In the long-running dispute between Sky and SkyKick, the UK courts developed on the notion of bad faith in trademark filings that normally extends to seeking trade mark protection for a broad range of goods and services way and beyond classes covered by the core trademark.
The Court of Appeal clarified that an applicant does not need to have a plan to use the mark for all goods and services within each category of goods or services the mark is registered for delivered in the context of , will be welcomed by trade mark owners, who are now less likely to have trade mark rights invalidated on ‘bad faith’ grounds than they were previously.
The underlying dispute
Sky, a broadcaster, telecommunications and broadband provider sued Skykick, a US supplier of email migration and cloud storage services over trade mark rights and alleged ‘passing off’.
Sky claimed that SkyKick was infringing five of its UK and EU trade marks for SKY by providing its services under the sign SKYKICK. SkyKick denied infringement and counterclaimed for a declaration that Sky’s marks were invalidly registered due to bad faith, as Sky’s marks covered a very broad range of goods and services, including many that had no direct relevance to its core business.
The case came before the High Court for a trial and in 2018 the judge found that Sky’s trade marks to be infringed, provided they could withstand the counterclaim for invalidity. Before ruling on that point, however, the judge asked the Court of Justice of the EU (CJEU) to help him interpret the scope of invalidation for bad faith under EU trade mark law.
The CJEU held that a trade mark filing made without any intention to use the mark for the specified goods and services is made in bad faith if there is “objective, relevant and consistent indicia” demonstrating that 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 [the] trade mark”. The CJEU confirmed that partial invalidation of a mark was possible where the bad faith affected only some of goods and services.
Following the CJEU guidance, the High Court considered how it applied to the specifics of the Sky and SkyKick dispute. The court limited the scope of Sky’s trademarks after finding that some of them were registered for goods and services Sky had no intention of providing, in a deliberate strategy to use the bad faith marks as a legal weapon for seeking broad trademark protection without any commercial justification for them.
Nevertheless, despite partially invalidating the bad faith registrations, the court held that Skykick’s activities still infringed Sky’s core trademarks and still awarded Sky an injunction and damages. Sky appealed the finding of partial invalidity and consequent restriction of their trade marks. Skykick also cross appealed on the findings of infringement.
The two companies each filed an appeal on the issue of bad faith when applying for trade marks covering an extensive range of goods and services. The court carried out a detailed review of existing EU and UK case law on bad faith and held that Sky’s appeal should be allowed and the judge’s order set aside insofar as it cut down the specifications of goods and services of the trade marks.
The Court of Appeal’s primary criticism of the High Court judgment concerned the interpretation of the CJEU’s bad faith test. The High Court analysis concluded that a mere lack of intention to use the mark for some of the goods or services covered by the registration will result in partial invalidation of the marks in respect of those goods and services. The Court of Appeal however held that that approach is incorrect, inferring that merely applying for a mark to cover a very broad range of goods and services is not evidence of bad faith. Similarly, it said it will not automatically be bad faith if the applicant does not intend to use the marks for all of those goods and services. More is needed to demonstrate a bad faith registration.
The Court of Appeal said it is necessary to show no commercial justification for applying to cover those goods and services, meaning a clear absence of initial intention to use the mark in respect of them, to a degree where the applicant pursues the unique objective to undermine the interests of third parties or obtain an exclusive trade mark right for purposes other than indicating goods and services of the applicant.
While overturning the High Court’s conclusions on bad faith, the court considered Sky to have good commercial justification for applying for broad specifications of goods and services, affording more leeway to applicants.
The Court of Appeal took the category of ‘computer software’ as an example and said that it would be possible for a small computer software company marketing only one program to make an application in good faith for a trade mark for ‘computer software’. It would not be bad faith simply because that company did not intend to use, and there was no prospect of them using, the mark in respect of every conceivable sub-division of computer software.
The Court of Appeal also confirmed on more than one occasion in its judgment that the burden of proving bad faith is on the party alleging it. Moreover, Bad faith allegations cannot be overbroad and need to provide sufficient factual details, including providing redrafts of the trade mark specification at issue.