1 June 2020
Brands update - June 2020 – 2 of 10 Insights
The latest chapter in the long running Sky/Skykick saga saw the UK High Court issue a final judgement in the Sky v Skykick case, which follows the CJEU's decision in January 2020.
It was held by Lord Justice Arnold that – despite the finding of partial invalidity of some of the SKY trade marks and the narrowing of their specifications on the basis of bad faith – Sky was nevertheless successful in establishing infringement by Skykick of its SKY trade marks registered for 'electronic mail services'.
The judgement demonstrated that a finding of partial invalidity for overly-broad trade marks due to bad faith may not necessarily taint the entire registration and deal a deathblow to the infringement claim. This significant case sheds lights on the notion of bad faith applications. Examining the potentially far-reaching implications of this decision is crucial in ensuring that brand owners are aware of how best to safeguard themselves against the possible harmful ramifications following this decision.
Sky Plc and others (Sky) were the proprietors of certain UK and EU registered trade marks containing "SKY" across a wide spectrum of goods and services, including "computer software". Sky brought registered trade mark infringement action against the defendant, Skykick UK Limited, a cloud automation and management software company, and others (Skykick) for their use of signs containing the word "SKYKICK".
Skykick denied any infringement and issued a counterclaim for invalidity of the registered trade marks Sky sought to rely on. This invalidity claim was founded on two main grounds:
The UK High Court heard these arguments and referred certain issues to the CJEU for clarification. The CJEU determined, amongst other things, that trade marks could not be declared wholly or partly invalid for the reason that their specifications lacked clarity and precision but could be declared invalid for bad faith stemming from a lack of an intention to use.
In light of the CJEU's decision, the High Court judgement considered the following key issues:
In line with the CJEU's decision, Lord Justice Arnold promptly dismissed this first counter-claim, confirming that a lack of clarity and precision in respect of the goods and services which a trade mark is registered for was not, per se, good reason for invalidating a trade mark.
The Court found that Skykick had successfully established that a number of the SKY marks were applied for in bad faith and were subsequently partially invalid. In reaching this conclusion, the court highlighted three main factors:
These three factors were found by the Court to show Sky's applications were pursued as "a legal weapon against third parties", whether in opposition or infringement proceedings. Arnold LJ therefore concluded that trade marks for goods in class 9 and services in class 38 were indeed made in bad faith and with a view to monopolise classes of goods and services, therefore undermining the business interests of others.
Accordingly, the judge narrowed the overly-broad specifications of goods and services to those where there was an intention to use, while declaring the marks invalid for bad faith in respect of the other goods and services with the exception of telecommunications services, electronic mail services and internet portal services. The judge trimmed down Sky's registrations as he saw fit to achieve a fair and commercially justified level of protection.
Notably, the specifications relating to 'computer software' were amended, as follows: "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".
Notwithstanding the findings of invalidity due to bad faith and the consequently narrowed scope of the trade marks, the remaining protection was sufficient for a finding that Skykick had infringed the trade mark for electronic mail services.
Crucially, Skykick had not alleged bad faith in relation to "telecommunication services" and "electronic mail services". Therefore, those marks were deemed validly registered in relation to those services. Accordingly, it follows that Skykick had infringed the marks for "electronic mail services" given the likelihood of confusion due to their identical goods and services.
This decision has certainly caused much interest, particularly over its ruling on striking down applications made in bad faith and trimming overly-broad specifications to specific goods and services for which there was intent to use. In essence, it effectively opens up a new line of attack for defendants of trade marks claims, potentially spelling trouble for brand owners.
Litigants will now likely be closely reviewing their cases to determine if there is the possibility of infringement counter-claims on the grounds of overly-broad specifications and bad faith. Since the burden of proof falls on brand owners to establish the reasons for including all the goods and services in their specification, brand owners are encouraged to keep a record of their decision making process at the time of filing (eg business plans, advertising proposals and marketing strategy reports) should they need to adduce evidence going forward.
There is also the uncertainty as to how this decision squares with the initial five year grace period in which use of a trade mark does not need to be proved. This decision could signify a break in this common practice and such trade marks may now be vulnerable to being struck down with regards to goods and services which were filed in bad faith, even if this is within the initial five year grace period. This remains very much a live issue for future litigation and enforcement.
However, the picture is not all bleak. Brand owners can take comfort in the fact that existing registrations covering overly-broad specifications or imprecise terms within the specifications, even if found to be partially filed in bad faith, will not necessarily be fatal to infringement claims.
Moreover, any pruning that is done by the courts to overly-broad specifications will be done in a targeted and considered manner, since protection will only be narrowed to the extent that bad faith is proved. Both the CJEU and the UK High Court have emphasised that "bad faith will not simply be presumed on the basis of the mere finding that, at the time of filing, the applicant had no economic activity corresponding to the goods and services referred to in that application" and that there is a very high evidential burden to meet.
The judge's analysis and decision in respect of how specifications should be narrowed also provides a useful practical guide in informing how similar assessments may be conducted in the future and in aiding new applicants in constructing their claims in an acceptable manner, especially if they relate to goods and services in classes 9 and 38. It appears that framing a specification as "software supplied as part of" another good or service or software that serves a specific function, would seem reasonable in the courts' eyes.
Similarly, new applicants may want to avoid filing for imprecise terms going forwards, so as not to open themselves up to attacks on the basis of bad faith.
Lord Justice Arnold was palpably frustrated by Sky's refusal to submit an alternative limited specification despite having had the opportunity to do so, forcing him to devise his own revised wording. It would be sensible for brand owners in such a situation to propose their own fall-back specification wording to the courts in advance, to steer them in the direction of a more favourable revised specification.
Ultimately, this decision could herald the beginning of a divergence in the UK and EU trade mark systems, with the UK system shifting away from the generous approach of the EU Court in favour of the more precise approach in the USA, as alluded to by Arnold LJ in his very first judgement. Only time will tell whether this decision will result in a significant overhauling of trade mark filing strategies and whether the UKIPO will object during the examination stage to broad terms like "computer software".
Sky Plc, Sky International AG, Sky UK Limited v Skykick UK Limited, Skykick Inc  EWHC 990 (Ch), 2020 WL 02047926
Case No: HC-2016-001587
by Julia King