The long-awaited Supreme Court judgment of Sky v SkyKick was released on 13 November 2024. The decision addresses whether a broad specification can give raise to a “bad faith” claim and just how broad that claim can reach. The case also considers infringement and whether, post-Brexit, UK courts can rule on actions involving EU trade marks.
The decision of the Supreme Court overturns the Court of Appeal’s ruling in 2021, where it was previously held that the broadness of a specification does not amount to bad faith. The Supreme Court’s decision is likely to have a significant impact on future trade mark registrations and the scope of protection sought.
Background
The dispute arose back in 2016 when Sky brought an action against SkyKick. Sky alleged that SkyKick infringed five of Sky’s registered trade marks (the “SKY marks”) and that they had also passed off their products and services as being those of or connected with Sky by using the SkyKick mark in relation to electronic mail migration and cloud storage products and services. The marks relied upon by Sky were four EU trade marks and one UK trade mark.
SkyKick denied these claims and counterclaimed that the specifications covered by the SKY marks (i) lacked clarity and precision and (ii) had been applied for in bad faith on the basis that Sky had no genuine intention to use its marks in relation to all or some of the goods and services covered by the registrations.
In 2018, Arnold J (as he then was) delivered judgment in the High Court and found that, if Sky’s trade marks were valid, then SkyKick’s use was an infringement. The High Court also found that Sky’s claim in passing off had failed.
As the validity of the registrations raised issues of law, guidance from the European Court of Justice (CJEU) in relation to points (i) and (ii) mentioned above was required.
The CJEU provided its guidance in January 2020, stating that, in relation to point (i), a trade mark cannot be declared wholly or partially invalid on the basis that the goods and services covered by the trade mark registration lack clarity and precision. In addition, in relation to point (ii), the CJEU stated that a lack of intention to use the mark could lead to a finding of bad faith, but it can only be established where there are “objective, relevant and consistent indicia tending to show” that the applicant for registration 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”.
When the case returned to the High Court in April 2020, the court ruled that, the claim in relation to point (i) must fail in light of the CJEU’s guidance. In relation point (ii), the court found that the SKY marks were partly applied for in bad faith for the following reasons:
- There was no intention to use the mark in relation to some of the goods (including, for example, “bleaching preparations” in class 03 and “whips” in class 18);
- The specification of goods and services was so broad that Sky couldn’t have intended to use its SKY marks across the breadth of the category; and
- The specifications were drawn so widely that they would cover all goods and services in a particular class.
In light of the above, some of the broader goods and services covered by the SKY marks (excluding “telecommunication services”, “electronic mail services” and “internet portal services”) were narrowed accordingly by the judge.
In relation to the infringement claim, the High Court found that, even though the specification covered by the SKY marks had been narrowed, SkyKick had still infringed through its use of the SkyKick mark in relation to their email migration services and later found (in its July 2020 judgment) that it had also infringed through use of the mark in relation to its cloud storage services. The High Court also dismissed Sky’s claim for passing off.
The parties then appealed to the Court of Appeal:
- Sky appealed against the finding of bad faith and the dismissal of the passing off action.
- SkyKick appealed against the finding of an infringement and argued that the goods and services covered by the SKY marks should’ve been narrowed further than the restrictions imposed by the High Court.
The judgment of the Court of Appeal was given in July 2021, holding that Sky’s appeal was allowed in relation to the bad faith claim and thus the court restored the specifications covered by the SKY marks to their full width. Because of this, SkyKick’s appeal against infringement had to be dismissed.
The Court of Appeal did, however, reject Sky’s passing off claim.
SkyKick appealed to the Supreme Court.
The Supreme Court Judgment
Bad faith
In the Court of Appeal judgment, it was held that the SKY marks “were made, at least in part, with the intention of protecting the use of the mark in relation to goods and services in which Sky had a substantial present trade and a future expectation of trade” and therefore were consistent with the function of a trade mark. The court added that there were “legitimate reasons” connected with Sky’s “particularly prolific” expansion and desire to protect its brand”, signifying that the broadness of Sky’s specification was justified.
The Supreme Court disagreed with the Court of Appeal’s finding of no bad faith and agreed with the High Court’s modification of the goods and services covered by the SKY marks. Within the judgment, the Supreme Court touches upon a number of issues in which the Court of Appeal failed to consider and confirmed that, where terms within a specification are broad and include distinct categories of goods and services (such as, “computer programs” and “computer services” as referenced the judgment), it is possible that a proprietor may be found to have acted in bad faith.
Infringement
The Court of Appeal disagreed with the High Court’s ruling on infringement and found that SkyKick had not infringed in relation to the email migration services on the basis that “electronic mail services” covered by the SKY marks does not include “all services related to electronic mail”. With that said, the Court of Appeal did agree with the High Court’s decision that SkyKick’s use of the mark in relation to the cloud backup services was an infringement.
The Supreme Court agreed with the Court of Appeal’s findings in this instance.
Brexit
The final issue addressed by the Supreme Court was the impact of Brexit in these proceedings as Sky argued that the “guillotine has come down” for UK courts to rule on actions involving EU trade marks.
However, the Supreme Court confirmed that, for cases pending before the end of the transition period (i.e. before the “IP completion day” on 31 December 2020) the UK courts “retain the status and retain the jurisdiction to decide these cases”.
Summing up
This case signifies the importance for businesses to now consider the scope of protection for future trade mark registrations, as adopting a narrower specification may be the way forward to avoid any possible bad faith claims.
You can read the Supreme Court’s full judgment below.
