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27 November 2024

Supreme Court Rules In Sky v SkyKick

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The Supreme Court has today handed down its long awaited judgment in Sky v SkyKick on the issue of bad faith in trade mark filings.
United Kingdom Intellectual Property

The Supreme Court has today handed down its long awaited judgment in Sky v SkyKick on the issue of bad faith in trade mark filings. We are very proud that a Fieldfisher team, led by John Linneker, represented SkyKick in the matter prior to ConnectWise's acquisition of SkyKick earlier this year. Our team included Christopher Leung, Natasha Rao, Samantha-Jayne Millington and Mikhail Popov.

Sky had sued SkyKick for trade mark infringement and passing off. The key consideration, which has led to the case escalating to the Court of Justice of the European Union ("CJEU") and the Supreme Court, was the extent to which Sky's trade marks had been validly registered.

The position taken by SkyKick was that the great breadth of Sky's trade marks indicated that the marks had been filed solely for enforcement purposes and without a genuine intention to use the marks in trade for all the goods and services covered. The extent to which such a filing strategy is in bad faith, and gives rise to partial or complete invalidity of the trade marks, is the central question in the present appeal.

The Supreme Court has now held that the Sky trade marks were indeed filed in bad faith and that the trade mark specifications should be restricted accordingly.

Background / brief summary of proceedings to date

Sky sued SkyKick for infringement of one of its UK and four of its EU SKY trade marks and for passing off by SkyKick's use of SKYKICK for email migration and cloud storage services.

In February 2018, Mr Justice Arnold delivered judgment in the High Court, holding that while there was no passing off, if the trade mark registrations were valid, then they were infringed. However, he referred the following (paraphrased) questions in relation to whether those marks were indeed valid to the Court of Justice of the European Union ("CJEU"). The CJEU answered on 29 January 2020:

Question Answer
Is lack of clarity/precision in a trade mark specification a ground for invalidity of a trade mark? No

If yes is a term like 'computer software' sufficiently clear and precise or is it invalid?

Not applicable
Is registering a trade mark without intention to use it bad faith (which can therefore lead to invalidity)? Yes, where "the applicant for registration ... had the intention either of undermining, in a manner inconsistent with honest practices, the interests of third parties, or of obtaining, without even targeting a specific third party, an exclusive right for purposes other than those falling within the functions of a trade mark..."
Is registering a trade mark without intention to use it bad faith (which can therefore lead to invalidity)? Yes, where "the applicant for registration ... had the intention either of undermining, in a manner inconsistent with honest practices, the interests of third parties, or of obtaining, without even targeting a specific third party, an exclusive right for purposes other than those falling within the functions of a trade mark..."
If yes, can a trade mark be made partly in good faith and partly in bad faith if there is intention to use it for some goods and services specified but not others? Yes. Only those goods and services "tainted" by bad faith are invalid (not the whole mark).
Is s32(3) Trade Marks Act, which requires the applicant of a UK mark to state that the mark is being used or that he has a bona fide intention that it will be used, compatible with the EU Trade Marks Directive, which does not require such a statement? Yes. Falsely making that statement may point to bad faith, but cannot "constitute a ground for invalidity of the trade mark concerned".

When the case returned to the High Court, Arnold J found in a 29 April 2020 judgment that Sky's marks had been applied for partly in bad faith, "for purposes other than those falling within the functions of a trade mark, namely purely as a legal weapon against third parties". Accordingly, he narrowed the specification of the trade marks to remove terms where there was no intention to use and to limit certain broad terms such as "computer software" to the specific sub-categories of goods where an intention to use could be found. Notwithstanding the narrowing of the specifications, Arnold J still found infringement in relation to certain activities.

Sky appealed against the finding of partial invalidity and the dismissal (in the 2018 decision) of its claim for passing off. SkyKick appealed against the finding of infringement and argued for a more extensive restriction of the trade mark specifications.

The Court of Appeal's decision was handed down on 2 July 2021. It overturned the partial invalidity of Sky's trade marks but maintained the rejection of its passing off claim. It also dismissed SkyKick's appeals against infringement and for greater restriction of the specifications. On infringement, email services did not include the migration of emails, so there was no infringement there; however, there was infringement in relation to the cloud storage services, which fell within "computer services for accessing and retrieving audio, visual and/or audiovisual content and documents via a computer or a computer network" in class 38.

The parties appealed to the Supreme Court, which summarised the issues before it as follows:

  • "(1) What is the test for determining "bad faith" in s.3(6) of the Trade Marks Act 1994?
  • (2) If such bad faith is found, what is the correct approach to determining the specification that the proprietor of the trade mark should be permitted to retain?"

The Supreme Court's judgment

Bad faith

The Supreme Court found that bad faith can be inferred from the length and breadth of trade mark specifications, and can be inferred from broad terms, and whether such an inference can be properly drawn will depend on the circumstances of the case.

On broad terms which could be broken down into categories or subcategories, such as "computer software", while an applicant need not have a commercial justification "for every possible species of goods or services falling within the specification", it should not escape a finding of bad faith merely because it has decided to use general terms rather than specifying categories or subcategories within the general term.

The court therefore concluded that the decision of Arnold J in the High Court had been correct as far as validity was concerned. The registrations were partly invalid for bad faith due the breadth of the specifications and lack of genuine intention to use the marks across the full specification of goods and services applied for. The registrations remained valid only for goods and services where there was a genuine intention to use.

Infringement

The Supreme Court upheld the Court of Appeal's decisions on infringement. The Court agreed that email migration services should not be extended to include "all services related to electronic mail", and so there was no infringement by the email migration services. However, the cloud storage services did fall into "computer services for accessing and retrieving audio, visual and/or audiovisual content and documents via a computer or a computer network" and therefore did infringe.

Brexit

The Supreme Court also addressed the impact of Brexit. It confirmed that the UK courts continue to act as EU trade mark courts, for all proceedings which were pending before a UK court (designated as an EU trade mark court) prior to the end of the Brexit transition period on 31 December 2020. In this case, this means that the decision has effect across all the EU trade marks Sky relied on in the original proceedings and not just its UK mark.

Comments

This judgment will have a significant impact on trade mark filing strategies. Businesses which have been inclined to adopt broad approaches to trade mark filing to date will need to consider much more carefully the scope of their intended activities when filing. Furthermore, many cases, whether oppositions/cancellations in the UK Intellectual Property Office or court proceedings, have been stayed pending this judgment. We should expect them now to resume.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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