Sky relied on the breadth of its SKY registrations to challenge two services offered by SkyKick. That breadth raised a prior question: had Sky sought protection for goods and services it never genuinely intended to supply? The Supreme Court restored the trial judge’s findings of partial invalidity for bad faith and distinguished the two services when deciding infringement.
Sky claimed that SkyKick’s email migration and cloud storage products, supplied under the SkyKick sign, infringed five registered SKY trade marks: four EU trade marks and one UK trade mark, applied for between April 2003 and October 2008. SkyKick denied infringement and passing off, and counterclaimed that the applications had been made in bad faith because Sky had no genuine intention to use the marks for all, or at least some, of the enormous range of goods and services covered. The marks were still inside the five-year grace period, so they were not yet open to revocation for non-use. Passing off was rejected at trial and was not pursued further.
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Arnold J found that Sky had deliberately sought very broad protection without commercial justification for parts of the specifications. He narrowed them accordingly. The Court of Appeal reversed the findings of bad faith. The Supreme Court had to decide whether the trial judge was entitled to draw that inference and restrict the marks as he had.
When lack of intention amounts to bad faith
Lord Kitchin, with whom Lord Reed, Lord Lloyd-Jones, Lord Hamblen and Lord Burrows agreed, treated bad faith as an autonomous concept. It is not enough that the applicant has not yet used the mark, or does not yet have a settled plan. An applicant may properly seek protection before use, including where the intention is conditional on developing supply, distribution or a viable business, and then has the grace period in which to begin genuine use. Bad faith arises where the application is made not to engage fairly in competition, but either to undermine third parties inconsistently with honest practices, or to obtain an exclusive right for purposes other than the functions of a trade mark, above all the function of indicating origin.
Lack of intention to use is therefore evidence rather than a free-standing ground of invalidity. It may support bad faith where there is no rationale consistent with those functions and the circumstances show that the applicant sought the registration as a weapon. The width of the specification, set against the nature of the applicant’s business, can rebut the presumption of good faith if the applicant offers no satisfactory explanation. Using a broad term such as “computer software”, or a class heading, does not put the applicant in a better position than an applicant who names the offending sub-categories: distinct categories or sub-categories for which there was never any intention of use may still be excised. Bad faith affecting only some goods or services invalidates the registration only for those goods or services. A false statement of intention under section 32(3) of the Trade Marks Act 1994 can be evidence of bad faith, but is not itself a ground of invalidity.
The Court held that the trial judge was entitled to apply those principles as he did. Sky had originally relied on the full breadth of the registrations, narrowed its case only shortly before and during trial, and had a long record of enforcement in areas where it did not trade. The Court of Appeal had taken too narrow a view of bad faith, particularly in treating the overall width of a specification, and the use of broad descriptions, as incapable of supporting the allegation. The procedure was not unfair. Sky knew the case it had to meet, both sides had an opportunity to propose a narrower specification, and the judge was entitled to draw the line himself when neither proposal was satisfactory.
Infringement on the restricted specifications
Cloud Migration moved email accounts between systems. That did not make it an electronic mail service within the narrowed specifications, and infringement on that basis was not established. Cloud Backup, by contrast, was the same as or sufficiently similar to relevant computer services covered by the marks. The finding of a likelihood of confusion could stand. The Court declined to undertake a fresh assessment of other infringement allegations.
Jurisdiction after the end of the transition period
The proceedings were already pending on IP completion day, 31 December 2020. Lord Kitchin and Lord Reed held that article 67 of the Withdrawal Agreement, given direct effect by section 7A of the European Union (Withdrawal) Act 2018, keeps the jurisdiction provisions of the EU Trade Mark Regulation in force for such proceedings. Courts in the United Kingdom that had been designated as EU trade mark courts therefore remain EU trade mark courts for those pending cases. They can decide infringement and validity of the EU trade marks, including with effect across the European Union, and can also deal with the comparable UK trade marks (EU) created on IP completion day. Domestic provisions cannot be read so as to remove that jurisdiction. The Court rejected the argument that, once the transition period ended, UK courts lost all power over the EU marks.
After the hearing, the parties reached a worldwide settlement and asked the Court either not to give judgment or to confine itself to an advisory opinion on bad faith. The Court refused. The issues were of general public importance, the Comptroller-General had asked the Court to decide them, and the outcome could affect other traders and the register. The parties and the intervener were left to make observations on the form of the final order.
Verdict: The Supreme Court unanimously allowed SkyKick’s appeal in part. It restored the findings of partial invalidity for bad faith. Infringement by Cloud Migration was not established; the relevant finding concerning Cloud Backup stood. The Court invited submissions on the form of the final order.
Source: SkyKick UK Ltd and another v Sky Ltd and others [2024] UKSC 36
