Brand reputation: Advertising is not enough to create goodwill

The UK Supreme Court has put the final nail in the coffin for Hong Kong-based firm PCCW Media Ltd in its battle to prevent British broadcaster Sky from using the name Now TV for its internet protocol television (IPTV) service.

Despite PCCW owning an IPTV service by the name of Now TV in Hong Kong, the numerous legal proceedings and appeals ruled in favour of Sky, both in terms of trade mark infringement where the trade mark was invalidated, and in terms of passing off. The judge rejected the most recent appeal, recognising that PCCW possessed no goodwill within the UK market and therefore Sky's Now TV service was in no way passing off PCCW's existing brand.

The key issue here was whether an entity needed only to establish a reputation within the UK, and did not need to create goodwill by establishing a business, to maintain legal action against passing off. While PPCM's Now TV channels have a degree of recognition among the Chinese community in the UK, the channels are not available in the UK, they have no subscribers, and they do not hold an Ofcom licence to broadcast in the UK.

The Supreme Court has stated that PCCM's Now TV 'channel' on YouTube and its Now TV websites are effectively advertising designed to increase subscribers in Hong Kong. A reputation based on advertising alone does not create goodwill and is therefore insufficient to support a claim in passing off.

This is a pragmatic decision. The internet provides access to millions of sites globally. The fact that a website targeted at a specific geographic market can be, and is, used in other countries does not support an argument that its brand has a reputation or goodwill.

The trend for broadcasters and intellectual property (IP) rights holders to use YouTube channels to generate awareness and advertising revenue has been prevalent for many years, for example. The argument that a broadcaster, which has used YouTube as a medium to promote a product or service that may not be available in the same jurisdiction as the YouTube video, has the right to prevent a broadcaster from using a similar name in a different territory by way of a passing off action is unreasonable and impractical.

Sky chose Now TV as the brand for its UK IPTV operations to differentiate the offer from its subscription-based satellite offer and to highlight the immediacy and simplicity of the Now TV offer for customers who don't want an annual subscription to Sky. The vast majority of Sky's Now TV subscribers have no awareness of PCCM's Now TV channel, and it would therefore be of no benefit if Sky were to be passing off PCCW's brand.

This judgment also highlights the importance of IP protection and the need for this to be considered at the inception
of a brand. Words such as 'now' are difficult to protect and are unlikely to be registered as trade marks due to their descriptive nature.

This leaves a company or brand inherently vulnerable,
as companies in the same industry are able to use the same descriptive words, and it is then the business' responsibility to prove that a large proportion
of the target market associates
the word with their brand,
to prevent others capitalising
on it. SJ

John Illsley is a director at brand valuation firm Intangible Business