Following a detour via the CJEU, in April 2020 the SkyKick case returned to the High Court in the UK which concluded that the mark SkyKick infringed Sky's trade mark rights in the SKY mark (see full decision here). The recent decision highlights that care should be taken when considering defensive filing strategies which could give rise to bad faith claims.
Back in 2018, Lord Justice Arnold sitting in the UK High Court referred 5 questions to the CJEU for further guidance in an infringement case initiated by Sky (a well-known satellite and digital television broadcaster in the UK) against SkyKick (a start-up company which supplies cloud migration information technology services). Sky's rights covered a broad range of goods and services, but were not vulnerable to a non-use cancellation at the time of the action. SkyKick counterclaimed that Sky's trade marks were invalidly registered on the basis that the specification of goods and services lacked clarity and precision, as well as being filed in bad faith since Sky had no intention of using its marks for some of the applied for goods and services (examples include whips and fire extinguishers).
The questions which Arnold LJ referred to the CJEU were:
- Can an EU trade mark or a national trade mark registered in a Member State be declared wholly or partially invalid on the ground that some or all of the terms in the specification of goods and services are lacking in sufficient clarity and precision to enable the competent authorities and third parties to determine on the basis of those terms alone the extent of the protection conferred by the trade mark?
- If the answer to question (1) is yes, is a term such as 'computer software' too general and covers goods which are too variable to be compatible with the trade mark's function as an indication of origin for that term to be sufficiently clear and precise to enable the competent authorities and third parties to determine on the basis of that term alone the extent of the protection conferred by the trade mark?
- Can it constitute bad faith simply to apply to register a trade mark without any intention to use it in relation to the specified goods or services?
- If the answer to question (3) is yes, is it possible to conclude that the applicant made the application partly in good faith and partly in bad faith if and to the extent that the applicant had an intention to use the trade mark in relation to some of the specified goods or services, but no intention to use the trade mark in relation to other specified goods or services?
- Is section 32(3) of the UK Trade Marks Act 1994, which requires the application to state that the trade mark is being used, by the applicant or with his consent, in relation to the applied for goods or services, or that he has a bona fide intention that it should be so used, compatible with EU trade mark laws.
In brief, the CJEU responded in the negative to questions (1) and (2). As regards the third question, the court concluded that a trade mark application made without any intention to use the trade mark can constitute bad faith, but, only, if the applicant 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. Furthermore, when the absence of the intention to use the trade mark concerns only certain goods or services, that application constitutes bad faith only in so far as it relates to those goods or services. The Court concluded that the provisions found in national law, such as a declaration of use, or a bona fide intention to use (which is mandatory when applying for a trade mark in the UK), is permitted under EU law provided that any infringement of such an obligation does not constitute, in itself, a ground for invalidity of a trade mark once registered.
In the most recent decision of the High Court, Arnold LJ applied the law clarified by the CJEU's judgment to the facts of the case.
Specifications that lack clarity and precision
The first two questions raised before the CJEU centered upon clarity and precision, in this case the term "computer software", and whether use of such language within a specification results in the trade mark being wholly or partially invalid. Use of such broad terms provides trade mark owners with wide ranging monopolies potentially resulting in barriers prohibiting new-starters from entering the market. On the basis of the CJEU's decision that a trade mark cannot be declared invalid, or partially invalid, on the grounds that the specification lacks clarity and precision, Lord Justice Arnold dismissed that part of SkyKick's counterclaim.
Intention to use
The second issue relates to whether an application filed without an intention to use the mark in respect of some applied for goods and services amounts to bad faith and, as such, could render the registration wholly or partly invalid. The CJEU found that bad faith may arise where the applicant had the intention of undermining the interests of third parties in a manner inconsistent with honest practices. The CJEU confirmed that it would only render the registration invalid in respect of those particular goods and services where there was no intention to use.
Lord Justice Arnold in his UK High Court decision reiterated his previous findings that Sky had not intended to use the trade marks in relation to some of the goods and services covered by the specifications. In respect of these goods and services, the lack of intention to use the marks occurred in three different ways:
- no intention to use the trade marks at all (examples being 'bleaching preparations', 'insulation materials' and 'whips');
- intention to use not conceivable due to the breadth of the category of goods or services (for example, 'computer software'); and
- use of class headings in the specification with an intent to cover all possible goods and services in the relevant classes.
Arnold LJ further found that "...Sky made the applications pursuant to a deliberate strategy of seeking very broad protection of the trade marks regardless of whether it was commercially justified. Sky thus applied for the trade marks with the intention of obtaining an exclusive right for purposes other than those falling within the functions of a trade mark, namely purely as a legal weapon against third parties". As a result, Sky's registrations were held to be filed partially in bad faith and as a result were invalidated for these goods and services.
In the context of these findings, Arnold LJ considered validity of particular terms in Sky's specification, in particular, 'software'. He noted that "The fact that Sky did not intend to use the trade marks across the breadth of this category of goods does not mean that they did not intend to use the trade marks in relation to any computer software. On the contrary, I made findings in the Main Judgment that Sky had actually used the trade marks in relation to some kinds of software." Arnold LJ then proceeded to devise a specification which would reflect the extent of the goods and services filed in bad faith and concluded that Sky's trade marks should be declared invalid in relation to "computer software" except for the following software products: "computer software supplied as part of or in connection with any television, video recording or home entertainment apparatus or service; computer software supplied as part of or in connection with any telecommunications apparatus or service; electronic calendar software; application software for accessing audio, visual and/or audio-visual content via mobile telephones and/or tablet computers; games software". Certain class 38 services were also limited accordingly.
In spite of the finding of 'partial' bad faith and the resulting limitations to the scope of its trade marks, Sky was successful in demonstrating that SkyKick had infringed its SKY marks, at least in so far as they were registered for 'electronic mail services'.
Trade mark owners will be relieved that existing registrations consisting of broad but historically standard terms, such as "computer software" or "financial services", are not automatically rendered invalid in their entirety.
That said, and in view of the limitation of Sky's specification by the High Court, consideration should be given to specifications of applications when seeking to cover broad terms, as it leaves the resulting registrations vulnerable to third-party attacks based on bad faith.
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.