Last November, the Supreme Court handed down its judgment in the much-publicised SkyKick v Sky case. In Lord Kitchin’s judgment, the Supreme Court upheld the High Court’s findings of partial invalidity of Sky’s trade marks, overturning the decision of the Court of Appeal, but still found that SkyKick had infringed Sky’s rights in some respects.
Unusually, despite the fact that the parties had reached a settlement, and their submissions to the court to the effect that this judgment should not be published, the Supreme Court nevertheless published their judgment due to the importance of the issues at hand, and the relevance of this case to trade mark law at large.
This judgment seeks to make clearer the circumstances in which a trade proprietor may be held to have acted in bad faith such that its registration may be declared invalid – particularly where it has provided a very wide (or too wide) specification of the goods and services on which the mark is intended to be used.
By way of introduction to the case, Sky Ltd alleged infringement of their SKY registrations by SkyKick UK Ltd for their use of the ‘SkyKick’ marks on certain services including email migration services. SkyKick counter-claimed, alleging bad faith on Sky’s part when applying for their ‘SKY’ trade marks, citing their very broad specifications and alleged lack of intention to use their mark for all the goods/services specified. This appeal to the Supreme Court followed a number of judgments in the High Court, as well as a referral to the Court of Justice of the EU (“CJEU”), and a judgment in the Court of Appeal.
In their appeal, SkyKick alleged that the Court of Appeal had made errors, and that Sky’s registrations should be declared invalid for bad faith in respect of at least certain key goods and services in question, and consequently that Sky’s claim for infringement should be dismissed.
There has never been a definition of what amounts to bad faith in trade mark law. The judgment of the CJEU, however, has previously confirmed the broad principle that bad faith describes conduct that departs from the “accepted principles of ethical behaviour or honest commercial practices”. The court highlighted two non-exhaustive categories of conduct: the first where the proprietor’s intention was to undermine third parties, and the second where the intention was to obtain an exclusive right for purposes other than those falling within the functions of a trade mark (for example to act as a badge of trade origin).
So Skykick’s position was that if Sky could not prove that it had an intention to use its trade mark for the goods/services it had specified in its registration, that amounted to bad faith and that its registrations were invalid either as a whole or in part. A further allegation was that even if Sky had an intention to use its mark in respect of e.g. computer software, it amounted to bad faith to specify “computer software” per se without limiting its description to software with the particular functionality of interest.
And not only Sky’s filing strategy but its trade mark strategy as a whole consequently came under inspection, it being common ground that Sky were very active in the enforcement of their (wide) trade mark rights, even against third party trade mark applications where the ‘identical’ goods and services were those in respect of which Sky had no intention to use its own trade marks.
Ultimately, after a review of the existing case law and the parties’ arguments, the Supreme Court concluded that the High Court had been entitled to find that Sky had applied for its registrations in bad faith for certain goods and services (where it did not have the requisite intention to use in respect of those goods and services). This meant that Sky’s registrations would have been removed from the register for those goods/services. For goods such as “computer software” per se, the specification would have been reworded to a narrow more specific description, defining software with functionality likely to be used by Sky. (This would have been the effect, if the case had not been settled before judgment.)
Since Sky retained its registrations for at least a range of computer-related goods/services, the Court held that some of Skykick’s services, namely its Cloud Backup services (even if not its email migration services), would still have infringed the remaining Sky registrations.
Of more general application, the Supreme Court made clear that the assessment of bad faith had to be made in the round, taking account of all relevant factors. But key factors they highlighted are:
- The length and breadth of the proprietor’s specification (clearly, very long lists of goods/services are more vulnerable to at least an allegation of bad faith);
- The size and nature of the proprietor’s business (a larger business with more capacity for more product lines would justify a longer specification);
- The proprietor’s commercial rationale (even if the proprietor is not a large business it may be able to justify a longer specification if it at least has a logical and commercially clear rationale); and
- The proprietor’s enforcement strategy (the extent to which it challenges third parties using its trade mark rights may be taken into account).
The Court also made clear though that a proprietor is entitled to a “modest penumbra” of protection around its core goods and services and the proprietor does not need to have concrete business plans to meet the requirement for an intention to use – a commercial rationale is sufficient.
It will have to be seen how this guidance is implemented by the UK Intellectual Property Office and the lower courts but trade mark proprietors may in response to this judgment take a slightly more cautious and conservative approach to how they draft the specifications of their trade mark applications and how aggressively they seek to enforce the rights obtained.