The UK Court of Appeal has today given judgment in the long-running trade mark dispute between Sky and SkyKick, in one of the most important and keenly awaited trade mark decisions of the last few years. The Court of Appeal found in Sky’s favour, reversing the previous decision that part of Sky’s trade marks were invalid on grounds of bad faith, on the basis that the specifications were too broad. The appeal decision has brought some long sought after clarity (and reassurance) for trade mark owners on whether trade marks filed with an overly broad trade mark specification may run the risk of being invalidated on grounds of being filed in bad faith. This goes to the heart of many brands' filing strategies and also impacts enforcement and will be a welcome decision for many trade mark owners.
Sky brought proceedings against SkyKick for trade mark infringement in relation to a handful of its SKY marks back in 2018. SkyKick denied infringement and counterclaimed for a declaration that Sky's marks were wholly or partially invalid. Mr Justice Arnold, as he was then, presided over the case in the English High Court, delivering a detailed judgment before making a preliminary reference to the CJEU on a few key issues. The CJEU made its decision in January 2020, largely retaining the status quo for trade mark owners. The key issue that remains in the current appeal is whether an application for a trade mark filed without any intention to use the mark in relation to the specified goods/services is made in "bad faith". The CJEU decided that a lack of intention to use a mark can amount to bad faith in certain circumstances (such as an intention to block or undermine the interests of other businesses) and therefore the offending part(s) of the trade mark specification could be invalidated.
In June 2020, the UK High Court decided the case on the basis of the CJEU’s decision, with Sky succeeding in its claim for trade mark infringement, although with the Court finding that SkyKick had successfully established that some of Sky’s marks had been applied for in bad faith as they had no intention to use the marks for all of the specifications applied for. Both parties were granted permission to appeal: SkyKick against the finding of infringement and as to whether Sky’s trade mark specifications should have been cut down further; and Sky against the partial finding of bad faith.
The Court of Appeal found in favour of Sky and reversed the finding that part of its trade mark specifications were invalid on the basis of bad faith. It held that Sky had a substantial present trade and a future expectation of trade in relation to the goods and services in question. Sky’s "particularly prolific” expansion and extensive brand recognition were cited as a reason for justifying registrations with a broad specification.
The door was however left open to a finding of bad faith where the sole objective of the application is to provide an exclusive right to stop third parties' use, with a trade mark which would not be used at all, or to pursue any other exclusive purpose which was not in accordance with honest practices. The judge held, in that case, it would be clear that the mark should be declared invalid as a whole. The judge also indicated that a finding of bad faith might be made, if there was no intention to use a whole category of goods or services.
The first instance judgment that part of Sky’s trade mark specification had been applied for in bad faith was based on two principal conclusions:
- in relation to some goods and services covered by the specifications Sky did not intend to use the trade marks at the application dates and there was no foreseeable prospect that they would ever do so (“the no prospect of use conclusion”); and
- the marks were applied for pursuant to a deliberate strategy of seeking very broad protection, regardless of whether it was commercially justified (“the broad strategy/no justification conclusion”).
On 1), the Court of Appeal held that, it is not necessary for a trade mark owner to intend to use the mark in respect of all conceivable sub-divisions of a particular good or service, for example, computer software. The Court did however indicate that this would be different, if the trade mark owner had no intention to use the mark for a specific category at all.
On 2) it was held that a trade mark owner does not have to formulate a commercial strategy for using the mark in relation to every species of goods or services falling within a general description, in order to avoid invalidity on the basis of bad faith. Such an applicant is entitled to say “I am using the mark for specific goods falling within description X. I have no idea precisely where my business in goods of that description will develop in the next 5 years, but there will undoubtedly be more such goods than there are now.” A trade mark applicant using one item of computer software can therefore apply in good faith for computer software as a whole.
The Court of Appeal dismissed SkyKick’s cross-appeal on partial invalidity and SkyKick’s appeal on infringement was rendered moot by the result of Sky’s appeal. Sky’s appeal against the refusal of its passing off claim was refused.
Implications for trade mark owners
This decision will come as a relief to many brand owners who have previously filed, or wish to continue to file, broad trade mark specifications as part of their filing strategies. The judgment provides welcome clarity that such broad filings may continue to be made without the risk of a finding that the filings were made in bad faith. However, care should still be taken in drafting trade mark specifications as the door was left ajar to a finding of bad faith where there is clearly no intention to use a trade mark in relation to a whole category of goods or services included within a trade mark specification. Furthermore, broad trade mark specifications, naturally encompassing more goods and services, continue to run the risk of a conflict with other third party rights.