For more on this topic:
- Revisit the Court of Appeal’s decision.
- Explore the UK IPO Practice Note to see how the Supreme Court decision has been implemented in practice.
SkyKick UK Ltd & Anor v Sky Ltd & Ors (Rev1) [2024] UKSC 36
Bad faith – overly broad specifications – trade mark registrations as a “legal weapon”
Key points
The Supreme Court handed down its judgment in Sky v SkyKick on 13 November 2024.
The appeal to the Supreme Court was anticipated by the trade mark profession as it raised an issue which significantly impacts a large number of established UK trade mark portfolios, namely:
- Where a trade mark applicant has applied to protect a trade mark for a broad range of goods and services when it does not have an intention to use across the full range of goods and services, has it been acting in bad faith?
- If so, is the trade mark registration liable to be invalidated in whole or in part for the goods and services not used?
The Supreme Court ruled that Sky’s applications for registration had been applied for partly in bad faith, and were liable to be invalidated for some of the goods and services. The first instance decision of Arnold LJ was upheld and the Court of Appeal judgment was overturned. The Supreme Court found that the trial judge was entitled to draw an inference from, inter alia, the width and size of the specification of goods and services that Sky’s application had been filed partly in bad faith.
The first instance decisions¹²³⁴
Sky is a household name in the UK as a TV broadcaster as well as a provider of telephony and broadband services. Sky claimed that SkyKick had, by offering and supplying email migration and cloud storage products and services under the mark SkyKick, infringed five of its trade mark registrations (the Sky Registrations), and passed off its goods and services as being connected with Sky.
The Sky Registrations protected a very broad range of goods and services. In some cases, they covered all the goods and services in a particular class.
SkyKick counterclaimed, seeking cancellation of Sky’s trade marks, claiming that the specifications for goods and services were so broad as to lack clarity and that Sky’s applications for the Sky Registrations were made in bad faith because Sky did not have an intention to use in respect of all of the goods and services.
Mr Justice Arnold (as he then was) made a finding of fact that Sky did not intend to use the Sky marks for all the goods and services for which they had sought protection. He found that these fell into three different categories:
- where there was no intention to use the goods and services, for example “bleaching preparations“;
- where the specification was so broad, there was no intention to use all of the goods and services within the category claimed, including “computer software“; and
- where Sky had sought to cover all the goods and services of a particular class by using class headings to describe its goods and services.
At the second of many, many hearings, the judge made a referral to the European Court of Justice (CJEU) for a determination on a point of law in relation to Skykick’s counterclaim.
Referral to the CJEU⁵
The CJEU ruled that it was not a ground for invalidity of a trade mark registration that the specification of goods and services was imprecise or vague and that whilst an intention not to use goods or services could constitute grounds for bad faith, this would only affect the goods or services which were not intended to be used and not the entire registration.
Return to the High Court
The case was referred back to the High Court of England & Wales for a ruling following the CJEU guidance⁶. Arnold J made a finding of infringement, but also held that Sky had made its application partly in bad faith as it did not intend to use all the goods and services of the Sky Registrations, but had pursued a deliberate strategy of seeking very broad protection as a “legal weapon” against third parties, rather than for purposes falling within the functions of a trade mark⁷. He held that the category of “computer software” had been registered partly in bad faith and provided his own specification limiting the category of goods covered by the Sky Registrations.
The decision was appealed.
Court of Appeal
The Court of Appeal, however, found to the contrary. It upheld Sky’s appeal, ruling that for a finding of bad faith, it must be the sole intention of the proprietor to use the mark in a manner inconsistent with the functions of a trade mark. A broad trade mark specification was not a ground for concluding that an application for a trade mark was made in bad faith. Sky’s reputation and brand recognition justified a wide claim to cover goods and services. It could also not be expected to know what its future use of goods and services would be when applying for trade mark protection. This meant that it could not be established that Sky’s sole intention was one of bad faith. In relation to computer software, Sky had a substantial business and was justified in seeking trade mark protection. The onus was on SkyKick to identify which of the goods and services were filed in bad faith and could not simply challenge a broad trade mark specification in its entirety.
The decision was appealed again.
Supreme Court
Despite the parties reaching settlement, the Supreme Court determined that there was a public policy interest in delivering judgment. It was also invited by the UK IPO to do so.
The Supreme Court overturned the decision of the Court of Appeal, ruling that it was bad faith to apply for a registered trade mark without any intention to use it as a badge of origin; that:
Constitutes an abuse – that is to say, a misuse of the system₈
The Supreme Court also said that the size and breadth of an application could be a ground for concluding the application was made in bad faith⁹; and that the reputation of a trade mark applicant could not justify an application for goods and services which the applicant had no intention to use¹⁰. This was to be considered in the context of the applicant’s existing business as to whether there was commercial justification for including those items or whether there was “no prospect of use”.
It also held that applying for overly broad categories, e.g. “software” where the applicant had an intention to use for some but not all of the goods and services in that category could be grounds for bad faith unless there was an obvious commercial justification¹¹.
The Supreme Court took into account the fact that Sky had relied upon the full range of goods and services of the Sky Registrations and maintained that position until around five weeks before trial. This supported the proposition that they relied upon a range of goods and services they did not intend to sell or provide but were prepared to deploy as a “legal weapon”. The failure to disclose any contemporary documents evidencing the filing strategy entitled the judge to draw adverse inferences on this behaviour.
Sky made an allegation of procedural fairness in relation to the manner in which the first instance judge had reached his decision and claimed that SkyKick should have particularised its case to identify the goods and services which it alleged were filed in bad faith. However, the Supreme Court ruled that Sky must have understood the case against it from an early stage. The judge was entitled to find the applications were made in bad faith and to require the modification of the categories of the goods and services of the Sky Registrations¹².
On infringement the Supreme Court ruled that there had been infringement of Sky’s registrations by the cloud back-up service but not the cloud migration service¹³.
Conclusion
This case is an extreme example of a common filing practice being condemned by the UK’s most senior court. Bad faith invalidity actions are now likely to be raised more frequently and so any infringement analysis should consider carefully whether there was plausible commercial justification for including each of the items in the registration.
The SkyKick judgment has to be seen in light of the concerns over the “cluttering” of the trade mark register over time. Filing practice in the UK and EU has historically permitted use of broader terms. The argument against that practice is that it confers unjustified monopolies on the owners and unfairly restrain competition. The courts have shown they are ready to intervene and reduce the scope of such registrations.
Key takeaways
- A party which cannot show any commercial rationale for seeking protection for goods and services in its registration is vulnerable to a challenge that it was acting in bad faith.
- A trade mark registration filed in bad faith is liable to be cancelled or partially cancelled in respect of any goods or services where there was no intention to use.
- Where parties were encouraged to file for class headings by official guidance this may be relevant to the assessment of bad faith.
- There may be bad faithwhere the use is for a small sub-class of a wider term e.g. computer software, depending on the circumstances.
¹[2018] EWHC 155 (Ch) – “the Main Judgment”
²[2018] EWHC 943 (Ch), [2018] RPC 12 – “the Second Judgment”
³[2020] EWHC 990 (Ch) – “the Third Judgment”, applying the CJEU guidance
⁴[2020] EWHC 1735 (Ch) – “the Fourth Judgment”, dealing with the appropriate orders
⁵Case-371/18
⁷Paragraphs 54 to 57. See also L’Oréal SA v Bellure NV Case, C-487/07 [2010] RPC 1 for discussion of the multiple functions of a trade mark, including the essential function to guarantee origin to consumers but also the quality function, and communication, investment and advertising functions.
⁸Paragraph 251
⁹Paragraph 320
¹⁰Paragraph 258
¹¹Paragraph 260
¹²Paragraph 474(i)
¹³Paragraph 474(ii)
