No more pie in the sky: UK Supreme Court rules over-broad trade marks invalid for bad faith – SkyKick v Sky

Background

The dispute has been running for several years, starting in the High Court in 2018 and ending in the Supreme Court in 2024 (via a ruling from the CJEU in 2020 and a Court of Appeal decision in 2021 – for more detail on the background to this litigation, read our coverage of the Court of Appeal decision here). In brief, Sky (the respondents) brought a claim against SkyKick (the appellants) for infringement of its registered trade marks for SKY by using SkyKick in relation to email and cloud storage products and services. SkyKick denied infringement and counterclaimed that Sky's marks were invalid on bad faith grounds.

After the Court of Appeal reversed the High Court decision which held that Sky’s trade marks were invalid on the grounds of bad faith, Skykick appealed. The main issue before the Supreme Court concerned the validity of trade marks with very broad specifications, namely: a) in what circumstances such a trade mark could be invalidated on grounds of bad faith; and b) whether the entire trade mark is invalidated as a result of a bad faith finding or only in respect of the offending specification terms.

In its appeal to the Supreme Court, SkyKick, the appellant, argued that filing broad specifications without a bona fide intention to use in itself amounts to bad faith, and that a finding of bad faith on that basis would invalidate the trade mark in its entirety. It placed great stead upon the function of the trade mark register to convey accurate messages about what trade marks are available and which might block plans to use. It alleged that filing broadly leads to a cluttering of the register and makes clearance of new brands difficult.  SkyKick also alleged that it leaves it open to the trade mark owner to use those registrations to enforce widely against competitors, at least for the five year use period following registration.

The Supreme Court heard the appeal in June 2023. Brand owners and practitioners have been eagerly anticipating a decision on this important issue ever since.

Decision

In a last minute plot twist before judgment was handed down, the parties settled the dispute and asked the Supreme Court not to give judgment. The Supreme Court declined to do so, citing in particular the public importance of the issues in the appeal.

The Supreme Court allowed SkyKick's appeal in part, holding that the Court of Appeal was wrong to overturn the High Court's findings that Sky's trade marks were applied for in bad faith. The Supreme Court judgment makes it clear that:

• Depending on the circumstances, the overall width and size of a trade mark's specification of goods and services may lead to an inference that an application was made in bad faith.

• A trade mark application which covers a broad category of goods and services may be partly invalid for bad faith, if that broad description includes distinct sub-categories of goods or services in respect of which the applicant never intended to use the mark.

In overturning the High Court's decision on bad faith, the Court of Appeal had failed to take into account a number of highly significant matters. This included the fact that Sky had originally asserted the full range of goods and services covered by each of its marks against SkyKick. Sky only narrowed down the goods and services it relied upon several weeks before trial, and then further narrowed the basis of its claim during closing submissions at trial. Sky's conduct in this regard lent support to SkyKick's argument that Sky had applied for those registrations with no intention of ever selling such goods/services, but rather to "deploy the full armoury" of those marks against other traders whose activities were not likely to cause confusion or amount to passing off. Accordingly, the judge was entitled to find that the SKY marks had been applied for partly in bad faith.

Furthermore, the Supreme Court found that there was no procedural unfairness in the High Court's approach and that in the circumstances of the case, the High Court was entitled to amend the specifications of the SKY marks in the way that it did. For example, having found the marks invalid in relation to "computer software" in class 9, the judge had (in the absence of any proposal from Sky) limited that part of the specification to a narrower sub-category of computer software supplied as part of or in connection with telecommunications apparatus or services (among other things).

On infringement, however, the Supreme Court upheld the Court of Appeal's finding that due to the narrowing of the SKY marks' specifications, only some, but not all, of SkyKick's goods and services were infringing.

Comment

This decision opens the door to attacks on marks with broad specifications. Owners of marks covering broad specifications (and broad terms such as “computer software”) may wish to proactively limit the specifications of any key marks which are at risk of invalidation following this judgment. Brand owners will have to think very carefully about future filings, avoiding overly broad terms and lengthy specifications.

We wonder whether the Supreme Court’s finding that the inclusion of broad terms such as “computer programs” and “computer services” may amount to bad faith will result in an official change to classification practice at the UKIPO in respect of those terms (similar to that which followedIP Translator). More detailed analysis to follow – watch this space.