September 27, 2021
In 2016, Sky initiated proceedings for infringement under Articles 10(2)(b) and 10(2)(c) of the Trade Mark Directive (2015/2436/EU) by SkyKick of four of Sky’s EU trade marks and one UK trade mark for SKY as registered in relation to specific goods and services including “telecommunications services”, “electronic mail services” and various iterations of “computer software” (the “Selected Goods and Services”).
Sky targeted two products marketed by SkyKick: (i) Cloud Migration, an email migration product; and (ii) Cloud Backup, a product providing cloud-based, wholesale backups of Office 365 data.
SkyKick counterclaimed that Sky’s marks should be declared (partly) invalid on the ground that they were registered for “computer software”, which was not specified with sufficient clarity and precision. SkyKick also said that the trade marks were registered in bad faith because Sky did not intend to use them in relation to the Selected Goods and Services, but only in relation to “telecommunications services” and “electronic mail services”.
On a referral from the High Court, the CJEU found that a trade mark cannot be declared wholly or partially invalid on the ground that the specification of the goods and services lacks clarity and precision. Moreover, if the applicant had no intention of using the mark in relation to some of the goods and services in the specification, the application could only be found to have been made in bad faith in relation to those goods and services.
Back in the High Court following the CJEU judgment, Lord Justice Arnold sitting at first instance had: (i) declared Sky’s marks partially invalid due to bad faith and restricted their protection to goods and services with some connection to Sky’s established businesses; (ii) dismissed Sky’s claim for passing off; and (iii) dismissed SkyKick’s counterclaim alleging lack of clarity and precision in the specification wording. He found that SkyKick’s Cloud Migration product and Cloud Backup product both infringed Sky’s marks. Sky’s additional claim for passing off was, however, rejected.
Sky appealed against the finding of partial invalidity and consequent restriction of its marks, and the dismissal of the passing-off action. SkyKick cross-appealed against the findings of infringement.
Giving the lead judgment, Sir Christopher Floyd said that, following the CJEU’s finding on partial bad faith, SkyKick was precluded from arguing that an entire category of Sky’s goods or services could be declared invalid, because the bad faith related to only some of the goods or services that fell within it.
Further, it was necessary to proceed with particular caution when applying findings about the trade marks as a whole to the question of whether the Selected Goods and Services were applied for in bad faith. Each category of goods and services had to be considered in its own right. In any event, a lack of intention to use was not, of itself, a ground for a finding of bad faith.
Arnold LJ had found that, in relation to some of the goods and services in “computer services”, Sky did not intend to use the marks and there was no foreseeable prospect that it would ever do so.
However, Arnold LJ had also found that Sky did have a substantial business in “computer services” under the SKY marks. It was true that Sky had no prospect of using the mark in relation to every conceivable sub-division of computer software, but that was not a relevant or objective indication of bad faith, Sir Christopher said. Arnold LJ had said that Sky did not intend to use the marks “across the breadth of the category”, which was not the same as finding that Sky had no intention to use the marks for that category at all. Therefore, Arnold LJ’s conclusion could not be used to support a finding of bad faith.
Arnold LJ had also concluded that Sky had applied for the marks pursuant to a deliberate strategy of seeking very broad protection, regardless of whether it was commercially justified.
Sir Christopher said that a trade mark applicant does not have to formulate a commercial strategy for using the mark in relation to every type of goods or services falling within a general description, observing that such a requirement would “create an increasingly impossible burden on applicants”. Clearly, there would be no prospect whatsoever of an applicant using the mark for every variety of goods within the description, but that did not mean that the application had been made in bad faith. It was not bad faith to employ a strategy of applying for protection of sufficient width to cover some further, as yet unformulated, goods within the same category. In Sir Christopher’s view, an applicant with only one item of computer software could apply in good faith for “computer software” as a whole and the absence of a plan to use a mark for all goods or services within a certain category was not relevant to bad faith.
Accordingly, Arnold LJ had erred in his approach to the bad faith issues and Sky’s appeal on them was allowed.
Sir Christopher dismissed Sky’s appeal on passing off, finding that there was no basis on which the Court of Appeal could interfere with Arnold LJ’s evaluation of the claim.
Sky’s appeal in relation to the partial invalidity of the trade marks for the Selected Goods and Services was therefore allowed, but not otherwise. SkyKick’s cross-appeal on partial validity was dismissed. SkyKick’s cross-appeal on infringement was rendered moot by the result of Sky’s appeal.
This is a far-reaching judgment, heavily in favour of trade mark applications with a wide scope of goods and services. It poses considerable challenges for those wishing to clear their own signs for future use. Skykick has said that it will appeal to the Supreme Court. Given the significant commercial importance of the case, many traders would welcome the Supreme Court’s views.
(Sky Ltd v SkyKick, UK Ltd  EWCA Civ 1121 (26 July 2021) — to read the judgment in full, click here).