In this article, we discuss a recent, precedent-setting decision of the UK's highest court, the Supreme Court.
Disclaimer – SkyKick is a complex case so we will therefore focus this discussion on one of the major issues of this case, the issue of bad faith.
The parties
Sky Ltd ("Sky") provides a range of SKY-branded broadcasting, entertainment, digital, internet telecommunications and software services, including the well-known Sky TV satellite channels.
SkyKick UK Ltd has been around since November 2011 ("SkyKick") and is a smaller outfit that offers 'cloud-based information technology migration, backup, and management services to Microsoft partners'.
Trade mark infringement
Sky sued SkyKick for passing off and infringement of its figurative and word marks for 'SKY,' covering a broad spectrum of goods and services, the case was based on both EU and UK trade mark registrations.
Counterclaim
SkyKick kicked back, challenging the validity of those registrations on the basis that Sky had applied for its trade mark registrations in bad faith by filing for overly broad specifications of goods and services. Two grounds were raised: overclaiming and bad faith.
Overclaiming
The argument was that Sky had been guilty of overclaiming and that its specifications of goods and services lacked precision and clarity - as an example, a term like 'computer software' is considered overly broad and vague.
Bad faith
SkyKick also argued that the trade marks were filed in bad faith due to a lack of intention to use the trade marks in relation to certain goods or services. They contended that there was no commercial rationale behind Sky opting for excessively broad coverage, other than to block competitors entering the market, which is an abuse of process.
High Court (there was bad faith)
The Judge held that there was no passing off, but that Sky had acted in bad faith and that its trade mark registrations were partially invalid. as Sky had 'no foreseeable prospect that they would ever intend to use the trade marks in relation to such goods and services'.
The judge went on to say that Sky had sought this broad protection purely for the purposes of using the trade marks as a 'legal weapon' against third parties.
Off to the Court of Appeal (there was no bad faith)
The Court of Appeal disagreed with the High Court's findings on bad faith and restored the specifications. Significantly the judge held that Sky did not need to have a commercial justification for every item in the category to have applied in good faith for computer software as a whole.
Finally, the Supreme Court (there was bad faith)
Of course, this case went all the way. The Supreme Court held that the High Court was entitled to find that Sky's trade mark registrations were filed in bad faith. Below are some of the findings:
- No intention to use: The Court of Appeal failed to consider Sky's behaviour in the lead-up to the trial. This behaviour supported the view that Sky had 'secured these registrations across a great range of goods and services which they never had any intention to sell or provide, and yet they were prepared to deploy the full armoury presented by these SKY marks against a trader whose activities were not likely to cause confusion'.
- Abuse: The judge said that he did 'not accept that these [General Court] decisions justify any general rule that the contrast between the size of the list of goods and services for which the applicant sought protection, on the one hand, and the nature of the business of the applicant, on the other, can never justify a finding that the application was made in bad faith. That would leave the system open to abuse and, in my view, it is not a reasonable or correct interpretation of the legislation.'
- Commercial strategy: an applicant 'does not have to have a commercial strategy to use a mark for every possible species of goods or services falling within the specification'.
- Bad faith: The judge made this point: 'Where...the broad description includes distinct categories or subcategories of goods or services, as "computer programs" and "computer services" undoubtedly do, then ... the proprietor may be found to have acted in bad faith in relation to one or more of those, and it would be manifestly unjust if it escaped that consequence simply because it had framed its specification using general terminology.'
So what does this judgment mean?
Caution should be exercised in filing trade mark applications for broad specifications of goods and services as this could leave trade marks open to attack on the ground of bad faith. At the time of filing a trade mark application, the applicant is entitled to seek protection for goods and services for which it intends to use a mark. However, care should be taken to not overstate that intention. Rather, in light of this judgment, trade mark owners are encouraged to specify the precise goods and services instead of relying on overly broad terms, particularly when filing trade mark applications in the UK.
*Reviewed by Rowan Forster, an Executive in ENS' Intellectual Property Department
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.