubtedly been undertaken in Hong Kong. He argues that, by virtue of the commercial activities in Hong Kong, Starbucks, or at any rate the relevant company in the PCCW Group, which from the Particulars of Claim would appear to be PCCW Media Ltd, has acquired a substantial spill-over reputation and goodwill amongst the expatriate Chinese population in the United Kingdom and Britons of Chinese decent. As he recognised, that gives rise to factual and legal issues of the kind that were considered in the decision of the Court of Appeal in Hotel Cipriani Srl v Cipriani (Grosvenor Street) Ltd [2010] EWCA Civ. 110, [2010] R.P.C. 16.[15]The second way in which goodwill is said to have arisen is pleaded in the Particulars of Claim as follows: “10. Between June 2000 and January 2002, PCCW offered an internet television service in English to consumers across the globe through the domain name www.now.com. PCCW spent several million pounds promoting the service and close to £100 million to produce content for the service, which was offered under the name ‘now’ and ‘now network of the world’ and under the logo set out below”.[19]Again, there is some further evidence before the court with regard to that. In particular, an article from the Guardian dated 5 March 2011, which has been adduced by Sky, shows that the NOW service was based in London and employed a substantial number of staff in producing content. It also fleshes out, to some extent, the nature and reputation of the service at that point in time, as follows:
"NOW, launched last June, offering five theme web portals alongside a TV channel, based around the same five content genres, which is beamed to 130 million homes in Asia via satellite and is available as a streamed video service to internet users elsewhere ... NOW launched with five individually branded web portals and complimentary TV programming strands themed around sport, gaming, film, art, earth and space and cutting edge music. The daily block of TV output broadcasts from 4pm London time, which consists of 15, 30 minute programmes, would increase from two and a half to fours hours a day in mid November. A sixth technology themed programming strand (Tech) was launched at the same time when the website went live last week."
[12]As counsel for Starbucks acknowledged, that usage ceased over ten years ago. Accordingly, as he accepted, in those circumstances Starbucks' case must be one of residual goodwill. He submitted that, even if the residual goodwill was not particularly substantial, it had not disappeared altogether.[13]The third way in which goodwill is said to have arisen is pleaded in the Particulars of Claim as follows: "11. Since 2004 a member of the PCCW group, the company UK Broadband Limited, which is incorporated in England, Wales (‘UKB’) has used the name NOW and the logo registered as the CTM in the United Kingdom, under licence from the Claimant. The terms of the licence were set out in an unsigned agreement, a copy of which is Annex B hereto. The Claimant thereby licensed UKB to use three different logos, the first of which is the logo which is now registered as the CTM. 12. UKB used both the name NOW and the said logos in relation to its business as anticipated by the said licence, from 2004 onwards in relation to a broadband internet service, and the supply of modems, software and mobile broadband cards to allow customers to connect to that broadband service (the ‘Broadband Services’). UKB also used domain names www.now.com and www.mynow.co.uk (the ‘Domain Names’) in relation to the Broadband Services.13. The table below sets out UKB's turnover in the products and services provided in relation to the Broadband Services in the UK under the NOW name and/or the CTM between 2004 and 2010. Between 2004 and 2010, approximately 18,000 customers signed up to the Broadband Services provided under the NOW name by UKB and 33,692 ‘mynow.co.uk’ e-mail accounts were set up by UKB customers. [The turnover figures peaked in 2006 at £1,897,522, but in 2009 and 2010 declined to £97,344 and £57,921 respectively.]14. Approximately £6.5 million was spent on advertising the Broadband Services in the UK from 2004 to 2010, especially in London and the south east of England. Advertisements included a poster campaign on bus shelters and tube stations, advertorials in the Metro newspaper, a radio marketing campaign in autumn 2005 on the radio stations XFM and Heart, and substantial direct mail shots.15. From about 2008 onwards, UKB undertook a migration to a new service of the relevant technology, with a view to offering 4G services and from October 2009 onwards UKB ceased charging its existing customers for use of the original technology. This was reflected in the decrease in turnover in 2009 to 2010 set out above. UKB will be offering commercial 4G services in the UK from June 2012 under the name NOW Broadband. [It does not appear that that has in fact occurred yet.]” [The turnover figures peaked in 2006 at £1,897,522, but in 2009 and 2010 declined to £97,344 and £57,921 respectively.][14]I note that the evidence of use that was filed in the OHIM non-use proceedings to which I have referred appears to be somewhat less extensive than that claimed in the Particulars of Claim, but on the other hand it does go some way to substantiating the allegations pleaded.[15]Counsel for Starbucks acknowledged that the use by UK Broadband Ltd was in relation to broadband services, but submitted that those services were sufficiently similar to an internet television service that the goodwill generated thereby was relevant for the purposes of a passing off action.[16]In the light of those three aspects of goodwill I should say next that the point was taken by counsel for Sky that Starbucks is, on its own evidence, a non-trading company which owns no assets other than registered trade marks. Both on that basis and having regard to the evidence that the usage pleaded in the Particulars of Claim and the subject of the evidence on its face was carried out by other companies within the PCCW Group, he submitted that the goodwill was owned by those companies and not by Starbucks. Counsel for Starbucks informed me, however, that he anticipates that he will shortly be receiving instructions to join the other companies to these proceedings as claimants, and I will proceed on the assumption that that will be done.[17]On that basis, Starbucks contends that Sky's intended use of the name NOW TV will cause consumers who associate the name NOW with one of the PCCW Group's three uses of it to think that NOW TV is connected in the course of trade with one of PCCW's businesses or services, contrary to the fact. Accordingly, it claims that such use would amount to passing off.[18]Sky deny that Starbucks, or any company in the PCCW Group, has any substantial reputation or goodwill in the United Kingdom. In any event, to the extent that there is some small reputation and goodwill in the United Kingdom, Sky say that consumers will not be confused since it will be clear to them, both from the context and from the manner in which these signs will be promoted, that NOW TV is a Sky offering.[19]Furthermore, Sky points to the fact, as is common ground, that there are other traders in adjacent fields who use names that include the word NOW. The principal ones relied upon by Sky are identified in counsel for Sky’s skeleton argument as follows:
“(a) On TV Now - a customisable TV listings site for a large selection of channels in the UK; (b) Watch TV Now - an online portal offering live TV programmes directly from the internet; (c) Nowwatchtvlive.com - a website offering the streaming of live sports from around the world; (d) MoviesNow - a channel on the TV service offered by the broadband operator TalkTalk; (e) Musicnow.fm - a music streaming website; (f) PlayNow - a music download service offered by Sony Ericsson; (g) Now Player - an application for the iPad and iPhone which allows users to share music through social networking sites; … (i) The Now Show - a radio show broadcast on BBC Radio 4.”
[20]Having regard to those third party uses, Sky say that consumers would be aware of the fact that there are a multiplicity of brand names in this area which include the word NOW and therefore will be astute to distinguish between them.[21]In all of those circumstances, counsel for Sky again submitted that, notwithstanding the fact that there was no application for summary judgment before the court, I could and should conclude that there was no serious issue to be tried with regard to Starbucks’ (or PCCW Group's) passing off claim. Again, however, my conclusion is that there are serious issues to be tried, and Starbucks has a real as opposed to a fanciful prospect of success.

The history of the proceedings

[22]Before turning to the two applications, for reasons that will appear, I must outline the history of the proceedings. As I have already indicated, Sky's proposed launch was announced on 21 March 2012 in a speech given by Jeremy Darroch, Sky's Chief Executive, at the Media Guardian Changing Media Summit 2012. A press release was issued on the same day. The speech and the press release were picked up by a series of media outlets which reported on the launch, both that day and the following day.[23]This quickly came to the PCCW Group's attention, and on 27 March 2012 solicitors instructed on behalf of the PCCW Group wrote a letter before action to Sky. That letter before action alleged that Sky's proposed use of NOW TV would amount to infringement of the CTM. The letter concluded as follows:
"In view of our client's prior rights we require you to provide us with the undertakings attached at Annex 2 to this letter by 14:00 on Tuesday 3 April 2012. Once we have received these undertakings we will let you know if our client requires any further undertakings to resolve the matter. Should you not provide the requested undertakings we are instructed to issue proceedings against you immediately seeking inter alia an interim injunction to prevent your launching the Infringing Service. In the meantime we reserve all of our client's rights."
In the meantime we reserve all of our client's rights."[24]Both by telephone on 2 April 2012 and by letter dated 3 April 2012, solicitors instructed on behalf of Sky requested more time to respond to the letter before action. This was recorded in the letter dated 3 April 2012 as follows:
"As discussed during our conversation yesterday (Rose/Kavanagh), we are currently investigating the allegations set out in your letter and are not in a position to respond by 2pm today (as you have requested). Please therefore confirm your client agrees to extending its deadline until close of business on Friday, 13 April 2012. We agree that our clients will not take a point on delay between now and the date of our reply (in this regard, if we are in a position to revert any sooner than 13 April we will do so). We look forward to hearing from you by return and reserve our clients' rights in the interim."
[25]On 4 April 2012 Starbucks' solicitors wrote to Sky's solicitors granting an extension of time to respond to the letter before action until 6pm on 11 April 2012. Slightly later than that on 11 April 2012, Sky's solicitors sent a ten page letter with nine tabs of supporting documents to Starbucks' solicitors, addressing the claim in considerable detail. That letter informed Starbucks' solicitors, as was the case, that Sky had that very day applied to OHIM to invalidate the CTM and Starbucks’ two older registrations and also to revoke the two older registrations for non-use. A copy of the submissions in support of the application for invalidation of the CTM was one of the documents enclosed with the letter.[26]After a holding response on 13 April 2012, Starbucks' solicitors replied on 16 April 2012. In that letter they said inter alia as follows:
"As you would expect, your letter of 11 April 2012 and its attachments raised issues which our client has had to address in the evidence in support of the interim injunction application. Our client will therefore be issuing proceedings and applying for an interim injunction in the next 48 hours and papers will be served on you immediately."
[27]On 17 April 2012 Sky's solicitors replied, essentially saying that their clients would co-operate in a speedy determination of the application for an interim injunction.[28]On 18 April 2012, however, Starbucks' solicitors wrote again saying:
"… upon further reflection, our client has decided not to seek interim relief against your client but will instead be seeking a trial on an expedited basis. We attach draft directions accordingly. We request your client's response to these directions within the next seven days. Our client will seek an order for an expedited trial shortly thereafter, irrespective of whether directions have been agreed."
The proposed directions enclosed with that letter suggested a trial of the claim between 1 and 31 October 2012 with an estimated length of trial of four to five days.[29]On 20 April 2012 Sky's solicitors replied, making it clear that Sky would resist the application for expedition.[30]In the meantime, the Claim Form had been issued with Particulars of Claim on 19 April 2012 and was served shortly thereafter.[31]In the event, Starbucks' application notice seeking an expedited trial was not issued and served until 18 May 2012. Directions were given for the determination of the application by Morgan J on 30 May 2012.[32]On 6 June 2012 Sky served a Defence and counterclaim in which it challenged the validity of the CTM without prejudice to its position that the proceedings relating to the CTM should be stayed pursuant to Article 104 of the CTM Regulation.[33]On 8 June 2012 Starbucks issued an application seeking an interim injunction contingent upon such a stay being granted.[34]Finally, on 19 June 2012, Sky issued their application for a stay.

Stay

[35]Logically, as counsel agreed, the application for a stay falls to be considered first. For these purposes it is necessary to have regard to the relevant provisions of the CTM Regulation:
"Article 52 Absolute grounds for invalidity 1. A Community trade mark shall be declared invalid on application to the Office or on the basis of a counterclaim in infringement proceedings: (a) where the Community trade mark has been registered contrary to the provisions of Article 7; (b) where the applicant was acting in bad faith when he filed the application for the trade mark. … Article 55 Consequences of revocation and invalidity 1. The Community trade mark shall be deemed not to have had, as from the date of the application for revocation or of the counterclaim, the effects specified in this Regulation, to the extent that the rights of the proprietor have been revoked. An earlier date, on which one of the grounds for revocation occurred, may be fixed in the decision at the request of one of the parties. 2. The Community trade mark shall be deemed not to have had, as from the outset, the effects specified in this Regulation, to the extent that the trade mark has been declared invalid. 3. Subject to the national provisions relating either to claims for compensation for damage caused by negligence or lack of good faith opt part of the proprietor of the trade mark, or to unjust enrichment, the retroactive effect of revocation or invalidity of the trade mark shall not affect: (a) any decision on infringement which has acquired the authority of a final decision and been enforced prior to the revocation of invalidity decision. (b) any contract concluded prior to the revocation or invalidity decision, in so far as it has been performed before that decision; however, repayment, to an extent justified by the circumstances, of sums paid under the relevant contract, may be claimed on grounds of equity. Article 56 Application for revocation or for a declaration of invalidity 1. An application for revocation of the rights of the proprietor to a Community trade mark or for a declaration that the trade mark is invalid may be submitted to the Office: (a) where Articles 51 and 52 apply, by any natural or legal person and any group or body set up for the purpose of representing the interests of manufacturers, producers, suppliers of services, traders or consumers which under the terms of the law governing it has the capacity in its own name to sue and be sued; … 3. An application for revocation or for a declaration of invalidity shall be inadmissible if an application relating to the same subject matter and cause of action, and involving the same parties, has been adjudicated on by a court in a Member State and has acquired the authority of a final decision. Article 94 Application of Regulation (EC) No 44/2001 1. Unless otherwise specified in this Regulation, Regulation (EC) No 44/2001 shall apply to proceedings relating to Community trade marks and applications on Community trade marks, as well as to proceedings relating to simultaneous and successive actions on the basis of Community trade marks and national trade marks. … Article 96 Jurisdiction over infringement and validity The Community trade mark courts shall have exclusive jurisdiction: (a) for all infringement actions and - if they are permitted under national law - actions in respect of threatened infringement relating to Community trade marks; … (d) for counterclaims for revocation or for a declaration of invalidity of the Community trade mark pursuant to Article 100. Article 99 Presumption of validity – Defence as to the merits 1. The Community trade mark courts shall treat the Community trade mark as valid unless its validity is put in issue by the defendant with a counterclaim for revocation or for a declaration of invalidity. … Article 100 Counterclaims 1. A counterclaim for revocation or for a declaration of invalidity may only be based on the grounds for revocation of invalidity mentioned in this Regulation. 2. A Community trade mark court shall reject a counterclaim for revocation or for a declaration or invalidity if a decision taken by the Office relating to the same subject matter and cause of action and involving the same parties has already become final. … 7. The Community trade mark court hearing a counterclaim for revocation or for a declaration of invalidity may stay the proceedings on application by the proprietor of the Community trade mark and after hearing the other parties and may request the defendant to submit an application for revocation or for a declaration of invalidity to the Office within a time limit which it shall determine. If the application is not made within the time limit, the proceedings shall continue; the counterclaim shall be deemed withdrawn. Article 104(3) shall apply. Article 104 Specific rules on related actions 1. The Community trade mark court hearing an action referred to in Article 96, other than an action for a declaration of non-infringement shall, unless there are special grounds for continuing the hearing, of its own motion after hearing the parties or at the request of one of the parties an after hearing the other parties, stay the proceedings where the validity of the Community trade mark is already in issue before another Community trade mark court on account of a counterclaim or where an application for revocation or for a declaration of invalidity has already been filed at the Office. 2. The Office, when hearing an application for revocation or for a declaration of invalidity shall, unless there are special grounds for continuing the hearing, of its own motion after hearing the parties or at the request of one of the parties and after hearing the other parties, stay the proceedings where the validity of the Community trade mark is already in issue on account of a counterclaim before a Community trade mark court. However, if one of the parties to the proceedings before the Community trade mark court so requests, the court may, after hearing the other parties to these proceedings, stay the proceedings. The Office shall in this instance continue the proceedings pending before it. 3. Where the Community trade mark court stays the proceedings it may order provisional and protective measures for the duration of the stay."
Absolute grounds for invalidity (a) where the Community trade mark has been registered contrary to the provisions of Article 7; (b) where the applicant was acting in bad faith when he filed the application for the trade mark. Article 55 Consequences of revocation and invalidity (a) any decision on infringement which has acquired the authority of a final decision and been enforced prior to the revocation of invalidity decision. (b) any contract concluded prior to the revocation or invalidity decision, in so far as it has been performed before that decision; however, repayment, to an extent justified by the circumstances, of sums paid under the relevant contract, may be claimed on grounds of equity. Application for revocation or for a declaration of invalidity (a) where Articles 51 and 52 apply, by any natural or legal person and any group or body set up for the purpose of representing the interests of manufacturers, producers, suppliers of services, traders or consumers which under the terms of the law governing it has the capacity in its own name to sue and be sued; … Article 94 Application of Regulation (EC) No 44/2001 Article 96 Jurisdiction over infringement and validity The Community trade mark courts shall have exclusive jurisdiction: Article 99 Presumption of validity – Defence as to the merits Article 100 Counterclaims Article 104

Specific rules on related actions

[36]In addition to those provisions it is also necessary to bear in mind recitals 16 and 17 to the CTM Regulation:
"(16) Decisions regarding the validity and infringement of Community trade marks must have effect and cover the entire area of the Community, as this is the only way of preventing inconsistent decisions on the part of the courts and the Office and of ensuring that the unitary character of the community trade marks is not undermined. The provision of Council regulations, (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters should apply to all actions at law relating to Community trade marks, save where this registration derogates from those rules. (17) Contrary judgments should be avoided in actions which involve the same acts and the same parties and which are brought on the basis of a Community trade mark and parallel national trade marks. For this purpose, when the actions are brought in the same Member State, the way in which this is to be achieved is a matter for national procedural rules, which are not prejudiced by this Regulation, whilst when the actions are brought in different Member States, provisions modelled on the rules on lis pendens and related actions of Regulation (EC) No 444/2001 appear appropriate."
[37]Certain matters are common ground. First, the purpose of Article 104 is to avoid multiplicity of proceedings and inconsistent decisions. Secondly, where Article 104(1) applies, the national court must stay proceedings relating to a Community trade mark unless there are special grounds. Thirdly, the concept of special grounds must be given a uniform and autonomous interpretation as a matter of European law. Fourthly, the special grounds must relate to factual circumstances specific to the given case: see, by way of analogy, Case C-316/05 Nokia Corp v Joacim Wärdell [2006] ECR I-12083 at [38].[38]There is, surprisingly, a dearth of authoritative guidance with regard to the interpretation and application of Article 104(1). I have been referred to four cases. The first in time is a decision of the Oberster Gerichtshof (Austrian Supreme Court) dated 20 August 2002 in a case called Manpower. Neither counsel suggested that that decision was of any assistance.[39]The second in time is a decision of the Tribunal de Grande Instance de Paris (Paris Commercial Court) dated 17 October 2006 in the case Sothys International v Europeenne de Produits de Beauté. In that case the claimant registered a Community trade mark in July 2003 which was published in July 2004. In June 2005 it sent formal notice to the defendant. By letter dated 31 August 2005 the defendant notified the claimant that it did not recognise the validity of the claimant's claims of infringement, but made proposals for settlement. It did not at that stage bring any action challenging the validity of the Community trade mark. By a letter dated 26 September 2005 the claimant rejected the defendant's settlement proposals. Again, at that stage the defendant did not seek to challenge the validity of the Community trade mark. On 8 November 2005 the claimant executed a saisie preparatory to the commencement of infringement proceedings. Only following the saisie did the defendant bring proceedings before OHIM challenging the validity of the Community trade mark on 22 November 2005. Furthermore, although the defendant was made party to the proceedings before the Tribunal de Grande Instance on 1 December 2005, it waited until 28 March 2006 to apply for a stay of the proceedings. In all of those circumstances the Tribunal de Grande Instance was satisfied that there were special grounds for refusing a stay, holding that the defendant had applied to OHIM, rather than counterclaiming, “for purely dilatory purposes”.[40]Counsel for Starbucks relied upon the fact that the Tribunal de Grande Instance considered it was relevant that the application for invalidity was only brought before OHIM following the threat of infringement proceedings and regarded it as a delaying tactic. Counsel for Sky emphasised that the defendant had delayed, both in making its application for invalidity and in seeking a stay.[41]The third decision in time is the recent decision of the Court of Appeal in Samsung Electronics(UK) Ltd v Apple Inc [2012] EWCA Civ 729. That case concerned the parallel provision in Article 91(1) of Council Regulation 6/2002/EC of 12 December 2001 on Community designs. The issue as to special grounds was not directly before the court in that case, and accordingly the passage in the judgment of Lloyd LJ, who delivered the judgment of the Court of Appeal, dealing with it is obiter. Nevertheless, it is of persuasive authority. In paragraph 49 of his judgment he said this:
"It seems to us that, while it would be rash to attempt to define ‘special grounds’, something can usefully be said in relation to the legislative policy. The nature and force of the special grounds which would justify not ordering a stay in a given case would need to be such as make it appropriate to allow proceedings to continue to which article 91(1) applies, thereby opening up the possibility of parallel and active proceedings on the same issue of validity or otherwise, and therefore possible inconsistent decisions on the same point in different courts or as between a Community design court and OHIM. The grounds would have to be of sufficient importance and substance, on the facts of the given case, to justify that risk. In relation to the present case, some features apparent to us might be eligible to be brought into account on this question. (There may well be others.) One is that the current proceedings in England do not in fact include any issue as to validity, because Samsung has not responded to Apple's counterclaim, as it could have done, by counterclaiming for a declaration of invalidity. Therefore the proceedings as currently constituted would not result in the English court coming to a decision as to validity which would be even potentially inconsistent with whatever determination was eventually reached (if any) by OHIM. Another relevant factor might be the objectively justifiable need, as found by the judge, for speed in the determination of the claim, though whether that itself justifies allowing the counterclaim to proceed, rather than only the claim, may require further consideration. Moreover, although we do not see that the parties' agreement could itself constitute special grounds, the fact that they do agree, or that Samsung does not object, and that the invalidity proceedings are brought by Samsung, may be a factor which can properly be taken into account."
[42]The last case in time is the decision of Mr John Baldwin QC sitting as a Deputy High Court Judge in EMI (IP) Ltd v British Sky Broadcasting Group plc [2012] EWHC 1644 (Ch). That was a decision given in a parallel dispute to the present one. EMI is also the proprietor of a Community trade mark which it claims will be infringed by Sky's proposed use of NOW TV. It too has brought proceedings. In the application that was before Mr Baldwin QC, EMI sought an interim injunction to restrain Sky from using NOW TV in relation to internet television services and an expedited trial. Sky, for their part, sought an order staying the action pending the outcome of an application to invalidate EMI's Community trade mark which it had lodged with OHIM. In that case, as in the present one, Sky's application to OHIM was made after the proceedings were threatened by the claimants. Mr Baldwin QC refused to grant an interim injunction or to order an expedited trial and granted a stay.[43]Mr Baldwin QC dealt with the question of a stay, having cited from part of the passage in the judgment of Lloyd LJ in Samsung v Apple that I have just quoted and having referred to Nokia v Wardell, as follows: “31. EMI rely on the following factors, individually and collectively, as constituting special grounds for the continuation of the proceedings:31.1 the fact that Art 104 only applies in this case because of Sky’s own filing of an application to invalidate the registered mark in response to EMI’s letter before claim;31.2 that Sky took no steps to clear the way for its proposed launch, despite being aware of the registered mark;31.3 that the passing off claim will continue in any event; and31.4 there is a need for commercial certainty, particularly so given EMI’s own plans to launch a television channel under the NOW brand, which plans are threatened by Sky’s proposed launch of its internet television services under the name NOW TV. 32. In my judgment none of these grounds taken individually or as a whole comes close to what I apprehend to be ‘special grounds’. I see nothing in the first ground to take the case outside the norm. An application to invalidate a registration which is threatened against a party seems to me to be no more than what could be described as an expected response. The fact that no steps were taken to clear the way is to my mind of little consequence in this context. Although there was no direct evidence on it, as I have mentioned already, steps to clear the way are not often commercially practical in trade mark cases. The fact that the passing off claim will continue in any event is again of little import, especially in the circumstance that EMI did not seek to rely on this cause of action in its application for interim relief. Finally, the need for commercial certainty is no greater in this case than in many others; on the facts there is nothing to take the case outside the norm in the context of commercial certainty.” 31.1 the fact that Art 104 only applies in this case because of Sky’s own filing of an application to invalidate the registered mark in response to EMI’s letter before claim; 31.2 that Sky took no steps to clear the way for its proposed launch, despite being aware of the registered mark; 31.3 that the passing off claim will continue in any event; and 31.4 there is a need for commercial certainty, particularly so given EMI’s own plans to launch a television channel under the NOW brand, which plans are threatened by Sky’s proposed launch of its internet television services under the name NOW TV.[44]It emerged in the course of argument before me that counsel for EMI's skeleton argument had referred to the Manpower and Sothys cases, but those cases had not been cited during the course of oral argument. I must return to consider Mr Baldwin QC's reasoning later on in this judgment.[45]Turning to the present application, it is important to note at the outset that Starbucks does not suggest that the proceedings brought by Sky before OHIM are either an abuse of process, to use English legal terminology, or an abus de droit, to use the French term. Still less does Starbucks seek an anti-suit injunction to restrain Sky from pursuing the application before OHIM. On the contrary, Starbucks accepts that the application before OHIM to invalidate the CTM and the other applications relating to the other two trade marks are properly constituted proceedings.[46]As I shall relate, however, Starbucks nevertheless relies upon both the circumstances in which those proceedings were instituted and the relative timings in which it may be expected that those proceedings and the present proceedings may be determined in support of its case that there should be no stay of the present proceedings.[47]Counsel for Sky submitted that it was illegitimate to take those factors into account. In support of that proposition he relied upon two principles of European law. The first is the general principle which follows from Article 4(3) of the Consolidated Treaty on the European Union that there must be sincere co-operation between the courts of the Member States. For this purpose he submitted, and I accept, that it is clear from the provisions of the CTM Regulation that OHIM is to be treated as of equivalent status to a national court. Counsel for Sky went on to submit, and I accept, that, as can be seen from the recent decision of the Court of Appeal in Ryanair Holdings plc v Office of Fair Trading [2012] EWCA Civ 643 at [38], the duty of sincere co-operation goes beyond avoiding inconsistent decisions and extends to the exercise of overlapping jurisdictions.[48]Secondly, and to my mind more importantly, counsel for Sky relied upon the judgment of the CJEU in Case C-159 Turner v Grovit [2004] ECR I-3565 at [28]:
"Notwithstanding the explanations given by the referring court and contrary to the view put forward by Mr Turner and the United Kingdom Government, such interference cannot be justified by the fact that it is only indirect and is intended to prevent an abuse of process by the defendant in the proceedings in the forum State. In so far as the conduct for which the defendant is criticised consists in recourse to the jurisdiction of the court of another Member State, the judgment made as to the abusive nature of that conduct implies an assessment of the appropriateness of bringing proceedings before a court of another Member State. Such an assessment runs counter to the principle of mutual trust which, as pointed out in paragraphs 24 to 26 of this judgment, underpins the Convention and prohibits a court, except in special circumstances which are not applicable in this case, from reviewing the jurisdiction of the court of another Member State."
[49]I accept that it is for OHIM to judge its own competence and powers (subject, of course, to the supervision of the General Court and the CJEU), and accordingly it is for OHIM to decide how to deal with proceedings that are pending before it. Thus it would not be proper for this court to treat such proceedings as abusive even if that were alleged. I also accept that it is not legitimate for a party resisting a stay under Article 104(1) of the CTM Regulation to rely upon differences in the procedures between the national courts and OHIM as constituting special grounds. I do not accept that it follows that this court cannot take into account the circumstances in which proceedings were instituted before OHIM, or the time which such proceedings may be expected to take until final determination, when deciding whether there are “special grounds” within Article 104(1).[50]The next point to observe is that it is common ground that, if the national court is satisfied that special grounds exist which justify refusal of a stay under Article 104(1) or if OHIM is satisfied that special grounds exist which justify refusal of a stay under Article 104(2), then it follows that there will be multiple proceedings. Counsel for Sky submitted that the legislation provided simply no answer as to what was to happen in those circumstances. Counsel for Starbucks disagreed with this. He submitted that Articles 56(3) and 100(2) provided the answer as to what would happen. Where a stay under Article 104(1) was refused, and the national court proceeded to determine the issue of validity (assuming, of course, that validity was put in issue in the national proceedings) before OHIM did, then he submitted that Article 56(3) would come into effect once that decision became final. Conversely, if OHIM’s decision became final first, Article 100(2) would apply. Counsel for Sky submitted that that was an incorrect interpretation of Articles 56(3) and 100(2), which were concerned purely with the admissibility of proceedings as at the date of filing. As he acknowledged, however, OHIM does not appear to have a published statement as to the policy it adopts towards such parallel proceedings. It may be that, if the national court refuses a stay, then OHIM will stay its proceedings.[51]I acknowledge that, on its face, Article 56(3) appears to be limited to admissibility as at the date of filing and that it is arguable that Article 100(2) should be interpreted in the same way. It nevertheless seems to me that there is force in counsel for Starbucks' argument that, giving Articles 56(3) and 100(2) a purposive interpretation, they operate in the way that he suggested. It is not necessary for me to reach a conclusion on this point for present purposes, however.[52]Turning to the present case, two preliminary points should be noted. First, this is not a case where either side suggests that infringement should be tried in this country and validity tried in OHIM. On the contrary, it is common ground that, if the court considers that validity should be stayed, then infringement should likewise be stayed.[53]Secondly, it is also common ground that Article 104(1) does not apply to the passing off claim in the present proceedings. For that reason, although it appears to be within the scope of Sky's application notice, counsel for Sky has made it clear that Sky seeks no order for a stay of the passing off claim. All Sky seeks is an order for a stay of the Community trade mark proceedings. Despite that being the case, Starbucks accepts that there will be a very substantial evidential overlap between the trade mark claim and the passing off claim. Furthermore, although counsel for Starbucks suggests that it is possible for different results to be reached in the trade mark proceedings than in the passing off proceedings, nevertheless he accepts that it is undesirable for the claims to be tried separately. Accordingly, if the CTM claims have to be stayed, Starbucks accept that it would be appropriate to stay the passing off claim as well. Starbucks contends, however, that if that were to occur, that would give added impetus to its contingent application for an interim injunction.[54]Starbucks relies upon three grounds as individually or cumulatively amounting to special grounds for the purposes of Article 104(1). The first is the fact that Sky only commenced the proceedings before OHIM after receipt of Starbucks' letter before action and after requesting an extension of time in which to respond to the letter before action and agreeing not to take any point on delay.[55]Starbucks points out that this is not a case where Sky sought to clear the way of obstacles to its proposed launch by invalidity proceedings as, at least in theory, it could have done. On the contrary, the application to OHIM was only made in direct response to Starbucks’ threat of infringement proceedings, and in particular its threat to apply for an interim injunction. It is only because Sky managed to file its application at OHIM before Starbucks served its claim form here that Article 104(1) applies. Starbucks argues that it would be wrong to penalise Starbucks for having had the courtesy to send Sky a letter before action first.[56]Furthermore, Starbucks points out that the practical effect, if a stay is granted, will be that there will be a considerable elapse of time until the proceedings before OHIM are finally determined. As I understand it, it is common ground that it may be expected that the Cancellation Division will not reach a decision until sometime in the first half of 2013. Thereafter, either party will have a right of appeal to the Board of Appeal. After that there is the possibility of further appeals to the General Court and to the CJEU. As is regrettably a common experience, the net result is that disputes over the validity of trade marks brought before OHIM can take as much as a decade to resolve. Only then, if successful, will Starbucks be able to pursue its infringement claim.[57]Sky's riposte to this argument is to rely upon the concession that the proceedings before OHIM are properly constituted proceedings which are not an abuse of the process and which will proceed anyway, subject to the argument over what may be the effect of a final decision of this court, having regard to Article 56(3). Sky contend that applying to OHIM for a declaration of invalidity of the CTM was a perfectly legitimate response to receipt of a letter before action. Sky point out that, as at 11 April 2012, there was no other forum in which Sky could commence proceedings seeking a declaration of invalidity of the CTM. Sky argue that it cannot constitute special grounds within Article 104(1) to respond to a letter before action in that way. Furthermore, as I have already indicated, Sky contends that it is illegitimate to take into account the long time which may be required finally to determine the OHIM proceedings.[58]The second ground relied upon by Starbucks is the existence of the passing off claim. As I have already mentioned, it is Starbucks' contention that there is a substantial evidential overlap between the two claims and that it is highly desirable to try the two claims together. Starbucks say it will be wrong to delay the resolution of the passing off claim as a result of a stay of the Community trade mark proceedings. Sky ripostes that it would be open to Starbucks to proceed with the passing off claim even if the CTM proceedings are stayed: if Starbucks agrees to a stay of the passing claim, that is its own choice.[59]The third factor relied upon is that Starbucks contends that this is a matter which requires urgent resolution. Starbucks contends that the only forum in which resolution of all the disputes between the parties is possible is this court. This court has before it the infringement claim which cannot be brought before OHIM. It also has before it the passing off claim which cannot be brought before OHIM. It will also have, if a stay is refused, a counterclaim by Sky seeking a declaration of invalidity of the CTM. Accordingly, if the proceedings go to trial in this country without a stay, all the disputes can be tried and resolved together.[60]Furthermore, for the reasons that I will come to when I deal with the expedition application, Starbucks say that this is a case where expedition is warranted. If expedition is granted, these proceedings can be tried in October 2012 and any appeal determined early in 2013. In those circumstances, Starbucks says that this supports the conclusion that there are special grounds, relying upon the observations of Lloyd LJ in Samsung v Apple.[61]Sky contest that all the disputes between the parties can be tried together in this court. They point out that Starbuck’s two earlier registrations are only in issue in OHIM. Sky cannot attack those registrations by counterclaim in these proceedings since Starbucks has not sued on them. Furthermore, Sky contend that there is no justification for expedition of the present proceedings come what may.[62]In my judgment, the grounds relied upon by Starbucks, at least considered cumulatively, do constitute special grounds within Article 104(1). So far as the first ground is concerned, I agree with Starbucks that it is relevant to take into account the fact that the application before OHIM was only instituted by Sky in direct response to the letter before action and only after requesting an extension of time, and agreeing not to take a point on delay, without revealing that Sky was contemplating the possibility of making such an application. In saying that, I should make it clear that in my view the matter does not depend upon Sky's subjective intention at that point in time. It matters not whether, as counsel for Starbucks suggested, this was a deliberate blocking tactic, or whether, as counsel for Sky submitted, it was simply intended to seek to remove a threat to Sky's business. The important question is the objective effect of what was done when it was done. The effect of Sky’s application to OHIM, having regard to the length of time the proceedings in OHIM will take to resolve, would be substantially to delay the resolution of Starbucks’ claims. In the circumstances of the present case, I consider that that does amount to special grounds, at least viewed in combination with the other factors.[63]The passing off point on its own would not be decisive, but again I think it supports the conclusion that there are special grounds in this case, given that it is common ground that the passing off claim is not within the scope of Article 104(1). I agree with Starbucks that that this court is the only tribunal which can try all the disputes between the parties together and that it makes sense to do so. I do not consider that it matters that OHIM is the only tribunal seized of Sky’s claims with regard to the two earlier Starbucks registrations. Starbucks is not seeking to enforce those registrations through infringement proceedings, and any attempt to do so after having failed to enforce the CTM would be likely to be struck out as an abuse of process.[64]The third factor I consider also supports the conclusion that there are special grounds in the present case. For the reasons I am going to explain, I do think this is a case where expedition is warranted. That is something that this court is able to provide to enable the disputes between the parties to be speedily determined, and much more so than in OHIM.[65]I am conscious of the fact that I have reached a different conclusion to the conclusion reached by Mr Baldwin QC in EMI and Sky. That case can be distinguished from the present case for at least two reasons. First, as Mr. Baldwin pointed out, passing off was not relied upon by counsel for EMI on the application before him. Secondly, Mr Baldwin QC was not satisfied that the case was one which was fit for expedition. So far as his observations on the timing question is concerned, it seems clear that Mr. Baldwin QC did not have the benefit of the wide-ranging argument that I have had the advantage of. In particular, as I have mentioned, my understanding is that he was not in the end taken to the Stothys case.

Expedition

[66]I turn therefore to consider the application for expedition. The relevant principles were recently reviewed by Henderson J in JW Spear & Sons v Zynga Inc [2012] EWHC 1374 (Ch) at [16]-[25]. I take into account everything that was said in that passage. Nevertheless, it seems clear that the key principles to be applied on an application of the present nature were those identified by Lord Neuberger in WL Gore & Associates GmbH and Geox SPA [2008] EWHC Civ. 622 at [25]:
"To my mind when considering such an application, there are four factors to take into account. The first is whether the applicants have shown good reason for expedition, the second is whether expedition would interfere with the good administration of justice, the third is whether expedition would cause prejudice to the other party and the fourth is whether there are any other special factors."
[67]Considering those in turn, the first question is whether Starbucks has shown good reason for expedition in the present case. So far as that is concerned, Starbucks contends that there is good reason for expedition for the following reasons. First, Starbucks points to the fact that it is clear from Sky's own evidence that Sky is intending to launch its service soon. The precise date of Sky's launch is confidential, but it is in the near future. As Starbucks points out, Sky's evidence shows that Sky has well-developed plans for a very substantial marketing exercise involving substantial expenditure to promote the service at the point when it is launched. In those circumstances, Starbucks submits that, unless the dispute is tried quickly so that Starbucks is in a position to obtain a final injunction in the relatively near future, its goodwill accrued in the three ways that I referred in this judgment, or perhaps more accurately the goodwill of the other members of the PCCW Group, will quite simply be swamped by the goodwill Sky will generate.[68]Secondly, Starbucks contends that, even if its registered trade mark is vindicated at some point in the distant future, that will be of no practical use to it, because it will not be in a position to exploit those trade mark rights once the mark has become indelibly associated with Sky's service.[69]Thirdly, Starbucks points to the PCCW Group's own commercial plans for expanding its rival service into the United Kingdom in the fourth quarter of this year. As I observed earlier in this judgment, those plans do not appear to have any great concreteness as yet. Nevertheless, I do not think I can discount this factor entirely.[70]Fourthly, Starbucks points out that in the circumstances of this case it is in the interests of consumers that confusion be avoided.[71]Lastly, Starbucks argues that it is actually in Sky's own interests to know where they stand as soon as possible. So far as that is concerned, I note in particular the evidence given by Simon Creasey of Sky with regard to Sky's marketing plans. He says, in short, that a major burst of advertising and PR is intended for the launch period, but that in addition a further major burst of advertising in PR is planned for the period from September 2012 through to February 2013, which of course includes the crucial Christmas period. Starbucks says that a rational businessman in the position of Sky would wish to know whether it is infringing Starbucks' rights prior to the Christmas period rather than afterwards, particularly if Sky have such a strong case on the merits as Sky claim.[72]Against those arguments, counsel for Sky points to the small scale of Starbucks' past usage. He also points, as I have already acknowledged, to the lack of concreteness of its plans for its own forthcoming launch, and in particular the absence of any agreement with Starbucks' proposed partner. He submits that in these circumstances there is not a sufficient interest to justify expedition. Furthermore, he also prays in aid in this context the third party usage which I referred to earlier in this judgment. He submits that Starbucks does not have any exclusivity at present, and in those circumstances it will not improve its position in that regard even if it is successful in these proceedings. Finally, he relies on Starbucks’ delay in making the application.[73]My conclusion with regard to those arguments is that there is good reason for expedition for the reasons given by Starbucks. I am not persuaded to the contrary by any of the points made by counsel for Sky.[74]Secondly, I must consider the good administration of justice. This particularly involves considering the effect of acceding to the application on third parties. Whenever a case is expedited the result is that some other litigant somewhere gets pushed out of the queue. One does not know which litigant that is or what the nature of their case will be, but that is the practical result. Accordingly, expedition should only be ordered where that is warranted. That is particularly so the greater the degree of expedition that is sought.[75]In the present case, as I have already indicated, the order sought by Starbucks envisages a trial in October 2012. That is a fairly rapid degree of expedition. Nevertheless, I do not consider that it is so rapid as to be unduly prejudicial to other litigants, bearing in mind that I am satisfied that there is good reason to do it.[76]The third factor is prejudice to Sky. So far as that is concerned, Starbucks points out that the claim was intimated on 27 March 2012 and that there was a very detailed response indeed to it as early as 11 April 2012. In those circumstances, counsel for Starbucks submits that Sky with all its resources will be well able to be ready for a trial in October 2012. Counsel for Sky did not suggest to the contrary.[77]The final question is whether there are any special factors in the present case. Other than the Article 104 point which I have already considered, I do not consider there are any.[78]For all of those reasons, my conclusion is that I will refuse a stay as sought by Sky and I will grant expedition as sought by Starbucks.

Cited in 2 later judgments